Company: RAIN
Filing Date: 2025-04-16
Form Type: 10-K
Source: 0001213900-25-032239
Chunk: 849

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-04-16
Form: 10-K
Item: Item 5
Chunk 849
---
alance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Estimates 

The consolidated financial statements have been
prepared in accordance with U.S. GAAP and pursuant to the rules and regulations of the SEC.

Preparation of the consolidated financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities. We also make estimates and assumptions on revenue generated and reported expenses incurred during the reporting
periods. Our estimates are based on our historical experience and on various other factors that it believes are reasonable under the
circumstances. The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates.

While our significant accounting policies are
described in the notes to our consolidated financial statements included elsewhere in this Annual Report, our management believes there
was no critical accounting estimates identified during the years ended December 31, 2024 and 2023.

Derivative Financial Instruments

We do not use derivative instruments to hedge exposures to cash flow,
market, or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain
features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC
480”) and ASC 815. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is re-assessed at the end of each reporting period. The assessment considers whether the financial instruments are freestanding
financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the financial instruments
meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to our own
ordinary shares, among other conditions for equity classification.

Equipment

We capitalize our cost to build its rainfall ionization
equipment (the “Equipment”), including materials and allocated labor costs. In July 2023, we finished building the Equipment
and transferred its capitalized cost from Construction in-process to Equipment. As soon as the Equipment is placed in service upon agreement
with the customers, we will begin to depreciate those assets on a straight- line basis over the estimated useful lives of the assets,
generally 10 to 15 years. At the time of retirement or other disposition of the Equipment, the cost and accumulated depreciation
will be removed