Company: RAIN
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-044438
Chunk: 20

Company: Rain Enhancement Technologies Holdco, Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 1
Chunk 20
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 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.

12

RAIN ENHANCEMENT TECHNOLOGIES
HOLDCO, INC.

NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2025

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
consolidated statements of operations each reporting period until the Maturity Date. As of December 31, 2024, the prepayment shortfall
liability was recorded at maximum value.

Upon receipt of consideration related to the
sale of any shares sold by Meteora, the Company will record the receipt of funds as an increase to cash and a decrease to the “Prepayment
Shortfall liability” until the “Prepayment Shortfall Liability” is zero, and then any remaining proceeds received will
reduce the receivable previously recorded as contra-equity.

The Company incurred no transaction costs that
were directly related to the issuance of the Forward Purchase Agreement.

As of December 31, 2024, the Company recorded
the $4.1 million of Prepayment amount paid at closing within additional paid-in capital and approximately $20,000 in shortfall
payment liability in the accompanying consolidated balance sheet. As of March 31, 2025, the value of the shortfall payment liability
remained unchanged.

Public and Private Placement Warrants

Prior to Closing, Coliseum had 5,000,000 Coliseum
Public Warrants and 3,225,000 Coliseum Private Placement Warrants outstanding. In connection with the Business Combination,
as discussed above, an aggregate of 3,225,000 Coliseum Private Placement Warrants were converted into 806,250 shares
of Holdco Class A Common Stock, and the Coliseum Public Warrants became warrants to purchase