RAIN 10-K & 10-Q changes, risk factors and insider trading

Risks Relating to RWT’sRET’s Status as an Emerging Company

RWT RET has a limited operating history and has notgenerated yetlimited generated anyrevenues revenues,to date, which makes it difficult to forecast its future results of operations.

As a result of RWT’sRET’s limited operating history, its ability to accurately forecast the future results of operations is limited and subject to a number of uncertainties, including RWT’sRET’s ability to plan for and model future growth. RWT’sRET’s ability to generate revenues will largely be dependent on its ability to develop and improve ionization rainfall generationAEI technology, and market and sell its services and products. RWT’s RET’s business model is in the early stages of developmentdevelopment, and its technical roadmap may not be realized as quickly as hoped, or even at all. The development of RWT’s RET’s business model will likely require the incurrence of significant costs, while RWT’s RET’s revenues will be impacted by technological, go-to-market, and operational advancements which may not occur on the currently anticipated timetable or at all. Further, in future periods, RWT’s RET’s growth could slow or decline for a number of reasons, including but not limited to slow market acceptance, increased competition, competing technology, inability to develop, improve or effectively scale up RWT’s RET’s technology, a decrease in the growth of the overall market, government regulation, or RWT’sRET’s failure, for any reason, to continue to take advantage of growth opportunities.

RWT RET will also encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If RWT’s RET’s assumptions regarding these risks and uncertainties and its future growth are incorrect or change, or if RWTRET does not address these risks successfully, RWT’sRET’s operating and financial results could differ materially from its expectations, and its business could suffer. RWT’s RET’s success as a business ultimately relies upon fundamental researchcontinued research, development, and developmentcommercialization breakthroughsefforts inover the coming years and decade. years. There is no certainty these research and development milestones will be achieved as quickly as hoped, or even at all.

RWT RET expects to incur significant expenses and losses for the foreseeable future.

RWT RET believes that it will incur operating and net losses until it is able to grow its one-to-many business model at scale, deliver a robust, sustainable pipeline of clients and acquire long-term, multi-annual contracts. Among other things, RWTRET will incur ongoing expenses in connection with the design, development and manufacturing of its technology, conduct and expansion of its research and development activities, increases in its sales and marketing activities, development of its distribution infrastructure, and increases in its general and administrative functions to support its growing operations.

RWT RET may find that these efforts are more expensive than it currently anticipates or that these efforts may not result in revenues, which would further increase RWT’sRET’s losses. If RWTRET is unable to achieve and/or sustain profitability, or if RWTRET is unable to achieve the growth that it expects, it could have a material effect on RWT’s RET’s business, financial condition or results of operations. RWT’s RET’s business model is unproven and may never allow it to cover its costs.

RWT’s RET’s estimates of market opportunity and growth forecasts may prove to be inaccurate.

Market opportunity estimates and growth forecasts, including those RWT RET has generated itself, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. RWT’s RET’s business plan assumes a strong sales pipeline of actionable client targets that can be converted to revenue-generating clients beginning in 2025.clients. However, RWT does notRET currently havehas clients,limited commercial engagements and is in the early stages of deploying pilot projects and evaluation programs with certain public and research stakeholders, and the variables that go into the calculation of RWT’sRET’s client acquisition forecasts are subject to change over time. There is no guarantee that any particular number or percentage of clients or companies covered by its estimates will purchase its products at all or generate any particular level of revenue for RWT.RET. Any growth of RWT’s RET’s business depends on a number of factors, including the cost, performance, and perceived value associated with its technology.

RWT’s RET’s success will also depend upon its ability to expand, scale its operations, and increase its sales capability. RWT’sRET’s business model allows for affordable installation and manufacturing costs, expected to initially be approximately $280,000 per system, which price point will allow clients to be “laddered up” with a “land and expand” sales strategy, which will also involve continued involvement with RWTRET as it expects to be the sole operator for its rainfallrain and snowfall generation services. The all-in cost per system is expected to be approximately $425,000$425,000, thatwhich includes labor, a meteorologistmeteorologist, installation and other relatedmanufacturing costs. However, RWTRET is currently deploying and evaluating its systems through pilot projects and collaborative programs designed to measure potential rainfall enhancement and other atmospheric effects, but has not implemented such strategy with any revenue-generating clients as of the date of this Annual Report, and cannot assure you that it will be successful. Further, unforeseen issues associated with scaling up the technology at commercially viable levels could negatively impact RWT’sRET’s business, financial condition and results of operations.

RWT’s RET’s growth is dependent upon its ability to successfully support and service its clients.

Because RWT’s RET’s platform is expected to be unique in certain respects, its future clients will require particular support and service functions, some of which are not currently available, and may never be available. If RWTRET is unable to attract and retain the service and support staff needed in its client locations, it may not be able to successfully launch pilot projects or support and maintain the installation and operation of projects that have been sold. If RWTRET experiences delays in adding such support capacity or servicing its future clients efficiently, or experiences unforeseen issues with the reliability of its platform, it could overburden RWT’sRET’s servicing and support capabilities. Similarly, increasing the number of RWTRET products and services would require it to rapidly increase the availability of these services. Failure to adequately support and service its future clients may inhibit RWT’sRET’s growth and ability to expand.

