Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 40
Item 1C. Cybersecurity 41
Item 2. Properties 41
Item 3. Legal Proceedings 41
Item 4. Mine Safety Disclosures 41
PART II
Item 6 [Reserved] 42
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 53
Item 8. Financial Statements and Supplementary Data 53
Item 9A. Controls and Procedures 53
Item 9B. Other Information 55
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 55
PART III
Item 10. Directors, Executive Officers and Corporate Governance 56
Item 11. Executive Compensation 62
Item 14. Principal Accountant Fees and Services 72
Part IV
Item 15. Exhibits and Financial Statement Schedules 73
SIGNATURES 75
i
EXPLANATORY NOTE
Overview
Rain Enhancement Technologies Holdco, Inc. (the “Company”
or “Holdco”) is filing this annual report on Form 10-K for the year ended December 31, 2025 (“Form 10-K”). This Form 10-K contains
the Company’s audited financial statements for the year ended December 31, 2025, and restates certain financial information
from the Affected Periods (as defined below).
Restatement Background
As previously disclosed in the Company’s Current
Report on Form 8-K filed with the SEC on April 14, 2026, the audit committee of the board of directors of the Company,
in consultation with management, determined that the Company’s previously issued unaudited condensed consolidated financial statements
contained in its (i) Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2025, filed
with the Securities and Exchange Commission (“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 (the “Affected Periods”),
should no longer be relied upon due to an error in the accounting for financed insurance premiums. The misstatement affected the presentation
of prepaid expenses and related liabilities in the consolidated balance sheets. Accordingly, the Company has concluded that a restatement
of the consolidated financial statements for the Affected Periods is required.
The Company obtained its liability insurance coverage
for directors and officers (“D&O”) effective December 31, 2024. On January 2, 2025, the Company executed an agreement
with a financing company to finance the $640,000 premium for the D&O insurance. On January 30, 2025, the down payment and first installment
was paid. The Company should have recorded the premium financing agreement as a liability, with an offset to prepaid expenses, upon its
execution. The impact of the error was that assets and liabilities were each understated by $380,800 in the first quarter Form 10-Q and
by $217,600 in the second quarter Form 10-Q. The error was identified as part of the preparation of the Company’s consolidated
financial statements for the year ended December 31, 2025.
The Company does not intend to file amendments to
the previously filed Quarterly Reports on Form 10-Q for the Affected Periods. Accordingly, investors should rely only
on the financial information and other disclosures regarding the Affected Periods in this Form 10-K or in future filings
with the SEC (as applicable), and not on any previously issued or filed reports, or other communications describing the Company’s
previously issued condensed consolidated financial statements and other related financial information covering the Affected Periods.
Except as described above, this Form 10-K does
not amend, update or change any other disclosures in the filings made for the Affected Periods. This Form 10-K should
be read in conjunction with the Company’s other filings with the SEC.
ii
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTOR SUMMARY
This
Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements for purposes of the safe harbor provisions
under the United States Private Securities Litigation Reform Act of 1995, including statements regarding, among other things, the plans,
strategies and prospects, both business and financial, of Rain Enhancement Technologies Holdco, Inc. (the “Company” or “Holdco”)
and its wholly-owned subsidiary Rain Enhancement Technologies, Inc. (“RET”). These statements are based on the beliefs and
assumptions, whether or not identified in this Annual Report, of the management of the Company. Although the Company believes that its
plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, the Company cannot assure
you that it will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks,
uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed
future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements
may be preceded by, followed by or include the words “anticipate,” “believe,” “could,” “continue,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,”
“possible,” “potential,” “project,” “scheduled,” “seek,” “should,”
“will” or similar expressions, but the absence of these words does not mean that a statement is not forward-looking. These
forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that
may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, the following risks, uncertainties and other factors:
● general economic uncertainty;
● the volatility of currency exchange rates;
● RET’s ability to manage growth;
● risks related to the rollout of RET’s business and expansion strategy;
● the effects of competition on RET’s future business;
● changes in personnel and ability to recruit and retain qualified personnel;
iii
● the Company’s revenues and results of operations may fluctuate significantly;
Forward-looking
statements are provided for illustrative purposes only and are not guarantees of performance. You should not put undue reliance on these
statements which speak only as of the date hereof. You should understand that the factors discussed under the heading “Risk
Factors” and elsewhere in this Annual Report, could affect the future results of the Company, and could cause those results
or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this Annual Report.
In
addition, the risks described under the heading “Risk Factors” are not exhaustive. Other sections of this Annual Report
describe additional factors that could adversely affect the businesses, financial conditions, or results of operations of the Company.
