Rain Enhancement Technologies Holdco, Inc. 10-K

Item 1A. Risk Factors You should carefully consider the following risk factors in addition to the other information included in this Annual Report, including matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements and Risk Factor Summary.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business, prospects, financial condition or operating results. The following discussion should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements included herein. Risks Relating to RET’s Status as an Emerging Company RET has a limited operating history and has generated limited revenues to date, which makes it difficult to forecast its future results of operations. As a result of RET’s limited operating history, its ability to accurately forecast the future results of operations is limited and subject to a number of uncertainties, including RET’s ability to plan for and model future growth. RET’s ability to generate revenues will largely be dependent on its ability to develop and improve AEI technology, and market and sell its services and products. RET’s business model is in the early stages of development, and its technical roadmap may not be realized as quickly as hoped, or even at all. The development of RET’s business model will likely require the incurrence of significant costs, while 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, 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 RET’s technology, a decrease in the growth of the overall market, government regulation, or RET’s failure, for any reason, to continue to take advantage of growth opportunities. RET will also encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If RET’s assumptions regarding these risks and uncertainties and its future growth are incorrect or change, or if RET does not address these risks successfully, RET’s operating and financial results could differ materially from its expectations, and its business could suffer. RET’s success as a business ultimately relies upon continued research, development, and commercialization efforts over the coming years. There is no certainty these development milestones will be achieved as quickly as hoped, or even at all. 12 RET expects to incur significant expenses and losses for the foreseeable future. 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, RET 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. 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 RET’s losses. If RET is unable to achieve and/or sustain profitability, or if RET is unable to achieve the growth that it expects, it could have a material effect on RET’s business, financial condition or results of operations. RET’s business model is unproven and may never allow it to cover its costs. RET’s estimates of market opportunity and growth forecasts may prove to be inaccurate. Market opportunity estimates and growth forecasts, including those RET has generated itself, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. RET’s business plan assumes a strong sales pipeline of actionable client targets that can be converted to revenue-generating clients. However, RET currently has 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 RET’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 RET. Any growth of RET’s business depends on a number of factors, including the cost, performance, and perceived value associated with its technology. RET’s success will also depend upon its ability to expand, scale its operations, and increase its sales capability. RET’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 RET as it expects to be the sole operator for its rain and snowfall generation services. The all-in cost per system is expected to be approximately $425,000, which includes labor, a meteorologist, installation and manufacturing costs. However, RET 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 RET’s business, financial condition and results of operations. RET’s growth is dependent upon its ability to successfully support and service its clients. Because RET’s platform is expected to be unique in certain respects, its future clients will require support and service functions, some of which are not currently available, and may never be available. If RET 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 RET 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 RET’s servicing and support capabilities. Similarly, increasing the number of RET 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 RET’s growth and ability to expand. 13 RET may not manage growth effectively. RET’s failure to manage growth effectively could harm its business, results of operations and financial condition. RET anticipates that a period of significant expansion will be required to address potential growth. This expansion will place a significant strain on 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 RET’s products or services, or that RET will be able to avoid cost overruns or be able to hire additional personnel to support them. In addition, 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, RET must establish appropriate and scalable operational and financial systems, procedures and controls and establish and maintain a qualified finance, administrative and operations staff. 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. 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. RET will need additional capital to pursue its business objectives. RET’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. As of December 31, 2025, the Company had approximately $214,000 in cash. Additionally, the Company has a $7 million line of credit from an affiliate of Harry You, of which approximately $6.0 million has been borrowed as of December 31, 2025. The Company has adjusted certain operational and production activities in order to align with the available funding and intends to seek additional sources of capital to support its operational and commercialization activities. RET’s management continues to invest in research and development activities to enhance the performance and application of its AEI systems, including ongoing testing and development related to rain and snowfall generation, fog dispersion and other atmospheric applications. During 2025, the Company also manufactured and deployed additional systems and incurred costs associated with system production, installation, monitoring and operational support. RET’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 we will be able to obtain additional capital for our future business plan. RET’s operating plan may change because of factors currently unknown, and RET 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, 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 RET on favorable terms, or at all. The inability to obtain financing when needed may make it more difficult for RET to operate its business or implement its growth plans. Risks Relating to RET’s Business and Industry There are many risks and uncertainties that may affect RET’s operations, performance, development and results. Many of these risks are beyond RET’s control. The following is a description of the important risk factors that may affect RET’s business and industry. If any of these risks were to actually occur, RET’s business, financial condition or results of operations could be materially adversely affected. Additional risks and uncertainties not currently known to RET or that RET currently considers to be immaterial may also materially adversely affect its business, financial condition or results of operations. We have a history of operating losses, limited cash resources and substantial doubt exists about our ability to continue as a going concern. We are an early-stage company with a limited operating history and have not yet generated significant revenue from operations. As of December 31, 2025, we had approximately $214,000 in cash and a working capital deficit of approximately $13.0 million. We expect to continue to incur operating losses as we continue developing, deploying and evaluating our AEI technology. 14 Our ability to continue as a going concern depends on our ability to obtain additional financing, generate revenue and manage operating expenses. We have historically relied on related-party financing arrangements, including borrowings under our line of credit, and we have used a substantial portion of the available capacity under such arrangements. There can be no assurance that additional funding will be available on acceptable terms, or at all. If we are unable to obtain additional financing or generate sufficient revenue, we may be required to delay, reduce or discontinue certain operations, manufacturing activities installations or development activities, which could materially adversely affect our business, financial condition and results of operations. We have identified material weaknesses in our internal control over financial reporting. Such material weaknesses could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner, could result in the loss of investor confidence, listing deficiencies or delisting from Nasdaq and litigation and adversely affect the trading of our securities. 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 financial statements for external purposes in accordance with 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 financial statements will not be prevented or detected on a timely basis. This Annual Report includes a restatement of our previously issued unaudited condensed consolidated financial statements contained in our (i) Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2025, filed with the SEC on May 15, 2025, and (ii) Quarterly Report on Form 10-Q as of and for the three and six months ended June 30, 2025, filed with the SEC on August 14, 2025. As described elsewhere in this Annual Report, the Company should have recorded the premium financing agreement in connection with its insurance policy as a liability, with an offset to prepaid expenses, upon its execution in January 2025. The error was identified as part of the preparation of the Company’s consolidated financial statements for the year ended December 31, 2025. As a result, our management has concluded that a material weakness existed in the Company’s internal control over financial reporting as of December 31, 2025, and that the Company’s disclosure controls and procedures were ineffective as of December 31, 2025. See “Item 9A—Controls and Procedures” within this Annual Report for a description of these matters. The Company intends to take steps to remediate this material weakness, including enhancing its internal controls over the accounting and review of recurring transactions, including insurance premium financing arrangements. Specifically, the Company plans to improve its accounting policies and implement a review control as part of the period-end close process to ensure such transactions are appropriately identified, evaluated, and recorded in accordance with U.S. GAAP. While the Company is committed to remediation, there can be no assurance that these measures will be sufficient. For a discussion of management’s consideration of the material weakness identified related to the accounting for financed insurance premiums, see “Note 2—Restatement of Previously Issued Financial Statements” to the accompanying consolidated financial statements, as well as “Item 9A—Controls and Procedures” included in this Annual Report. We previously identified a material weakness in our internal control over financial reporting as of and for the year ended December 31, 2023, 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 RET’s liquidity, cash flows, or operating costs during the period covered by RET’s audited consolidated financial statements. During 2024 and 2025, management implemented 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 such material weakness was remediated as of December 31, 2025. We cannot assure you that we won’t identify further material weaknesses or control deficiencies in the future. Our current and potential future material weaknesses may cause us to be unable to report our financial results accurately and on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and cause the market price of our Class A common stock to decline. Failure to implement and maintain effective internal controls over financial reporting could also subject the Company to potential delisting from Nasdaq or any other stock exchange on which our stock is listed or to other regulatory investigations and civil or criminal sanctions. We also 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 our internal control over financial reporting and the preparation of our 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 our business and results of operations and financial condition. 