Company: RAIN
Filing Date: 2025-04-16
Form Type: 10-K
Source: 0001213900-25-032239
Chunk: 1016

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-04-16
Form: 10-K
Item: Item 6
Chunk 1016
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 Stock

As of December 31, 2024 and 2023, the Company
had an aggregate of 57,752 and 0 shares of Class B Common Stock issued and outstanding, as retroactively restated to reflect the Business
Combination, respectively.

Stock Options

On August 23, 2024, the Company granted
1,433,892 and 716,946 options, as retroactively restated to reflect the Business Combination, to purchase RWT’s Class A common
stock to Harry You and Niccolo de Masi, respectively. The options expire in ten years from the date of grant, had an exercise price
of $2.06 and were fully vested upon the grant date.

The Company recognized approximately $2.8 million
for stock-based compensation expenses upon issuance of such options in August 2024 within general and administrative expenses in
the accompanying consolidated statements of operations during the year ended December 31, 2024. The fair value of the operations was measured
on the date of grant using a hybrid method of probability weighted expected return (“PWERM”), where the equity value was allocated
in one or more of the scenarios using a Black-Scholes option pricing model.

The assumptions used in the Company’s model
represent management’s best estimates. These estimates are complex, involve a number of variables, uncertainties and assumptions
and the application of management’s judgment, so that they are inherently subjective. If factors change and different assumptions
are used, the stock-based compensation expense could be materially different in the future.

These assumptions are estimated as follows:

●Estimated value of common stock: The Company allocated
equity value in one or more of the scenarios using a Black-Scholes option pricing model to derive the estimated value of common stock

●Risk-free interest rate: The Company used the implied yield available on U.S. Treasury zero-coupon
issues with an equivalent remaining term of the options for each option group.

●Expected term: The expected
term represents the period that the stock-based awards are expected to be outstanding. Because of the limitations on the sale or transfer
or the Company’s common stock as a privately held company as of grant date, the Company does not believe its historical exercise
pattern is indicative of the pattern it will experience as a publicly traded company. The Company estimated that the options issued to
its holders of Founder Shares will be held for the full ten-year term.

●Volatility:  The Company determined the price volatility factor based on