New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact
of all such risk factors on the businesses of the Company, or the extent to which any factor or combination of factors may cause actual
results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to the
Company or persons acting on their behalf are expressly qualified in their entirety by the foregoing cautionary statements. The Company
undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
In
addition, this Annual Report contains statements of belief and similar statements that reflect the beliefs and opinions of the Company
on the relevant subject. These statements are based upon information available to the Company as of the date of this Annual Report, and
while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete,
and statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially
available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
Summary
Risk Factors
Our
business is subject to numerous risks and uncertainties, including those highlighted in the section entitled “Risk Factors”,
that represent challenges that we face in connection with the successful implementation of our strategy and the growth of our business.
In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business
strategy, which could cause a decline in the price of shares of our Class A Common Stock or Warrants and result in a loss of all or a
portion of your investment:
Risks
Relating to RET’s Business and Industry
iv
● RET may not manage growth effectively.
● RET may be harmed by competing technologies.
v
Risks
Relating to Ownership of Holdco Securities
vi
Item
1. Description of Business
Overview
Rain
Enhancement Technologies, Inc. (“RET”) was founded to provide the world with reliable access to water, one of life’s
most important resources. To achieve this mission, RET aims to develop, manufacture and commercialize atmospheric enhancement by ionization
(“AEI”) technology. RET was incorporated in Delaware on November 10, 2022, and was later converted into a Massachusetts corporation
on April 8, 2024. As described in more detail in the Company’s Annual Report for fiscal year 2024, RET is a wholly-owned subsidiary
of Holdco. Holdco began operations as a public company on January 2, 2025 pursuant to a business combination with Coliseum Acquisition
Corp, a Cayman Islands exempted company, RET and certain other companies formed for purposes of the business combination that closed
on December 31, 2024 (“Business Combination”).
Today,
water scarcity issues are one of the world’s foremost concerns. According to the World Wildlife Fund, 1.1 billion people globally
lack access to water for basic necessities, and, according to the American Geophysical Union, 80% of global croplands are expected to
experience water scarcity by 2050, threatening agricultural yields.
RET
is combining specialized expertise and personnel to develop, improve and commercialize AEI technology that enhances rainfall when conditions
are appropriate in the atmosphere. We are building our proprietary Weather Enhancement Technology Array (“WETA”) platform
with software, meteorology, hardware, product design and operations to make rain and snowfall generation more dependable. We aim to improve
the existing rain and snowfall generation technologies by introducing robust measurement tools, including automation technology, rain
gauges, and weather stations, to more precisely quantify system performance and potential water resource impacts.
RET
aims to develop, invent, improve, manufacture, commercialize and operate technologies that enhance rainfall and elevate water reserves.
We believe our technology has the potential to enhance rain and snowfall and increase the availability of freshwater resources that may
ultimately contribute to potable water supplies. The projected cost (not including land costs, which are still being determined) and
energy requirements for our technology are modest on a per gallon basis for communities and ecosystems, estimated to be $0.10 per cubic
meter, less than other alternative technologies. We aim to enhance agricultural, industrial and household water supplies for all the
communities in which we operate by developing technology and services to serve governmental and commercial clients’ needs in creating
water resiliency and abundancy.
RET
expects to expand its offerings to additional atmospheric and water-related technologies, such as fog mitigation and other water generation
or water management solutions, where complementary technologies may enhance RET’s ability to address water scarcity challenges.
RET’s target client segments include governmental entities, large landowners, infrastructure operators, and commercial enterprises
seeking to improve water availability, enhance snowfall or mitigate weather-related impacts.
RET’s
business model is based on a unique one-to-many community-centric business model. The numerous client segments to which we market include
large landowners including agriculture, resorts, energy and transportation companies, insurance and reinsurance companies, decarbonization
initiatives of major corporations and philanthropists, supranational governmental organizations, and city, county, state, federal and
non-U.S. governments. In addition, we aim to leverage our offerings and enhance our potential market position by exploring ways to expand
our future water generation products through licensing and acting as a channel partner for additional water generation technologies.
Since
the beginning of 2025 RET has created new marketing and sales programs, identified and contacted potential customers in core market segments,
expanded our contacts with rain enhancement experts who could endorse our technology and introduce us into existing projects looking
to address lack of rainfall, and organized our production of systems to serve expected demand.
In
October 2025, RET announced preliminary field observations from a fog-mitigation pilot conducted in Australia using our WETA platform.
Initial observations suggested ionization may influence fog dissipation under certain atmospheric conditions. Based on these results,
we plan to conduct expanded, instrumented pilot programs in 2026 in Oregon, California, Utah and Colorado to further evaluate performance
across different fog types and use cases, and we are also exploring the potential application of our technology to snow enhancement.
These activities remain in the research and development stage and are not expected to generate material revenue until validation and
commercialization.
In
November 2025, RET placed its first two fully built rain generation systems into services using its WETA platform in the United States.
