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Item 7. Management’s Discussion and Analysis

2026-04-15 compared with 2025-04-16 · 555 added, 562 removed, 10 unchanged (99% of the section changed)

Management’s discussion and

analysis of financial condition and results of operations.

The following discussion and analysis of the

Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements

and the notes related thereto which follow Item 16 of this Annual Report on Form 10-K.

Certain information contained in the discussion

and analysis set forth below includes forward-looking statements.

Our actual results may differ materially from those anticipated in

these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking

Statements,” “Item 1A.

Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Unless otherwise indicated or the context

otherwise requires, references in this Holdco Management’s Discussion and Analysis of Financial Condition and Results of Operations

to the company, “we,” “us” “our,” “Holdco” and other similar terms refer to Rain Enhancement

Technologies Holdco, Inc.

Management’s discussion and analysis of financial condition and results of operations.

following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction

with our audited consolidated financial statements and the notes related thereto which follow Item 16 of this Annual Report on Form 10-K.

Certain information contained in the discussion and analysis set forth below includes forward-looking statements.

Our actual results

may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth

under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A.

Risk Factors” and elsewhere in this Annual

Report on Form 10-K.

otherwise indicated or the context otherwise requires, references in this Holdco Management’s Discussion and Analysis of Financial

Condition and Results of Operations to the company, “we,” “us” “our,” “Holdco” and other

similar terms refer to Rain Enhancement Technologies Holdco, Inc.

on a consolidated basis.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 generation technology.

We are combining unique expertise and personnel to develop, improve

and undertake efforts to commercialize ionization rainfall generation technology that enhances rainfall when conditions are appropriate

in the atmosphere.

We are building our core platform with software, meteorology, hardware, product design and operations to make rainfall

generation more dependable.

We aim to improve on existing rainfall generation technologies by introducing robust measurement tools, including

automation technology, rain gauges, and weather stations, to more precisely quantify the positive water benefit it expects to deliver

to millions globally.

We intend 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.

Our business model is based on a unique one-to-many community-centric

business model.

The numerous client segments to which we market includes 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.

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.

Since the beginning of 2025 we have created new marketing and sales

programs, identified and contacted potential customers in core market segments, expanded our contacts with rain enhancement experts who

could endorse our technology and introduce us into existing projects looking to address lack of rainfall, and organized our production

of systems to serve expected demand.

We have a limited operating history and have not yet generated any

revenue, and our ability to generate revenue sufficient to achieve profitability will depend on our ability to successfully build and

commercialize rainfall generation technology and successfully execute our sales strategy.

Business Combination

On the Closing Date, Coliseum, RWT, Holdco, Merger

Sub 1, and Merger Sub 2 consummated the Business Combination pursuant to the terms of the Business Combination Agreement.

Pursuant to the Business Combination Agreement,

on the Closing Date, the Mergers occurred, and, after giving effect to such Mergers, the Closing occurred.

Following the Closing, Holdco

holds all of the equity interests of RWT and Merger Sub 1.

The Business Combination was treated as a reverse

recapitalization in accordance with U.S.

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

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.

Our common stock and warrants commenced trading

on the Nasdaq Stock Market LLC under the symbols “RAIN” and “RAINW”, respectively, on January 2, 2025.

PIPE Subscriptions

In connection with the Closing, Holdco entered

into the PIPE Subscription Agreements with the PIPE Investors and related parties to sell an aggregate of $1.35 million of shares of Holdco

Class A Common Stock at $11.39 per share, of which Holdco received $700,000 of the PIPE Investment and recorded a subscription receivable

of $650,000 on the consolidated balance sheet as of December 31, 2024.

Such receivable was fully paid on February 6, 2025.

On the Closing Date, the Company closed on $700,000 of investment pursuant

to the PIPE Subscription Agreements 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 from two PIPE Investors for the purchase of 57,083 shares of Class A Common Stock.

On January 29,

2025, the Company closed $500,000 of such subscription receivable pursuant to the PIPE Subscription Agreements and issued an aggregate

of 43,910 shares of Class A Common Stock to the PIPE Investors.

On February 6, 2025, the Company closed on the remaining $150,000 of subscription

receivable pursuant to the PIPE Subscription Agreements and issued an aggregate of 13,173 shares of Class A Common Stock to the PIPE Investors.

Forward Purchase Agreement with Meteora

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.

Loan Agreement with an Affiliate of Harry You

On December 30, 2024, Holdco entered into the Loan Agreement with RHY,

an affiliate of Harry You, pursuant to which RHY committed to provide Holdco with up to $7 million in new loans.

Prior to each drawdown,

pursuant to the Loan Agreement, Holdco must certify to RHY, among other things, that it has used its best efforts to raise equity, equity-linked,

or debt financing on terms available in the market to a similarly-situated company in similar circumstances, and is unable to obtain alternate

financing in the amount of such drawdown.

Once amounts are borrowed, they may not be re-borrowed.

Additionally, Mr.

You agreed to roll

over an aggregate of approximately $3.1 million of loans and advances owed to him or to his affiliates by Coliseum and RWT into the Loan

Agreement and such amounts will be treated for all purposes as loans outstanding pursuant to the Loan Agreement (which, for the avoidance

of doubt, does not decrease the $7 million commitment).

As of the date of this Annual Report, Holdco has borrowed an additional $839,000

of new funds under the Loan Agreement.

Recent Developments

Appointment of Directors

On April 1, 2025, the Board increased the size

of the Board from five to seven directors and appointed Mr.

Marcus Peperzak and Mr.

Robert Reardon to fill the resulting vacancies.

Reardon was appointed to serve as a Class I director with a term expiring at the Company’s first annual meeting of stockholders.

Peperzak was appointed to serve as a Class II director with a term expiring at the second annual meeting of stockholders.

the appointment, Mr.

Peperzak and Mr.

Reardon serve on the Audit Committee.

In connection with this appointment, Mr.

Peperzak each entered into a Director Agreement (as defined below) that is consistent with the Company’s form of Director

Under the Director Agreement, members of the Board will receive compensation for service on the Board and on committees of

the Board consisting of the following:

(i) subject to approval by the Board and compensation committee of the Board (the “Compensation

Committee”), a cash payment of $12,500 promptly following attendance at each quarterly Board meeting, for a total annual cash compensation

and (ii) at the beginning of each year of service, and subject to approval by the Board and the Compensation Committee, a

grant of restricted stock, with the number of shares determined by dividing $100,000 by the closing price of the Company’s Class

A common stock, par value $0.0001 per share (“Class A Common Stock”) as reported on the Nasdaq Stock Market LLC on the date

of the grant.

The restricted stock granted pursuant to the Director Agreement will vest in full on the first anniversary of the grant

date, subject to acceleration in accordance with the terms of the restricted stock award or the Company’s 2024 Incentive Award Plan.

