Company: RAIN
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001213900-25-110062
Chunk: 77

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 8
Chunk 77
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 CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2025

Note 3 — Business Combination
Updates

PIPE Subscriptions Receivable

On February 6, 2025, Holdco received $650,000 of
the PIPE investment subscription receivable jn connection with the Business Combination as described in the Company’s Annual Report
on Form 10-K filed with the SEC on April 16, 2025.

Forward Purchase Agreement with Meteora

Also in connection with the Business Combination,
on December 30, 2024, Holdco entered into a forward purchase agreement (the “Forward Purchase Agreement”) with Meteora Capital
Partners, LP and affiliated funds (“Meteora”) for an OTC equity prepaid forward transaction as described in the Company’s
Annual Report on Form 10-K filed with the SEC on April 16, 2025.

The Company’s management determined that
the prepaid Forward Purchase Agreement is a hybrid instrument with an embedded derivative (forward purchase contract), which meets the
definition of a derivative and does not meet the criteria for the derivative accounting scope exception in ASC 815. As such, the embedded
derivative is recognized initially and subsequently at fair value, with changes in fair value reported in earnings in accordance with
ASC 815. Because the bifurcated embedded derivative is a forward contract, it must have an initial fair value of zero. As a result,
the prepayment amount was allocated entirely to the host contract, which represents a receivable classified as contra-equity. Any shares
issued under the Forward Purchase Agreement were accounted for and classified as issued and outstanding for accounting purposes.

Until the earlier of 1) the maturity date, and
2) the date that gross proceeds from the sale of the shares by Meteora equal 100% of the “Prepayment Shortfall”, the
Company recognizes a liability for the Prepayment Shortfall at fair value, with subsequent changes in fair value recognized in the Company’s
unaudited condensed consolidated statements of operations each reporting period until the Maturity Date. As of September 30, 2025 and
December 31, 2024, the value of the shortfall payment liability at its maximum value of approximately $21,000 remained unchanged.

Note 4 — Intangible Assets

Patent License

On November 21, 2022, the Company entered
into a license agreement with Dr.