15 RET can provide no assurance of the effectiveness and success of AEI technology in increasing precipitation. Commercial applications of AEI technology are still at the early stages of development, and further development and testing will be required to determine its technical feasibility and commercial viability across different atmospheric conditions and geographies. While RET has conducted pilot deployments and has publicly reported preliminary observations and early indications from certain field installations, these observations are not conclusive and may not be predictive of future performance. The scientific community continues to evaluate the effectiveness of various weather modification approaches, and attributing changes in precipitation to any intervention is complex due to the variability of weather systems, measurement limitations, and the need for statistically rigorous study designs. Accordingly, there can be no assurance that AEI technologies, including RET’s platform, will produce statistically significant, repeatable, or commercially viable results. 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 rain and snowfall generation development, deployment, measurement, or commercialization. As RET expands its pilot programs and data collection efforts, results may vary by location, season, and weather pattern, 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 developing and evolving technology involved and the other factors described elsewhere in this Annual Report, there can be no assurance that RET 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. RET’s AEI technology is still being evaluated through pilot deployments and ongoing testing, and we face challenges in demonstrating consistent and repeatable rain and snowfall generation. If RET cannot successfully overcome those barriers, its business will be negatively impacted and could fail. Rain and snowfall generation is a difficult undertaking. There are significant engineering, technology, operational and climatological challenges that RET must overcome to deliver consistent results with its platform. RET remains in an early stage of commercial deployment and faces significant challenges in further developing and scaling its rain and snowfall generation platform and in producing the necessary technology and machines in commercial volumes. While 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 rain and snowfall generation technologies can vary significantly depending on atmospheric conditions, geographic factors and other variables that may be beyond the Company’s control. Some of the development challenges that could prevent the successful commercialization of RET’s technology include, but are not limited to, failure to: find scalable ways to secure real estate to set up and operate trials, secure commercial 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, RET may fail to achieve a high degree of repeat success in rain and snowfall generation, which could lead to a failure to ensure client retention or to generate sustainable commercial demand for its technology. RET may also fail to realize the potential of AEI technology or other weather modification applications that it seeks to develop. 16 RET has not demonstrated it can market and sell its AEI technology and faces market barriers to entry that it may not be able to overcome. RET’s rain enhancement ionization technology is not widely adopted or accepted in the market. RET 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. RET 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. RET 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. RET may not be able to manufacture its technology at the pace, scale and volume needed to generate and meet market demand. RET will need to develop the manufacturing process necessary to make AEI technology at scale. While RET has manufactured and deployed systems and currently maintains its inventory of certain components and systems, the Company must continue to refine and expand its manufacturing capabilities to support large scale deployments and future demands. In the future, RET may evaluate or explore additional manufacturing approaches, including expanding production capabilities or working with additional manufacturing partners, in order to mitigate potential supply constraints or manufacturing lead times. However, such arrangements may not be successfully implemented or may introduce additional operational, logistical or quality control risks. If RET is not able to effectively manage these manufacturing hurdles in building its technology, RET’s ability to deploy systems and meet customer demand may be limited. Even if RET successfully increases production capacity, if the cost, performance characteristics or other specifications of the AEI technology fall short of RET’s projections, RET’s business, financial condition and results of operations would be adversely affected. Additionally, developing manufacturing techniques to produce the volumes required to achieve forecasted production levels may require significant investment and capital and could negatively impact margins or profitability in the future. If RET’s technology fails to achieve a broad advantage in generating rainfall, its business, financial condition and future prospects may be harmed. The markets for rain and snowfall generation-related products are in nascent stages, and RET may have limited opportunities to license our technologies or sell its products. The rain and snowfall generation industry is in the early stage of commercializing AEI technology. Skepticism around the efficacy of the technology’s ability to enhance rainfall has hindered previous adoption. 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 RET’s technology at commercially viable levels could negatively impact RET’s business, financial condition and results of operations. RET’s growth is dependent upon its ability to successfully market and sell AEI technology. RET does not have experience with the mass distribution and sale of AEI technology. Its growth and long-term success will depend upon the development of its sales and delivery capabilities. RET may be harmed by competing technologies. The markets in which RET 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, RET expects competition to intensify. RET could lose market share and its revenues could decline, thereby affecting its earnings and potential for growth. In particular, although RET 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. 17 In the future, RET’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. RET is dependent on its suppliers and manufacturers, and supply chain issues could delay the introduction of RET’s product and negatively impact its business and operating results. RET has not yet entered into relationships with potential suppliers and manufacturers. However, RET may face delays in the introduction of its product due to supply chain issues. The manufacture, installation, production and operation of the AEI technology is expected to be dependent upon third party suppliers, service providers and networks. Any of the following factors (and others) could have an adverse impact on RET’s operations: ● RET’s inability to enter into agreements with suppliers on commercially reasonable terms, or at all; ● difficulties of suppliers ramping up their supply of materials to meet RET’s requirements; ● a failure to forecast humidity conditions, natural updrafts and realized range for rainfall enhancement activities; ● a failure to retain key technical staff; ● introduction of new regulations limiting or prohibiting weather modification, including the reinterpretation of existing regulations and/or the issuance of executive orders limiting/prohibiting weather modification; ● a significant increase in the price of one or more components, including due to industry consolidation occurring within one or more component supplier markets or as a result of decreased production capacity at manufacturers; ● any reductions or interruption in supply, including disruptions on RET’s global supply chain as a result of geopolitical conflicts, which RET may in the future experience; ● financial problems of either manufacturers or component suppliers; ● significantly increased freight charges, or raw material costs and other expenses associated with RET’s business; ● a failure to develop its supply chain management capabilities and recruit and retain qualified professionals; ● a failure to adequately authorize procurement of inventory by RET’s contract manufacturers; ● a failure to appropriately cancel, reschedule, or adjust its requirements based on RET’s business needs; or ● other factors beyond RET’s control or which it does not presently anticipate, could also affect its suppliers’ ability to deliver components to RET on a timely basis. If any of the aforementioned factors were to materialize, it could cause RET to halt production of its AEI technology and/or entail higher manufacturing costs, any of which could materially adversely affect RET’s business, operating results, and financial condition and could materially damage relationships with future clients. 18 RET’s products may not achieve market success, but will still require significant costs to develop. RET believes that it must continue to dedicate significant resources to its research and development efforts before knowing whether there will be market acceptance of its RET rain and snowfall generation technologies. Furthermore, the performance of these products is uncertain. RET’s rain and snowfall generation services could fail to attain sufficient market acceptance, if at all, for many reasons, including: ● pricing and the perceived value of RET’s platform relative to its cost; ● delays in releasing rain and snowfall generation technologies with sufficient performance and scale to the market; ● failure to produce products of consistent quality that offer functionality comparable or superior to existing or new products; ● ability to produce products fit for their intended purpose; ● failures to accurately predict market or client demands; ● defects, errors or failures in the design or performance of RET’s rain and snowfall generation technologies; ● negative publicity about the performance or effectiveness of RET’s technology; ● strategic reaction of companies that market competitive products; and ● the introduction or anticipated introduction of competing technology. To the extent RET is unable to effectively develop and market its rain and snowfall generation technologies to address these challenges and attain market acceptance, its business, operating results and financial condition may be adversely affected. RET intends to make significant investments in new products and services that may not achieve technological feasibility or profitability or that may limit RET’s revenue growth. RET intends to make significant investments in research, development, and marketing of new technologies, products and services. Investments in new technologies are speculative and technological feasibility may not be achieved. Commercial success depends on many factors including demand for innovative technology, availability of materials and equipment, selling price the market is willing to bear, competition and effective licensing or product sales. RET may not achieve significant revenues from new product and service investments for a number of years, if at all. Moreover, new technologies, products and services may not be profitable, and even if they are profitable, operating margins for new products and businesses may not be as high as the margins we have experienced historically or originally anticipated. RET may fail to obtain statistically significant results that demonstrate its ability to enhance rainfall. RET intends to create standardized measurement approaches and collect climatological data in order to demonstrate statistically significant results indicating its ability to successfully achieve rain and snowfall generation. Its ability to achieve replicable statistically significant results is not yet proven, and failure to do so may affect its commercial success. Currently, there is limited research and no historical basis for RET’s ability to develop, manufacture, and deliver this technology, as well as on its ability to implement this technology regardless of location. RET may also experience increased costs relating to obtaining, analyzing, and reviewing data that demonstrates statistical significance of this technology in increasing rainfall. 