RWT RET may not manage growth effectively.

RWT’s RET’s failure to manage growth effectively could harm its business, results of operations and financial condition. RWTRET anticipates that a period of significant expansion will be required to address potential growth. This expansion will place a significant strain on RWT’s RET’s management, operational and financial resources. Expansion will require significant cash investments and management resources and there is no guarantee that they will generate additional sales of RWT’s RET’s products or services, or that RWTRET will be able to avoid cost overruns or be able to hire additional personnel to support them. In addition, RWT RET will also need to ensure its compliance with regulatory requirements in various jurisdictions applicable to the sale, installation and servicing of its products. To manage the growth of its operations and personnel, RWTRET must establish appropriate and scalable operational and financial systems, procedures and controls and establish and maintain a qualified finance, administrative and operations staff. RWT RET may be unable to acquire the necessary capabilities and personnel required to manage growth or to identify, manage and exploit potential strategic relationships and market opportunities.

RWT RET will need additional capital to pursue its business objectives and respond to business opportunities, challenges or unforeseen circumstances, and it cannot be sure that additional financing will be available.

RWT RET will need additional capital to pursue its business objectives. RWT’sRET’s business and its future plans for expansion are capital-intensive and the specific timing of cash inflows and outflows may fluctuate substantially from period to period. RWT management currently estimates approximately $6.3 million and approximately $62 million in expenses for its one-year and five-year business plan.

As of December 31, 2024, after Closing,2025, the Company had approximately $37,000$214,000 in cash. Additionally, the Company has a $7 million line of credit from an affiliate of Harry You, of which $839,000 approximately $6.0 million has been borrowed as of theDecember date31, of this Annual Report.2025. The Company has adjusted certain operational and production ramp-upactivities in order to align with the available funding.funding RWT’sand intends to seek additional sources of capital to support its operational and commercialization activities. RET’s management hascontinues determinedto thatinvest in research and development activities to enhance the RWT system’s design is complete, requiring no additional R&D in the near-term,performance and that the main cash requirement for operations in the next 12 months will be production costapplication of additionalits units, staffingAEI systems, including ongoing testing and operations.development Therelated Company’sto managementrain determinedand thatsnowfall generation, fog dispersion and other atmospheric applications. During 2025, the Company hasalso accessmanufactured to funds under the Loan Agreement, and the affiliate of Harry You has the financial ability to provide such funds, that are sufficient to fund the working capital needs of the Company over the next 12 months from the date of issuance of this Annual Report. However, RWT expects to requiredeployed additional systems capital toand pursueincurred itscosts associated with system production, installation, monitoring and operational support. RET’s business objectives in the future. RWT’s business and its future plans for expansion are capital-intensive and the specific timing of cash inflows and outflows may fluctuate substantially from period to period. However, we cannot assure you that the Companywe will be able to obtain additional capital for itsour five-yearfuture business plan.

RWT’s RET’s operating plan may change because of factors currently unknown, and RWTRET may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financings may result in dilution to stockholders, issuance of securities with priority as to liquidation and dividend and other rights more favorable than common stock, imposition of debt covenants and repayment obligations or other restrictions that may adversely affect its business. In addition, RWT RET may seek additional capital due to favorable market conditions or strategic considerations even if it believes that it has sufficient funds for current or future operating plans. There can be no assurance that financing will be available to RWTRET on favorable terms, or at all. The inability to obtain financing when needed may make it more difficult for RWTRET to operate its business or implement its growth plans.

Risks Relating to RWT’sRET’s Business and Industry

There are many risks and uncertainties that may affect RWT’s RET’s operations, performance, development and results. Many of these risks are beyond RWT’sRET’s control. The following is a description of the important risk factors that may affect RWT’sRET’s business and industry. If any of these risks were to actually occur, RWT’s RET’s business, financial condition or results of operations could be materially adversely affected. Additional risks and uncertainties not currently known to RWTRET or that RWTRET currently considers to be immaterial may also materially adversely affect its business, financial condition or results of operations.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

We havepreviously identified a material weakness in our internal control over financial reporting as of and for the year ended December 31, 20232023, regarding the calculation of deferred tax assets and disclosure of income taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Classification (“ASC”) Topic 740, “Income Taxes.”. This misstatement led to a change in accounting for the correction of the error in calculating the gross deferred tax asset and the offsetting valuation allowance, as well as the omission of certain income tax disclosures. However, it did not impact RWT’sRET’s liquidity, cash flows, or operating costs during the period covered by RWT’s RET’s audited consolidated financial statements. RWT’sDuring 2024 and 2025, management determinedimplemented remediation measures designed to address this material weakness, including enhancing internal review procedures and engaging external specialists to assist with the preparation and review of the income tax provision and related disclosures. Based on these actions and management’s evaluation of the related controls, management concluded that thesuch material weakness had not beenwas remediated as of December 31, 2024. For a discussion of management’s consideration of the material weakness identified related to such issues, see “Note 2” of RWT’s audited consolidated financial statements including in the prospectus filed with the SEC on December 12, 2024.2025.