Early operational observations from these installations have indicated preliminary positive signals consistent with management’s
expectations regarding rain and snowfall enhancement under suitable atmospheric conditions. These installations are part of our broader
effort to validate our technology in real-world environments and to support future commercialization of rainfall enhancement services.
At this stage, we are continuing to analyze the data collected and have not yet completed sufficient validation to determine the extent
to which the system may influence precipitation under different atmospheric conditions.
1
As
of December 31, 2025, we had completed construction of seven additional WETA systems that had not yet been placed into service and were
being stored pending deployment or installation as additional pilot or commercial opportunities develop.
We
have a limited operating history and our ability to generate revenue sufficient to achieve profitability will depend on our ability to
validate, commercialize and deploy AEI technology and execute our broader business strategy.
RET’s
website can be found at https://rainenhancement.com/. The references to the SEC’s website and our website are inactive textual
references only, and information contained therein or connected thereto is not incorporated into this Annual Report.
RET’s
Strategy
RET’s
mission is to provide the world with reliable access to water at a time when water scarcity is one of the world’s foremost concerns.
RET intends to fulfill its mission by:
Industry
Background: Atmospheric Enhancement by Ionization
History
and Development of Core Technology
RET’s
AEI platform will capitalize on approximately 70 years of technological efforts beginning in the 1950s at one of the largest industrial
conglomerates in the United States. Ionization rainfall generation technology has been used for fog dissipation during the cold war,
as well as rainfall generation and hail reduction in a number of locales over the decades. Weather forecasting models, computing power
plus ground-based radar networks have allowed weather forecasting to improve exponentially over the past decade. Cloud condensation nuclei
and the water cycle are now broadly accepted science. Water scarcity has unfortunately reached critical levels throughout North America,
Asia, Africa and Europe. Federal and local governments, and Fortune 500 companies all recognize the urgency of action as water becomes
a social justice issue.
2
Traditional
cloudseeding involves the use of chemicals dispensed from aircraft at precise moments of raincloud formation, creating potential risks
(such as environmental concerns and unintended downstream consequences, for example, small concentrations of chemical substances affecting
cloudseeding-produced precipitation). Desalination plants offer an alternative technology for increasing the supply of potable water
but such process is highly energy intensive, expensive and requires transportation from the coast to inland clients.
AEI
technology allows for lower operating costs at scale and provides a method that does not use chemicals in the rain and snowfall generation
process. Both chemical and ionic approaches have been utilized for weather modification, including rainfall generation, snowpack augmentation,
hail reduction, and cloud dispersal.
Historically,
piloted aircraft (e.g. cropping) or (recently) drones delivered chemicals into clouds at the right time in order to enhance rainfall.
However, ionized AEI technology is ground-based, capitalizing on natural updraft airflow. Based on third party trials in Oman, the operating
range of RET’s AEI equipment is expected to be considerable, as it will be reliant upon natural updrafts to carry the ions into
clouds with sufficient water vapor to condense and form rain droplets. Such third-party testing has demonstrated that the equipment’s
reliance on natural updrafts would result in it being powered by a minimal source of energy, approximately 600kWh annually based on 100
hours of operation per month, which is approximately the amount required in one year by an average household oven. Moreover, as the technology
is developed, RET intends to continue working on ways to maintain low and efficient energy usage.
Ionized
AEI technology may enhance the amount and possibility of rainfall when conditions are appropriate in the atmosphere and cloud formation
is underway in an approximately 40-mile downwind area, according to third-party testing. The third-party experiments in Oman, using ionizers
based on existing rainfall generation technology, indicate that the majority of the rainfall generation occurs within approximately 60
miles of the ground-based ionizers. This range allows for placement of the equipment to optimize for the cost of land leases, as well
as predominant wind flows.
By
installing multiple systems at appropriate ranges away from the desired impact area, RET’s approach would allow for enhanced rainfall
with high level, broad-based targeting, by synchronizing the ionization on-off with increasingly accurate weather information and forecasting.
RET is in the process of partnering with ground-based radars and satellite imaging for optimal and powerful real time weather forecasting
data access.
In
addition, RET expects that its systems will be able to be manufactured and installed in approximately four to six months, which differs
from the desalination process that generally takes several years to obtain permits and build associated energy generation. RET believes
that the expected rapid time-to-market and anticipated use of off-grid solar and wind power systems will provide an advantage in addressing
water scarcity in the coming decades.
Initial
installation would be more costly than the cloudseeding approaches and requires a small amount of semi-permanent land to operate from.
However, RET’s system would be able to operate continually up to 365 days per year, and key post-installation costs would be modest,
including electricity and monitoring. Once installed, the system is expected to use approximately 600 kwH of energy consumption per year.