19 RET may not be able to accurately estimate the future supply and demand for its AEI technology, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue. If RET fails to accurately predict how clients will adopt its platform, it could incur additional costs or experience delays. It is difficult to predict RET’s future revenues and appropriately budget for its expenses, and RET may have limited insight into trends that may emerge and affect its business. RET anticipates being required to provide forecasts of its demand to its current and future suppliers prior to the scheduled delivery of products and technology to potential clients. Currently, there is limited research and no historical basis for making judgments on the demand for AEI technology or its ability to develop, manufacture, and deliver this technology, or RET’s profitability, if any, in the future. If RET overestimates client adoption of its platform, its suppliers may have excess inventory, which indirectly would increase RET’s costs. If RET underestimates its requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of its products and result in delays in shipments and revenues. In addition, lead times for materials and components that RET’s suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If RET fails to accurately qualify client adoption curves of its platform in the near- and medium-term period, which may cause failure to order sufficient quantities of product components in a timely manner, the delivery of its technology to its potential clients could be delayed, which would harm RET’s business, financial condition and operating results. RET may fail to accurately estimate the size and growth of client demands. There is no assurance that RET will be able to ramp its business to meet client demands about rainfall timing and predictability. Potential clients may require rapid increases in production on short notice. RET may not be able to purchase sufficient supplies or allocate sufficient manufacturing capacity to meet such increases in demand. Rapid client ramp-up in the future and significant increases in demand may strain RET’s resources or negatively affect its margins. Inability to satisfy client demand in a timely manner may harm its reputation, reduce its other opportunities, damage its relationships with clients, reduce revenue growth, and/or cause it to incur contractual penalties. Failure to grow at rates similar to that of other competitors in the industry may adversely affect RET’s operating results and ability to effectively compete within the industry. RET may fail to find adequate sites to operate its platform and machinery. RET’s ability to meet its financial and operating objectives depends on its ability to find adequate sites to operate its machines and platform, which can be difficult and expensive. The process to find adequate sites (including leases) requires compliance with numerous zoning, environmental, and governmental requirements. Further, the cost of operation, including leases, may become economically unfeasible causing RET to abandon or cease operations at said site. RET’s ability to find such sites could hinder our financial operating objectives and adversely affect operating results. RET may be affected by failures of its clients, both private and public, to meet their payment obligations. A failure of RET’s future clients to meet their payment obligations may affect its ability to receive payments under its contracts. In addition to RET’s potential contracts with private parties, RET intends to derive a portion of its revenues directly or indirectly from contracts with federal, state and city agencies, and other governmental authorities of various countries, in areas relating to, among others, water resiliency, decarbonization, forest fire mitigation, agricultural and other water infrastructure projects. The funding of these programs could be reduced or eliminated due to numerous factors beyond RET’s control, including lack of funding or budgetary constraints due to current political party views, geopolitical events, sovereign default, and other macro- or micro-economic conditions. A reduction or elimination of government spending under RET’s contracts could cause a material adverse effect on its business, financial condition, results of operations and cash flow. RET’s clients may refuse to pay for rain and snowfall generation services that directly or indirectly benefit other nearby parties. RET expects its offerings to have an expansive operating range, with rainfall occurring anywhere within an approximately 50-mile radius. Accordingly, there may be situations where a party who has not paid for RET’s technology could still benefit from nearby rain enhancement, particularly since the success of the technology is linked to specific weather conditions. It is possible that RET’s clients may not want and/or fail to meet some or all of their payment obligations when the rain enhancement did not solely or directly benefit them or the specific area it was intended to. This failure to collect payment owed may adversely harm RET’s business, financial condition and operating results. 20 RET’s future success depends in part on recruiting and retaining key personnel and failure to do so may make it more difficult for us to execute the business strategy. RET is dependent upon the continued services of key personnel, including members of its executive management team. The loss of any one of these individuals could disrupt our operations or its strategic plans. Additionally, RET’s future success will depend on, among other things, its ability to hire and retain the necessary qualified sales, marketing and managerial personnel, for whom it competes with numerous other companies, academic institutions and organizations. If RET loses key employees, if it is unable to retain other qualified personnel, or if its management team is not able to effectively manage it through these events, RET’s business, financial condition, and results of operations may be adversely affected. RET’s operations, projects and prospects will be located in remote areas, and its production, processing and product delivery will rely on the infrastructure and skilled labor being adequate and remaining available. RET’s success depends to a significant extent on its ability to attract, hire, and train qualified employees, including its ability to attract employees with the necessary skills in the regions in which it will operate. While very technical skills should not be required for basic construction and ongoing maintenance of RET’s platform, in order to successfully operate its technology, it will need to hire qualified project managers, engineers, and statisticians who, respectively, can properly and self-sufficiently maintain and manage its technology suite, evaluate weather data, and have the required expertise to improve system design and functionality. RET could experience increases in its recruiting and training costs and decreases in its operating efficiency, productivity and profit margins if it is unable to attract, hire and train a sufficient number of skilled employees to support its operations. RET’s business is dependent on the international market prices of energy and fiberglass, among other materials, which are both cyclical and volatile. RET expects that its business and financial performance will be affected by the market prices of energy needed to power the platform. Although its cost and energy requirements are expected to be modest on a per gallon basis, prices of energy have been subject to wide fluctuations and are affected by numerous factors beyond RET’s control, including international economic and political conditions, the cyclicality of consumption, actual or perceived changes in levels of supply and demand, the availability and costs of substitutes, inventory levels maintained by users, actions of participants in the commodities markets and currency exchange rates. Current or future semiconductor shortages could also affect production. In addition, market prices and supply chain delays in obtaining fiberglass (the key material required for the apparatus design) could potentially inhibit production schedules. System security and data protection breaches, as well as cyber-attacks, could disrupt RET’s operations, which may damage RET’s reputation and adversely affect its business. In recent years, cyberattacks, including denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other tactics designed to gain access to and exploit sensitive information by breaching mission critical systems of large organizations have increased in volume and sophistication. RET’s information technology systems and automated machinery, which it will rely on to operate its business, could be exposed to such tactics. RET may also experience unavailable systems, unauthorized access or disclosure due to employee theft or misuse, sophisticated nation-state and nation-state supported actors and advanced persistent threat intrusions. RET may be unable to implement adequate preventative measures or stop security breaches while they are occurring, and attackers may sabotage or to obtain unauthorized access to RET’s systems, networks, or physical facilities. Actual or perceived breaches of RET’s security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about RET, its partners, its clients or third parties could expose us and the parties affected to a risk of loss or misuse of this information, resulting in litigation and potential liability, paying damages, regulatory inquiries or actions, damage to the RET brand and reputation or other harm to the RET business. Additionally, cyberattacks that impact RET’s ability to operate its platform could result in production errors, processing inefficiencies and unscheduled downtime/degradation of operations, in turn causing the loss of sales and clients, and decreased revenue and increased overhead costs, which could have a material adverse effect on our results of operations. 21 Unfavorable conditions in RET’s industry or the global economy, could limit RET’s ability to grow its business and negatively affect its results of operations. RET’s results of operations may vary based on the impact of changes in its industry or the global economy on RET or its potential clients. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, pandemics (such as the COVID-19 pandemic), political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could cause a decrease in business investments, including the progress on development of rain and snowfall generation technologies, and negatively affect the growth of RET’s business. In addition, in challenging economic times, potential future clients may experience cash flow problems and as a result may modify, delay or cancel plans to purchase RET’s products and services. Additionally, if RET’s clients are not successful in generating sufficient revenue or are unable to secure financing, they may not be able to pay, or may delay payment of, accounts receivable due to RET. Moreover, RET’s key suppliers may reduce their output or become insolvent, thereby adversely impacting RET’s ability to manufacture its products. Furthermore, uncertain economic conditions may make it more difficult for RET to raise funds through borrowings or private or public sales of debt or equity securities. RET cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any particular industry. Holdco may invest in or acquire other businesses in the future, which may or may not be complementary to the RET business. Investing in or acquiring other businesses will require the devotion of a significant amount of time and resources, may not be successful, and could negatively impact Holdco’s results of operations, financial condition and liquidity. Each of RET and Merger Sub 1 (as the surviving company of the SPAC Merger) are wholly-owned subsidiaries of Holdco. We intend for the business of developing, improving, and commercializing AEI technology to continue to be conducted by RET as a subsidiary of Holdco. Under the Holdco A&R Articles, Holdco may engage in any and all lawful business for which a business corporation may engage in under the MBCA. In the future, Holdco, directly or indirectly, may acquire additional businesses or assets which may or may not be complementary to the RET business. The costs of such acquisitions may be substantial, including as a result of professional fees and due diligence efforts. There is no assurance that the time and resources expended on pursuing a particular acquisition will result in a completed transaction, or that any completed transaction will ultimately be successful. In addition, Holdco may be unable to identify suitable acquisition or strategic investment opportunities, or may be unable to obtain any required financing or regulatory approvals, and therefore may be unable to complete such acquisitions or strategic investments on favorable terms, if at all. Holdco may decide to pursue acquisitions with which its investors may not agree and Holdco cannot assure investors that any acquisition or investment will be successful or otherwise provide a favorable return on investment. If Holdco acquires a business or assets that are not complementary to the RET business, such business or assets may not be able to leverage our existing infrastructure or operational experience, which may increase the costs and risk associated with such acquisitions, and we may determine in connection with such acquisition or afterward to separate the ownership of such business or assets from that of RET through a spin-off, split off or otherwise of RET or of such business or assets. In addition, acquisitions and the integration thereof will require significant time and resources and place significant demands on Holdco’s management, as well as on its operational and financial infrastructure. Risks related to the successful integration of an acquired business include: ● diverting the attention of Holdco management and that of the acquired business; ● merging or linking different accounting and financial reporting systems and systems of internal controls and, in some instances, implementing new controls and procedures; ● merging computer, technology and other information networks and systems, including enterprise resource planning systems and billing systems; 22 ● assimilating personnel, human resources, billing and collections, and other administrative departments and potentially contrasting corporate cultures; ● disrupting relationships