UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
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As of October 10, 2025, there were
TABLE OF CONTENTS
| PART I — FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 19 |
| Item 4. | Controls and Procedures | 19 |
| PART II — OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 20 |
| Item 1A. | Risk Factors | 20 |
| Item 2. | Unregistered Sales of Equity Securities, and Use of Proceeds | 20 |
| Item 3. | Defaults Upon Senior Securities | 20 |
| Item 4. | Mine Safety Disclosures | 20 |
| Item 5. | Other Information | 20 |
| Item 6. | Exhibits | 21 |
| SIGNATURES | 22 | |
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31, 2025 AND MAY 31, 2025
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT SHARE AMOUNTS; UNAUDITED
| August 31, 2025 | May 31, 2025 | |||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ||||||||
| Total current assets | ||||||||
| Operating lease assets | ||||||||
| Property and equipment, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders’ Equity: | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Warrant liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total Liabilities | ||||||||
| Shareholders’ Equity (Deficit): | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity (Deficit) | ||||||||
| Total Liabilities and Shareholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT PER SHARE AMOUNTS; UNAUDITED
| For the three months ended | ||||||||
| August 31, 2025 | August 31, 2024 | |||||||
| Operating expenses | ||||||||
| Research and development | $ | $ | ||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expenses (income) | ( | ) | ||||||
| Interest expense (income), net | ( | ) | ( | ) | ||||
| Change in fair value of Warrants | ||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||
| Total other expenses | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Basis and diluted weighted average Class A ordinary shares outstanding | ||||||||
| Basic and diluted net loss per Class A ordinary share | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT SHARE AMOUNTS; UNAUDITED
| Class A Ordinary Shares | Preferred Shares | Additional Paid-in | Total Shareholders’ Equity | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance at May 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Stock-based Compensation | — | — | ||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Incentive Shares Issued | — | |||||||||||||||||||||||||||
| Warrant Exercises | — | |||||||||||||||||||||||||||
| Class A Ordinary Shares Issued under Sales Agreement | — | |||||||||||||||||||||||||||
| Balance at August 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Class A Ordinary Shares | Preferred Shares | Additional Paid-in | Total Shareholders’ Equity | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance at May 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Stock-based Compensation | — | — | ||||||||||||||||||||||||||
| Net Loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Warrant Issuance | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Pre-Funded Warrants | — | — | ||||||||||||||||||||||||||
| Class A ordinary shares issued | — | |||||||||||||||||||||||||||
| Warrant Exercises | — | |||||||||||||||||||||||||||
| Incentive Shares Issued | — | |||||||||||||||||||||||||||
| Balance at August 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
EXPRESSED IN CANADIAN DOLLAR 000’S; UNAUDITED
| Three months ended | ||||||||
| August 31, 2025 | August 31, 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Registered Share Offering Costs | ||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||
| Change in Warrant liability | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities | ( | ) | ||||||
| Operating leases | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows used in Investing Activities: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Sales Agreement | ||||||||
| Proceeds from Registered Securities Offering | ||||||||
| Registered Share Offering Costs | ( | ) | ||||||
| Proceeds from warrants exercised | ||||||||
| Net cash provided by financing activities | ||||||||
| Net Change in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents - Beginning of period | ||||||||
| Cash and Cash Equivalents - End of period | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
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NEW HORIZON AIRCRAFT LTD.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. Organization and Nature of Business
Organization and Nature of Business
New Horizon Aircraft Ltd. (the “Company”,
“Horizon”, “we,” “us” or “our”), a British Columbia corporation, with headquarters located
in Lindsay, Ontario, is an aerospace company. The Company is a former blank check company incorporated on
The Company is designing and developing a hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks.
NOTE 2. Going Concern and Liquidity
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred and expects to continue to incur significant costs in pursuit of the Company’s development plans. Funding of these activities has primarily been through the net proceeds received from the issuance of Class A ordinary shares and Preferred shares, as well as the issuance of related and third-party convertible debt.
Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management estimates that cash and cash equivalents on-hand as of August 31, 2025, will be sufficient to fund our current operating plan for at least the next 12 months from the date these unaudited condensed interim consolidated financial statements were available to be issued, there is substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.