Reliance on natural updrafts would limit targeting but would minimize energy use and avoid using chemicals in the rain enhancement process.
Ultimately, some of the water that condenses due to RET’s operation will come out of nearby oceans per the established “water
cycle”.
In
Oman, over a six-year randomized third-party trial from 2013 to 2018, an ionization rainfall generation system based on existing technology
generated an average of approximately 16% of additional rainfall according to results published by the National Institute for Applied
Statistics Research Australia (“NIASRA”), a third-party research organization, in the International Statistical Review. Three
years after this trial occurred, news reporters in Oman continued to report enhanced rainfall as compared to prior years when the hardware
was not operating. In addition, trials performed by third-party individuals funded by the National Key Research and Development Plan
of China and the National Natural Science Foundation of China in the Wushaoling and Liupan Mountains in China also indicate that an ionization
rainfall generation system helped increase rainfall in the area by 20%. RET believes significant improvements from software, synchronization
with real-time weather, and broader placement would lead to even greater rain and snowfall generation. Furthermore, RET believes it can
create an AEI team that will be well capitalized, with the full suite of expertise required, to commercialize and scale ionization rain
and snowfall generation.
3
In November 2025, RET
commenced operation of our WETA installation in Grand County, Utah, including operations intended to evaluate potential snow enhancement.
We have observed preliminary winter-season observations indicating measurable differences in localized precipitation and/or snowpack
at certain times and locations that are directionally consistent with our modeled impact area; however, these observations remain preliminary,
may vary materially by storm type and atmospheric conditions, and do not yet constitute statistically validated evidence of performance.
We expect continued operations and expanded data collection across the 2025–2026 winter season to increase the observational dataset,
evaluate enhancement magnitude under varying conditions, and improve operating strategies
Commercialization
and Scale of AEI Technology
AEI
technology has shown promise in third-party trials, and thus commercialization and scale of this technology will require a strong go-to-market
and operations infrastructure to show the market the rain enhancement capacities of these systems. The first phase of commercialization
has included leveraging RET’s management and Board to develop global sales organizational structures and methodologies, as well
as building operations, sales, marketing and customer service functions to accelerate client traction. RET also intends to create operating
momentum by achieving enhanced rainfall in the initial systems that it deploys, in order to demonstrate the viability of this technology
to the market. It is anticipated that this will enable RET to expand into existing client bases, create additional client verticals,
and drive future global expansion. The second phase of commercialization and scale of AEI technology is expected to involve investment
in additional technologies to optimize the performance of the systems. This includes investment and development of weather forecasting
models, computing power, data collection tools and ground-based radar networks, among other things, in order to improve RET’s weather
forecasting abilities. Supporting growth at scale will require manufacturing optimizations, bill of materials value engineering, and
enhancing software controls and machine learning to automate the operational and data collecting processes.
For
more details regarding the steps that RET’s management team believe are necessary to commercialize and scale ionization rain enhancement
technology, please see “RET Management’s Discussion and Analysis of Financial Condition and Results of Operations - Plan
of Operations.”
Trial
Results Based on Existing Third-Party Technology
There
is a void for institutionally supported analysis for quantifying rain and snowfall generation from AEI technology. Previous rainfall
generation trials by third parties relied on comparisons of trial results with long-term averages of rainfall on a given catchment. However,
the high variability of rainfall data has hindered conclusive demonstrations of efficacy using such techniques. Demonstrating efficacy,
however, will rely on statistical evaluation of data obtained while operating the technology under real-world scenarios.
In
the third-party trials for previously existing rainfall generation technology in Oman, the NIASRA employed statistical estimation methodology
estimating the correlation between observations of rainfall at different locations at specific time intervals to make concurrent predictions
of rainfall in a target area with both a control model and effects model to assess the ground-based ionization technology performance.
The NIASRA concluded in these third-party trials that the methodology used is well instrumented and scientifically rigorous, and that
it has the potential to increase rain and snowfall. Third-party trials in Oman have indicated a high probability of rain generation if
AEI technology is used.
In
2022, the model-based approach used in these third-party trials was noted in the Journal of Royal Statistical Society and the International
Statistical Review. The results in these third-party trials demonstrate the plausible practical effects of and plausible analysis methods
for the technology that RET intends to develop.
RET’s
Business Overview
AEI
Market Opportunity
The global water crisis
has massive economic implications. Global health organizations estimate that water scarcity in some regions could impact GDP by up to
6% with $260 billion lost globally each year due to lack of basic water and sanitation. In a December 2025 Insight Report by the World
Economic Forum current global investment in water infrastructure was stated to be approximately €326 billion (approximately $377
billion as of March 20, 2026), with an estimated cumulative amount of €11.4 trillion (approximately $13.2 trillion as of March 20,
2026) through 2040 needed “... to deliver equitable, resilient, sustainable and technologically advanced drinking water and
sanitation systems for all [people]...” RET’s economic impact is intertwined with the number of people it can help get
access to water they would have otherwise not received, allowing it to capture a significant portion of the impending water spend.