with or losses of key clients and suppliers of RET’s business or the acquired business; ● interfering with, or loss of momentum in, RET’s ongoing business or that of the acquired company; ● failure to retain key personnel; and ● delays or cost-overruns in the integration process. Holdco’s inability to manage its growth through acquisitions, including the integration process, and to realize the anticipated benefits of an acquisition could have a material adverse effect on its business, financial condition and results of operations. Risks Relating to the Environment, Health and Safety The efficacy of RET’s machines could be materially adversely affected by changes in weather conditions generally, including variability and longer-term shifts in climate patterns, as a result of climate change or otherwise. The revenues expected to be generated by RET’s machines are correlated to weather conditions, and the timing and predictability of its operations are subject to environmental conditions that RET cannot ultimately control. The technology does not cause rainfall to be created but is designed to enhance the amount and possibility of rainfall when conditions are appropriate in the atmosphere and when cloud formation is underway in an approximately 40-mile radius, according to third-party testing, thus this is dependent upon irradiance and weather conditions generally. Weather conditions have natural variations from season to season and from year to year and may also undergo long-term or permanent change because of climate change or other factors. While RET may try to reduce such risks through studies of present or historical conditions or modeling of future conditions, projections of rain depend on assumptions about weather patterns, shading and irradiance, which are inherently uncertain and may not be consistent with actual conditions at the site. A sustained decline in suitable weather conditions could lead to a material adverse change in the volume of rain generated, revenues and cash flow. Additionally, climate change may increase the frequency and severity of adverse weather conditions, such as tropical storms, wildfires, droughts, floods, hurricanes, tornadoes, ice storms or extreme temperature, and may have the long-term effect of changing weather patterns, which could result in more frequent and severe disruptions to our technology. Such disruptions may include, among other things, damage to or destruction of, our assets or to assets required for weather generation or the impaired operation or forced shutdown of these assets. Furthermore, because RET’s platform will rely on appropriate conditions, client satisfaction might be hindered by factors such as wind speed, wind direction or lack of wind. If these machines are unable to produce the levels clients want, then demands for RET’s services may decrease and its business may be adversely affected. Clients may experience significant financial impacts from insufficient rain increases due to weather conditions. Clients and others may hold RET accountable for changing environmental and/or weather conditions, including challenges resulting from excessive rain. Changes in rainfall patterns may lead to extreme weather conditions and unintended consequences, including, but not limited to, excessive rains, increased hail, natural disasters like mudslides, flooding, changes in rainfall patterns, increased or decreased temperatures, and increased storm frequency and tendency. While RET does not believe that its product could lead to such extreme environmental conditions as RET expects to be able to control when the rain enhancement machines are turned off and on, changes in environmental conditions in the areas in which it operates could have a material adverse effect on its reputation, which may adversely affect its operations. The RET technology has a large target area coverage which has the potential to generate excess rainfall outside or in extension to desired locations. Timing of targeted rain and snowfall generation is also highly variable, meaning that additional rain may occur at inopportune times, for example during the day in tourism-focused areas. 23 Clients and others dependent on RET’s services may hold RET accountable for any failures to fulfill increased rainfall expectations. RET’s future AEI technology may fail to meet RET’s projections for increased rainfall for a variety of reasons, including, but not limited to, technological malfunctioning, regulatory impediments, and operational or financial conditions. Clients whose projects depend on increased rainfall may hold RET accountable for any failures to increase rainfall and the subsequent effect on their respective businesses, such as, a negative return on investments in agricultural projects dependent on increased rainfall. RET may suffer or be exposed to liability or costly litigation from its clients or others whose dependency on increased rainfall is affected. In addition, RET’s reputation may be adversely affected, which may adversely affect RET’s operations and financial condition. ESG issues, including those related to climate change and sustainability, may have an adverse effect on RET’s business, financial condition and results of operations and could damage our reputation. There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning environmental, social, and governance matters (“ESG”). Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow, and evolving SEC disclosure requirements and enforcement may increase scrutiny of ESG-related statements. If RET’s ESG practices or disclosures fail to meet regulatory requirements or investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, board of directors and employee diversity, human capital management, employee health and safety practices, product quality, corporate governance and transparency, its reputation, brand and employee retention may be negatively impacted, and its clients and suppliers may be unwilling to continue to do business with RET. Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, dams, energy and water use, and other sustainability concerns. Concern over climate change, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. If RET does not adapt to or comply with new regulations, or if it fails to comply with disclosure requirements and consequently fail to meet evolving regulatory, investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in RET, and customers and consumers may choose to stop purchasing its products, which could have a material adverse effect on our reputation, business or financial condition. Political, regulatory and social opposition to our activities could adversely impact RET’s business and reputation. Disputes and protests related to the nature of RET’s business may arise from time to time. In some instances, lobbying by competitive chemical-based cloudseeding and desalination technologies could slow RET’s growth and ability to address target markets. Disagreements or disputes with research group, institutions, and lobbying groups for competing technology could cause delays or interruptions to RET’s operations, adversely affect its reputation or otherwise hamper its ability to conduct our operations. Certain individuals or groups opposed to AEI technology may take actions to disrupt RET’s operations and projects, and they may continue to do so in the future, which may harm its operations and could adversely affect its business. Given the variety of rain and snowfall generation approaches, competing claims regarding the efficacy of each approach may make it difficult to delineate the relative impact each approach has on rain and snowfall generation. Certain individuals or groups may oppose RET’s operations by accusing us of unsubstantiated claims regarding environmental pollution and/or health risks, as well as point to RET’s shorter operating history to create uncertainty around the statistical significance of the historical results of its technology. Social demands and conflicts could have a material adverse effect on RET’s business and results of operations and areas in which it operates. 24 Risks Relating to Intellectual Property & Technology Existing AEI technologies may largely be in the public domain and RET’s competitors could develop and commercialize products similar or identical to RET’s, and its ability to successfully commercialize its products may be adversely affected. Therefore, success of RET’s business is dependent on its ability to create and implement new technologies and to obtain and maintain patent protection for such technologies. As existing AEI technologies are based on approximately 70 years of technological efforts beginning in the 1950s, the current state-of-the-art of this technology may largely be in the public domain. Therefore, RET’s competitors could develop and commercialize products similar or identical to RET’s, and its ability to successfully commercialize its products may be adversely affected, and RET’s success depends on its ability to create and implement new or improved AEI technologies that are proprietary to RET. RET will devote significant resources to developing new technologies and intends to seek patent protection to achieve a competitive advantage. RET’s research and development efforts may require long development cycles and a substantial investment before RET can determine the commercial viability of any resulting technologies. Moreover, there is no assurance that RET can successfully develop, deploy and market new or improved technologies in a timely or commercially acceptable fashion or obtain patent protection over such technologies. Even if RET is able to obtain patents covering such technologies, it is still uncertain whether these patents will be contested, circumvented, invalidated or limited in scope in the future. The rights granted under any issued patents may not provide RET with meaningful protection or competitive advantages, and some foreign countries provide significantly less effective patent enforcement than in the United States, particularly in those countries where RET’s solutions are likely to be deployed, resulting in significant harm to RET’s business, financial position, results of operations and cash flows. If RET fails to protect and enforce its existing and future technology and intellectual property, its business will suffer. RET believes that its success will depend in large part on its ability to protect its existing and future technology and intellectual property, including its ability to obtain intellectual property protection in a timely manner, its ability to convince third parties of the applicability of its potential intellectual property rights to its products and its ability to enforce its intellectual property rights. RET intends to achieve the foregoing through a combination of license, development and non-disclosure agreements and other contractual provisions and patent, trademark, trade secret and copyright laws However, regardless of RET’s efforts to protect its future technology and intellectual property, third parties may attempt to copy or otherwise obtain and use such technology, including through the compromise of RET’s trade secrets. Monitoring unauthorized use of RET’s future intellectual property may be difficult and costly, and the steps RET will take to prevent misappropriation may not be sufficient. Any enforcement efforts RET undertakes, including litigation, could be time-consuming and expensive and could divert management’s attention, which could harm its business, results of operations and financial condition. In addition, existing intellectual property laws and contractual remedies may afford less protection than needed to safeguard RET’s potential intellectual property, as patent, copyright, trademark and trade secret laws vary significantly throughout the world. A number of foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Therefore, RET’s potential intellectual property rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the unauthorized use of RET’s intellectual property rights, technology and other proprietary rights may be more expensive and difficult outside of the United States. If RET fails to adequately protect its future technology and intellectual property, its licensees and competitors may seek to use its technology and intellectual property without the payment of license fees and royalties, which could weaken its competitive position, reduce its operating results and increase the likelihood of costly litigation. 