EffortsWe tocannot remediateassure thisyou materialthat weaknesswe maywon’t identify not be effective or prevent any future material weakness or significant deficiency in Holdco’s internal control over financial reporting. If Holdco’s efforts are not successful or otherfurther material weaknesses or control deficiencies occur in the future,future. HoldcoOur current and potential future material weaknesses may cause us to be unable to report itsour financial results accurately and on a timely basis, which could cause Holdco’sour reported financial results to be materially materially misstated and result in the loss of investor confidence and cause the market price of theour Class A Commoncommon Stockstock to decline. Ineffective internal controls could also cause investors to lose confidence in Holdco’s reported financial information, which could have a negative effect on the trading price of its stock. Failure to implement and maintain effective internal controls over financial reporting could also subject Holdcothe Company to potential delisting from Nasdaq or any other stock exchange on which itsour stock is listed or to other regulatory investigations and civil or criminal sanctions.

AsWe a result of such material weakness, the restatement and other matters raised or that may in the future be raised by the SEC, RWT incurred additional costs, including increased accounting and legal fees, and RWT faces (and RWT and Holdco following the Business Combinationalso face) potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in RWT’s our internal control over financial reporting and the preparation of RWT’s consolidatedour financial statements. As of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on theour business of Holdco and its results of operations and financial condition.

RWT RET can provide no assurance of the effectiveness and success of ionization rainfall generationAEI technology in increasing precipitation.

RWT’s RET’s success will depend on its ability to prove and demonstrate, to potential clients and the broader community, scientific and technological advances and to translate such advances into commercially competitive products. Failure can occur at any stage of therain process.and Ifsnowfall thegeneration development, developmentdeployment, of this technology is not successfulmeasurement, or thecommercialization. market isAs notRET convincedexpands thatits ionizationpilot rainfall generation technologies lead to demonstrable results, RWT may invest substantial amounts of timeprograms and moneydata withoutcollection developingefforts, revenue-producingresults products.may vary Asby RWTlocation, eventually enters into more robust developmentseason, and trialsweather ofpattern, the technology,and the data and results generated may not be as compelling as earlier results in previous trials done by third parties.

In light of the unprovendeveloping and evolving technology involved and the other factors described elsewhere in this Annual Report, there can be no assurance that RWTRET will be able to successfully complete the development, commercialization or marketing of any new technology or products which could materially harm its business, results of operations and prospects.

RWT has not demonstrated it can develop rainfall generationRET’s AEI technology is still being evaluated through pilot deployments and ongoing testing, and we face challenges in demonstrating consistent and facesrepeatable barriersrain inand replicating meaningful rainfallsnowfall generation. If RWTRET cannot successfully overcome those barriers, its business will be negatively impacted and could fail.

RainfallRain and snowfall generation is a difficult undertaking. There are significant engineering, technology, operational and climatological challenges that RWTRET must overcome to deliver consistent results with its platform. RWTRET isremains in thean developmentearly stage of commercial deployment and faces significant challenges in thefurther developmentdeveloping ofand scaling its rainfallrain and snowfall generation platform and in producing the necessary technology and machines in commercial volumes. SomeWhile RET has installed and deployed several systems and has reported preliminary observations from certain field deployments, these results remain subject to further validation and may not be repeatable across different atmospheric conditions or geographies. The effectiveness of therain developmentand challengessnowfall generation technologies can vary significantly depending on atmospheric conditions, geographic factors and other variables that could prevent the introduction of RWT’s technology include, but are not limited to, failure to: find scalable ways to secure real estate to set up and operate trials, secure paying client engagements, hire key team members with relevant water expertise, address any and all permitting requirements, establish prototyping scalability and bespoke supply chains, find adequate construction partners, and grow, create and train a productive sales force. Additionally, RWT may failbe to achieve a high degree of repeat success in rainfall generation, which could lead to a failure to ensure client retention. RWT may also fail to realizebeyond the potentialCompany’s of rainfall generation technology.control.

RWT RET has not demonstrated it can market and sell its rainfall generationAEI technology and faces market barriers to entry that it may not be able to overcome.

RWT’s RET’s rain enhancement ionization technology is not widely adopted or accepted in the market. RWTRET may face difficulties overcoming skepticism about its ability to create rain, or creating too much rain, or taking rain away from areas where it could naturally fall. RWTRET may need to educate the market to develop a broader understanding and acceptance of the science underlying the technology, as well as convince clients that the benefits justify the investment and costs of implementing its technology. RWTRET faces further challenges to streamline its go-to-market strategy, integrate its technology with other products and services, build its brand and engender loyalty while improving the core technology offering.

