Note 9 — Fair Value Measurements

 

Financial liabilities measured at fair value during the periods on a recurring basis consisted of the following as of December 31, 2025 and 2024:

 

December 31, 2025

 

   Fair Value Hierarchy     
   Level 1   Level 2   Level 3   Total 
Financial liabilities:                
Warrant liabilities – Public Warrants $-  $1,250,000  $-  $1,250,000 
Shortfall payment liability  -   -   20,636   20,636 
Total financial liabilities $-  $1,250,000  $20,636  $1,270,636 

 

December 31, 2024

 

   Fair Value Hierarchy     
   Level 1   Level 2   Level 3   Total 
Financial liabilities:                
Warrant liabilities – Public Warrants $-  $350,000  $-  $350,000 
Shortfall payment liability  -   -   20,636   20,636 
Total financial liabilities $-  $350,000  $20,636  $370,636 

 

The Warrants are listed on the Nasdaq under the ticker “RAINW”. As of December 31, 2025 and 2024, the fair value measurements for the Warrants were classified as Level 2 due to low trading volume.

 

During the years ended December 31, 2025 and 2024, there were no transfers between levels of the fair value hierarchy.

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Historical Timeline

Fiscal YearFiled
2025Apr 15, 2026Showing above
2024Apr 16, 2025

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.