25 The intellectual property rights of others may prevent RET from commercializing its products or developing new technology or entering new markets, and RET’s business may suffer or be exposed to liability or costly litigation if third parties assert that RET violates their intellectual property rights. RET’s success depends in part on its ability to commercialize its products and continually adapt to incorporate new technologies and to expand into markets that may be created by new technologies. However, RET may become subject to intellectual property disputes that prevent it from commercializing its products, introducing new technologies or expanding into new markets. Therefore, RET’s success depends, in part, on its ability to develop and commercialize its products without infringing, misappropriating or otherwise violating the intellectual property rights of third parties. However, RET may not be aware that its products are infringing, misappropriating or otherwise violating third-party intellectual property rights and such third parties may bring claims alleging such infringement, misappropriation or violation. For example, there may be issued patents of which RET is unaware, held by third parties that, if found to be valid and enforceable, could be alleged to be infringed by RET’s offerings. There also may be pending patent applications of which RET is not aware that may result in issued patents, which could be alleged to be infringed by RET’s offerings. Because patent applications can take years to issue and are often afforded confidentiality for some period of time there may currently be pending applications, unknown to RET, that later result in issued patents that could cover RET’s future technologies. Lawsuits can be time-consuming and expensive to resolve, and they divert management’s time and attention. RET’s platform may not be able to withstand any third-party claims against its use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. In a patent infringement claim against RET, RET may assert, as a defense, that we do not infringe the relevant patent claims, that the patent is invalid or both. RET does not have a large patent portfolio which it could use in counter-claims as part of a defense against infringement. The strength of RET’s defenses will depend on the patents asserted, the interpretation of these patents, and its ability to invalidate the asserted patents. However, RET could be unsuccessful in advancing non-infringement and/or invalidity arguments in its defense. In the United States, issued patents enjoy a presumption of validity, and the party challenging the validity of a patent claim must present clear and convincing evidence of invalidity, which is a high burden of proof. Conversely, the patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if RET cannot modify its technology to make it non-infringing, or license or develop alternative technology for any infringing aspect of our business, it may be forced to limit or stop sales of its products or cease business activities related to such intellectual property. RET cannot predict the outcome of lawsuits and cannot ensure that the results of any such actions will not have an adverse effect on its business, financial condition or results of operations. Any intellectual property litigation to which RET might become a party, or for which it is required to provide indemnification, regardless of the merit of the claim or its defenses, may require RET to do one or more of the following: ● cease selling or using technology that incorporates the intellectual property rights that allegedly infringes, misappropriates or violates the intellectual property of a third party; ● make substantial payments for legal fees, settlement payments or other costs or damages; ● obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; ● redesign the allegedly infringing technology to avoid infringement, misappropriation or violation, which could be costly, time-consuming or impossible; ● rebrand RET or pursue a different trademark; or ● indemnify organizations using RET’s platform or third-party service providers. 26 Even if the claims do not result in litigation or are resolved in RET’s favor, these claims, and the time and resources necessary to resolve them, could divert the resources of its management and harm its business and operating results. Moreover, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of RET’s common stock. The occurrence of infringement claims may grow as the market for our products, services and technologies grows. Accordingly, RET’s exposure to damages resulting from infringement claims could increase and this could further exhaust its financial and management resources. If we are unable to develop, access or effectively integrate artificial intelligence (“AI”) and advanced analytics capabilities in the future, or if we face increased costs, regulatory scrutiny or cybersecurity risks associated with AI, our competitiveness, operations and prospects could be adversely affected. We currently do not have developed or deployed AI for rainfall predictability, targeting or operational decision-making, and any future use of AI would require significant investment, access to high-quality data, specialized personnel, third-party tools and infrastructure, and extensive testing and validation. Competitors or potential partners may develop or deploy AI-enabled forecasting, measurement, automation or optimization capabilities more quickly or effectively than we do, which could reduce demand for our services, increase pricing pressure, or limit our ability to differentiate our offerings. If we pursue AI-related initiatives in the future, we may experience operational risks, including model or data errors, limitations in predictive performance, integration challenges with hardware and software controls, and difficulties establishing appropriate governance, documentation and internal controls. In addition, AI-related laws, regulations and standards are rapidly evolving in the United States and internationally and may impose new compliance obligations, require additional disclosures, restrict certain uses of data, or increase the risk of investigations, enforcement actions, litigation or reputational harm, including scrutiny of public statements regarding AI capabilities. AI initiatives may also increase our cybersecurity and data protection risks. The use of third-party AI tools or cloud-based services, the collection and processing of weather and operational data, and the potential for adversarial attacks, data poisoning, model theft, or unauthorized access could expose us to business interruption, loss of proprietary information, regulatory inquiries, contractual liability, and reputational damage. Any of these risks could materially adversely affect our business, financial condition and results of operations. Risks Relating to Regulatory and Legal Matters RET may be subject to certain federal, state and/or local environmental and governmental regulations and laws that limit the scope of its marketplace and affect its business, results of operations and financial condition. Additionally, failure to comply with applicable laws and regulations could subject RET to liability and negatively affect its business, results of operations and financial condition. Certain jurisdictions have codified regulations around cloudseeding technology that may subject RET to certain licensing and permitting requirements. Furthermore, the use of certain materials for seeding purposes may be subject to governmental regulation. RET could be subject to the United Nations Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques. This Convention bans hostile weather modifications. It is yet to be determined whether AEI technology is considered hostile. RET could also face liability with respect to environmental issues occurring at sites on which it operates as a result of indirect consequences of rain and snowfall generation, and may face costs or liabilities as a result of its role on sites. In addition, licensing and permitting requirements, among other potential regulatory restrictions, may not only limit the scope of RET’s marketplace, but make it uneconomical for RET to carry out its business in certain locations, thus negatively affecting RET’s financial condition and results of operations. 27 RET may also be required to comply with economic and trade sanctions administered by governments in the areas in which we currently operate, and where we may operate in the future, including the U.S. government (including without limitation regulations administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the U.S. Department of State) and the Council of the European Union. These economic and trade sanctions prohibit or restrict transactions to or from or dealings with certain specified countries, regions, their governments and, in certain circumstances, their nationals, and with individuals and entities that are specially-designated, such as individuals and entities included on OFAC’s List of Specially Designated Nationals. Any future economic and trade sanctions imposed in jurisdictions where we operate could negatively impact our business, financial condition, and results of operations. RET’s ability to expand in certain locations is subject to land restriction policies and permits which we may fail to obtain or which may be terminated or not renewed by governmental authorities. RET’s business is subject to regulation, including with respect to acquiring and renewing the required authorizations, permits, concessions and/or licenses from the relevant governmental regulatory bodies necessary to perform operations in specific, regulated areas. In order to successfully operate RET’s technology, it will need to obtain, or be in the process of obtaining, all material authorizations, permits, concessions and licenses required to conduct its rain and snowfall generation operations. It may be difficult to receive the required permits, which may require RET’s management team to divert its attention from other aspects of its business, or it may be more capital intensive or a more time consuming process than expected to receive permits, either of which could increase costs and delay the launch of its products. Furthermore, if RET does not comply with the requirements set forth in the permits, RET could lose the granted permits or not receive them at all. These authorizations, permits, concessions and licenses are also subject to RET’s compliance with conditions imposed and regulations promulgated by the relevant governmental authorities. While RET anticipates that all required authorizations, permits, concessions and environmental licenses or their renewals will be granted as and when sought, there is no assurance that these items will be granted as a matter of course, and there is no assurance that new conditions will not be imposed in connection with such renewals. If RET were to violate any laws and regulations or the conditions of its concessions, authorizations, licenses and permits, it may be subjected to substantial fines or sanctions, revocations of operating permits or licenses and possible closings of certain of its operations. RET may also be subject to the potential risk of confiscation or nationalization of its operating facilities by the governmental authorities of certain countries. Non-compliance with anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws can subject RET to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could materially adversely affect its reputation, business, financial condition, and results of operations. RET will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which it conducts or in the future may conduct activities, including the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act 2010, and other anti-corruption laws and regulations. The FCPA and the U.K. Bribery Act 2010 prohibits RET and its officers, directors, employees and business partners acting on its behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The U.K. Bribery Act also prohibits non-governmental “commercial” bribery and soliciting or accepting bribes. A violation of these laws or regulations could adversely affect RET’s business, results of operations, financial condition and reputation. RET’s policies and procedures designed to ensure compliance with these regulations may not be sufficient and its directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible. Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject RET to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially adversely affect its reputation, business, financial condition, and results of operations. Risks Relating to Ownership of Holdco Securities Unless the context otherwise requires, references in this subsection “— Risks Relating to Ownership of Holdco Securities” to “we”, “us”, and “our” generally refer to Holdco. 