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There can be no assurance that we will be successful in achieving our business plans, that our current capital will be sufficient to support our ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that we do not meet our business plans, we may be required to raise additional capital, alter, or scale back our aircraft design, development, and certification programs, or be unable to fund capital expenditures. Any such events could have a material adverse effect on our financial position, results of operations, cash flows, and ability to achieve our intended business plans.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Principles of Consolidation and Financial Statement Presentation
The accompanying unaudited condensed interim consolidated financial statements are presented in Canadian dollars in conformity with GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed interim consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries, New Horizon Aircraft Operations Ltd., a British Columbia company, and HOVR Technologies Corp. (“HTC”), a Delaware company. HTC is a dormant subsidiary. All intercompany balances and transactions have been eliminated on consolidation.
These unaudited condensed interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. Certain prior period amounts have been reclassified to conform to the current year’s presentation. The Company’s functional and reporting currency is Canadian dollars. All figures are in thousands of Canadian dollars unless noted otherwise.
There have been no changes to the Company’s significant accounting policies described in Note 3 “Summary of Significant Accounting Policies” to the audited consolidated financial statements in the Company’s annual report on Form 10-K for the year-ended May 31, 2025, filed with the SEC on August 22, 2025 (the “Annual Report”) that have had a material impact on these unaudited condensed interim consolidated financial statements.
Certain information and footnote disclosures typically included in the Company’s annual audited Consolidated Financial Statements and accompanying notes have been condensed or omitted in these accompanying unaudited condensed interim consolidated financial statements and footnotes. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year-ended May 31, 2025 set forth in the Company’s Annual Report.
Recent Accounting Standards
No recently issued accounting pronouncements have had or are expected to have a material impact on the Company’s unaudited condensed interim consolidated financial statements.
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NOTE 4. Balance Sheet Components
Property and Equipment, net
Property and equipment consist of the following:
| Year-Ended | ||||||||
| August 31, 2025 | May 31, 2025 | |||||||
| Computer Equipment | $ | $ | ||||||
| Leasehold Improvements | ||||||||
| Equipment | ||||||||
| Website Development | ||||||||
| Vehicles | ||||||||
| Software | ||||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Total Property and Equipment, net | $ | $ | ||||||
Depreciation expenses of $
Prepaid Expenses
Prepaid Expenses consisted of the following:
| August 31, 2025 | May 31, 2025 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid rent | ||||||||
| Prepaid software | ||||||||
| Prepaid capital market services | ||||||||
| Total Prepaid expenses | $ | $ | ||||||
Accrued Expenses
Accrued Expenses consisted of the following:
| August 31, 2025 | May 31, 2025 | |||||||
| Accrued professional fees | $ | $ | ||||||
| Accrued employee costs | ||||||||
| Other accrued expenses | ||||||||
| Total Accrued expenses | $ | $ | ||||||
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NOTE 5. Segmented Reporting
Operating segments are defined as components
of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision
Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The
Company’s CODM is its .
NOTE 6. Fair Value Measurements
The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of August 31, 2025, and May 31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
| Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| August 31, 2025 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| May 31, 2025 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following table provides quantitative information regarding Level 3 fair value measurements inputs related to these Warrant liabilities at their measurement dates:
| August 31, 2025 | May 31, 2025 | |||||||
| Redemption Price (USD) | $ | $ | ||||||
| Stock Price (USD) | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free rate | % | % | ||||||
8
The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the three months ended August 31, 2025, is summarized as follows:
| May 31, 2025 | ||||
| Fair value Derivative Liability - May 31, 2025 | $ | |||
| Warrant Exercises | ( | ) | ||
| Change in fair value of Warrant Liabilities | ||||
| Fair value Derivative Liability – August 31, 2025 | $ | |||
NOTE 7. Common Stock
The Company’s Class A ordinary shares and
public warrants trade on the Nasdaq Capital Market under the symbol “HOVR” and “HOVRW”, respectively. Pursuant
to the terms of the Company’s Articles and Notice of Articles, the Company is authorized to issue the following shares and classes
of capital stock, each with no par value: (i) an unlimited number of Class A ordinary shares; (ii) an unlimited number of Class B ordinary
shares; and (iii) an unlimited number of preferred shares. The holder of each ordinary share is entitled to
As of August 31, 2025, there were warrants outstanding
of
Warrant holders exercised
A summary of warrant activity for the Company is as follows:
| Number of Warrants | Weighted Average Exercise Price(USD) | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value (USD) | |||||||||||||
| Outstanding warrants May 31, 2025 | $ | $ | ||||||||||||||
| Exercised | $ | |||||||||||||||
| Outstanding warrants August 31, 2025 | $ | $ | ||||||||||||||
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In March
2025 the Company filed a shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from
time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $
On June 27, 2025, the Company filed a prospectus
supplement to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to
an additional aggregate $
During the
three months-ended August 31, 2025, the Company sold
During the
three months-ended August 31, 2025, the Company incurred $
NOTE 8. Stock-based Compensation
In August 2022, the Company established a Stock Option Plan, superseded by the 2023 Equity Incentive Plan (the “Incentive Plan”), under which the Company’s Board of Directors may, from time-to-time, in its discretion, grant stock options to directors, officers, consultants and employees of the Company.