4
Unlike
with the price of fossil fuel commodities, where governments can step in to shield consumers from volatility, water cannot easily be
manufactured at large scale. For instance, due to droughts there are cities in California’s Central Valley whose access to water
is severely limited, with populations relying upon emergency bottled water handouts to survive. Water tables continue to decline across
the West, South and Southwest of the United States to near-emergency levels, and the price of water has climbed.
RET
believes its ionization technology can be used to influence fog dissipation and is actively researching whether its technology can remove
harmful airborne pollution from the atmosphere. If successful, these advances would open up additional markets such as airports, railways,
and highway systems.
RET’s
WETA platform is expected to create large new markets due to its low energy consumption, ease of operation, and large area impact. With
a low entry price for access, demand from all client segments is anticipated to grow strongly, indicated by both initial client data
points as well as the past decade of trials in Oman. RET’s planned technological approach of ground-based ionization stations is
expected to allow it to implement a one-to-many community-centric business model, as described above under “RET’s Strategy.”
Numerous clients can be sold services off of the same hardware platform. RET intends to create new markets to commercialize and scale
ionization rain and snowfall generation by bringing down the cost of its technology, reducing friction to access, and continually improving
its technology and capabilities.
RET
seeks to develop commercial applications for rainfall enhancement technologies. RET has begun its sales focus in the United States with
the intent to expand globally and take advantage of new opportunities that may present themselves in any region. By setting up its AEI
systems in areas with many constituent potential clients, it expects to be able to sell up to a dozen segments of user benefits from
the same hardware array. Small improvements in annual rainfall make significant differences to industries such as insurance, agriculture
and resorts.
RET
recognizes that increasing the water table, potable water reserves, and greening urban and suburban areas are another way to attract
clients, while making a positive operating contribution with as few as one client per site. RET is targeting commercial clients in each
operating area, and adding potential governmental and philanthropic clients as the business develops.
RET’s
Business Model
RET’s
strategy consists primarily of a focus on ground-based ionization stations to implement a one-to-many community-centric business model,
as described above under “RET’s Strategy”.
For
its initial enhanced rainfall business, RET has invested and plans to invest further in the development and improvement of ground-based
ionization stations, hardware platforms and technologies to enable enhanced rainfall. Leveraging its extensive design, simulation and
prototyping capability, it intends to set up its AEI systems in areas with many constituent potential clients, allowing it to sell its
technology to numerous segments of users who will all benefit from the same hardware array. Small increases in annual rainfall make significant
differences to industries such as insurance, agriculture and resorts, and RET aims to partner with leaders throughout these diverse client
segments to develop, demonstrate, optimize, commercialize and license its technologies.
To
increase the likelihood that its technologies are adopted, RET is leading with the development of its technology and will subsequently
determine reasonable royalties. Successful negotiation of these royalties is generally dependent on:
● Explaining the value proposition over existing or alternative technologies;
● Demonstrating its technology in pilot projects;
● Explaining the manufacturability of the technologies;
● Countering bias against externally developed solutions; and
● Providing technical and market data supporting our products.
5
AEI
technology integrates several advanced engineering and scientific disciplines, and the resulting products are of interest in a broad
variety of application domains. As such, RET continues its ongoing development of strong technical and business relationships with both
current and prospective clients across diverse industries. Those client relationships provide not only a source of ongoing and growing
revenue but also insights into industry trends that will help RET build desirable products. For instance, RET plans to pioneer new technologies
for image processing and object recognition, while staying apprised of potentially relevant technical advances from elsewhere.
RET’s business
model will allow for affordable installation and manufacturing costs. We expect these initial administrative, setup and manufacturing
costs to include, among other expenses: power systems, control systems, all the fiber-reinforced plastic and steel work, shipping and
inspections. This entry level installation 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.
RET
intends to develop and improve software and machine learning control systems to provide more specific area targeting, as well as more
precise operating timing. We believe that RET’s prospective partnerships for proprietary radar and weather data will give it client
segmentation and pricing opportunities. Wherever possible RET will endeavor to strike multi-year WaaS (“water as a service”)-like
client contracts.
Commercialization
of Water Technology
RET
has pulled together ingredients to commercialize and scale ionization rain and snowfall generation. RET also intends to acquire and license
adjacent technologies that expand its solutions offering to clients. Its management has experience scaling businesses over the prior
decades. R&D leadership and technology is important; however, the RET team knows that operations, sales, marketing, and client service
are equally vital to drive product-market fit at scale.