28 There can be no assurance that Holdco will be able to comply with the continued listing rules of Nasdaq. Holdco’s Class A Common Stock and Warrants are currently listed on Nasdaq. To maintain the listing of our Class A Common Stock and Warrants on Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards, including those related to the closing price of our Common Stock and Warrants. On February 18, 2025, Holdco received written notice (the “MVLS Notice”) from the Listing Qualifications Staff (“Staff”) of the Nasdaq which notified us that, for the 30 consecutive business days ended February 14, 2025, our market value of listed securities (“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) (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). On August 19, 2025, the Company received a notice (the “Notice”) from the Staff indicating that the Company had not regained compliance with either the MVLS Rule or the MVPHS Rule and, unless the Company timely requests a hearing before the Nasdaq Hearings Panel (the “Panel”), the Company’s securities would be subject to suspension and delisting from The Nasdaq Global Market at the opening of business on August 28, 2025. The Company submitted its timely request for a hearing before the Panel on August 21, 2025, to request additional time to regain compliance with the MVLS Rule and the MVPHS Rule. As part of the compliance plan submitted to the Panel, the Company requested a transfer of its 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 the Company’s request for continued listing on Nasdaq, subject to the Company’s application to transfer its listing from the Nasdaq Global Market to the Nasdaq Capital Market on or before October 20, 2025, and its demonstration of compliance with all listing rules of the Nasdaq Capital Market on or before October 31, 2025. The Company applied for listing on the Nasdaq Capital Market and demonstrated compliance with all of the listing rules of the Nasdaq Capital Market, and Nasdaq approved the listing of the Company’s securities on the Nasdaq Capital Market. In connection with the approval of the Company’s application, the listing qualifications staff of Nasdaq indicated that the Company’s previously disclosed deficiencies were cured. On February 18, 2026, the Company received an additional notice from the Listing Qualifications Staff of Nasdaq indicating that, for the 30 consecutive business days ended February 14, 2026, the Company’s market value of listed securities had again fallen below the minimum $35,000,000 requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2). In accordance with Nasdaq rules, the Company has been provided a compliance period of 180 calendar days, or until August 17, 2026, to regain compliance with this requirement. There can be no assurance that the Company will be able to regain compliance with the applicable Nasdaq listing standards within the compliance period or maintain compliance thereafter. If Nasdaq delists the Class A Common Stock or Warrants from trading on its exchange for failure to meet its listing rules, Holdco and its shareholders could face significant material adverse consequences including: ● a limited availability of market quotations for our securities; ● reduced liquidity for our securities; ● a determination that shares of Class A Common Stock are “penny stock” which will require brokers trading in shares of Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; ● a limited amount of news and analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future. 29 The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” The Class A Common Stock and Warrants are covered securities because they are listed on Nasdaq. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If Holdco’s securities are no longer listed on Nasdaq, such securities would not qualify as covered securities and Holdco would be subject to regulation in each state in which it offers its securities. An active trading market for Class A Common Stock may not develop or be sustained and the share price of the Class A Common Stock may be volatile. Holdco cannot guarantee that an active trading market for the Common Stock will develop or be sustained, nor can Holdco predict the prices at which its common shares may trade from time to time. If a public trading market does develop for the Class A Common Stock, its market price is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: ● the concentration of the ownership of our shares by a limited number of affiliated stockholders may limit interest in our securities; ● limited “public float” with a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for the Class A Common Stock; ● additions or departures of key personnel; ● loss of a strategic relationship; ● variations in operating results from the expectations of securities analysts or investors; ● announcements of new products or services by us or our competitors; ● reductions in the market share of our products; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● investor perception of our industry or prospects; ● insider selling or buying; ● investors entering into short sale contracts; ● regulatory developments affecting our industry; ● changes in our industry; ● competitive pricing pressures; ● our ability to obtain working capital financing; ● sales of the Class A Common Stock; ● our ability to execute our business plan; ● operating results that fall below expectations; 30 ● revisions in securities analysts’ estimates or reductions in security analysts’ coverage; ● our ability to regain compliance with Nasdaq listing requirements within any applicable compliance period; ● our ability to maintain compliance with Nasdaq’s continued listing standards; and ● economic and other external factors. Many of these factors are beyond our control and may decrease the market price of the Class A Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for the Class A Common Stock will be at any time, including as to whether the Class A Common Stock will sustain current market prices, or as to what effect that the sale of shares or the availability of the Class A Common Stock for sale at any time will have on the prevailing market price. In addition, the securities markets have from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Class A Common Stock. If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Class A Common Stock may decline. If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of the Class A Common Stock may decline. Fluctuations in the price of Class A Common Stock could contribute to the loss of all or part of your investment. The trading price of Class A Common Stock following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond Holdco’s control. Broad market and industry factors may materially harm the market price of Class A Common Stock irrespective of Holdco’s operating performance. The stock market in general, and Nasdaq specifically, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your securities at or above the price at which they were acquired. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to Holdco could depress Holdco’s share price regardless of Holdco’s business, prospects, financial conditions or results of operations. A decline in the market price of Holdco’s securities also could adversely affect Holdco’s ability to issue additional securities and Holdco’s ability to obtain additional financing in the future. Inflationary pressures, increases in interest rates and other adverse economic and market forces may contribute to potential downward pressures in market value of the Class A Common Stock. Additionally, any of the risk factors discussed in this Annual Report could have a material adverse effect on your investment in Class A Common Stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of Class A Common Stock may not recover and may experience a further decline. The RET Founders have substantial control over Holdco, which could limit other shareholders’ ability to influence corporate matters and could delay or prevent a change in corporate control. Harry You, Paul Dacier and Niccolo de Masi (together, the “RET Founders”) collectively own approximately 42.30% of the outstanding Common Stock and approximately 47.48% of the voting power of the Common Stock (assuming no exercise of any Warrants or Options). While the RET Founders have no agreement to act together with respect to voting or investment decisions in their RET shares, if they were to act together, they would be able to influence Holdco’s management and affairs and control the outcome of matters submitted to our shareholders for approval, including the election of directors and any sale of equity, merger, consolidation, or sale of all or substantially all of our assets. 31 Further, the RET Founders hold an aggregate of 57,752 shares of Class B Common Stock, representing all issued and outstanding shares of Class B Common Stock. The Class B Common Stock has fifteen votes per share, and the Class A Common Stock, which is the class of stock held by public shareholders, has one vote per share. Pursuant to the Holdco A&R Articles, the RET Founders as the sole initial holders of Class B Common Stock will have rights that are different from unaffiliated shareholders for so long as the RET Founders or their permitted transferees collectively beneficially own more than 20% of the number of shares of Class B Common Stock collectively held by them as of the Closing. Such rights include the right to fill vacancies on Holdco’s Board, to call special meetings of shareholders, to take action by written consent of the shareholders, and that amendments to the Holdco A&R Articles will require the affirmative vote of a majority of the shares of Common Stock entitled to vote in lieu of two-thirds of the shares of Common Stock entitled to vote on the matter. Future transfers by holders of Class B Common Stock will generally result in those shares converting to Class A Common Stock, subject to limited exceptions, such as certain transfers effected for estate planning or charitable purposes. Further, the Class B Common Stock will automatically convert into Class A Common Stock on the date that is 5 years after the Closing Date, or earlier in certain circumstances, including if the initial holders thereof collectively cease to beneficially own at least twenty percent (20%) of the number of shares of Common Stock held by them on the Closing Date, as more fully set forth in the Holdco A&R Articles. The RET Founders may have interests, with respect to their Common Stock which are different from those of unaffiliated shareholders and the concentration of voting power among one or more of these stockholders may have an adverse effect on the trading price of the Class A Common Stock. In addition, this concentration of ownership might adversely affect the market price of the Class A Common Stock by: (1) delaying, deferring or preventing a change of control; (2) impeding a merger, consolidation, takeover or other Business Combination involving Holdco; or (3) discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of Holdco. The dual class structure may have the effect of concentrating voting control with the holders of Class B Common Stock. Holdco has a dual class stock structure in which shares of Class A Common Stock each have one vote per share and shares of Class B Common Stock have fifteen votes per share. As of March 31, 2026, there were 8,131,081 shares of the registrant’s Class A common stock, par value $0.0001 per share (including 301,160 unvested restricted stock awards), and 57,752 shares of the registrant’s Class B common stock, par value $0.0001 per share, outstanding, 5,000,000 shares of Class A Common Stock issuable upon the exercise of outstanding Warrants, and 2,150,838 shares of Class A Common Stock issuable upon the exercise of outstanding Options. Class B Common Stock is exclusively held by the RET Founders, which moderately increases their voting control. See “ Risk Factors — The RET Founders have substantial control over Holdco, which could limit other shareholders’ ability to influence corporate matters and could delay or prevent a change in corporate control. ” Further, Holdco has the ability to issue additional shares of Class B Common Stock without your consent. If additional shares of Class B Common Stock are issued in a financing or other transaction, whether to the RET Founders or to third parties, such shares would give the holder increased voting power as compared to shares of Class A Common Stock. The requirements of being a public company may strain Holdco’s resources and distract management and we will incur substantial costs as a result of being a public company. Holdco is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Securities Act. These rules, regulations and requirements are extensive. We incur significant costs associated with our public company corporate governance and reporting requirements. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. As previously disclosed, we have identified material weaknesses in our internal control over financial reporting. For additional information, see “Item 9A—Controls and Procedures” in this Annual Report. In order to improve our disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight is required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more corporate employees to comply with these requirements or engage outside consultants, which would increase our costs and expenses. 