Stock options outstanding vest in equal tranches
over a period of three years. During the three months ended August 31, 2025, the Company granted
| August 31, 2025 | August 31, 2024 | |||||||
| Stock price | $USD | $USD | ||||||
| Risk-free interest rate | % | % | ||||||
| Term (years) | ||||||||
| Volatility | % | % | ||||||
| Forfeiture rate | % | % | ||||||
| Dividend yield | % | % | ||||||
A summary of stock option activity for the Company is as follows:
| Number of Shares | Weighted Average Exercise Price (USD) | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding stock options May 31, 2025 | $ | $ | ||||||||||||||
| Issued June 24, 2025 | $ | $ | - | |||||||||||||
| Outstanding stock options August 31, 2025 | $ | $ | ||||||||||||||
| Exercisable as of August 31, 2025 | $ | $ | ||||||||||||||
During the three months-ended August 31, 2025, the Company recorded
stock-based compensation expenses of $
On August 27, 2025, the Company issued
10
The following assumptions were used to estimate the fair value of the PSUs:
| August 27, 2025 | |||
| Stock price | $USD | ||
| Risk-free interest rate | % | ||
| Term (years) | |||
| Volatility | % | ||
| Dividend yield | % | ||
NOTE 9. Net Loss per Share Attributable to Common Stockholders
The Company computes net income (loss) per share using the two-class method. Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of stock options, preferred shares, PSU’s, and warrants. Certain stock options, preferred shares, PSU’s, and warrants were excluded from the computation of diluted net income (loss) per share as including them would have been anti-dilutive. As we reported net losses for all periods presented, diluted loss per share is the same as basic loss per share.
The following outlines the Company’s basic and diluted loss per share for the three months-ended August 31, 2025, and August 31, 2024 (000’s CAD, except share amounts):
| Quarter-Ended | ||||||||
| August 31, 2025 | August 31, 2024 | |||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Basic weighted-average common shares outstanding | ||||||||
| Basic and diluted net loss per common share | $ | ( | ) | $ | ( | ) | ||
NOTE 10. Grants and Subsidies
INSAT
The Canadian government recently announced the
Initiative for Sustainable Aviation Technology (“INSAT”) fund whereby $
Green Fund
In August 2024, the Company entered into a funding
agreement with the Downsview Aerospace Innovation and Research Centre (“DAIR”). DAIR selected the Company with a project on
the Engineering of an eVTOL wing. The funding approved to the Company was $
NOTE 11. Related Party Transactions
During the three months-ended August 31, 2025, the Company paid $
NOTE 12. Subsequent Events
The Company has evaluated subsequent events from September 1, 2025, through to the date of this filing Form 10-Q and determined that there have been no reportable subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to New Horizon Aircraft Ltd. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
All figures noted are in thousands of Canadian dollars unless noted otherwise.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 22, 2025 (the “Annual Report”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
New Horizon Aircraft Ltd. (the “Company”, “Horizon”, “we,” “us” or “our”), a British Columbia corporation, with our headquarters located in Lindsay, Ontario, is an aerospace company. Horizon is a former blank check company incorporated on March 11, 2022, under the name Pono Capital Three, Inc., (“Pono”).
