Company: RAIN
Filing Date: 2025-04-16
Form Type: 10-K
Source: 0001213900-25-032239
Chunk: 64

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-04-16
Form: 10-K
Item: Item 1
Chunk 64
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 enforce the forum provisions (an “enforcement action”), and (y) having service of process made
upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as
agent for such warrant holder.

This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Holdco, which may discourage such
lawsuits and result in increased costs to warrant holders to bring a lawsuit. Alternatively, if a court were to find this provision of
our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we
may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect
our business, financial condition and results of operations and result in a diversion of the time and resources of our management and
the Board.

37

The Warrants are recognized and accounted
for as derivative liabilities in accordance with ASC 815 and are recorded at fair value upon issuance with changes in fair
value each period reported in earnings, which may have an adverse effect on the market price of the Class A Common Stock.

The guidance contained in FASB ASC Topic 815, “Derivatives
and Hedging” (“ASC 815”) provides that because the Warrants do not meet the criteria for equity treatment thereunder,
each Warrant must be recorded as a liability. Accordingly, we classify each of the Warrants as a liability at its fair value as determined
by us based upon a valuation report obtained from an independent third party valuation firm. At each reporting period (1) the accounting
treatment of the Warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the
liability of the Warrants is remeasured and the change in the fair value of the liability is recorded as other income (expense) in our
consolidated statements of operations. Changes in the inputs and assumptions for the valuation model we use to determine the fair value
of such liability may have a material impact on the estimated fair value of the embedded derivative liability. The share price of Class
A Common Stock represents the primary underlying variable that will impact the value of the derivative instruments. Additional factors
that may impact the value of the derivative instruments include the volatility of our stock price, discount rates and stated interest
rates. As a result, our consolidated