32 In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected. As a result of disclosure of information in this Annual Report and in the filings that we are required to make as a public company, our business, operating results and financial condition have become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If any such claims are successful, our business, operating results and financial condition could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, operating results and financial condition. The exercise of registration rights by the Previous Sponsor, New Sponsor, Sponsor Affiliate and certain RET shareholders may adversely affect the market price of the Class A Common Stock. Pursuant to the Registration Rights Agreement and the prospectus filed on January 30, 2025, Holdco has registered for resale, pursuant to Rule 415 under the Securities Act, an aggregate of 5,194,056 shares of Class A Common Stock. Pursuant to the Registration Rights Agreement, the selling shareholders have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut back provisions with respect to Class A Common Stock. An aggregate of 5,914,057 shares of Class A Common Stock are subject to registration rights, representing approximately 72.73% of the 8,131,081 outstanding shares of Class A Common Stock as of March 31, 2026, and approximately 251.76% of the approximately 2,349,046 shares of Class A Common Stock in the public float as of March 31, 2026. The registration of these shares permits the public resale of such shares, subject to any applicable contractual lock-up obligation. The registration and availability of a significant number of securities for trading in the public market may have an adverse effect on the market price of the Class A Common Stock. Sales of a substantial number of shares of Class A Common Stock in the public market, particularly sales by our executive officers, directors and significant shareholders, or the perception that these sales could occur, could cause the market price of Class A Common Stock to decline. Sales of a substantial number of shares of Class A Common Stock in the public market, particularly sales by our executive officers, directors and principal shareholders, or the perception that these sales might occur, could cause the market price of Class A Common Stock to decline. Some of our executive officers, directors and the holders of a substantial number of shares of Class A Common Stock following the Business Combination are subject to lock-up provisions pursuant to the Lock-up Agreement that, for a period of at least two years from the date of Closing, subject to certain exceptions, prohibit them from offering for sale, selling, contracting to sell, granting any option for the sale of, transferring or otherwise disposing of any shares of Class A Common Stock and of any securities convertible into or exercisable for Class A Common Stock. 33 When the applicable lock-up periods expire, our security holders subject to lock-up provisions will be able to sell shares of Class A Common Stock in the public market. Sales of a substantial number of such shares upon expiration of the lock-up provisions, the perception that such sales may occur or early release of these provisions could cause our market price to fall or make it more difficult for you to sell your Class A Common Stock at a time and price that you deem appropriate. In addition, we may file a registration statement to register shares reserved for future issuance under our equity compensation plans. Subject to the satisfaction of applicable vesting requirements and expiration of the lock-up provisions referred to above, the shares issued upon exercise of outstanding stock options would be available for immediate resale in the open market. A decline in the price of Class A Common Stock could affect our ability to raise working capital and adversely impact our ability to continue operations. A prolonged decline in the price of Class A Common Stock could result in a reduction in the liquidity of the common stock and a reduction in our ability to raise capital. A decline in the price of Class A Common Stock could be especially detrimental to our liquidity, operations and strategic plans. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect on our business plan and operations, including our ability to develop new products and services and continue current operations. If the price of the Common Stock declines, we can offer no assurance that we will be able to raise additional capital or generate funds from operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able to have the resources to continue our normal operations. We do not intend to pay any cash dividends in the foreseeable future and, therefore, any return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital stock. Neither RET nor Holdco has paid any cash dividends on its securities in the past, and Holdco does not intend to pay cash dividends on Common Stock in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Any credit agreements, which we may enter into with institutional lenders, may restrict our ability to pay dividends. Whether we pay cash dividends in the future will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and any other factors that the Board decides is relevant. Therefore, any return on your investment in our capital stock must come from increases in the fair market value and trading price of the capital stock. If our stock price fluctuates, you could lose a significant part of your investment. The market price of Class A Common Stock could be subject to wide fluctuations in response to, among other things, the risk factors described in this Annual Report, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. U.S. and global markets have experienced volatility and disruption in recent years as a result of macroeconomic uncertainty and geopolitical developments, including ongoing military conflicts such as the Russia-Ukraine war and escalating tensions and hostilities in the Middle East. Economic uncertainty in various global markets caused by economic challenges, trade disputes, sanctions, tariffs, political instability and these conflicts, has led to market disruptions, including significant volatility in commodity prices, credit and capital market instability and supply chain disruptions, as well as inflationary pressures. Our business, financial condition, and results of operations could be materially and adversely affected by further negative impacts on the global economy and capital markets resulting from these global economic conditions, particularly if such conditions are prolonged or worsen. Volatility in the capital markets may also adversely affect our ability to obtain additional financing on acceptable terms, or at all. Although, to date, our results of operations have not been materially impacted by these global economic and geopolitical conditions, it is impossible to predict the extent to which our operations may be impacted in the short and long term. In the past, many companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business. 34 Warrants are exercisable for Class A Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our shareholders. Warrants to purchase an aggregate of up to 5,000,000 Public Warrants are exercisable in accordance with the terms of the Warrant Assumption Agreement governing those securities. The exercise price of the Warrants is $11.50 per share, subject to adjustment. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration, and, as such, the Warrants may expire worthless. See “— the Warrants may never be in the money, and they may expire worthless and the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Warrants approve of such amendment . As a result, the exercise price of the Warrants could be increased, the exercise period could be shortened and the number of shares of Class A Common Stock purchasable upon exercise of a Warrant could be decreased, all without your approval. ” The Warrants may never be in the money, and they may expire worthless, and the terms of the Warrants may be amended in a manner adverse to a holder if holders of at least 50% of the then outstanding Warrants approve of such amendment. As a result, the exercise price of the Warrants could be increased, the exercise period could be shortened and the number of shares of Class A Common Stock purchasable upon exercise of a Warrant could be decreased, all without your approval. The Warrants were issued in registered form under a warrant agreement between the Transfer Agent, as warrant agent, and Holdco. The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder for the purpose of curing any ambiguity or to correct any defective provision or mistake, adjusting the provisions relating to cash dividends on Common Stock as contemplated by and in accordance with the Warrant Agreement, adding or changing any provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the outstanding Warrants is required to make any change that adversely affects the interests of the registered holders of Warrants. Although Holdco’s ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, shorten the exercise period or decrease the number of shares of Common Stock purchasable upon exercise of a Warrant. Warrants are exercisable in accordance with the terms of the Warrant Agreement. The exercise price of these warrants is $11.50 per share. To the extent such Warrants are exercised, additional shares of Class A Common Stock will be issued, which will result in dilution to the holders of Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of Class A Common Stock. However, there is no guarantee that the Warrants will ever be in the money prior to their expiration, and as such, the Warrants may expire worthless. We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless. We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the shares of Class A Common Stock equals or exceeds $18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the Warrant holders and provided certain other conditions are met. We will not redeem the Warrants unless an effective registration statement under the Securities Act covering the shares issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares is available throughout the 30-day redemption period, except if we elect to require the Warrants to be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the Warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants or (iii) accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants. As of the date of this Annual Report, the Class A Common Stock has never traded above $18.00 per share, therefore neither current nor recent share prices meet or exceed the threshold that would allow Holdco to redeem the Warrants. 35 In addition, we have the ability to redeem the outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of the Class A Common Stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain other conditions are met, including that holders will be able to exercise their warrants on a cashless basis prior to redemption for a number of shares of Class A Common Stock determined based on the redemption date and the fair market value of the Class A Common Stock. The value received upon exercise of the Warrants (i) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (ii) may not compensate the holders for the value of the Warrants, including because the number of shares of Class A Common Stock received is capped at 0.361 shares per warrant (subject to adjustment) irrespective of the remaining life of the Warrants. In addition, such redemptions may occur at a time when the Warrants are “out-of-the-money,” in which case holders thereof would lose any potential embedded value from a subsequent increase in the value of the Class A Common Stock had such Warrants remained outstanding. In the event that Holdco determines to redeem the Warrants when the closing price of the shares of Class A Common Stock equals or exceeds $18.00 per share or $10.00 per share, pursuant to Section 6.1 or Section 6.2 of the Warrant Agreement, respectively, Holdco will fix a date for the redemption. Notice of redemption will be mailed by first class mail, postage prepaid, by Holdco not less than thirty (30) days prior to the redemption date to the registered holders of the Warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner herein provided will be conclusively presumed to have been duly given whether or not the registered holder received such notice. Warrant holders will only be able to exercise their Warrants on a “cashless basis” under certain circumstances, and if they do so, they will receive fewer shares of Class A Common Stock from such exercise than if such warrants were exercised for cash. The Warrants generally may not be exercised on a “cashless basis”, except as described below. The Warrant Agreement provides that in the following circumstances holders of Warrants who seek to exercise their Warrants will not be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the Class A Common Stock issuable upon exercise of the Warrants are not registered under the Securities Act in accordance with the terms of the Warrant Agreement; and (ii) if we have so elected and the Class A Common Stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act. If you exercise your Warrants on a cashless basis under the circumstances described in clauses (i) and (ii) in the preceding sentence, you would pay the warrant exercise price by surrendering the Warrants for that number of shares of Class A Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A Common Stock underlying the Warrants, multiplied by the excess of the “fair market value” of the shares of Class A Common Stock (as defined in the next sentence) over the exercise price of the Warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the shares of Class A Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of Warrants, as applicable. As a result, a holder of Warrants would receive fewer shares of Class A Common Stock from such exercise than if such Warrants were exercised for cash. The Warrants may have an adverse effect on the market price of the Class A Common Stock. Upon the Closing, the Coliseum Warrants were assumed and converted into Warrants of Holdco and entitle the holders to purchase shares of Class A Common Stock. Such Warrants, when exercised, will increase the number of issued and outstanding shares of Class A Common Stock and reduce the value of the Class A Common Stock. 