Company: RAIN
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044438
Chunk: 103

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 103
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 financing arrangements or any relationships with unconsolidated
entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that
were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Estimates 

The unaudited condensed 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 unaudited condensed 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 unaudited condensed consolidated financial statements included elsewhere in this Annual Report, our management
believes there was no critical accounting estimates identified during the three months ended March 31, 2025 and 2024.

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