RWT RET may not be able to manufacture its technology at the pace, scale and volume needed to generate and meet market demand.

Even if RWTRET completessuccessfully development and achieves volumeincreases production of its platform,capacity, if the cost, performance characteristics or other specifications of the rainfall generationAEI technology fall short of RWT’s RET’s projections, RWT’sRET’s business, financial condition and results of operations would be adversely affected.

Additionally, developing manufacturing techniques to produce the volume volumes required to achieve forecasted production levels may require significant investment and capital and could hindernegatively impact margins or profitability in the future. If RWT’sRET’s technology fails to achieve a broad advantage advantage in generating rainfall, its business, financial condition and future prospects may be harmed.

The markets for rainfallrain and snowfall generation-related products are in nascent stages, and RWTRET may have limited opportunities to license our technologies or sell its products.

The rain rainfalland snowfall generation industry is in the early stage of commercializing rainfall generationAEI technology. Skepticism around the efficacy of the technology’s ability to enhance rainfall has hindered previous adoption.

RWT’s RET’s success will depend upon its ability to expand, scale its operations, and increase its sales capability, which may take longer or be more expensive than expected. Unforeseen issues associated with scaling up and constructing RWT’sRET’s technology at commercially viable levels could negatively impact RWT’sRET’s business, financial condition and results of operations. RWT’sRET’s growth is dependent upon its ability to successfully market and sell rainfallAEI generation technology. RWTRET does not have experience with the mass distribution and sale of rainfall generationAEI technology. Its growth and long-term success will depend upon the development of its sales and delivery capabilities.

RWT RET may be harmed by competing technologies.

The markets in which RWTRET operates are rapidly evolving to address increasing global need for reliable access to water, creating additional investment in competition. There has been significant improvement in water generation technologies such as desalination and chemical-based cloudseeding. As these markets continue to mature and new technologies and competitors enter such markets, RWTRET expects competition to intensify. RWTRET could lose market share and its revenues could decline, thereby affecting its earnings and potential for growth. In particular, although RWTRET does not plan to use chemicals in its manufacturing and production process, chemical-based cloudseeding companies may provide additional competition due to the maturity of chemical-based technology, more established historical operational data, stronger research groups, demonstrated effects in specific use cases, market acceptance and funding by recognized institutions.

In the future, RWT’sRET’s technologies may also compete with other emerging technologies. These technologies may be less expensive and provide higher or additional performance. Companies with these competing technologies may also have greater resources. Technological change could render its technologies obsolete, and new, competitive technologies could emerge that achieve broad adoption and adversely affect the use of its technologies and intellectual property.

RWT will beRET is dependent on its suppliers and manufacturers, and supply chain issues could delay the introduction of RWT’sRET’s product and negatively impact its business and operating results.

RWT RET has not yet entered into relationships with potential suppliers and manufacturers. However, when RWT enters into relationships with suppliers and manufacturers, itRET may face delays in the introduction of of its product due to supply chain issues. The manufacture, installation, production and operation of the ionizationAEI rainfall generation technology is expected to be dependent upon third party suppliers, service providers and networks. When RWT begins contracting with suppliers and manufacturers, it may be adversely affected if it is not able to obtain the required materials, supplies and critical spare parts required to build the machinery and operate our technology.

We were founded to provide the world with reliable access to water, one of life’s most important resources. To achieve this mission, we aim to develop, manufacture and commercialize ionization rainfall generationAEI technology.

We are combining unique expertise and personnel to develop, improve and undertake efforts to commercialize ionization rainfall generationAEI technology that enhances rainfall and snowfall when conditions are appropriate in the atmosphere. We are building our coreproprietary WETA platform with software, meteorology, hardware, product design and operations to make rainfall rain and snowfall generation more dependable. We aim to improve onthe existing rainfallrain and snowfall generation technologies by introducing robust measurement tools, including automation technology, rain gauges, and weather stations, to more precisely quantify the positive water benefit itgenerated expectsby toour deliver to millions globally.systems.

We intend aim to develop, invent, improve, manufacture, commercialize and operate technologies that enhance rainfall and elevate water reserves. We believe that our future services will yield potable water that can be used for all purposes. The projected cost (not including land costs, which are still being determined) and energy requirements for our future technology are modest on a per gallon basis for communities and ecosystems, estimated to be $0.10 per cubic meter, approximately 10 times less than other alternative technologies. We aim to enhance agricultural, industrial and household water supplies for all the communities in which we operate by developing technology and services to serve governmental and commercial clients’ needs in creating water resiliency and abundancy.abundance.

