v3.26.1
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2026
Summary of Significant Accounting Policies [Abstract]  
Basis of Consolidation and Presentation

Basis of Consolidation and Presentation

 

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Rainwater Acquisition Corp (f.k.a Merger Sub 1) and RET. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

The unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Certain disclosures normally included in financial statements have been condensed or omitted from these unaudited condensed consolidated financial statements as they are not required for interim financial statements under GAAP and the rules of the SEC. Accordingly, these unaudited condensed consolidated financial statements do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation of the financial position, operating results and cash flows for the periods presented have been included. Operating results for the three months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026 or any future period.

 

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report Form 10-K as of December 31, 2025, as filed with the SEC on April 15, 2026, which contains the Company’s audited consolidated financial statements and notes thereto.
Use of Estimates

Use of Estimates

 

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements. Actual results could differ from those estimates.
Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at fair value and may include money market funds, U.S. Treasury and U.S. government-sponsored agency securities, corporate debt, commercial paper, and certificates of deposit. The Company had no cash equivalents as of June 30, 2026 and December 31, 2025.

Deferred Financing Costs

Deferred Financing Costs

 

The Company capitalizes costs directly associated with equity financings until such financings are consummated, at which time such costs are recorded in additional paid-in capital against the gross proceeds of the equity financings. Costs associated with the prospectus supplement to the shelf registration statement on Form S-3 filed for the ATM program (as defined in Note 4) with the SEC on June 30, 2026 were capitalized and will be reclassified to additional paid-in capital on a pro rata basis when the Company completes offerings under the shelf registration. Any remaining unamortized costs will be expensed immediately should the Company terminate the ATM program prior to raising the full amount.

 

As of June 30, 2026, no sales has been made and the full aggregate amount of approximately $3.5 million remained available for sale under the ATM program. See Note 12, Subsequent Events.

Financial Instruments

Financial Instruments

 

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying consolidated balance sheets, either because of the short-term nature of the instruments or because the instruments are recognized at fair value.
Fair Value Measurements

Fair Value Measurements

 

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

 

  ● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

 

  ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

 

  ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Financial Instruments

Derivative Financial Instruments

 

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to FASB ASC Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. The assessment considers whether the financial instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the financial instruments meet all of the requirements for equity classification under ASC 815, including whether the financial instruments are indexed to the Company’s own ordinary shares, among other conditions for equity classification.
Foreign Currency Translation and Transactions

Foreign Currency Translation and Transactions

 

The U.S. dollar is the Company’s functional currency. Transactions denominated in currency other than the Company’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency at the rates prevailing at the balance sheet date. The remeasurement of these transactions is included in the Company’s consolidated statements of operations within the general and administrative expenses.

 

During the three and six months ended June 30, 2026 and 2025, the only foreign currency transaction the Company incurred was the amount paid to its senior technology advisor in Australian Dollars. The amount of these foreign currency payments was translated into U.S. dollars.
Equipment and Construction In-Process Equipment

Equipment and Construction In-Process Equipment

 

The Company capitalizes its cost to build its rainfall ionization equipment (the “Equipment”), including materials and allocated labor costs directly attributable to the construction of the Equipment. Upon the installation of the Equipment, the Company transfers its capitalized cost from Construction in-process Equipment to Equipment. Equipment that has been completed but has not yet been installed or otherwise placed into service remains within Construction in-process Equipment and is not depreciated until transferred into Equipment and placed into service. Construction in-process Equipment includes costs for units under construction or in transit prior to installation.

 

In July 2024, the Company completed its building process for its two initial units. As of June 30, 2026, the Company completed building a total of 10 additional units. All of these units were included in the Construction in-process Equipment until they are placed in service.

 

Depreciation begins when the equipment is placed into service and is recorded on a straight-line basis over the estimated useful life of the assets, which the Company currently estimates to be 10 years. At the time of retirement or other disposition of the Equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting loss, if any, will be reflected in operations.

 

As of December 31, 2024, no Equipment was placed in service. In November 2025, two systems were placed into service and was moved from Construction in-process Equipment into Equipment. During the three and six months ended June 30, 2026, the Company recorded approximately $10,000 and $20,000 of depreciation expense related to those units in the accompanying unaudited condensed consolidated statements of operations, respectively. The remaining 10 units were not placed in service and remained included in the Construction in-process Equipment as of June 30, 2026 and December 31, 2025 in the accompanying unaudited condensed consolidated balance sheets.

 

Field operations costs represent expenses incurred in connection with the installation of the Company’s AEI systems deployed in pilot installations and evaluation projects. These costs are expensed as incurred and primarily consist of labor, travel, site preparation and related operational expenses associated with system deployment and testing. As the Company is currently in an early stage of commercial deployment, certain installation activities may occur prior to the execution of revenue-generating customer agreements.