Additionally, effective as of April 4, 2025, the

Company entered into Director Agreements with Lyman Dickerson, Alexandra Steele, and Christopher Riley, each non-employee members of the

The terms of the Director Agreements are consistent with the Company’s standard form of Director Agreement described above,

except with respect to the grants of restricted stock to Mr.

Dickerson and Mr.

Riley, which are as follows:

(i) subject to approval by

the Board and the Compensation Committee, in lieu of an annual grant of restricted stock, Mr.

Dickerson will receive an initial grant

of restricted stock equal to the number of shares determined by dividing $2,000,000 by the closing price of the Class A Common Stock on

the date of grant, and such grant of restricted stock will vest in full on the third anniversary of the grant date, subject to acceleration

in accordance with the terms of the restricted stock award or the Company’s 2024 Incentive Award Plan, and (ii) subject to approval

by the Board and the Compensation Committee, Mr.

Riley will receive an annual grant of restricted stock equal to the number of shares

determined by dividing $50,000 by the closing price of the Class A Common Stock on the date of grant.

The grants of restricted stock to each of Mr.

Dickerson, Ms.

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 AEI technology.

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 WETA platform with software, meteorology, hardware,

product design and operations to make rain and snowfall generation more dependable.

We aim to improve the existing rain 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 generated by our systems.

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, 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 abundance.

business model is based on a unique one-to-many community-centric business model.

The numerous client segments to which we market 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

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.

the beginning of 2025 we have continued advancing the commercialization of our technology, including manufacturing and deploying additional

rain and snowfall generation systems and conducting field deployments with potential governmental and commercial clients.

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.

have a limited operating history, and our ability to generate revenue sufficient to achieve profitability will depend on our ability

to successfully build and commercialize AEI technology and successfully execute our sales strategy.

This Annual Report includes a restatement of our

financial statements for the Affected Periods resulting from an error in the accounting for financed insurance premiums as of March 31,

2025 and June 30, 2025.

In connection with the restatement, our management reassessed the effectiveness of our internal control

over financial reporting and our internal control over financial reporting and our disclosure controls and procedures for the Affected

As a result of that reassessment, we determined that a material weakness existed in the Company’s internal control over

financial reporting as of December 31, 2024, and that our disclosure controls and procedures were not effective as of December 31,

For more information, see “Item 9A—Controls and Procedures” in this Annual Report.

We have not amended our previously filed Quarterly

Reports on Form 10-Q for the Affected Periods.

The financial information that has been previously filed or otherwise reported for

the Affected Periods is superseded by the information in this Annual Report on Form 10-K, and the financial statements and related financial

information contained in such previously filed reports should no longer be relied upon.

The restatement is more fully described in Note 2

of the notes to the audited consolidated financial statements included herein.

December 31, 2024 (the “Closing Date”), Coliseum Acquisition Corp., Rain Enhancement Technologies, Inc., Rain Enhancement

Technologies Holdco, Inc.

(“Holdco”), and the merger subsidiaries consummated the business combination pursuant to the Business

Combination Agreement (the “Business Combination”).

Following the closing, Holdco became the publicly traded parent company

and holds all of the equity interests of RET.

Business Combination was accounted as a reverse recapitalization in accordance with U.S.

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.

net assets of Coliseum were stated at historical cost, with no goodwill or other intangible assets recorded.

common stock and warrants commenced trading on the Nasdaq Stock Market LLC under the symbols “RAIN” and “RAINW”,

respectively, on January 2, 2025.

Subscriptions

connection with the Closing, Holdco 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 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 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.

January 29, 2025, the Company received $500,000 pursuant to the PIPE Subscription Agreements and issued 43,910 shares of Class A Common

On February 6, 2025, the Company received the remaining $150,000 and issued 13,173 shares of Class A Common Stock.

As of February

6, 2025, the subscription receivable had been fully paid.

Purchase Agreement with Meteora

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

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.

Agreement with an Affiliate of Harry You

December 30, 2024, Holdco entered into the Loan Agreement with RHY Management LLC (“RHY), an affiliate of Harry You, pursuant to

which RHY committed to provide Holdco with up to $7 million in new loans.

In addition, approximately $3.1 million of existing loans and

advances owed to Mr.

You and his affiliates were rolled into the Loan Agreement.

of December 31, 2025, the Company had approximately $9.1 million outstanding under the Loan Agreement, consisting of approximately $3.1

million of rollover amounts and approximately $6.0 million of additional borrowings during 2025.

On March 11, 2026, the Compensation Committee

and the Board approved repayment of the amounts due under the Loan Agreement of up to 30% of any amount received by the Company from

any potential future capital raise net of any underwriting, legal, and accounting fees and related costs.

On March 24, 2026, the Audit Committee and the

Board approved an increase in the amount that could be borrowed under the Loan Agreement from $7,000,000 to $10,000,000.

and RHY entered into an amendment to the Loan Agreement reflecting such increase, effective as of March 31, 2026.

October 2025, we announced preliminary field observations from a fog-mitigation pilot conducted in Australia using our WETA platform.

Initial observations suggested ionization may influence fog dissipation under certain atmospheric conditions.

Based on these results,

we plan to conduct expanded, instrumented pilot programs in 2026 in the USA (Oregon, California, Utah or Colorado) and Australia to further

evaluate performance and use cases.

These activities remain in the research and development stage and are not expected to generate material

revenue until validation and commercialization.

first two US installed systems entered operation in November 2025.

These installations represent the Company’s 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.

observations are preliminary, and additional research and analysis are ongoing to evaluate potential precipitation and snowpack impacts

under varying atmospheric conditions.

During 2025, we also expanded production of our

WETA systems and manufactured ten additional units in Australia which were shipped to, and are stored in, the United States intended

to support future pilot programs, field deployments and operational readiness.

As of December 31, 2025, seven of these units had been

completed and were being stored pending deployment.

The remaining three units were completed and delivered to the United States in March

Additionally, three systems are currently under construction.

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.

believes that maintaining an inventory of completed systems may allow the Company to respond more efficiently to pilot opportunities,

research collaborations and potential commercial deployments as they arise.

addition, we also continued internal development efforts related to potential enhancements to our WETA platform, including instrumentation,

data collection and deployment configurations intended to support future pilot programs and operational flexibility.

These initiatives

remain in development and are being evaluated as part of our broader research and engineering activities.

The timing and extent of any

future implementation or commercialization of these capabilities remain uncertain.

Agreement with Utah Division of Water Resources

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 provides for payment of

$10,500 to us in connection with the installation.

We completed the installation and fully received the payment in February 2026.

December 22, 2025, the holders of Class B Common Stock appointed Mr.

David Sylvester as a Class II director with a term expiring at the

second annual meeting of stockholders, and the Board increased the size of the Board from seven to eight directors and appointed Mr.