36 The Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with the post-Business Combination company. The Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Notwithstanding the foregoing, these provisions of the Warrant Agreement do not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in the Warrant Agreement. If any action, the subject matter of which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder. This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Holdco, which may discourage such lawsuits and result in increased costs to warrant holders to bring a lawsuit. Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and the Board. The Warrants are recognized and accounted for as derivative liabilities in accordance with ASC 815 and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of the Class A Common Stock. The guidance contained in FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”) provides that because the Warrants do not meet the criteria for equity treatment thereunder, each Warrant must be recorded as a liability. Accordingly, we classify each of the Warrants as a liability at its fair value as determined by us based upon a valuation report obtained from an independent third party valuation firm. At each reporting period (1) the accounting treatment of the Warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the Warrants is remeasured and the change in the fair value of the liability is recorded as other income (expense) in our consolidated statements of operations. Changes in the inputs and assumptions for the valuation model we use to determine the fair value of such liability may have a material impact on the estimated fair value of the embedded derivative liability. The share price of Class A Common Stock represents the primary underlying variable that will impact the value of the derivative instruments. Additional factors that may impact the value of the derivative instruments include the volatility of our stock price, discount rates and stated interest rates. As a result, our consolidated financial position and results of operations will fluctuate quarterly, based on various factors, such as the share price of the Class A Common Stock, many of which are outside of our control. In addition, we may change the underlying assumptions used in our valuation model, which could result in significant fluctuations in our results of operations. If our stock price is volatile, we expect that we will recognize non-cash gains or losses on our Warrants or any other similar derivative instruments each reporting period and that the amount of such gains or losses could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of Class A Common Stock. 37 Massachusetts law and the Holdco A&R Articles contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts. Chapter 156D, §8.06 of the Massachusetts General Laws provides that the terms of the directors of a publicly traded Massachusetts corporation must be staggered over three years. This could make it difficult to replace a majority of the board in any one year. A public corporation may opt out of the staggered board requirement by a vote of its board of directors or a two-thirds vote of each class of stock outstanding. Chapter 110F of the Massachusetts General Laws generally provides that, if a person acquires 5% or more of the stock of a Massachusetts corporation without the approval of the board of directors of that corporation, such person may not engage in certain transactions with the corporation for a period of three years following the time that person becomes a 5% shareholder, with certain exceptions. A Massachusetts corporation may elect in its articles of organization or bylaws not to be governed by Chapter 110F. Under the Massachusetts control share acquisitions statute (Chapter 110D of the Massachusetts General Laws), a person who acquires beneficial ownership of shares of stock of a corporation in a threshold amount equal to one-fifth or more but less than one-third, one-third or more but less than a majority, or a majority or more of the voting stock of the corporation, referred to as a control share acquisition, must obtain the approval of a majority of shares entitled to vote generally in the election of directors (excluding (1) any shares owned by any person acquiring or proposing to acquire beneficial ownership of shares in a control share acquisition, (2) any shares owned by any officer of the corporation and (3) any shares owned by any employee of the corporation who is also a director of the corporation) for the purpose of acquiring voting rights for the shares that such person acquires in crossing the foregoing thresholds. The Massachusetts control share acquisitions statute permits the corporation, to the extent authorized by its articles of organization or bylaws, to redeem all shares acquired by an acquiring person in a control share acquisition for fair value (which is to be determined in accordance with procedures adopted by the corporation) if (1) no control share acquisition statement is delivered by the acquiring person or (2) a control share acquisition statement has been delivered and voting rights were not authorized for such shares by the shareholders in accordance with the applicable provision of the control share acquisitions statute. If the voting rights for shares acquired in a control share acquisition are authorized by a majority of shareholders, and the acquirer has acquired beneficial ownership of a majority or more of all voting power in the election of directors, then each stockholder of record, other than the acquirer, who has not voted in favor of authorizing voting rights for the control may demand payment for his or her stock and an appraisal in accordance with M.G.L. chapter 156D. The Massachusetts control share acquisition statute permits a Massachusetts corporation to elect not to be governed by the statute’s provisions by including a provision in the corporation’s articles of organization or bylaws pursuant to which the corporation opts out of the statute. Chapter 110C of the Massachusetts General Laws (1) subjects an offeror to certain disclosure and filing requirements before such offeror can proceed with a takeover bid, defined to include any acquisition of or offer to acquire stock by which, after acquisition, the offeror would own more than 10% of the issued and outstanding equity securities of a target company and (2) provides that, if a person (together with its associates and affiliates) beneficially owns more than 5% of the stock of a Massachusetts corporation, such person may not make a takeover bid if during the preceding year such person acquired any of the subject stock with the undisclosed intent of gaining control of the corporation. The statute contains certain exceptions to these prohibitions, including if the board of directors approves the takeover bid, recommends it to the corporation’s shareholders and the terms of the takeover are furnished to shareholders. The validity of Chapter 110C has been called into questioned by a 1982 US Supreme Court decision that invalidated a similar law in the state of Illinois. The Holdco A&R Articles include an election not to be governed by the control share acquisition statute, Chapter 110D, or the business combination statute, Chapter 110F of the Massachusetts General Laws. 38 The provisions of the Holdco A&R Articles requiring exclusive forum in the courts of the Commonwealth of Massachusetts and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers. The Holdco A&R Articles provides that, to the fullest extent permitted by law, and unless Holdco consents in writing to the selection of an alternative forum, the courts of the Commonwealth of Massachusetts (or, in the event that the courts of Massachusetts does not have jurisdiction, the federal district court for the District of Massachusetts or other state courts of the Commonwealth of Massachusetts) will be the sole and exclusive forum for (i) any derivative action, suit or proceeding brought on Holdco’s behalf, (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any director, officer or stockholder of Holdco to Holdco or Holdco’s stockholders, (iii) any action, suit or proceeding arising pursuant to any provision of the MBCA or the Holdco A&R Articles or Holdco A&R Bylaws (as each may be amended from time to time), (iv) any action, suit or proceeding as to which the MBCA confers jurisdiction on the courts of the Commonwealth of Massachusetts, or (v) any action, suit or proceeding asserting a claim against Holdco or any current or former director, officer or stockholder governed by the internal affairs doctrine. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such Securities Act claims. To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, the Holdco A&R Articles provide that, unless Holdco consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act; however, there is uncertainty as to whether a court would enforce such provision, and investors cannot waive compliance with federal securities laws and the rules and regulations thereunder. Notwithstanding the foregoing, the Holdco A&R Articles provide that the exclusive forum provision will not apply to suits brought to enforce any cause of action arising under the Securities Act, any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Holdco A&R Articles also provide that, without prejudice to any other rights or remedies that we may have, each of our shareholders acknowledges that damages alone would not be an adequate remedy for any breach of the selection of the courts of the Commonwealth of Massachusetts as exclusive forum and that accordingly we shall be entitled, without proof of special damages, to the remedies of injunction, specific performance or other equitable relief for any threatened or actual breach of the selection of the courts of the Commonwealth of Massachusetts as exclusive forum. These choice of forum provisions may increase a shareholder’s cost and limit the shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, executive officers or other employees, which may have the effect of discouraging lawsuits against Holdco’s directors and officers. Any person or entity purchasing or otherwise acquiring any of our shares or other securities, whether by transfer, sale, operation of law or otherwise, shall be deemed to have notice of and have irrevocably agreed and consented to these provisions. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against Holdco, a court could find the choice of forum provisions contained in the Holdco A&R Articles to be inapplicable or unenforceable in such action. If a court were to find this provision in the Holdco A&R Articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could have adverse effect on our business and financial performance. 39 Holdco is an “emerging growth company” and a “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of the reduced reporting requirements applicable to smaller reporting companies and emerging growth companies could make the Class A Common Stock less attractive to investors. Holdco is an “emerging growth company” within the meaning of the Securities Act as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile. Further, 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 Securities Act registration statement 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. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Holdco expects not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, 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 our 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. We 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 our registration statement on Form S-4 in connection with the Business Combination, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. Additionally, Holdco is 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. Our status as a smaller reporting company is determined annually. We will continue to qualify as a smaller reporting company through the following fiscal year as long as (i) the market value of Common Stock held by non-affiliates (measured as of the end of the second quarter of the then current fiscal year) does not exceed $250 million or (ii) our annual revenues for the most recently completed fiscal year do not exceed $100 million and the market value of Common Stock held by non-affiliates (measured as of the end of the second quarter of the then current fiscal year) does not exceed $700 million. If we exceed these thresholds, we will cease to be a smaller reporting company as of the first day of the following fiscal year. We cannot predict if investors will find the Class A Common Stock less attractive if Holdco chooses to rely on any of the exemptions afforded to emerging growth companies and smaller reporting companies. If some investors find the Class A Common Stock less attractive because Holdco relies on any of these exemptions, there may be a less active trading market for the Class A Common Stock and the market price of the Class A Common Stock may be more volatile and may decline.