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

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 13
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 levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Derivative Financial Instruments

The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its 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 FASB ASC Topic 815, “Derivatives and Hedging” (“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 the Company’s own ordinary shares,
among other conditions for equity classification.

Foreign Currency Translation and Transactions

The U.S. dollar is the Company’s functional
currency. Transactions denominated in currency other than the Company’s functional currency are recorded upon initial recognition
at the exchange rate on the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign
currency are remeasured at each reporting date into the foreign currency at the exchange rate on that date. Exchange rate differences,
other than those accounted for as hedging transactions, are recognized as foreign currency transaction gain or loss included in the Company’s
statements of operations within the general and administrative expenses.

During the three and nine months ended September
30, 2025 and 2024, the only foreign currency transaction the Company incurred was the amount paid to its senior technology advisor in
Australian Dollars. The amount of these foreign currency payments was translated into U.S. dollars.

8

RAIN ENHANCEMENT TECHNOLOGIES HOLDCO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

SEPTEMBER 30, 2025

Equipment and Construction In-Process Equipment

The Company capitalizes its cost to build its
rainfall ionization equipment (the “Equipment”), including materials and allocated labor costs. Upon the completion of building