Our business model is based on a unique one-to-many community-centric business model. The numerous client segments to which we market includes include large landowners including agriculture, resorts, energy and transportation companies, insurance and reinsurance companies, decarbonization initiatives of major corporations and philanthropists, supranational governmental organizations, and city, county, state, federal and non-U.S. governments. In addition, we aim to leverage our offerings and enhance our potential market position by exploring ways to expand our future water generation products through licensing and acting as a channel partner for additional water generation technologies.

We have a limited operating history and have not yet generated any revenue,history, and our ability to generate revenue sufficient to achieve profitability will depend on our ability to successfully build and commercialize rainfall generationAEI technology and successfully execute our sales strategy.

The Business Combination was treatedaccounted as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Coliseum was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of RWT RET issuing stock for the net assets of Coliseum, accompanied by a recapitalization. The net assets of Coliseum were stated at historical cost, with no goodwill or other intangible assets recorded.

In connection with the Closing, Holdco entered into subscription agreements (collectively, the “PIPE Subscription Agreements ”) with thecertain PIPE Investorsinvestors and related parties (the “PIPE Investors”) to sell an aggregate of $1.35 million of118,557 shares of Holdco Class A Common Stock at a purchase price of approximately $11.39 per share, for gross proceeds of $1.35 million. At the Closing, Holdco received $700,000 of the PIPE investment and issued an aggregate of 61,474 shares of Holdco Class A Common Stock at $11.39 per share, of which Holdco received $700,000 ofto the PIPE InvestmentInvestors and recorded a subscription receivable of $650,000 for the remaining PIPE investment on the consolidated balance sheet as of December 31, 2024. Such receivable was fully paid on February 6, 2025.

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. An aggregate of 361,858 shares of Holdco Class A Common Stock (the “Forward Purchase Shares”) are subject to the Forward Purchase Agreement, for which Meteora was paid approximately $4.1 million at Closing (the “Prepayment”) and we retained approximately $20,000 (the “Prepayment Shortfall”). The Forward Purchase Agreement matures on the date of the effectiveness of a certain registration statement filed by Holdco with the Securities and Exchange Commission following the Closing Date (the “Maturity Date”). Meteora may sell the Forward Purchase shares at any time following the Closing Date until the Maturity Date at a price not less than $10.00 per share. If Meteora sells any of the Forward Purchase Shares, Meteora will pay to Holdco $10.00 for each share sold, less the Prepayment Shortfall. On Maturity Date, any Forward Purchase Shares that have not been sold by Meteora will be returned to us for no consideration, provided that if the proceeds of the shares sold by Meteora prior to the Maturity Date is less than the Prepayment Shortfall, then we will pay cash to Meteora in an amount equal to such difference. The forward purchase agreement remains subject to its contractual terms, including settlement provisions tied to the effectiveness of a registration statement.

On February 18, 2025, we received the MVLS Notice from the Staff of the Nasdaq which notified the Companyus that, for the 30 consecutive business days ended February 14, 2025, our MVLS closed below the $50,000,000 MVLS threshold required for continued listing on the Nasdaq Global Market under the MVLS Rule. Also on February 18, 2025, we received the MVPHS Notice from Nasdaq that for the 30 consecutive business days ended February 14, 2025, our MVPHS closed below the $15,000,000 MVPHS threshold required for continued listing on Nasdaq under Nasdaq Listing Rule 5450(b)(2)(AC).

We may not have sufficient liquidity to meet our anticipated obligations over the next year from the issuance of these unaudited condensed consolidated financial statements. In connection with our assessment of going concern considerations in accordance with FASB ASC 205-40, “Presentation of Financial Statements – Going Concern,” management has determined that we do not have sufficient liquidity to meet our anticipated obligations over the next year from the date of issuance of these unaudited condensed consolidated financial statements. Management’s plans to address this uncertainty include reducing expendituresexpenditures, utilizing the Company’s at-the-market offering program, and seeking additional financing through debt, equity, or a combination of both. However, there is no assurance that such funding will be available on acceptable terms, or at all. The unaudited condensed consolidated financial statements included in this Report do not include any adjustments that might result from the outcome of this uncertainty.

We were founded to provide the world with reliable access to water, one of life’s most important resources. To achieve this mission, we aim to develop, manufacture and commercialize atmospheric enhancement by ionization (AEI) technology.

We are combining unique expertise and personnel to develop, improve and commercialize AEI technology that enhances rainfall and snowfall when conditions are appropriate in the atmosphere. We are building our proprietary Weather Enhancement Technology Array (“WETA”) platform with software, meteorology, hardware, product design and operations to make rain and snowfall generationenhancement more dependable. We aim to improve the existing rain and snowfall generation enhancement technologies by introducing robust measurement tools, including automation technology, rain gauges, and weather stations, to more precisely quantify the positive water benefit generated by our systems.

Since the beginning of 2025 we have continued advancing the commercialization of our technology, including manufacturing and deploying additional rain and snowfall generationenhancement systems and conducting field deployments with potential governmental and commercial clients. We have also expanded our network of industry experts and consultants supporting system development, project execution and commercial outreach, and continued research and development activities aimed at improving system performance and exploring potential adjacent atmospheric water applications.