Organization and Nature of Business
The Company’s objective is to significantly advance the benefits of sustainable air mobility. In connection with this objective, we are designing and developing a cost effective and energy efficient hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks. The Company has built several small-scale prototypes including a 50%-scale aircraft that has completed flight testing. We are now building a full-scale demonstrator aircraft that is expected to commence flight testing in 2027.
Horizon intends to sell these Cavorite X7 aircraft to third parties, air operators, lessors, individual consumers, and NATO military customers. The Company plans to manufacture its aircraft and license its patented fan-in-wing technology and other core innovations to other Original Equipment Manufacturers (“OEM’s”). Manufacturing will be accomplished with a heavy reliance on experienced aircraft manufacturing partners and supply chain vendors. Horizon believes this highly focused business model will provide the most efficient use of capital to produce an aircraft that has a variety of applications.
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Key Factors Affecting Operating Results
See the section entitled “Risk Factors” in the Company’s Annual Report.
Development of the Regional Air Mobility Market
The Company’s revenue will be directly tied to the continued development of long-distance aerial transportation and related technologies. While the Company believes the market for Regional Air Mobility (“RAM”) will be significant, it is currently immature and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft prior to 2030, and its business will require significant investment leading up to commercialization, including, but not limited to, final engineering designs, prototyping and flight testing, manufacturing, software development, certification, and pilot training.
Horizon believes one of the primary drivers for adoption of its aircraft is the value proposition enabled by its aircraft that can take-off and land similar to a helicopter, fly almost twice as fast, and operate with much lower direct operating costs. Additional factors impacting adoption of eVTOL technology include, but are not limited to: perceptions about eVTOL quality, safety, performance and cost; perceptions about the environmental impact of hybrid-electric machines; volatility in the cost of oil and gasoline; availability of competing forms of transportation, such as ground or unmanned drone services; consumers perception about the convenience and cost of transportation using eVTOL relative to ground-based alternatives; and increases in fuel efficiency, autonomy, or electrification of vehicles. In addition, macroeconomic factors could impact demand for RAM services, particularly if customer pricing is at a premium to ground-based transportation. Horizon anticipates initial aircraft sales to be used for medevac services, firefighting services, disaster relief services, remote medical services, military operations, followed by sales to air operators and lessors for air cargo, business travel and air-taxi services. If the market for RAM does not develop as expected, this would significantly impact the Company’s ability to generate revenue or grow its business.
Competition
We believe that the primary sources of competition for our aircraft sales are traditional helicopters, ground-based mobility solutions, and other eVTOL developers. While we expect to produce a versatile aircraft that can be useful in a variety of air mobility missions, we believe this industry will be dynamic and increasingly competitive. It is possible that our competitors could gain significant market share. Horizon may not fully realize the sales it anticipates, and it may not receive any competitive advantage from its design or may be overcome by other competitors. If new companies or existing aerospace companies produce competing aircraft in the markets in which Horizon intends to service and obtain large-scale capital investment, we may face increased competition.
Horizon may receive an advantage from well-funded competitors that are paying to create certification programs, raise awareness of eVTOL advantages, and advocate for enhanced government funding programs.
Government Certification
For commercial operations, Horizon’s Cavorite X7 aircraft will require Type Certification. Horizon has had initial conversations with applicable regulators Transport Canada Civil Aviation (“TCCA”) in Canada, and the Federal Aviation Association (“FAA”) in the United States of America. As a Canadian company, TCCA is leading certification efforts. Horizon expects the FAA to participate during this process which we expect will reduce the traditional amount of time required to achieve FAA certification.
The Company maintains a partnership with Cert Centre Canada (“3C”) for the purpose of collaborating on aspects of the continued development and path to certification of Horizon’s eVTOL program. 3C is leveraging their deep experience with TCCA and FAA certification programs to support the Company’s certification basis for the certification of Horizon’s eVTOL aircraft.
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Typically, the certification of a new aircraft design by TCCA or the FAA is a long and complex process, often spanning more than five years and requiring significant capital. The Company has never undergone such a process, and there is no guarantee that its Cavorite X7 design will eventually achieve certification. The Company will need to obtain authorization and certifications related to the production of its aircraft. While it anticipates being able to meet the requirements of such authorization and certifications, the Company may be unable to obtain such authorization and certifications, or to do so on the timeline it projects. Should the Company fail to obtain any of the required authorization or certifications, or do so in a timely manner, or any of these authorization or certifications are modified, suspended or revoked after it obtains them, the Company may be unable to fulfill sales of its commercial aircraft or do so on the timelines it projects, which could have adverse effects on its business, prospects, financial condition, and results of operations.