Sylvester as Chairperson of the Audit Committee.

Following the appointment, Mr.

Sylvester, Mr.

Peperzak and Mr.

Reardon pursuant to the Director Agreements were deferred by the Board.

Nasdaq Compliance Notices

On February 18, 2025, we received the MVLS Notice from Nasdaq which

notified the Company 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 Nasdaq Listing Rule 5450(b)(2)(A).

In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have 180 calendar

days, or until August 18, 2025, to regain compliance with the MVLS Rule.

The MVLS Notice notes that, to regain compliance, our MVLS must

close at or above $50,000,000 for a minimum of ten consecutive business days during the MVLS Compliance Period.

The MVLS Notice further

notes that if we are unable to satisfy the MVLS requirement prior to such date, we may be eligible to transfer the listing of its securities

to The Nasdaq Capital Market (provided that we then satisfy the requirements for continued listing on that market).

If we do not regain

compliance by the end of the MVLS Compliance Period, Nasdaq staff will provide written notice to us that our securities are subject to

At that time, we may appeal any such delisting determination to a hearings panel.

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)C).

In accordance with Nasdaq Listing Rule 5810(c)(3)(D), we have 180 calendar

days, or until August 18, 2025, to regain compliance with the MVPHS Rule.

The MVPHS Notice notes that, to regain compliance, our MVPHS

must close at or above $15,000,000 for a minimum of ten consecutive business days during the MVPHS Compliance Period.

The MVPHS Notice

further notes that if we are unable to satisfy the MVPHS requirement prior to such date, we may be eligible to transfer the listing of

its securities to The Nasdaq Capital Market (provided that we then satisfy the requirements for continued listing on that market).

we do not regain compliance by the end of the MVPHS Compliance Period, Nasdaq staff will provide written notice to us that our securities

are subject to delisting.

At that time, we may appeal any such delisting determination to a hearings panel.

The MVLS Notice and MVPHS Notice are notifications

of deficiency, not of imminent delisting, and have no immediate effect on the listing of our securities.

Our Class A Common Stock and

Warrants continue to trade on Nasdaq under the symbols “RAIN” and “RAINW”, respectively.

We intend to actively monitor our MVLS and MVPHS between now and August

18, 2025, and may, if appropriate, evaluate available options to resolve the deficiencies and regain compliance with the MVLS Rule and

While we are exercising diligent efforts to maintain the listing of our securities on Nasdaq, there can be no assurance that

we will be able to regain or maintain compliance with Nasdaq listing standards.

See “ Risk Factors - There can be no assurance

that Holdco will be able to comply with the continued listing rules of Nasdaq.

Departure of Co-Chief Executive Officer

On January 29, 2025, Holdco, RWT and Christopher

Riley entered into a letter agreement whereby Mr.

Riley resigned as Co-Chief Executive Officer of our company and RWT effective as of

January 30, 2025 (the “Termination Letter”).

Pursuant to the Termination Letter, in lieu of all other compensation and payments

of any kind due and payable to Mr.

Riley will be paid for services rendered in an amount of $124,500, payable in 18 monthly

installments beginning in February 2025.

Additionally, conditioned on approval by the Compensation Committee of our board of directors,

the Termination Letter provides that Mr.

Riley will be granted 10,000 shares of Class A Common Stock of the Company vesting one year

from the date of grant.

Riley’s decision to resign as Chief

Executive Officer was not the result of any disagreement with our company or our board of directors, including any matters relating to

our operations, polices, accounting practices or financial reporting.

Riley will remain as a member of our board of directors.

As previously announced, we appointed Randall

Seidl to serve as Co-Chief Executive Officer effective as of January 2, 2025.

Following the resignation of Mr.

sole Chief Executive Officer.

Plan of Operations

12-Month Plan

RWT currently is warehousing two fully built rain generation systems

in Sydney, Australia.

The systems were built by a leading ionization rainfall generation engineer, and have undergone rigorous evaluation,

testing, and documentation.

We plan to ship these units to our U.S.

warehouse by May 2025 and expect to execute our first client contract

and begin the installation process in the third quarter of 2025.

Concurrently, we will identify, recruit, and hire a CTO, CFO and other

go to market resources.

In March 2025, we began planning the development of ten additional

rain generation systems for deployment in new locations.

While we have begun documenting the sourcing, manufacturing, and building processes,

we will collaborate with highly skilled technical advisors to develop a step-by-step training manual that can be scaled as our system

volume increases.

While systematically documenting the process, we will also explore ways to enhance efficiency and scalability, such

as reviewing the bill of materials to domesticate component sourcing and initiating the request-for-proposal process with prospective

U.S.-based manufacturers.

We are actively hiring and plan to recruit up to five employees to

support sales, operations, or climate science functions by the end of 2025.

We plan to host an onsite event, which will include training U.S.

on the installation and operation of the systems.

As part of this, we will install one of the systems received from Australia inside our

warehouse for validation testing, after which it will be re-packed in crates for delivery to the next client site.

The second system will

be set up for mechanical testing and value engineering work.

At that stage, we will assess whether any components are missing or require

modifications, placing orders and making necessary repairs as needed.

Additionally, that month, we will begin hardware engineering on

a variation of the rain generation system designed to meet local permitting requirements for potential installations on public land.

We will also plan and prepare for the installation of our system at

our first location in August 2025.

This process will include securing the services of a general contractor (“GC”) in the area.

We will collaborate with the GC to obtain all necessary building permits, which we anticipate will be similar to those required for cell

tower installations and should be acquired efficiently and at a reasonable cost.

Once the rain generation systems are installed at our first location,

we will aim to begin development for rain gauge with our intellectual property to assist with automating the operation of both the installed

system and future systems based on local weather conditions.

We will also begin finalizing site selection for the region where we

plan to install a system in 2025.

These regions are expected to host one or more systems to serve one or multiple clients.

to install the systems in a way that creates contiguous or overlapping areas of potential rainfall enhancement.

Depending on updrafts,

humidity, and other weather conditions, each installed system is expected to generate rainfall within an approximately 50-mile radius.

Site selection will be prioritized based on client engagement, projected returns for the company, and expected local weather and topography.

We anticipate that our supply chain will support the manufacturing and installation of additional systems within 5 to 6 months, allowing

RWT to scale operations rapidly as client referral effects drive increased demand.

We will continue to update and refine internal documentation that outlines

the criteria for selecting sites to install and operate the systems.

This will include, but not be limited to, factors such as weather

patterns, terrain, setbacks, access, prevailing wind direction, and average humidity.

Additionally, we plan to enhance our operations

process to include a complete set of drawings necessary for permitting, as well as incorporating all feedback received from the site of

our initial installation.