On December 31, 2024 (the “Closing Date”), our the Company,company, RET, Coliseum Acquisition Corp., and the merger subsidiaries consummated the business combination pursuant to the Business Combination Agreement (the “Business Combination”). Following the closing, the Companywe became the publicly traded parent company and holds all of the equity interests of RET.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Coliseum was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of RET issuing stock for the net assets of Coliseum, accompanied by a recapitalization. The net assets of Coliseum were stated at historical cost, with no goodwill or other intangible assets recorded.

In connection with the Closing, the Companywe entered into subscription agreements (collectively, the “PIPE Subscription Agreements”) with certain investors and related parties (the “PIPE Investors”) to sell an aggregate of 118,557 shares of Class A common stock at a purchase price of approximately $11.39 per share, for gross proceeds of $1.35 million. At the Closing, the Companywe received $700,000 of the PIPE investment and issued an aggregate of 61,474 shares of Class A common stock to the PIPE Investors and recorded a subscription receivable of $650,000 for the remaining PIPE investment on the consolidated balance sheet as of December 31, 2024.

On December 30, 2024, the Companywe 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. An aggregate of 361,858 shares of Class A common stock (the “Forward Purchase Shares”) are subject to the Forward Purchase Agreement, for which Meteora was paid approximately $4.1 million at Closing (the “Prepayment”) and we retained approximately $20,000$21,000 (the “Prepayment Shortfall”). The Forward Purchase Agreement matures on the date of the effectiveness of a certain registration statement filed by the Companyus with the Securities and Exchange Commission following the Closing Date (the “Maturity Date”). Meteora may sell the Forward Purchase shares at any time following the Closing Date until the Maturity Date at a price not less than $10.00 per share. If Meteora sells any of the Forward Purchase Shares, Meteora will pay to the Companyus $10.00 for each share sold, less the Prepayment Shortfall. On Maturity Date, any Forward Purchase Shares that have not been sold by Meteora will be returned to us for no consideration, provided that if the proceeds of the shares sold by Meteora prior to the Maturity Date is less than the Prepayment Shortfall, then we will pay cash to Meteora in an amount equal to such difference. The forward purchase agreement remains subject to its contractual terms, including settlement provisions tied to the effectiveness of a registration statement.

On December 30, 2024, the Companywe entered into the Loan Agreement with RHY Management LLC (“RHY), an affiliate of Harry You, pursuant to which RHY committed to provide the Companyus with up to $7 million in new loans.loans, which was later amended on March 31, 2026 to increase the loan commitment to up to $10 million. In addition, approximately $3.1 million of existing loans and advances owed to Mr. You and his affiliates were rolled into the Loan Agreement.

On March 11, 2026, theour Compensation Committee and the Board approved repayment of the amounts due under the Loan Agreement of up to 30% of any amount received by us from any potential future capital raise net of any underwriting, legal, and accounting fees and related costs.

We continued to monitor ourOur first two US installed systems entered operation in November 2025. These installations represent our first operational deployments in the United States and are part of our efforts to evaluate system performance under real-world atmospheric conditions. The systems are located in the La Sal Range of Utah, where we are monitoring snowfall and Snow Water Equivalent (“SWE”) measurements. Preliminary observations during certain periods of system operation coincided with changes in local snowfall and SWE measurements. These observations are preliminary, and additional research and analysis are ongoing to evaluate potential precipitation and snowpack impacts under varying atmospheric conditions.

As of MarchJune 31,30, 2026, we had 10 additional units were completed and deliveredavailable tofor theservice United States.placement. These systems are expected to support ongoing research activities, demonstration projects and potential future deployments as we continue to evaluate commercial applications of our technology. Management believes that maintaining an inventory of completed systems may allow us to respond more efficiently to pilot opportunities, research collaborations and potential commercial deployments as they arise.

In January 2026, we entered into a service agreement with the Utah Division of Water Resources to support the installation of a generator to facilitate radiometer data ingestion associated with our rainfall monitoring infrastructure. The agreement providesprovided for payment of $10,500 to us in connection with the installation. We completed the installation, received payment for the services in February 2026, and recognized revenue of $10,500 upon completion of the installation, which represents the satisfaction of our performance obligation in accordance with ASC 606. This activity is not part of our primary operations related to itsour AEI technology and is considered incidental in nature. We have not generated revenue from its our core business activities to date.

RET currently has two rain and snowfall generation enhancement systems installed and placed in service in the United States in November 20252025, andwhich are currently being used to support field observations, data collection and ongoing research activities related to our rainfall generation technology.

As of MarchJune 31,30, 2026, tenwe had 10 additional units was completed and deliveredavailable tofor theservice United States.placement. These units are intended to support future pilot programs, field deployments and operational readiness. The timing and location of future installations will depend on factors such as site availability, permitting requirements, customer engagement and the results of ongoing testing and evaluation. We expect that some of these systems may be deployed during 2026 as part of pilot programs, demonstration projects or other research initiatives.