Dual Use Business Model
Horizon intends to certify its Cavorite X7 aircraft as a dual-use aircraft for both civilian and military applications. Present projections indicate that sales volume of this dual use aircraft will result in a viable business model over the longer-term as production volumes scale and unit economics improve to support sufficient market adoption. The advantage of military application of Horizon’s aircraft in addition to sales volumes leads to a reduction in the risk of certification as aircraft used for military purposes do not need to achieve TCCA, FAA, or similar certification approval. As with any new industry and aerospace product, numerous risks and uncertainties exist. The Company’s financial results are dependent on delivering aircraft on-time and at a cost that supports returns at prices that support sufficient sales to customers who are willing to purchase based on value arising from time and versatility from utilizing regional eVTOL aircraft. Horizon’s civilian sector financial results are dependent on achieving certification on its expected timeline. Our aircraft includes numerous parts and manufacturing processes unique to eVTOL aircraft, particularly its product design. Significant efforts have been made to estimate costs in the Company’s planning projections; however, the variable cost associated with assembling its aircraft at scale remains uncertain at this stage of development.
Going Concern and Liquidity
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. Horizon has incurred and expects to continue to incur significant costs in pursuit of the Company’s commercialization plans. We have devoted many resources to the design and development of our eVTOL prototype aircraft. Funding of these activities has primarily been through the net proceeds received from the issuance of Class A ordinary shares, preferred shares, and the issuance of related and third-party convertible debt.
Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. With more than $16 million of cash and cash equivalents on-hand as of August 31, 2025, management expects to be in a position to fund our current operating plan for at least the next 12 months; however there remains substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.
There can be no assurance that we will be successful in achieving our business plans, that our current capital will be sufficient to support our ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that we do not meet our business plans, we may be required to raise additional capital, alter, or scale back our aircraft design, development, and certification programs, or be unable to fund capital expenditures. Any such events could have a material adverse effect on our financial position, results of operations, cash flows, and ability to achieve our intended business plans.
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Components of Results of Operations
Revenue
The Company is working to design, develop, certify, and manufacture our eVTOL aircraft and has not yet generated revenues in any of the periods presented. We do not expect to begin generating significant revenues until we are able to complete the design, development, and certification of our eVTOL aircraft.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of personnel expenses, including salaries, benefits, costs of consulting, equipment, engineering, data analysis, and materials.
We expect our research and development expenses to increase as we increase staffing to support aircraft engineering and software development, build aircraft, and continue to explore and develop our eVTOL aircraft and technologies.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of personnel expenses, including salaries, benefits, and stock-based compensation, related to executive management, finance, legal, and human resource functions. Other costs include business development, investor relations, contractor and professional services fees, audit and compliance expenses, insurance costs and general corporate expenses, including depreciation, rent, information technology costs and utilities.
We expect our selling, general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations, including the Sarbanes-Oxley Act and other SEC rules and regulations.
Other Income
Other income consists of grants and subsidies received for developmental work and foreign exchange gains and losses.
Interest Expense, net
Interest expense is related to the Company’s leases. Interest income primarily consists of interest earned on the Company’s cash and cash equivalents.
Change in fair value of Warrants
Changes in fair value of Warrants consists of fluctuations in the fair value of warrants outstanding as of the end of each reporting period.
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Results of Operations
We believe the following information includes all adjustments necessary to state fairly the results of operations for all periods presented. This data should be read in conjunction with Horizon’s unaudited condensed interim consolidated financial statements and notes thereto. These results of operations are not necessarily indicative of the future results of operations that may be expected for any future period.
Comparison of the Three Months Ended August 31, 2025, to the Three Months Ended August 31, 2024
Meaningful variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the quarters ended August 31, 2025, and August 31, 2024 (000’s).
| Quarter-Ended | ||||||||||||
| Operating expenses | August 31, 2025 | August 31, 2024 | Variance ($) | |||||||||
| Research and development | $ | 2,719 | $ | 297 | $ | (2,422 | ) | |||||
| General and administrative | 3,190 | 2,408 | (782) | |||||||||
| Total operating expenses | 5,909 | 2,705 | (3,204 | ) | ||||||||
| Loss from operations | (5,909 | ) | (2,705 | ) | 3,204 | |||||||
| Other expenses (income) | (25 | ) | 29 | 54 | ||||||||
| Interest expense (income), net | (118 | ) | (11 | ) | 107 | |||||||
| Change in fair value of Warrants | 5,137 | 5 | (5,132 | ) | ||||||||
| Change in fair value and Termination of Forward Purchase Agreement | — | 183 | 183 | |||||||||
| Net Income (Loss) | $ | (10,903 | ) | $ | (2,911 | ) | $ | 7,992 | ||||
Operating Expenses
Operating expenses increased by $3,204, from $2,705 for the quarter-ended August 31, 2024, to $5,909 for the quarter ended August 31, 2025. The increase was primarily driven by additional staff hired to support development activities and engineering costs, as well as stock-based compensation, partially offset by reduced general and administrative costs.
Research and Development Expenses
Research and development expenses increased by $2,422, from $297 during the quarter-ended August 31, 2024, to 2,719 during the quarter-ended August 31, 2025. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the respective periods:
| Quarter-Ended | ||||||||
| August 31, 2025 | August 31, 2024 | |||||||
| Compensation Costs | $ | 2,432 | $ | 269 | ||||
| Engineering costs | 261 | 28 | ||||||
| Depreciation | 26 | 1 | ||||||
| Total Research and Development costs | $ | 2,719 | $ | 297 | ||||
General and Administrative
General and Administrative costs increased by $782, from $2,408 during the quarter-ended August 31, 2024, to $3,190 during the quarter ended August 31, 2025. The increase was due to increased stock-based compensation relating to both employees and third party service providers.
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Cash Flows
The following tables set forth a summary of our cash flows for the periods indicated (000’s):
| Three months Ended | ||||||||||||
| Net cash provided by (used in) | August 31, 2025 | August 31, 2024 | Variance ($) | |||||||||
| Operating activities | $ | (2,364 | ) | $ | (1,475 | ) | $ | (889 | ) | |||
| Investing activities | (139 | ) | - | (139 | ) | |||||||
| Financing activities | 11,223 | 3,481 | 7,742 | |||||||||
| Net increase in cash | $ | 8,720 | $ | 2,006 | $ | 6,714 | ||||||
Net Cash used in Operating Activities
The Company’s cash flows used in operating activities have been primarily comprised of payroll, software expenses, technology costs, professional services related to research and development and general and administrative activities, and direct research and development costs for aircraft design, simulation, and prototype manufacturing, partially offset by periodic grants received from various government agencies. The Company expects to increase hiring to accelerate its engineering efforts in the coming years.
For the three months ended August 31, 2025, the $889 increase in cash used from operations as compared to the three months ended August 31, 2024, was primarily attributed to increased operating costs and changes in working capital.
Net Cash used in Investing Activities
The Company’s cash flows used in investing activities to date have been primarily comprised of property and equipment.
For the three months-ended August 31, 2025, there was $139 of capital expenditures as compared to $nil during the three months ended August 31, 2024.
Net Cash used in Financing Activities
The Company’s cash flows provided by financing activities to date have primarily been composed of funding raised with securities offerings as well as related and third-party convertible instruments.
For the three months ended August 31, 2025, the $7,742 increase in cash provided by financing activities was primarily attributed to proceeds from the issuance of Class A ordinary shares and warrant exercises.
Warrant holders exercised 2,900,000 warrants in exchange for 2,900,000 Class A ordinary shares for proceeds of $2,970 during the three months ended August 31, 2025 (August 31, 2024 - $nil).
As of August 31, 2025, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 310,000 remaining at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.
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In March 2025 the Company filed a shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $6.25 million USD, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a placement agent for the sale of its Class A ordinary shares.
On June 27, 2025, the Company filed a prospectus supplement to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to an additional aggregate $16.5 million USD of Class A ordinary shares.
During the three months ended August 31, 2025, the Company sold 3,445,210 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $8,253. As of August 31, 2025, the Company had $14.8 million USD remaining eligible for sales under the Sales Agreement.