By the fourth quarter of 2025, we expect to begin operationalizing

the manufacturing, testing, and warehousing of devices for the installation pipeline.

At that point, we anticipate having well-developed

documentation that we can follow to ensure a steady stream of successful system installations.

As we continue to refine our manufacturing process for rain technology

devices, we will also seek research partnerships with universities.

Our goal for these partnerships is to launch a multi-year case study

that evaluates the impact of our devices and related technology on rainfall enhancement in the initial U.S.

locations where our systems

have been installed.

Liquidity and Capital Resources

As of December 31, 2024, we had approximately

$37,000 in cash and had a working capital deficit of approximately $5.4 million.

We expect to continue to incur expenses and begin

to generate revenues as we continue to grow and scale our business.

In connection with the Business Combination, on

December 30, 2024, RHY Management LLC (“RHY”), an affiliate of Harry You, entered into the Loan Agreement and agreed to issue

a line of credit (the “LOC”) to Holdco for up to $7 million.

In addition, Mr.

You and his affiliate also agreed to rollover

all outstanding amount that Coliseum and RWT owed to them prior to Closing (the “Rollover” under the LOC (such amounts borrowed

under the LOC, together with the Rollover, the “Loan”).

The Loan has an interest rate of 5%, and interest will be due and

payable in arrears quarterly.

As of December 31, 2024, the Company has not withdrawn any amount under the $7 million available funding

under the LOC and has approximately $3.1 million in Rollover amount outstanding.

Subsequent to December 31, 2024, the Company borrowed

approximately $839,000 under the LOC.

Our management estimates approximately $6.3 million

and approximately $62 million in expenses for our one-year and five-year business plan.

These funds are expected to be used for producing

units, integrating and rolling out software for the rain enhancement platform, expanding water services through the ‘land and expand’

client acquisition model, and potentially acquiring other weather technologies.

Since the base technology and products are developed and

proven, the need for additional capital will primarily be driven by growth in customer acquisition and projects.

Our management believes

that the budget can be scaled in line with the funds actually received, enabling RWT to expand its client base, deliver equipment and

technology to newly acquired clients, and develop new products for the RWT platform.

We expect to fund our future development and exploration activities

using the available funding under the LOC and future operating cash flow.

The timing of most capital expenditures is largely discretionary.

We have a significant degree of flexibility to adjust the level of our capital expenditures as circumstances warrant.

If our plans or

assumptions change, we may seek additional funding through debt or other equity financing arrangements, implement incremental expense

reduction measures or a combination thereof to continue financing our operations.

Although our management continues to pursue these plans,

there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations,

In connection with the Company’s

assessment of going concern considerations in accordance with FASB ASC Subtopic 205-40, “Going Concern,” our management

has determined that although we do not have sufficient liquidity to meet our anticipated obligations over the next year from the

date of issuance of these consolidated financial statements, we have access to funds under the LOC.

Additionally, an existing

shareholder has pledged financial support as necessary and has the financial ability to provide such funds, that are sufficient to

fund our working capital needs over the next twelve months from the date of issuance of these consolidated financial statements.

Results of Operations

For the year ended December 31, 2024, we had net loss of approximately

$4.5 million, which consisted mainly of general and administrative expenses of approximately $4.5 million and interest expense in connection

with the note payable to related parties of approximately $30,000.

The Company experienced higher expenses compared to previous years

due to the merger completed on December 31, 2024.

Reardon serve on the

Audit Committee.

connection with this appointment, Mr.

Sylvester entered into a director agreement that is consistent with our form of Director Agreement.

which provides for annual cash compensation and potential equity awards subject to approval by the Board and Compensation Committee.

As of the date of this Annual Report, no equity awards have been granted to our directors under these agreements.

Compliance Notices

February 18, 2025, we received the MVLS Notice from the Staff of the Nasdaq which notified us 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)C).

August 19, 2025, we received the Notice from the Staff indicating that we had not regained compliance with either the MVLS Rule or the

MVPHS Rule and, unless we timely request a hearing before the Panel, our securities would be subject to suspension and delisting from

The Nasdaq Global Market.

We timely submitted our request for a hearing before the Panel on August 21, 2025.

part of the compliance plan submitted to the Panel, we requested a transfer of our listing from the Nasdaq Global Market to the Nasdaq

Capital Market.

A hearing before the Panel was held on September 18, 2025 and on October 14, 2025, the Panel granted our request

for continued listing on Nasdaq, subject to our timely application to transfer our listing from the Nasdaq Global Market to the Nasdaq

Capital Market and demonstrating compliance with the applicable listing requirements.

We completed the transfer to the Nasdaq Capital

Market and demonstrated compliance with the applicable listing rules.

Nasdaq subsequently confirmed that we had regained compliance with

its previously disclosed deficiencies,

Class A common stock and warrants continue to trade under the symbol “RAIN” and “RAINW”, respectively.

February 18, 2026, we received an additional written notice from Nasdaq indicating that, for the 30 consecutive business days ended February

17, 2026, our MVLS had closed below the $35,000,000 minimum required for continued listing on the Nasdaq Capital Market under Nasdaq

Listing Rule 5550(b)(2).

In accordance with Nasdaq rules, we have 180 calendar days, or until August 17, 2026, to regain compliance with

the MVLS requirement.

To regain compliance, our MVLS must close at or above $35,000,000 for a minimum of ten consecutive business days

during this compliance period.

We intend to monitor our MVLS and evaluate available options to regain compliance with Nasdaq listing

however, there can be no assurance that we will regain or maintain compliance within the applicable compliance period.

of Operations

currently has two rain and snowfall generation systems installed and placed in service in the United States.

These units arrived in the

US in September 2025, and began operating in November 2025 and are currently being used to support field observations, data collection

and ongoing research activities related to our rainfall generation technology.

observations from these installations have enabled us to evaluate system performance using available meteorological and radar data.

collection and analysis remain ongoing as we continue to evaluate system performance and potential atmospheric effects associated with

our technology.

During 2025, we expanded production of our WETA

systems and manufactured ten additional units intended to support future pilot programs, field deployments and operational readiness.

As of December 31, 2025, seven of these units had been completed and were being stored pending deployment.

The remaining three units

were completed and delivered to the United States in March 2026.

Additionally, three systems are currently under construction.

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.

continue to document sourcing, manufacturing and assembly processes associated with our systems as part of our ongoing development efforts.

As part of these efforts, we may evaluate potential supply chain arrangements and manufacturing partners to support future production,

although no such arrangements have been finalized.

deployments, if pursued, may involve installing one or more systems within a geographic area as part of pilot programs or demonstration

Site selection will consider factors such as weather patterns, terrain, permitting requirements, accessibility and other operational

considerations.

also continue research and development activities related to instrumentation and measurement tools designed to support monitoring and

evaluation of system performance during field deployments.