As of MarchJune 31,30, 2026, we had approximately $581,000$33,000 in cash and had a working capital deficit of approximately $14.8$13.1 million. We expect to continue incurring expenses as we scale our operations and begin to generate revenue. We have historically funded our operations primarily through related-party financing arrangements, including borrowings under our loan agreement with Mr. You. As of MarchJune 31,30, 2026, we had approximately $1.3$1.5 million in remaining amount available under this facility. While we expect to continue relying on related party financing sources, additional capital raises and projected cash flows from operations, our limited operating history and continuing operating losses raise substantial doubt about our ability to continue as a going concern.

Management’s plans to address this uncertainty include continued support from related parties, utilizing the Company’s at-the-market offering program, seeking additional financing through debt, equity, or a combination of both, and pursuing commercial opportunities for installation and service agreements. However, there is no assurance that such funding will be available on acceptable terms, or at all.

Accordingly, our management has determined that we do not have sufficient liquidity to meet our anticipated obligations over the next year from the date of issuance of these unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements included in this Annual Report do not include any adjustments that might result from the outcome of this uncertainty.

In November 2025, we incurred installation and field deployment costs associated with the initial deployment and pilot operation of our rain and snowfall generationenhancement systems in the United States. These activities were undertaken as part of system validation and research programs and were not associated with revenue-generating customer contracts.

For the three months ended MarchJune 31,30, 2026, we had a net loss of approximately $1.9$3.2 million, which consisted of field operations costs of approximately $93,000,$105,000, general and administrative expenses of approximately $1.8$2.9 million (primarily related to personnel costs, stock based compensation expense, professional services, marketing, and other corporate operating expenses), research and development expenses of approximately $41,000,$32,000, amortization expense of approximately $3,000, depreciation expense of approximately $10,000, and interest expenses of approximately $139,000,$310,000, minimal interest income from an operating account, partially offset by a one-time service revenue with Utah Division of Water Resources of $10,500, and a gain due to the change in fair value of warrant liabilities of $205,000.$120,000.

For the three months ended MarchJune 31,30, 2025, we had net loss of approximately $1.5 million,$953,000, which consisted of general and administrative expenses of approximately $1.3$1.1 million,million (primarily related to personnel costs, professional services including quarterly audit, marketing, and other corporate operating expenses), amortization expenses of approximately $3,000, a loss indue to change in fair value of warrant liability of $90,000,$72,500, and interest expenseexpenses inand connectionminimal tax withexpenses theand noteinterest payableincome tofrom relatedoperating partiesaccount of approximately $47,000.$34,000, Wepartially experiencedoffset higherby expensesgain comparedfrom tosettlement previouswith yearsvendor of dueapproximately to the merger completed on December 31, 2024.$226,000.

For the threesix months ended MarchJune 31,30, 2026, net cash used in operating activities was approximately $1.9$2.9 million, net cash used in investing activities was approximately $9,500, and net cash provided by financing activities was approximately $2.3$2.7 million. Net cash used in operating activities included our net loss of approximately $1.9 $5.1 million, a gain due to change in the fair value of a warrant liabilities of $205,000,$325,000, partially offset by amortization expense of approximately $6,000, depreciation expense of approximately $20,000, approximately $617,000 paid by related parties on behalf of RET, and stock-based compensation expenses of approximately $1.7 million, and changes in operating assets and liabilities of approximately $519,000, partially offset by amortization expense of approximately $3,000, depreciation expense of approximately $10,000, approximately $439,000 paid by related parties on behalf of RET, and stock-based compensation expenses of approximately $258,000. $194,000. Cash used in investing activities consisted solely of payment for building Equipment of approximately $9,500. Cash provided by financing activities resulted from proceeds from drawdowns under the LOC (as defined below) of approximately $2.3$2.8 million.million, partially offset by payment of deferred financing costs of approximately $23,000.

For the threesix months ended MarchJune 31,30, 2025, net cash used in operating activities was approximately $1.0$1.4 million, net cash used in investing accountactivities was approximately $139,000,$613,000, and net cash provided by financing activities was approximately $1.4$2.0 million. Net loss of approximately $1.5$2.4 millionmillion, wasand gain from settlement with vendor of approximately $226,000, partially offset by changes in operating assets and liabilities of approximately $368,000 and non-cash activities, including$39,000, amortization expense of approximately $3,000,$6,000, minimalapproximately expenses$1.1 million paid by related parties on behalf of RET,RWT, and change in fair value of warrant liability of $90,000,$162,500, resulted in approximately $1.0$1.4 million of net cash used in operating activities. Cash used in investing activities consisted solely of payment for building Equipment of approximately $139,000.$613,000. Cash provided by financing activities resulted from proceeds from payment of subscription receivable of $650,000 and proceeds from drawdowndrawdowns under the LOC of approximately $737,000.$1.3 million.

