UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from to
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As of October 9, 2026, 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 | |
| i |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
AS AT AUGUST 31, 2026 AND MAY 31, 2026
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT SHARE AMOUNTS; UNAUDITED
| August 31, 2026 |
May 31, 2026 |
|||||||
| 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: | ||||||||
| Class A ordinary shares, par value; shares authorized; | ||||||||
| Class A ordinary shares to be issued | ||||||||
| Preferred shares, par value; shares authorized; | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 1 |
NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT PER SHARE AMOUNTS; UNAUDITED
| Three Months Ended | ||||||||
| August 31, 2026 |
August 31, 2025 |
|||||||
| Operating expenses | ||||||||
| Research and development | $ | $ | ||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other (income) expenses | ( | ) | ( | ) | ||||
| Interest (income) expense, net | ( | ) | ( | ) | ||||
| Change in fair value of Warrants | ( | ) | ||||||
| Total other expenses (income) | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share: | ||||||||
| Basic and Diluted | $ | ( | ) | ( | ) | |||
| Shares used in computing Loss per share: | ||||||||
| Basic and Diluted | ||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 2 |
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 |
Class A Ordinary Shares to be Issued |
Preferred Shares | Additional Paid-in |
Total Shareholders’ Equity |
||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance at May 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock-based Compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Incentive Shares Issued | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Pre-Funded Warrants Exercised | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Class A Ordinary Shares Issued under Sales Agreement | — | — | ||||||||||||||||||||||||||||||||||
| Balance at August 31, 2026 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Class A Ordinary Shares |
Class A Ordinary Shares to be Issued |
Preferred Shares | Additional Paid-in |
Total Shareholders’ Equity |
||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance at May 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock-based Compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Incentive Shares Issued | ||||||||||||||||||||||||||||||||||||
| Warrant Exercises | ||||||||||||||||||||||||||||||||||||
| Other Class A Ordinary Shares Issued | ||||||||||||||||||||||||||||||||||||
| Balance at August 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
| 3 |
NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
EXPRESSED IN CANADIAN DOLLAR 000’S; UNAUDITED
| Three Months Ended | ||||||||
| August 31, 2026 |
August 31, 2025 |
|||||||
| 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 | ||||||||
| Change in Warrant liability | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Accrued liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from Sales Agreement | ||||||||
| Proceeds from PFW exercises | ||||||||
| Repurchased Class A ordinary shares for tax obligations | ( | ) | ||||||
| Proceeds from General Warrants exercised | ||||||||
| Net cash provided by (used in) 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.
| 4 |
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 was 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 and non-dilutive government grants.
Horizon is a pre-revenue organization that is currently building a full-scale technical demonstrator aircraft in pursuit of certifying its Cavorite X7 aircraft. While management estimates that cash on-hand of more than $
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.
| 5 |
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 Securities and Exchange Commission (“SEC”). These unaudited condensed interim consolidated financial statements include all the accounts of the Company and its wholly owned subsidiaries. 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. 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, 2026, filed with the SEC on July 16, 2026 (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, 2026, set forth in the Company’s Annual Report.
Recent Accounting Standards
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories in the notes to the financial statements. The update is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The update can be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures within its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes the accounting for government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The update is effective for annual periods beginning after December 15, 2028, and interim periods beginning within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If a business entity adopts the amendments in this update in an interim reporting period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. The Company is currently evaluating the impact of ASU 2025-10 on its disclosures within its consolidated financial statements.
No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s financial statements.
| 6 |
NOTE 4. Balance Sheet Components
Property and Equipment, net
Property and equipment consist of the following:
| Period Ended | ||||||||
| August 31, 2026 | May 31, 2026 | |||||||
| Computer Equipment | $ | $ | ||||||
| Leasehold Improvements | ||||||||
| Tools and 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, 2026 | May 31, 2026 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid software | ||||||||
| Prepaid aircraft development costs | ||||||||
| Other general prepaid expenses | ||||||||
| Total Prepaid expenses | $ | $ | ||||||
Prepaid aircraft development costs represent components, tools, equipment, and services that relate to the assembly of the Company’s full-scale technical demonstrator aircraft that have not yet been received as of August 31, 2026.
Accrued Liabilities
Accrued Expenses consisted of the following:
| August 31, 2026 | May 31, 2026 | |||||||
| Accrued professional fees | $ | $ | ||||||
| Accrued employee costs | ||||||||
| Other accrued liabilities | ||||||||
| Total Accrued Liabilities | $ | $ | ||||||
| 7 |
NOTE 5. Segment 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. Shareholders’ Equity
The Company’s Class A ordinary shares and warrants trade on the NASDAQ stock exchange 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 Class A ordinary share is entitled to
Registered Direct Offering II
On May 27, 2026, the Company completed a registered direct offering (“RDO II”) by issuing
| Gross Proceeds - Class A ordinary shares | $ | |||
| Gross Proceeds - PFWs | $ | |||
| Gross Proceeds - Warrant Exercises | $ | |||
| Direct costs | $ | ( | ) | |
| Net Proceeds | $ |
PFWs may be exercised by warrant holders at any time at a nominal exercise price as they were funded in connection with RDO II. Upon exercise, each PFW may be exchanged for
Preferred Shares
On December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued an aggregate of
At-the-Market Program
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, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a sales agent for the sale of its Class A ordinary shares.
During the three months ended August 31, 2026, the Company sold
On August 28, 2026, the Company filed a new shelf registration statement on Form S-3 with the SEC and a related prospectus to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $
| 8 |
NOTE 7. 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, 2026, and May 31, 2026, 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, 2026 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Public Warrant Liabilities | $ | $ | $ | $ | ||||||||||||
| Other Warrant Liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| May 31, 2026 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Public Warrant Liabilities | $ | $ | $ | $ | ||||||||||||
| Other Warrant Liabilities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Level 1 Fair Value Measurements - Public Warrant Liabilities
The measurement of the public warrants is classified as Level 1 due to the use of an observable market quote in an active market under the ticker “HOVRW”. The quoted price of the public warrants was $USD
Level 3 Fair Value Measurements - Other Warrant Liabilities
Other Warrant Liabilities include the following two components:
| August 31, 2026 | May 31, 2026 | |||||||
| General Warrant Liabilities | $ | $ | ||||||
| Placement Warrant Liabilities | ||||||||
| Total Other Warrant Liabilities | $ | $ | ||||||
General Warrants
In connection with the Company’s underwritten offering that closed on August 21, 2024,
| August 31, 2026 | May 31, 2026 | |||||||
| Redemption Price (USD) | $ | $ | ||||||
| Stock Price (USD) | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free rate | % | % | ||||||
| 9 |
Placement Warrant Liabilities
The Company has
Summary of Level 3 fair value instruments
The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the three months ended August 31, 2026, is summarized as follows:
| August 31, 2026 | ||||
| Fair value Derivative Liability – May 31, 2026 | $ | |||
| Change in fair value of Warrant Liabilities | ( | ) | ||
| Fair value Derivative Liability – August 31, 2026 | ||||
NOTE 8. Stock-based Compensation
In August 2022, the Company established a stock option plan, superseded by a 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, Performance Share Units (“PSUs”), or other equity awards to its directors, officers, consultants and employees of the Company.
Stock Options
Stock options outstanding typically vest in equal tranches over a period of three years. During the three months ended August 31, 2026, the Company granted
| July 6, 2026 | June 24, 2025 | |||||||
| 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, 2026 | $ | $ | ||||||||||||||
| Stock options issued | $ | |||||||||||||||
| Outstanding stock options August 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of August 31, 2026 | $ | $ | ||||||||||||||
During the three months ended August 31, 2026, the Company recorded stock-based compensation expenses of $
Performance Share Units
On February 10, 2026, the Company issued
In June 2026,
| 10 |
Shares for Services
The Company periodically issues Class A ordinary shares for services provided by third parties. During the three months ended August 31, 2026, the Company recorded $
During the three months ended August 31, 2026, the Company incurred $
NOTE 9. Net loss per Share Attributable to Class A ordinary shareholders
The Company computes net loss per share using the two-class method. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net 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, PSUs, and warrants. Potentially dilutive securities were excluded from the computation of diluted net loss per share as including them would have been anti-dilutive.
The following outlines the Company’s basic and diluted loss per share for the three months ended August 31, 2026, and August 31, 2025:
| Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Loss per share: | ||||||||
| Basic and diluted: | $ | ( | ) | $ | ( | ) | ||
| Shares used in computing Loss per share: | ||||||||
| Basic and diluted: | ||||||||
NOTE 10. Grants and Subsidies
INSAT
The Canadian government recently announced the Initiative for Sustainable Aviation Technology (“INSAT”) fund whereby $
Scientific Research and Experimental Development
In connection with the year-ended May 31, 2026, the Company plans to file an application for Scientific Research and Experimental Development (“SR&ED”) credits with the Canadian federal government. As the specific SR&ED amount has not yet been determined, the Company did not accrue any credits in connection with the year-ended May 31, 2026.
NOTE 11. Related Party Transactions
There were identifiable related party transactions or balances for the period.
NOTE 12. Subsequent Events
The Company has evaluated subsequent events from September 1, 2026, through to the filing of this Form 10-Q and determined that there have been no reportable subsequent events.
| 11 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us,” “Horizon,” 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 July 16, 2026 (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 was incorporated on March 11, 2022.
Organization and Nature of Business
Robinson Aircraft Ltd., Horizon’s operating subsidiary, was incorporated in 2013. The company initially focused on hybrid-electric amphibious aircraft before transitioning in 2018 to the development of its proprietary hybrid-electric eVTOL platform, which ultimately evolved into the Cavorite X7.
Horizon’s long-term business strategy is centered on the design, certification, and commercialization of the Cavorite X7, while leveraging strategic manufacturing partners and an established aerospace supply chain to efficiently scale production. In addition to aircraft sales, the Company believes its patented fan-in-wing technology and related intellectual property may create future licensing opportunities with other OEMs.
Horizon intends to market the Cavorite X7 to commercial operators, aircraft lessors, government agencies and defense organizations that require aircraft capable of both vertical and conventional runway operations. The Company believes its asset-light manufacturing strategy, combined with strategic partnerships, will enable efficient capital deployment while supporting multiple commercial and government end markets.
Over the past year, Horizon has continued advancing the Cavorite X7 program through completion of major structural assemblies, expansion of its strategic supplier network, and building its full-scale technical demonstrator aircraft for flight testing.
| 12 |
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 regional aerial transportation and related technologies. While the Company believes the market for RAM will be significant, it is currently immature and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft beginning in 2028 or 2029, 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, and 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 could significantly impact the Company’s ability to generate revenue or grow its business.
Competition
The markets in which we intend to operate are highly competitive and characterized by significant capital requirements and rapid technological change. We expect to compete with traditional helicopter manufacturers, fixed-wing aircraft manufacturers, ground-based mobility solutions, and other eVTOL developers, many of whom have substantially greater financial, technical, and manufacturing resources than we do. 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 serve and obtain large-scale capital investment, we may face increased competition.
Horizon may receive an advantage from the substantial investments being made by well-funded peers that are advancing their eVTOL aircraft, in particular as it relates to supporting the development of certification frameworks, increasing public and market awareness of eVTOL technologies, and advocating for government support and funding programs. The Company expects this could contribute to the broader development and adoption of the RAM industry, potentially benefiting our commercial progress and pathway to revenue.
Government Certification
Commercial operation of Horizon’s Cavorite X7 aircraft will require Type Certification and related regulatory approvals. We have initiated engagement with Transport Canada Civil Aviation (“TCCA”) in Canada and the Federal Aviation Administration (“FAA”) in the United States to discuss potential certification pathways. As a Canadian company, we expect TCCA to serve as the primary certification authority, with participation from the FAA as the program progresses, which we expect will reduce the traditional amount of time required to achieve FAA certification.
Horizon maintains a partnership with Cert Centre Canada (“3C”) to support aspects of our certification planning and development activities. 3C is leveraging their deep experience with TCCA and FAA certification programs and is assisting us in developing our certification basis and advancing regulatory engagement.
Certification of a new aircraft design is a complex, multi-year process that typically requires significant time and capital. We have not previously completed an aircraft certification program, and there can be no assurance that our Cavorite X7 aircraft will achieve certification on our anticipated timeline, or at all. In addition to type certification, we will be required to obtain production approvals prior to commercial deliveries.
Delays in certification, changes in regulatory requirements, the need for additional testing or design modifications, or the inability to obtain required approvals could delay or prevent commercialization of our aircraft. Any such outcomes could materially and adversely affect our business, financial condition, results of operations, and prospects.
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Dual Use Business Model
Horizon is pursuing a dual use strategy designed to position the Cavorite X7 aircraft for both civilian and military applications. We believe this approach expands our potential addressable market, supports earlier mission adoption opportunities, and may enable a more efficient path toward scaling production over time.
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 require TCCA, FAA, or other related jurisdictional 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 include 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 cost associated with assembling its aircraft at scale remains uncertain at this stage of development.
We believe military and special-mission use cases, which may not require the same certification approvals as commercial passenger operations, could provide earlier operational opportunities and help validate performance, reliability, and mission versatility as the broader regional air mobility market continues to develop. Over time, we expect increasing production volumes and operational experience to support improvements in unit economics and market adoption.
Our long-term success in the civilian sector will depend on our ability to deliver aircraft on schedule, at competitive costs, and at price points that support customer adoption across multiple mission profiles. While our civilian market opportunity remains dependent on achieving regulatory certification, we believe our dual-use strategy provides an opportunity for earlier aircraft sales and revenue as we progress through development as military usage is not constrained by certification frameworks.
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. The Company 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 focused on research and development and flight-testing of our eVTOL aircraft. With more than $70 million of cash on-hand as of August 31, 2026, management expects that the Company has sufficient funds for its current operating plan for at least the next 12 months from the date the unaudited condensed interim consolidated financial statements were available to be issued. There remains substantial doubt regarding the Company’s ability to meet the going concern assumption beyond that period without securing 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 execute our 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 and benefits, the 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, as well as costs related to 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, 2026, to the Three Months Ended August 31, 2025
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 three months ended August 31, 2026, and August 31, 2025 (000’s).
| Three Months Ended | ||||||||||||
| Operating expenses | August 31, 2026 | August 31, 2025 | Variance ($) | |||||||||
| Research and development | $ | 7,429 | $ | 2,719 | $ | (4,710 | ) | |||||
| General and administrative | 1,669 | 3,190 | 1,521 | |||||||||
| Total operating expenses | 9,098 | 5,909 | (3,189 | ) | ||||||||
| Loss from operations | (9,098 | ) | (5,909 | ) | 3,189 | |||||||
| Other expenses (income) | (597 | ) | (25 | ) | 572 | |||||||
| Interest expense (income), net | (610 | ) | (118 | ) | 492 | |||||||
| Change in fair value of Warrants | (3,820 | ) | 5,137 | 8,957 | ||||||||
| Net Loss | $ | (4,071 | ) | $ | (10,903 | ) | $ | (6,832 | ) | |||
Operating Expenses
Operating expenses increased by $3,189, from $5,909 for the three months ended August 31, 2025, to $9,098 for the three months ended August 31, 2026. The increase was primarily driven by additional engineering costs related to building the Company’s full-scale prototype aircraft, partially offset by reduced general and administrative costs.
Research and Development Expenses
Research and development expenses increased by $4,710, from $2,719 during the three months ended August 31, 2025, to $7,429 during the three months ended August 31, 2026. The increase was primarily attributable to additional engineering costs related to building the Company’s full-scale prototype aircraft, flight software, and data analysis. Research and development expenses can be itemized into the following categories for the respective periods:
| Three Months Ended | ||||||||
| August 31, 2026 | August 31, 2025 | |||||||
| Compensation Costs | $ | 2,041 | $ | 2,432 | ||||
| Engineering costs | 5,316 | 261 | ||||||
| Depreciation | 72 | 26 | ||||||
| Total Research and Development costs | $ | 7,429 | $ | 2,719 | ||||
General and Administrative
General and Administrative costs decreased by $1,521, from $3,190 during the three months ended August 31, 2025, to $1,669 during the three months ended August 31, 2026. The decrease was primarily due to reduced stock-based compensation expenses.
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Cash Flows
The following tables set forth a summary of our cash flows for the periods indicated (000’s):
| Three Months Ended | ||||||||||||
| Net cash provided by (used in) | August 31, 2026 | August 31, 2025 | Variance ($) | |||||||||
| Operating activities | $ | (7,213 | ) | $ | (2,364 | ) | $ | (4,849 | ) | |||
| Investing activities | (671 | ) | (139 | ) | (532 | ) | ||||||
| Financing activities | (334 | ) | 11,223 | (11,557 | ) | |||||||
| Net increase (decrease) in cash | $ | (8,218 | ) | $ | 8,720 | $ | (16,938 | ) | ||||
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, 2026, the $4,849 increase in cash used in operations as compared to the three months ended August 31, 2025, was primarily attributed to increased operating costs and changes in non-cash 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, 2026, the $532 increase in cash used from investing activities as compared to the three months ended August 31, 2025, was primarily related to tooling and equipment connected with building the Company’s full-scale demonstrator aircraft and expansion of the Company’s facilities to accommodate additional personnel and aircraft.
Net Cash provided by (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, 2026, the $11,557 decrease in cash provided by financing activities was primarily attributed to decreased proceeds from the issuance of Class A ordinary shares and warrant exercises.
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, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a sales agent for the sale of its Class A ordinary shares.
During the three months ended August 31, 2026, the Company sold 219,624 Class A ordinary shares under the Sales Agreement for net proceeds of $618 (August 31, 2025 - $8,253).
On August 28, 2026, the Company filed a new shelf registration statement on Form S-3 with the SEC and a related prospectus to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $50 million USD, pursuant to the Sales Agreement. There were no sales made from this shelf registration statement during the three months ended August 31, 2026.
As of August 31, 2026, there were warrants outstanding of 12,065,375 at an exercise price of $USD 11.50, 277,647 warrants outstanding at a price of $USD 2.47, 298,805 warrants outstanding at a price of $USD 2.89, and 10,000 remaining at an exercise price of $USD 0.75 to purchase an equivalent number of Class A ordinary shares.
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Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of August 31, 2026, and May 31, 2026.
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:
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
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories in the notes to the financial statements. The update is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The update can be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures within its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes the accounting for government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The update is effective for annual periods beginning after December 15, 2028, and interim periods beginning within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If a business entity adopts the amendments in this update in an interim reporting period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. The Company is currently evaluating the impact of ASU 2025-10 on its disclosures within its consolidated financial statements.
No other 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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Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide this information.
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 effective.
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.
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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 August 6, 2026, the Company issued an aggregate of 32,124 Class A ordinary shares to third-party service providers for services rendered at a deemed price of USD$1.95 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 three months ended August 31, 2026, 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 9, 2026 | /s/ Brandon Robinson | |
| Name: | Brandon Robinson | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: October 9, 2026 | /s/ Brian Merker | |
| Name: | Brian Merker | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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