These efforts are intended to assist with the collection and analysis of atmospheric

and precipitation data associated with our systems.

addition, we may pursue research collaborations with academic institutions or other research organizations to further study atmospheric

effects and evaluate the potential impact of our technology in locations where systems are deployed.

our systems are currently being deployed primarily for research, pilot and demonstration purposes, the operational experience gained

from these deployments is intended to support the continued development of our technology and inform potential future commercial applications.

Concern Consideration

connection with our management’s assessment of going concern considerations in accordance with the Financial Accounting Standards

Board’s (“FASB”) Accounting Standards Classification (“ASC”) Subtopic 205-40, “Presentation of Financial

Statements - Going Concern,” we evaluate whether there are conditions or events that raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date that the financial statements are issued.

This assessment considers

our current cash position, projected cash requirements, and ability to obtain additional funding.

of December 31, 2025, we had approximately $214,000 in cash and had a working capital deficit of approximately $13.0 million.

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 line of credit with Mr.

As of December 31,

2025, we had drawn substantially all available amounts 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.

plans to address this uncertainty include continued support from related parties, 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.

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 consolidated financial statements.

The consolidated financial statements included in this Annual Report do

not include any adjustments that might result from the outcome of this uncertainty.

of Operations

2025, we incurred installation and field deployment costs associated with the initial deployment and pilot operation of our rain and

snowfall generation 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.

the year ended December 31, 2025, we had a net loss of approximately $9.1 million, which consisted of installation costs of approximately

$402,000, general and administrative expenses of approximately $7.6 million (primarily related to personnel costs, stock based compensation

expense, professional services including annual audit, marketing, and other corporate operating expenses), research and development expenses

of approximately $62,000, amortization expense of approximately $12,000, depreciation expense of approximately $7,000, a loss due to

the change in fair value of warrant liabilities of $900,000, and interest expenses, minimal tax expenses and interest income from an

operating account of approximately $283,000, partially offset by gain from a settlement with vendor of approximately $226,000.

For the year ended December 31, 2024, we had

net loss of approximately $437,000, which consisted mainly of general and administrative expenses of approximately $410,000 and interest

expense in connection with the note payable to related parties of approximately $27,000.

For the year ended December 31, 2024, net cash

used in operating activities was approximately $1.3 million, net cash used in investing account was approximately $46,000, and net cash

provided by financing activities was approximately $1.4 million.

Net loss of approximately $4.5 million was partially offset by non-cash

activities, including stock-based compensation expense of approximately $2.8 million, amortization expense of approximately $12,000, and

expenses paid by related parties on behalf of RWT of approximately $321,000, and also changes in operating assets and liabilities used

approximately $44,000 of cash for operating activities.

Cash used in investing activities consisted solely of payment for building Equipment

of approximately $46,000.

Cash provided by financing activities resulted from (i) issuance of RWT Class A and RWT Class B common stock

of $740,000 and $125,000, respectively, (ii) cash proceeds from issuance of Holdco Class A common stock in connection with PIPE subscriptions

of $700,000, and (iii) proceeds from reverse recapitalization in connection with the Business Combination, partially offset by payment

of deferred financing costs of $75,000 and payment of prepaid Forward Purchase Agreement with Meteora of approximately $4.1 million.

For the year ended December 31, 2023, net cash

used in operating activities was approximately $238,000, net cash used in investing account was approximately $264,000, and net cash

provided by financing activities was approximately $440,000.

Net loss of approximately $437,000 was affected by stock based compensation

expense of approximately $3,800, amortization expense of $12,000, expenses paid by related parties on behalf of RWT of approximately

$11,000, and changes in operating assets and liabilities used approximately $171,000 of cash for operating activities.

Cash used in investing

activities consisted solely of payment for building Equipment of approximately $264,000.

Cash provided by financing activities resulted

from issuance of common stock and Series A preferred stock of $1,998 and $8,000, respectively, and from the remaining proceeds of approximately

$447,000 pursuant to the Note, partially offset by repayment off advances to certain officer approximately $17,000.

Patent and Consulting Agreements

Patent License

On November 21, 2022, RWT entered into a

license agreement with Dr.

Theodore Anderson, a plasma physicist, whereby RWT was granted an exclusive, worldwide license under

certain of Dr.

net loss of approximately $4.5 million, which consisted mainly of general and administrative expenses of approximately $4.5 million and

interest expense in connection with the note payable to related parties of approximately $30,000.

the year ended December 31, 2025, net cash used in operating activities was approximately $2.0 million, net cash used in investing activities

was approximately $987,805, and net cash provided by financing activities was approximately $3.1 million.

Net cash used in operating

activities included our net loss of approximately $9.1 million, and a gain from the settlement with a vendor of approximately $226,000,

partially offset by changes in operating assets and liabilities of approximately $1.3 million, amortization expense of approximately

$12,000, depreciation expense of approximately $7,000, approximately $3.5 million paid by related parties on behalf of RET, stock-based

compensation expenses of approximately $1.6 million and a change in the fair value of a warrant liabilities of $900,000.

investing activities consisted solely of payment for building Equipment of approximately 987,805.

Cash provided by financing activities

resulted from proceeds from payment of subscription receivable of $650,000 and proceeds from drawdowns under the LOC (as defined below)

of approximately $2.5 million.

the year ended December 31, 2024, net cash used in operating activities was approximately $1.3 million, net cash used in investing activities

was approximately $46,000, and net cash provided by financing activities was approximately $1.4 million.

Net cash used in our operating

activities included our net loss of approximately $4.5 million, partially offset by non-cash activities, including stock-based compensation

expense of approximately $2.8 million, amortization expense of approximately $12,000, and expenses paid by related parties on behalf

of RET of approximately $321,000, and changes in operating assets and liabilities.

Cash used in investing activities consisted solely

of payment for building Equipment of approximately $46,000.

Cash provided by financing activities resulted from (i) the issuance of RET

Class A and RET Class B common stock of $740,000 and $125,000, respectively, (ii) cash proceeds from the issuance of Holdco Class A common

stock in connection with PIPE subscriptions of $700,000, and (iii) proceeds from the reverse recapitalization in connection with the

Business Combination, partially offset by payment of deferred financing costs of $75,000 and payment of the prepaid Forward Purchase

Agreement with Meteora of approximately $4.1 million.

and Contingencies

November 21, 2022, RET entered into a license agreement with Dr.

Theodore Anderson, a plasma physicist, whereby RET was granted

an exclusive, worldwide license under certain of Dr.

Anderson’s patents.

The consideration paid for the license of $33,000, which was fully paid in November 2022,

was recorded as a finite-lived intangible asset.

Consulting Agreement for Rainfall Ionization

In November 2022, RWT entered into a consulting agreement, which was

later amended on December 8, 2022, to engage with its senior technology advisor (“Technical Advisor”).

