Company: RAIN
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001213900-25-076727
Chunk: 71

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 71
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 Statement Expenses (Subtopic 220-40), requires the disaggregated disclosure of specific expense categories, including purchases
of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires
disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods
beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can
either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU
or retrospectively to any or all prior periods presented in the consolidated financial statements. While early adoption is permitted,
the Company does not plan to adopt this standard early. This ASU will likely result in additional disclosures being included in the Company’s
consolidated financial statements once adopted. The Company is currently evaluating the provisions of this ASU will have on its consolidated
financial statements.

Note 3 — Business Combination
Updates

PIPE Subscriptions Receivable

On February 6, 2025, the 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.