RET’s
management team has experience scaling technology-driven businesses and recognizes that successful commercialization requires more than
research and development. Accordingly, we are focused on building operational, sales, and customer engagement capabilities alongside
continued technology development.
To
support these efforts, RET has recruited and retained consultants and advisors with expertise in meteorology, atmospheric science, engineering,
and business development. These individuals provide guidance and support on research, operational deployment, field implementation, marketing,
sales, and commercialization strategy as we advance our rain and snowfall enhancement platform. RET also maintains industry relationships
intended to support business development and partnership opportunities as it expands engagement with governmental, agricultural, and
commercial clients.
RET
recognizes that long-term success is about client satisfaction and delivering solution efficacy and reliability. Manufacturing optimization,
build-of-material value engineering, and the generation of software controls and machine learning are all expected to play vital roles
in driving sustained and profitable growth. RET is also negotiating partnerships with global manufacturing and supply-chain firms to
ensure the smooth rollout of its AEI systems worldwide.
As
part of its commercial strategy, RET has deployed two AEI systems in the United States and continues to monitor operational performance
and collect meteorological data from these installations. We expect that insights gained from these early deployments will support further
refinement of our technology and inform future commercial opportunities. RET continues to evaluate potential collaborations with property
owners, including resorts and other large landholders worldwide, where improved water availability may provide operational and environmental
benefits.
Manufacturing
During
2025, RET manufactured ten additional WETA systems, bringing the total number of systems manufactured to twelve. As of December 31, 2025,
two systems had been installed and placed into service in the United States, and seven additional systems had been completed and were
being stored pending deployment. The remaining three systems were completed and delivered to the United States in March 2026. Additionally,
three systems are currently under construction.
6
RET’s
apparatus design is optimized to be modular, resulting in a high level of consistency and predictability with each build. The weight
is under 2,500 kilograms (5,600 pounds) per system when packaged into shipping crates. Each system consists of 10 crates to facilitate
transportation into remote areas. Installation can be completed completely manually using labor only if necessary, but has been shown
to be more quickly executed using skid steer loaders and small excavators. Cranes and similar equipment are not required.
The
power necessary to operate the system is generated by off-grid solar with the option of backup generators. A 3600W solar array provides
sufficient energy feed into the batteries for most sites.
Establishment
of a WETA system can be completed in under four days of the equipment being available at the site. This includes putting the system into
operation via remote telemetry or local automatic modes.
The
systems are pre-assembled by RET prior to packaging for shipping to customers to ensure all components fit, meet quality assurance requirements
and form a complete “ready-to-install” system in kit format.
RET
sources the materials required to operate its products and intends to maintain a small inventory in its own leased warehouse, with current
systems being stored in a shared facility.
RET
works with clients and their general contractor partners for installation plans for each device to suit the final selected site.
Clients
RET’s
business model is based on a unique one-to-many community centric business model. Initially, we have focused primarily on geographic
areas in North America and Western Europe, before further global expansion. The various client segments where RET intends to sell to
include, among others:
5. Insurance and reinsurance companies (i.e., fire prevention);
7. Supranational governmental organizations headquartered in the US and EU;
7
Large
landowners have the benefit of controlling the land for AEI equipment deployment and its measurement using automated rain gauges, as
well as benefitting from the entire rain and snowfall generation. Large landowners who are willing to provide positive externalities
to land adjacent to them are anticipated as early adopters of RET’s services.
We
think energy and transportation companies will also benefit in a very binary manner from enhanced rainfall, as they often cannot operate
without sufficient water levels. RET’s business plan contemplates that these companies will be willing to pay an annual sum to
subscribe to and utilize RET’s services to maximize their operational capacities.
In
another segment, we plan to enter into arrangements (which currently do not exist) that will allow insurance premiums to be reduced for
homeowners in regions taking active measures to enhance rainfall. The added benefit to such homeowners comes in the form of decarbonization
contribution, habitat expansion and greening.
Governments
are a typically slower sales cycle, however at all levels are capable of including an annual allowance for rain and snowfall generation,
which we expect would be a longstanding budget item once adopted.
Supranational
organizations such as the World Bank and IFC have the ability to commit to sizable programs for improving water reserves, the water table
and potable water (although there can be no assurances that they will do so). Both developed and emerging markets are in need of RET’s
technology and we anticipate significant traction in this category.
Sales
and Marketing
RET’s
sales activities focus primarily on rain and snow enhancement services to public clients and commercial markets, as well as water conservation
consulting and solutions. Over time, RET expects to expand its offerings to additional atmospheric and water-related technologies, such
as fog mitigation, smog and air pollution, and other water generation or water management solutions, where complementary technologies
may enhance RET’s ability to address water scarcity challenges. RET’s target client segments include governmental entities,
large landowners, infrastructure operators, and commercial enterprises seeking to improve water availability or mitigate weather-related
impacts. Product marketing focuses on identifying the clients’ needs and product requirements and supports the development of all
of its technologies throughout the development cycle, including preparing materials and technical information to assist with adoption
of the technologies across its target markets.
Principal
Factors Affecting Barriers to Entry & Competitive Landscape
Barriers
to Entry
There
are a number of barriers to entry in the AEI industry, including, among others: (a) key technical personnel, (b) scientific expertise
to drive development and improvements of technology (including software and machine learning automation), (c) client relationships/contracts,
(d) manufacturing and supply chain efficiencies, (e) key sales & marketing personnel, and (f) brand awareness. Another barrier to
entry involves market expansion, specifically with respect to expanding our services from initial trials into clients including, among
others, commercial clients, land developers and the agricultural sector.
Competitive
Position
The
operating competitive landscape has minimal to no brand awareness amongst clients and is comprised of primarily players in the following
categories: (i) mature industrial/chemicals/wastewater, (ii) cloudseeding startups, (iii) adjacent water startups, and (iv) existing
governmental operations. As with every vibrant pioneering technology ecosystem, several startups in the water technology sector have
ceased operating over the years, however we also expect to see other competing technologies emerge.
The
capital raised from the Business Combination has provided RET with some of the funding necessary to drive growth both organically and
inorganically. We plan to acquire and/or license adjacent technologies and add them to the product portfolio of RET. We intend to implement
best practices for structuring compensation to help retain all key technical and client-facing talent.
8
We
anticipate that being the first publicly traded rain and snowfall generation firm can facilitate growth in client momentum, due to the
enhanced visibility and higher caliber of employees RET can attract with liquid equity instruments. RET expects that having an acquisition
currency will also allow it to outcompete private competitor companies in terms of inorganic growth opportunities.
Holdco’s
listing on Nasdaq is a considerable advantage over smaller private companies in the water technology sphere. RET also aims to retain
the advantages of a nimbler startup over long-established industrial players. Moving quickly to capitalize on innovations and unlock
new client demand is expected to be a hallmark of RET’s approach given its team’s track record.
RET
has begun operations with a clear eye on value engineering, manufacturing scale and optimizations, as well as a world class software
and machine learning team. RET is currently developing a near-shore supply chain to minimize lead time and shorten turnaround times for
new innovation.
While
the current iteration of the AEI systems that RET initially plans to install will not require additional R&D, as they have been proven
to work in third-party trials, RET intends to invest in significant research and development in order to commercialize and scale the
technology. In particular, the current systems require local support personnel to operate the devices, and require manual reading of
rain gauges and manual analysis of the statistics derived from the weather data. Accordingly, in order to scale and commercialize the
business, RET plans to engage in R&D to automate these functions, as well as to develop and adopt new ways of delivering the ionization
aerosols from the systems to allow the technology to be deployed in the widest possible field conditions. For more information on the
steps, technological developments and improvements that RET will need to make to the rain enhancement technology in order to bring advancements
to the systems to market, please see “RET Management’s Discussion and Analysis of Financial Condition and Results of Operations”,
in particular the sub-headers “- Investment in Research and Development (R&D), Innovation and Technology”,
“- Development and Enhancement of Proprietary Technology”, and “- Plan of Operations”.
Integrating
the latest weather forecast techniques and data, along with automated control systems and water gauge measurements will enable continual
improvement of any existing generation of hardware in the field. We are currently engaged in trials that include charges for the services
provided.
RET’s
business model will be focused on achieving long-term client lock-in through SaaS-like, multi-annual contracts.
Moreover,
there are several approaches to rain and snowfall generation besides RET’s approach. There are companies developing and commercializing
chemical-based cloudseeding technologies. These companies utilize traditional cloudseeding technology, which involves the use of chemicals
such as silver iodide, potassium iodide and dry ice that are dispensed from aircrafts at precise moments of raincloud formation creating
potential risks and unintended consequences. Compared to the traditional chemical cloudseeding approach, RET’s atmospheric enhancement
by ionization approach does not use chemicals in the rain enhancement process. Moreover, we think that RET’s AEI technologies could
enjoy lower operating costs than traditional chemical cloudseeding. Lastly, the difference between RET and these companies lies in the
expertise in operations and leading team of water entrepreneurs that provides RET with a competitive advantage.
Sources
and Uses of Liquidity Following the Business Combination
As described in more
detail in the Company’s Annual Report for fiscal year 2024, the Business Combination between Holdco, RET, Coliseum, and Merger
Sub closed on December 31, 2024. During 2025, the Company funded its operations primarily through proceeds received from the PIPE subscriptions,
which were fully collected in February 2025, and borrowings under the related-party loan agreement (the “Loan Agreement”)
from an affiliate of the Company’s Chairman, as described below.
9
On December 30, 2024, the Company entered into
the Loan Agreement with RHY pursuant to which RHY agreed to provide the Company with a line of credit of up to $7.0 million. In connection
with the Loan Agreement, approximately $3.1 million of prior loans and advances owed to Mr. You and his affiliates were rolled over into
the Loan Agreement and are treated as loans outstanding thereunder. As of December 31, 2025, the Company had approximately $9.1 million
outstanding under the Loan Agreement, consisting of approximately $3.1 million related to rollover amounts assumed in connection with
the Business Combination and approximately $6.0 million of additional borrowings made during 2025. On March 11, 2026, the compensation
committee (the “Compensation Committee”) of our board of directors (the “Board”), and our Board, approved repayment
of the amounts due under the Loan Agreement of up to 30% of any amount received by the Company from any potential future capital raise
net of any underwriting, legal, and accounting fees and related costs. On March 24, 2026, the Audit Committee and the Board approved
an increase in the amount that could be borrowed under the Loan Agreement from $7,000,000 to $10,000,000. The Company and RHY entered
into an amendment to the Loan Agreement reflecting such increase, effective as of March 31, 2026. The Company may seek additional sources
of capital, but there can be no assurance that additional financing will be available to the Company on favorable terms or at all. See
“Risk Factors – the Company 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.”
Proceeds
received from the Business Combination, PIPE financing, and borrowings under the Loan Agreement have been used primarily to support RET’s
operations and the continued development and commercialization of its AEI platform. These uses include operational staffing, system manufacturing
and deployment, research and development activities, and general corporate expenses.
RET
expects that its current liquidity, together with available borrowings under the Loan Agreement and potential additional financing, will
be used to support ongoing operations and commercialization activities. However, RET may require additional capital to execute its business
plan and respond to future opportunities or unforeseen circumstances.
For
more information, see “RET Management’s Discussion and Analysis of Financial Condition and Results of Operations - Plan
of Operations - Summary of Milestones and Material Cash Requirements.”
Government
and Other Regulations
RET
expects its technology will be subject to certain environmental and governmental regulations. Certain jurisdictions have codified regulations
around cloudseeding that may subject RET’s rain and snowfall generation platforms to certain licensing and permitting requirements.
For instance, the Texas Department of Licensing and Regulation regulates the use of cloudseeding through a licensing and permitting procedure
codified in the Texas Weather Modification Act. In addition, RET has successfully completed the permit approval process to use its AEI
technology platform in Colorado and Utah. Furthermore, the use of certain materials for seeding purposes will likely be subject to governmental
and other regulations. For more information, see “Risk Factors - Risks Relating to Regulatory and Legal Matters”.
Research
& Development
RET’s
research and development groups will work closely with its sales and marketing groups, as well as its clients and partners, to bring
its products to market in a timely, high-quality and cost-efficient manner.
RET
has a roadmap of technological developments and improvements it plans to undertake, including optimizing the electrical and mechanical
components to maximize the number of ions produced, improving the design for cost, installation, and attaining the maximum number of
ions aloft and directionally into the cloud layer. RET also intends to develop and improve software and machine learning control systems
to provide more specific area targeting, as well as more precise operating timing. We are developing a roadmap of software features to
optimize power consumption, improve serviceability and reduce site visits, as well as to integrate with third party weather-data sources.
In
its atmospheric enhancement by ionization business, RET will invest in world-class R&D supported by strong relationships. RET aims
to offer advantages in generation rainfall technology, providing distinctive features, low-energy technology, ease of operation and large
area impact to its clients. RET further intends to license and act as a channel partner in additional water generation technologies.
RET intends to license these technologies and introduce them to its already established clients and prospective clients. In addition,
RET is seeking to partner with organizations impacted by fog to further pilot and document effects of WETA ionization on radiation fog
as a tool for improving visibility and reducing the impacts of fog on commercial and transportation activities.
10
Intellectual
Property
RET
is focused on building a strong scientific roadmap to underpin an analytical understanding with meaningful predictive power of its AEI
platform. The principles have been observed for many decades, however RET expects it will be the first company to fully control the plasma
and fluid dynamics underpinning rain and snowfall generation. RET has also obtained a worldwide, perpetual, exclusive license under certain
patents from Dr. Theodore Anderson, a distinguished plasma physicist and author of Plasma Antennas. These patents relate
to plasma antenna technology and are not central to the Company’s rainfall enhancement platform. RET intends to continue evaluating
opportunities to expand and strengthen its IP portfolio in areas relevant to its technology and operations.
RET
intends to evaluate intellectual property portfolios for purchase in the fields of water generation technology, scientific validation