RWT agreed to pay the

Technical Advisor a one-time fee upon execution of the agreement (“First-time fee”) and a consulting fee of AUD 250,000 per

year (equivalent to approximately $170,000 as of the effective date), which was later revised to $186,000 in February 2025, as well as

certain bonuses that will be paid upon reaching certain milestones.

In May 2023, the Technical Advisor met a significant milestone in

improving the design and a bonus of AUD 25,000 was paid in June 2023 (or approximately $13,000).

In connection with the consulting agreement, we also agreed to obtain

from the Technical Advisor an irrevocable, perpetual, non-exclusive license under certain engineering designs in connection with rainfall

ionization equipment and systems.

The consideration paid for the license of $33,000,

which was fully paid in November 2022, was recorded as a finite-lived intangible asset.

Agreement for Rainfall Ionization Equipment

We entered into a consulting agreement to engage

our senior technology advisor, Scott Morris 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).

2025, the agreement was amended to increase the annual consulting fee to $186,000, and in June 2025, it was further increased to $252,000

annually in exchange for the consultant assuming an additional role and responsibilities.

The agreement also provides 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.

During the year ended December 31, 2025, we paid an aggregate

of $50,000 in milestone payments to Mr.

Morris in connection with the achievement of certain development milestones.

connection with the consulting agreement, we also agreed to obtain from Mr.

Morris an irrevocable, perpetual, non-exclusive license under

certain engineering designs in connection with rainfall ionization equipment and systems.

We fully paid this amount of $83,750 in June

Related Party Transactions

Note Payable and Line of Credit from Related

On February 2, 2023, RWT issued a promissory

note (the “Note”) to its former CEO and Mr.

de Masi for an aggregate amount of $600,000.

The Note has an

annual interest rate of 5% and is currently due on demand.

On December 30, 2024, Holdco entered into the

Loan Agreement with RHY, an affiliate of Harry You, pursuant to which RHY agreed to issue an LOC to Holdco for up to $7 million, in addition

to the Rollover amount described below.

The Loan has an interest rate of 5%, and interest will be due and payable in arrears quarterly.

Prior to Closing, the outstanding amount that

Coliseum and RWT owed to Mr.

You and his affiliates are:

(i) approximately $1.7 million and approximately $333,000 of advances to Coliseum

and RWT, respectively, (ii) convertible note balance of $667,500 to Coliseum, and a portion under the Note discussed above of approximately

$216,000 to RWT (which amount includes $200,000 in principal and approximately $16,000 in accrued interest), and (iii) an outstanding

balance of $180,000 in accrued administrative fees to Coliseum, for a total of approximately $3.1 million.

The Rollover amounts were assigned

to and assumed by Holdco and are treated for all purposes as Loans outstanding under the Loan Agreement.

The Rollover amount does not

reduce the $7 million funding available to the Company under the LOC.

As of December 31, 2024, we had not borrowed any of the $7 million

available funding under the LOC.

Employment Agreement

On December 31, 2024, Holdco entered into a binding offer letter (the “Offer Letter”) with its new

Seidl effective January 2, 2025, pursuant to which Holdco agreed to pay to the CEO (i) an annual salary of $500,000, (ii) a contingent

bonus payment of $5.0 million that will be issued under a form of an unsecured note payable (the “Officer Note”) on the earlier

of (x) four-year anniversary of the Officer Note, subject to the CEO’s continued service with Holdco through such date, and (y)

the date of termination, if Holdco terminates the CEO’s employment without cause.

Holdco and Mr.

Seidl agreed to replace the Officer

Note, which was not yet issued, with a retention bonus agreement to better reflect the nature of the commitment (“Retention Bonus”).

As of the date of this filing, the Retention Bonus has not been issued.

We operate and manage the business as one reportable and operating

segment, which is the business of developing, manufacturing and commercializing ionization rainfall generation technology.

Our chief executive

officer, who is the chief operating decision maker, or CODM, reviews financial information on an aggregate basis for allocating resources

and evaluating financial performance.

Off-Balance Sheet Arrangements

We did not have off-balance sheet arrangements as of December 31, 2024,

and do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial

partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the

purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Estimates

The consolidated financial statements have been

prepared in accordance with U.S.

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.

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 December 31, 2025, we accrued approximately $831,000 of Retention Bonus and $1 million of annual incentive

bonus for 2025 in accrued expenses to related party in the accompanying consolidated balance sheet.

On March 16, 2026, the Company paid

Seidl the $1 million annual incentive bonus for 2025 pursuant to the determination and approval of the Compensation Committee.

In addition, Mr.

Seidl is also entitled to an

equity award under our equity incentive plan that was approved by the Compensation Committee on August 14, 2025 and by the Board on August

On September 5, 2025, we granted 602,320 RSAs to Mr.

Seidl, of which 50% vested on January 1, 2026, and 50% of which shall

vest on January 1, 2027, subject to continued employment or service through such vesting date.

Termination Letter

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

Riley an aggregate of $124,500, payable in 18 monthly installments beginning in February 2025 in consideration for his past

As of December 31, 2025, we had an aggregate of approximately $48,000 in outstanding amount in connection with such agreement

that was included in accrued expenses in the accompanying consolidated balance sheet.

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 December 31, 2025, the stock has not been granted.

Party Transactions

Payable and Line of Credit from Related Parties

On February 2, 2023, RET issued a promissory

note (the “Note”) to its former CEO, Mr.

de Masi for an aggregate amount of $600,000.

The Note has an annual

interest rate of 5%.

The Note amount owed to RET’s former CEO and Mr.

de Masi totaling $400,000 remains as outstanding due on demand,

and the $200,000 Note amount owed to Mr.

You was included in the Rollover amount described below.

December 30, 2024, Holdco entered into the Loan Agreement with RHY, an affiliate of Harry You, pursuant to which RHY agreed to issue

a line of credit (the “LOC”) to Holdco for up to $7 million, in addition to the Rollover amount described below (such amounts

borrowed under the LOC, together with the Rollover, the “Loan”).

The Loan bears interest at the greater of 5% per annum or

the applicable IRS short-term rate in the month of each drawdown (“Interest Rate”), payable quarterly in arrears.

If a quarterly

payment is missed, the loan balance increases by an amount equal to the principal multiplied by the 2% Default Rate (as defined below).

If an event of default has occurred and is continuing, then upon written notice by RHY to Holdco, the outstanding principal balance and

any unpaid accrued interest will accrue interest at 2% above the Interest Rate (the “Default Rate”).

to closing of the Business Combination, the outstanding amount that Coliseum and RET owed to Mr.

You and his affiliates was approximately

$3.1 million.

The Rollover amounts were assigned to and assumed by Holdco and are treated for all purposes as Loans outstanding under

the Loan Agreement.