We entered into a consulting agreement to engage our senior technology advisor advisor,who provides strategic technology leadership and advisory services to us, Scott MorrisMorris, in 2022, pursuant to which we agreed to pay him a one-time fee upon execution of the agreement and a consulting fee of AUD 250,000 per year (equivalent to approximately $170,000 as of the effective date). In February 2025, the agreement was amended to increase the annual consulting fee to $186,000, and in July and effective as of June 1, 2025, itthe annual consulting fee was further increased to $252,000 annually in exchange for the consultant assuming an additional role and responsibilities. The agreement also providesprovided for success fees payable upon the achievement of specified sales and development milestones. On March 19, 2026, the agreement was amended to add three additional milestones, each of which would entitle him to a $25,000 cash bonus. In November 2025, we paid an aggregate of $50,000 in milestone payments to Mr. Morris in connection with the achievement of certain development milestones.

Effective January 2, 2025, we entered into a binding offer letter (as amended, the “Offer Letter”), which was later amended on June 27, 2025, with our new CEO, Mr. Seidl. Pursuant to the amended Offer Letter, we agreed to pay to the CEO (i) an annual salary of $500,000, (ii) an annual incentive bonus up to 200% of his base salary, subject to Board or Compensation Committee approval, which will be subject to the achievement of Company and/or individual performance goals mutually agreed by the CEO and the Board or the Compensation Committee, and (iii) a cash bonus of $5.82 million (the “Retention Bonus”) payable on the earlier of (x) December 31, 2028, (y) the date on which we terminate the CEO’s employment without cause, or (z) the date on which a change of control is consummated. We accrue the Retention Bonus over the period of service. As of MarchJune 31,30, 2026 and December 31, 2025, we accrued approximately $1.3$1.7 million and $831,000 of Retention Bonus, respectively. In addition, we also accrued $1 million of annual incentive bonus for 2025 in accrued expenses to related party in the accompanying consolidated balance sheet as of December 31, 2025. We paid the $1 million annual incentive bonus for 2025 to Mr. Seidl in March 2026, pursuant to the Board’s determination and approval.

In January 2025, we entered into a termination letter agreement with our former CEO, Mr. Christopher Riley, pursuant to which, in lieu of all other compensation and payments, we agreed to pay Mr. Riley an aggregate of $124,500, payable in 18 monthly installments beginning in February 2025 in consideration for his past services. As of MarchJune 31,30, 2026 and December 31, 2025, we had an aggregate of approximately $28,000$7,000 and $48,000 remaining outstanding in connection with such agreement that was included in accrued expenses in the accompanying consolidated balance sheets, respectively. Additionally, conditioned on approval by the Compensation Committee, the Termination Letter provides that Mr. Riley will be granted 10,000 shares of Class A common stock vesting one year from the date of grant. As of March 31, 2026, the stock has not been granted.

Board of Directors Agreement

In connection with their appointments to the Board, Mr. Reardon, Mr. Peperzak,Peperzak and Mr. Sylvester each entered into the Director Agreements which are the form of agreement adopted by the Board in April 2025 to govern the terms of service and compensation of our company’s non-employee directors.directors (the “Director Agreements”). Additionally, effective as of April 4, 2025, we entered into Director Agreements with Lyman Dickerson, Alexandra Steele, and Christopher Riley, each non-employee members of the Board. Pursuant to the terms of the Director Agreements, we agreed to pay to each Board member (i) subject to approval by the Board and compensation committee of the Board (the “Compensation Committee,Committee”), a cash payment of $12,500 promptly following attendance at each quarterly Board meeting, for a total annual cash compensation of $50,000; and (ii) subject to approval by the Board and the Compensation Committee, a grant of restricted stock, with the number of shares and terms to be determined by the Board. We recognized an aggregateexpenses of $75,000 and $0$150,000 inrelated connectionto with suchthese agreements during the three and six months ended MarchJune 31,30, 20262026, respectively, and $100,000 during both the three and 2025six withinmonths ended June 30, 2025, which were included in general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations,operations. respectively.See AsRecent Developments for additional information regarding equity awards granted to members of March 31, 2026, there has been no grants of restricted stock to the directors.Board.

While our significant accounting policies are described in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, our management believes there were no critical accounting estimates identified during the three and six months ended MarchJune 31,30, 2026 and 2025.

We capitalize our cost to build our rainfall ionization equipment (the “Equipment”), including materials and allocated labor costs directly attributable to the construction of the Equipment. Costs incurred prior to completion of the equipment are recorded as construction in progress. Upon the installation of the Equipment, we transferred our capitalized cost from Construction in-process Equipment to Equipment. Equipment that has been completed but has not yet been installed or otherwise placed into service remains within Construction in-process Equipment and is not depreciated until transferred into Equipment and placed into service.