Sources of Liquidity
Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, contractual obligations, and other commitments. The Company assesses liquidity in terms of its cash flows from financing activities and their sufficiency to fund its operating and development activities. Beyond August 31, 2025, the Company’s principal source of liquidity is expected to be cash and cash equivalents of more than $16 million currently on-hand, future government grants and subsidies, and future sales of securities.
To date, the Company has funded its operations primarily with the issuances of Class A ordinary shares, Series A preferred shares, and issuances of convertible debt instruments. Additional funding has been provided through government-backed grants.
The Canadian government recently announced the Initiative for Sustainable Aviation Technology (“INSAT”) fund whereby $350 million will be invested into innovative companies focused on sustainable aviation solutions. The Company submitted an initial INSAT proposal in April 2025 along with its application partners for a project size of $10.5 million, of which up to 40% of project costs may be reimbursed. The Company’s proposal was aligned with three of the four key INSAT technology areas including (1) Hybrid and Alternative Propulsion, (2) Aircraft Architecture and Systems Integration, and (3) Transition to Alternative Fuels. The Company expects to receive information related to the success of this initial INSAT application in 2025.
The Company believes it has sufficient cash to fulfill its business plan for at least the next 12 months from the date of this filing. To the extent the Company is able to raise additional financing, either by way of the Sales Agreement, warrants, or by other means, the Company may be in a position to expedite its business plan including hiring employees at a more rapid pace. To achieve the Company’s long-term objectives, additional financing will be required and efforts to raise such working capital will be ongoing through at least the next several years.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of August 31, 2025, and May 31, 2025.
Critical Accounting Estimates
The preparation of the unaudited condensed interim consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed interim consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
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Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For derivative instruments that are classified as equity, the derivative instruments are initially measured at fair value (or allocated value), and subsequent changes in fair value are not recognized so long as the contracts continue to be classified in equity.
Research and Development Costs
The research and development costs are accounted for in accordance with ASC 730, Research and Development, which requires all research and development costs be expensed as incurred.
Recent Accounting Standards
No recently issued accounting pronouncements have had or are expected to have a material impact on the Company’s unaudited condensed interim consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.
Our management, under the supervision and with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures at the end of the period covered by this Quarterly Report. Based upon this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Quarterly Report, the design and operation of our disclosure controls and procedures were not effective.
Notwithstanding the identified material weakness, management, including our principal executive officer and principal financial and accounting officer, believe that the unaudited condensed interim consolidated financial statements contained in this Quarterly Report fairly present, in all material respects, our financial condition, results of operations and cash flows for the fiscal period presented in conformity with GAAP.
Remediation of Material Weakness
While significant progress has been made to improve our internal control over financial reporting, not all aspects of have been sufficiently remediated. The material weakness, as of August 31, 2025, relates to the inadequate separation of financial responsibilities. Our management, with the oversight of the Audit Committee of our Board of Directors, continues to design and implement measures to remediate the material weakness. Remediation of the material weakness will require further validation and testing of the operating effectiveness of the applicable remedial controls over a sustained period of financial reporting cycles. The Company is targeting remediation of this material weakness prior to the end of its current fiscal year-ending May 31, 2026.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not party to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. The outcome of litigation is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained. In addition, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) On July 9, 2025, the Company issued an aggregate of 337,748 Class A ordinary shares to third-party service providers for services rendered at a deemed price of CAD$2.3695 per share. These issuances were made in reliance upon one or more exemptions from the registration requirements of the Securities Act, including Section 4(a)(2) thereof, Regulation D, and Regulation S promulgated thereunder. The Class A ordinary shares were issued in transactions by the Company not involving a public offering, to “accredited investors,” or in offshore transactions in which no directed selling efforts were made in the United States.
(b) Not Applicable.
(c) None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
(a) None.
(b) None.
(c) During the quarter ended August 31, 2025,
none of our directors or officers
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed or furnished with this Quarterly Report. |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| New Horizon Aircraft Ltd. | ||
| Date: October 10, 2025 | /s/ Brandon Robinson | |
| Name: | Brandon Robinson | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: October 10, 2025 | /s/ Brian Merker | |
| Name: | Brian Merker | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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