The Rollover amount does not reduce the $7 million funding available to us under the LOC.

As a result, as of December

31, 2024, we had approximately $3.1 million outstanding under the LOC, comprised solely of the Rollover amount.

As of December 31, 2025, we had drawn approximately

$6.0 million under the LOC, in the combined form of cash proceeds and payments made on behalf of the Company, bringing the total

outstanding balance under the Loan Agreement to approximately $9.1 million (including the $3.1 million Rollover).

of December 31, 2025 and 2024, we had an outstanding accrued interest balance in connection with both the Note and the LOC of approximately

$323,000 and $38,000, respectively.

On March 11, 2026, the Compensation Committee

and the Board approved repayment of the amounts due under the Loan Agreement of up to 30% of any amount received by the Company from

any potential future capital raise net of any underwriting, legal, and accounting fees and related costs.

On March 24, 2026, the Audit Committee and the

Board approved an increase in the amount that could be borrowed under the Loan Agreement from $7,000,000 to $10,000,000.

and RHY entered into an amendment to the Loan Agreement reflecting such increase, effective as of March 31, 2026.

April 1, 2025, the Board increased the size of the Board from five to seven directors and appointed Mr.

Marcus Peperzak and Mr.

Reardon to the Board to fill the resulting vacancies.

On December 22, 2025, the Board further increased its size from seven to eight

directors and appointed Mr.

David Sylvester as a Class II director.

connection with their appointments to the Board, Mr.

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.

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, 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 aggregate of $225,000 in connection with such agreement during the year ended December 31, 2025 within general and administrative

expenses in the accompanying consolidated statements of operations.

As of December 31, 2025, there has been no grants of restricted stock

to the directors.

operate and manage the business as one reportable and operating segment, which is the business of developing, manufacturing and commercializing

AEI technology.

Our chief executive officer, who is the chief operating decision maker, or CODM, reviews financial information on an

aggregate basis for allocating resources and evaluating financial performance.

Sheet Arrangements

did not have off-balance sheet arrangements as of December 31, 2025, and do not currently have, any off-balance sheet financing arrangements

or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance

or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually

narrow or limited purposes.

Accounting Estimates

consolidated financial statements have been prepared in accordance with U.S.

GAAP and pursuant to the rules and regulations of the SEC.

Preparation of the consolidated financial statements

requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent

assets and liabilities.

We also make estimates and assumptions on revenue generated and reported expenses incurred during the reporting

Our estimates are based on our historical experience and on various other factors that it believes are reasonable under the

circumstances.

The results of these estimates form the basis for making judgments about the carrying value of assets and liabilities

that are not readily apparent from other sources.

of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and

liabilities and the disclosure of contingent assets and liabilities.

We also make estimates and assumptions on revenue generated and

reported expenses incurred during the reporting periods.

Our estimates are based on our historical experience and on various other factors

that we believe are reasonable under the circumstances.

The results of these estimates form the basis for making judgments about the

carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates.

While our significant accounting policies are

described in the notes to our consolidated financial statements included elsewhere in this Annual Report, our management believes there

was no critical accounting estimates identified during the years ended December 31, 2024 and 2023.

Derivative Financial Instruments

We do not use derivative instruments to hedge exposures to cash flow,

market, or foreign currency risks.

We evaluate all of our 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 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 our own

ordinary shares, among other conditions for equity classification.

We capitalize our cost to build its rainfall ionization

equipment (the “Equipment”), including materials and allocated labor costs.

In July 2023, we finished building the Equipment

and transferred its capitalized cost from Construction in-process to Equipment.

As soon as the Equipment is placed in service upon agreement

with the customers, we will begin to depreciate those assets on a straight- line basis over the estimated useful lives of the assets,

generally 10 to 15 years.

At the time of retirement or other disposition of the Equipment, the cost and accumulated depreciation

will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

As of December 31, 2024,

no Equipment has been placed in service.

Intangible Assets

Recognized intangible assets have finite lives

and include acquired licenses for market-ready technology and designs of weather modification and rainfall ionization equipment.

assets acquired separately are measured on initial recognition at cost.

Following initial recognition, intangible assets are carried

at cost less any accumulated amortization and accumulated impairment losses.

Intangible assets with finite lives are amortized using the straight-line

method over the estimated useful economic life.

The amortization period and the amortization method for an intangible asset with a finite

useful life are reviewed at least at the end of each reporting period.

Changes in the expected useful life or the expected pattern of

consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate,

and are treated as changes in accounting estimates.

The amortization expense on intangible assets with finite lives is recognized in the

consolidated statements of operations and in the expense category that is consistent with the function of the intangible assets.

Intangible assets with finite lives are tested

for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

These conditions may

include a change in the extent or manner in which the asset is being used or a change in future operations.

We assess the recoverability

of the carrying amount by preparing estimates of future revenue, margins, and cash flows.

If the sum of expected future cash flows (undiscounted

and without interest charges) is less than the carrying amount, an impairment loss is recognized.

The impairment loss recognized is the

amount by which the carrying amount exceeds the fair value of the asset.

Fair value of these assets may be determined by a variety of

methodologies, including discounted cash flow models.

As of December 31, 2024 and 2023, we did not have any intangible assets with indefinite

useful lives.

Stock Compensation

Our policy is to account for stock-based compensation

expense in accordance with FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”).

Under ASC 718,

stock-based compensation associated with equity awards is measured at fair value upon the grant date and recognized over the requisite

service period.

To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period,

if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event

is deemed probable to occur.

our significant accounting policies are described in the notes to our consolidated financial statements included elsewhere in this Annual

Report, our management believes there were no critical accounting estimates identified during the years ended December 31, 2025 and 2024.

Financial Instruments

do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.

We evaluate all of our 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 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

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 our own ordinary shares, among other conditions for equity

classification.

and Construction In-Process Equipment

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 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.

begins when the equipment is placed into service and is recorded on a straight-line basis over the estimated useful life of the assets,

which we currently estimate to be 10 years.

At the time of retirement or other disposition of the Equipment, the cost and accumulated

depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

of December 31, 2024, no Equipment has been placed in service.

In November 2025, we completed installation of two existing systems

and placed them into service.

As a result, we moved these costs associated with these two units from Construction in-process into Equipment

began recording depreciation on these assets and recognized approximately $7,000 of depreciation expense during the year ended December

31, 2025 in the accompanying consolidated statement of operations.

costs represent expenses incurred in connection with the installation of the Company’s rain and snowfall generation systems deployed

in pilot installations and evaluation projects.

These costs primarily consist of labor, travel, site preparation and related operational

expenses associated with system deployment and testing.