 

Equipment, including construction in-process Equipment, as of June 30, 2026 and December 31, 2025 was comprised of the following:

 

    June 30,
2026		     December 31,
2025		  
Equipment:            
Rainfall ionization equipment and systems, in-process   $ 997,289     $ 987,805  
Rainfall ionization equipment and systems, completed     414,034       414,034  
Less: Rainfall ionization equipment and systems, accumulated depreciation     (27,603 )     (6,901 )
Net rainfall ionization equipment and systems, completed     386,431       407,133  
Total   $ 1,383,720     $ 1,394,938  
Intangible Assets

Intangible Assets

 

Recognized intangible assets have finite lives and include acquired licenses for market-ready technology and designs of weather modification and rainfall ionization equipment. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

 

Intangible assets with finite lives are amortized using the straight-line method over the estimated useful economic life. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statements of operations and in the expense category that is consistent with the function of the intangible assets.

 

Intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. These conditions may include a change in the extent or manner in which the asset is being used or a change in future operations. The Company assesses the recoverability of the carrying amount by preparing estimates of future revenue, margins, and cash flows. If the sum of expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, an impairment loss is recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value of the asset. Fair value of these assets may be determined by a variety of methodologies, including discounted cash flow models. No impairment was recorded for the three and six months ended June 30, 2026 and 2025.

 

As of June 30, 2026 and December 31, 2025, the Company did not have any intangible assets with indefinite useful lives.

 

    Weighted
Average		   Carrying Value  
    Useful Life
(Years)		   June 30,
2026		     December 31,
2025		  
Intangible assets:                
Licensed technology for weather modification   10   $ 33,000     $ 33,000  
Purchased intellectual property for rainfall ionization equipment   10     83,750       83,750  
Less:                    
Accumulated amortization         (41,836 )     (35,998 )
Total intangible assets, net       $ 74,914     $ 80,752  
Research and Development Expenses

Research and Development Expenses

 

Research and development costs are expensed as incurred. Research and development expenses consist of expenditures incurred in the discovery and development of new products, processes or services and the improvement of existing products, processes or services and the cost of conducting trials.
Leases

Leases

 

The Company follows the guidance of FASB ASC Topic 842, “Leases,” which requires an entity to recognize a right-of-use (“ROU”) asset and a lease liability for virtually all leases. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company determines the present value of lease payments utilizing its incremental borrowing rate, as the implicit rate of interest in the respective leases is not readily determinable. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be.

 

The Company has elected not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term land leases as an expense on a straight-line basis over the lease term.
Stock-based Compensation

Stock-based Compensation

 

The Company’s policy is to account for stock-based compensation expense in accordance with FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation associated with equity awards is measured at fair value upon the grant date and recognized over the requisite service period. To the extent a stock-based award is subject to performance conditions, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. Forfeitures are recognized as incurred.
Income Taxes

Income Taxes

 

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the unaudited condensed consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

 

ASC 740 prescribes a recognition threshold and a measurement attribute for the unaudited condensed consolidated financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2026 and December 31, 2025. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of June 30, 2026 and December 31, 2025. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major tax authorities since inception.

Net Loss Per Common Share

Net Loss Per Common Share

 

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods. Diluted net loss per common share is computed by giving effect to all potential shares of common stock, including restricted stock awards (“RSAs”), warrants, and stock options, to the extent dilutive. Stock options and warrants with exercise prices greater than the average market price of the Company’s common stock for the period are excluded from the calculation of diluted net loss per share as their inclusion would be anti-dilutive. For the three and six months ended June 30, 2026 and 2025, due to a net loss, all potential shares of common stock were not included in the calculation of dilutive net loss per share as their effect would have been anti-dilutive. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented.

 

The net loss per common share presented in the consolidated statements of operations is based on the following for the three and six months ended June 30, 2026 and 2025:

 

    For the three months ended June 30,  
    2026     2025  
    Class A
common
stock		     Class B
common
stock		     Class A
common
stock		     Class B
common
stock		  
Basic and diluted net loss per common share:                        
Numerator:                        
Allocation of net loss   $ (3,223,542 )   $ (23,115 )   $ (945,518 )   $ (7,253 )
                                 
Denominator:                                
Basic and diluted weighted average share outstanding     8,053,935       57,752       7,528,761       57,752  
                                 
Basic and diluted net loss per common share   $ (0.40 )   $ (0.40 )   $ (0.13 )   $ (0.13 )

 

    For the six months ended June 30,  
    2026     2025  
    Class A
common
stock		     Class B
common
stock		     Class A
common
stock		     Class B
common
stock		  
Basic and diluted net loss per common share:                        
Numerator:                        
Allocation of net loss   $ (5,070,338 )   $ (36,547 )   $ (2,416,677 )   $ (18,538 )
                                 
Denominator:                                
Basic and diluted weighted average share outstanding     8,012,108       57,752       7,528,761       57,752  
                                 
Basic and diluted net loss per common share   $ (0.63 )   $ (0.63 )   $ (0.32 )   $ (0.32 )
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

Issued in November 2024, ASU 2024-03, Disaggregation of income Statement Expenses (Subtopic 220-40), requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to unaudited condensed consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the unaudited condensed consolidated financial statements. While early adoption is permitted, the Company does not plan to adopt this standard early. This ASU will likely result in additional disclosures being included in the Company’s unaudited condensed consolidated financial statements once adopted. The Company is currently evaluating the provisions of this ASU and the impact it will have on its unaudited condensed consolidated financial statements.