As we are currently in an early stage of commercial deployment, certain installation

activities may occur prior to the execution of revenue-generating customer agreements.

intangible assets have finite lives and include acquired licenses for market-ready technology and designs of weather modification and

rainfall ionization equipment.

Intangible assets acquired separately are measured on initial recognition at cost.

Following initial recognition,

intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

assets with finite lives are amortized using the straight-line method over the estimated useful economic life.

The amortization period

and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period.

Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered

to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

The amortization expense

on intangible assets with finite lives is recognized in the consolidated statements of operations and in the expense category that is

consistent with the function of the intangible assets.

assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be

These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations.

We assess the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows.

If the sum of

expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized.

The impairment loss recognized is the amount by which the carrying amount exceeds the fair value of the asset.

Fair value of these assets

may be determined by a variety of methodologies, including discounted cash flow models.

As of December 31, 2025 and 2024, we did not

have any intangible assets with indefinite useful lives.

evaluate long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that the

carrying value may not be recoverable.

No impairment was recorded for the years ended December 31, 2025 or 2024.

policy is to account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation-Stock Compensation”

Under ASC 718, stock-based compensation associated with equity awards is measured at fair value upon the grant

date and recognized over the requisite service period.

To the extent a stock-based award is subject to a performance condition, the amount

of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with

compensation recognized once the event is deemed probable to occur.

Forfeitures are recognized as incurred.

Recent Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”)

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The amendments in this ASU expand

public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the

Chief Operating Decision Maker and included within each reported measure of segment profit or loss, an amount and description of its composition

for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

We adopted ASU 2023-07, which

did not have a material impact on the consolidated financial statements.

Accounting Pronouncements

In December 2023, the FASB issued ASU No.

2023-09 (Topic 740),

Improvements to Income Tax Disclosures.

The ASU requires disaggregated information about a reporting entity’s effective tax rate

reconciliation as well as an expansion of other income tax disclosures.

The ASU is effective on a prospective basis for annual reporting

periods beginning after December 15, 2024.

We are currently evaluating the impact this ASU will have on our consolidated financial

statements and related disclosures.

Emerging Growth Company Status

Holdco is an emerging growth company, as defined

in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial

accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act declared

effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised

financial accounting standards.

Section 107 of the JOBS Act allows emerging

growth companies to take advantage of the extended transition period for complying with new or revised accounting standards.

Under Section 107,

an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private

Any decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

The Company has elected to use the extended transition period available under the JOBS Act, which means that when a standard is issued

or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt

the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s

consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company

which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting

standards used.

The Company will remain an emerging growth company

until the earlier of:

(1) the last day of the fiscal year (a) following the fifth anniversary of the effectiveness of

the Company’s registration statement on Form S-4 in connection with the Business Combination, (b) in which the Company has

total annual revenue of at least $1,235,000,000, or (c) in which the Company is deemed to be a large accelerated filer, which means

the market value of its common equity that is held by non-affiliates exceeds $700.0 million as of the end of the prior fiscal year’s

second fiscal quarter;

and (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities

during the prior three-year period.

We are also a “smaller reporting company”

as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take advantage of certain reduced disclosure obligations,

including, among other things, providing only two years of audited financial statements.

The Company will remain a smaller reporting

company until the last day of the fiscal year in which (i) the market value of the shares of Class A Common Stock held by non-affiliates

exceeds $250.0 million as of the prior June 30, and (ii) the Company’s annual revenue exceeds $100.0 million during such completed

fiscal year and the market value of the shares of Class A Common Stock held by non-affiliates exceeds $700.0 million as of the prior

To the extent the Company takes advantage of such reduced disclosure obligations, it may also make comparison of the Company’s

financial statements with other public companies difficult or impossible.

Quantitative And Qualitative Disclosures

About Market Risk

We are a smaller reporting company, as defined

in Rule 12b-2 of the Exchange Act.

Therefore, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information

required by this Item.

Financial Statements and Supplementary

This information appears following Item 16 of

this Form 10-K and is incorporated herein by reference.

Changes in and Disagreements With

Accountants on Accounting and Financial Disclosure.

(Topic 740), Improvements to Income Tax Disclosures.

The ASU requires disaggregated information about a reporting entity’s

effective tax rate reconciliation as well as an expansion of other income tax disclosures.

The ASU is effective on a prospective basis

for annual reporting periods beginning after December 15, 2024.

The Company adopted ASU 2023-09 in its fourth quarter of 2025 for

the period ending December 31, 2025, and the adoption impacted only the disclosures with no material impact on the Company’s consolidated

financial statements.

in November 2024, ASU 2024-03, Disaggregation of income 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

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.

Growth Company Status

is an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business

Startups Act of 2012 (the “JOBS Act”).

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from

being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had

a registration statement under the Securities Act declared effective or do not have a class of securities registered under the Exchange Act)

are required to comply with the new or revised financial accounting standards.

of the JOBS Act allows emerging growth companies to take advantage of the extended transition period for complying with new or revised

accounting standards.

Under Section 107, an emerging growth company can delay the adoption of certain accounting standards until

those standards would otherwise apply to private companies.

Any decision to opt out of the extended transition period for complying with

new or revised accounting standards is irrevocable.

The Company has elected to use the extended transition period available under the

JOBS Act, which means that when a standard is issued or revised and it has different application dates for public or private companies,

the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised

This may make comparison of the Company’s consolidated financial statements with another public company which is neither

an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible

because of the potential differences in accounting standards used.

Company will remain an emerging growth company until the earlier of:

(1) the last day of the fiscal year (a) following

the fifth anniversary of the effectiveness of the Company’s registration statement on Form S-4 in connection with the Business

Combination, (b) in which the Company has total annual revenue of at least $1,235,000,000, or (c) in which the Company is deemed

to be a large accelerated filer, which means the market value of its common equity that is held by non-affiliates exceeds $700.0 million

as of the end of the prior fiscal year’s second fiscal quarter;

and (2) the date on which the Company has issued more than

$1.0 billion in non-convertible debt securities during the prior three-year period.

are also a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

Smaller reporting companies may take

advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

The Company will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the shares

of Class A Common Stock held by non-affiliates exceeds $250.0 million as of the prior June 30, and (ii) the Company’s annual revenue

exceeds $100.0 million during such completed fiscal year and the market value of the shares of Class A Common Stock held by non-affiliates

exceeds $700.0 million as of the prior June 30.

To the extent the Company takes advantage of such reduced disclosure obligations, it

may also make comparison of the Company’s financial statements with other public companies difficult or impossible.

Quantitative And Qualitative Disclosures About Market Risk

are a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act.

Therefore, pursuant to Item 305(e) of Regulation S-K,

we are not required to provide the information required by this Item.

Financial Statements and Supplementary Data

information appears following Item 16 of this Form 10-K and is incorporated herein by reference.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis