UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-41607

NEW HORIZON AIRCRAFT LTD.

(Exact name of registrant as specified in its charter)

British Columbia, Canada		98-1786743
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

3187 Highway 35 Lindsay, Ontario		K9V 4R1
(Address of principal executive offices)		(Postal Code)

(613) 866-1935

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Class A Ordinary Share, no par value	HOVR	The Nasdaq Stock Market LLC

Warrants, each warrant exercisable for one Class A Ordinary Share at an exercise price of $11.50 per share	HOVRW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). No ☒ Yes ☐

As of January 13, 2025, there were 31,230,914 of the registrant’s Class A ordinary shares, issued and outstanding.

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	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities, and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

SIGNATURES		26

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NEW HORIZON AIRCRAFT LTD.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

AS AT NOVEMBER 30, 2024 AND MAY 31, 2024

EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT PER SHARE AMOUNTS; UNAUDITED

	November 30, 2024			May 31, 2024

Assets:
Current assets:
Cash and cash equivalents	$	887		$	1,816
Prepaid expenses		851			2,431
Accounts receivable		23			417
Total current assets		1,761			4,664
Operating lease assets		50			75
Property and equipment, net		151			205
Total Assets	$	1,962		$	4,944

Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	374		$	715
Accrued liabilities		236			574
Operating lease liabilities		29			44
Total current liabilities		639			1,333
Forward Purchase Agreement		-			20,938
Warrant liabilities		3,657			576
Operating lease liabilities		19			30
Total Liabilities		4,315			22,877

Shareholders’ Equity (Deficit):
Class A ordinary shares, no par value; 100,000,000 shares authorized; 24,574,247 issued and outstanding (18,607,931 as of May 31, 2024)		78,307			74,406
Additional paid-in capital		(82,730	)		(77,656	)
Retained Earnings (Deficit)		2,070			(14,683	)
Total Shareholders’ Equity (Deficit)		(2,353	)		(17,933	)
Total Liabilities and Shareholders’ Equity (Deficit)	$	1,962		$	4,944

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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						For the six months ended
	November 30, 2024			November 30, 2023			November 30, 2024			November 30, 2023
Operating expenses
Research and development	$	427		$	219		$	724		$	419
General and administrative		2,847			605			5,255			840
Total operating expenses		3,274			824			5,979			1,259
Loss from operations		(3,274	)		(824	)		(5,979	)		(1,259	)
Other income		(47	)		(227	)		(18	)		(229	)
Interest expenses (income), net		(13	)		143			(24	)		181
Change in fair value of Warrants		(2,035	)		-			(2,030	)		-
Change in fair value of Forward Purchase Agreement		557			-			740			-
Termination of Forward Purchase Agreement		(21,400	)		-			(21,400	)		-
Total other expenses		(22,938	)		(84	)		(22,732	)		(48	)
Income (Loss) before income taxes		19,664			(740	)		16,753			(1,211	)
Income tax expense		-			-			-			-
Net Income (Loss)	$	19,664		$	(740	)	$	16,753		$	(1,211	)

Income (loss) per share:
Basic:	$	0.83		$	(0.15	)	$	0.79		$	(0.24	)
Diluted:	$	0.80		$	(0.15	)	$	0.76		$	(0.24	)

Shares used in computing Income (loss) per share:
Basic:		23,599,144			5,075,420			21,246,788			5,075,420
Diluted:		24,574,247			5,075,420			21,930,531			5,075,420

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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 B Ordinary Shares				Non-Voting Common Shares				Additional Paid-in						Total Shareholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			(Deficit)
Balance at May 31, 2024		18,607,931	$	74,406		—	$	—		—	$	—	$	(77,656	)	$	(14,683	)	$	(17,933	)
Stock-based Compensation		—		—		—		—		—		—		26			—			26
Net Loss		—		—		—		—		—		—		—			(2,911	)		(2,911	)
Incentive Shares Issued		66,316		74		—		—		—		—		—			—			74
Class A Shares Issued		2,800,000		1,799		—		—		—		—		—			—			1,799
Warrant Exercise		45,000		44		—		—		—		—		—			—			44
Pre-Funded Warrants		—		—		—		—		—		—		1,925			—			1,925
Warrant Issuance		—		—		—		—		—		—		(5,157	)		—			(5,157	)
Balance at August 31, 2024		21,519,247	$	76,323		—	$	—		—	$	—	$	(80,862	)	$	(17,594	)	$	(22,133	)
Stock-based Compensation		—		—		—		—		—		—		13			—			13
Net Income		—		—		—		—		—		—		—			19,664			19,664
Warrant Exercise		55,000		59		—		—		—		—		44			—			103
Pre-Funded Warrants Exercised		3,000,000		1,925		—		—		—		—		(1,925	)		—			—
Balance at November 30, 2024		24,574,247	$	78,307		—	$	—		—	$	—	$	(82,730	)	$	2,070		$	(2,353	)

	Class A Ordinary Shares				Class B Ordinary Shares				Non-Voting Common Shares				Additional Paid-in					Total Shareholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)
Balance at May 31, 2023		5,075,420	$	5,083		1,062,244	$	—		168,832	$	—	$	55	$	(6,523	)	$	(1,385	)
Stock-based Compensation		—		—		—		—		—		—		13		—			13
Net Loss		—		—		—		—		—		—		—		(471	)		(471	)
Balance at August 31, 2023		5,075,420		5,083		1,062,244		—		168,832		—		68		(6,994	)		(1,843	)
Stock-based Compensation		—		—		—		—		—		—		33		—			33
Conversion of Convertible Debentures		—		—		517,532		1,496		—		—		—		—			1,496
Net Loss		—		—		—		—		—		—		—		(740	)		(740	)
Balance at November 30, 2023		5,075,420	$	5,083		1,579,776	$	1,496		168,832	$	-	$	101	$	(7,734	)	$	(1,054	)

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

NEW HORIZON AIRCRAFT LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

EXPRESSED IN CANADIAN DOLLAR 000’S; UNAUDITED

	Six months ended
	November 30, 2024			November 30, 2023
Cash Flows from Operating Activities:
Net Income (loss)	$	16,753		$	(1,211	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		61			19
Non-cash lease expense		—			28
Stock-based compensation		118			47
Non-cash interest		—			113
Registered Share Offering Costs		290			—
Change in fair value of Forward Purchase Agreement		740			—
Gain on Termination of Forward Purchase Agreement		(21,400	)		—
Change in Warrant liability		(2,030	)		—
Changes in operating assets and liabilities:
Prepaid expenses		1,580			(90	)
Accounts receivable		394			(252	)
Accounts payable		(341	)		33
Accrued liabilities		(346	)		—
Operating leases		(3	)		(27	)
Net cash used in operating activities		(4,184	)		(1,340	)

Cash Flows used in Investing Activities:
Purchase of property and equipment		(7	)		(54	)
Net cash used in investing activities		(7	)		(54	)

Cash Flows from Financing Activities:
Finance lease payments		—			(3	)
Proceeds from issuance of Convertible debentures		—			7,122
Repayment of notes payable		—			(75	)
Proceeds from Registered Securities Offering		3,947			—
Registered Share Offering Costs		(510	)
Forward Purchase Agreement termination		(278	)		—
Proceeds from warrants exercised		103			—
Net cash provided by financing activities		3,262			7,044

Net Change in Cash and Cash Equivalents		(929	)		5,650
Cash and Cash Equivalents - Beginning of period		1,816			228
Cash and Cash Equivalents - End of period	$	887		$	5,878

Taxes paid	$	—		$	—
Interest paid	$	1		$	—

The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.

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” or “Horizon”), a British Columbia corporation, with our headquarters located in Lindsay, Ontario, is an aerospace company. The Company is a former blank check company incorporated on March 11, 2022, under the name Pono Capital Three, Inc. (“Pono”), as a Delaware corporation, subsequently redomiciled in the Cayman Islands on October 14, 2022, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

The Company’s objective is to significantly advance the benefits of sustainable air mobility. In connection with this objective, we have designed and developed a cost-effective and energy efficient hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks.

Business Combination

On February 14, 2023, we consummated an initial public offering (“IPO”). On January 12, 2024 (the “Closing date”), we consummated a merger (the “Merger”) with Pono Three Merger Acquisitions Corp., a British Columbia company (“Merger Sub”) and wholly-owned subsidiary of Pono, with and into Robinson Aircraft Ltd. (“Robinson”) pursuant to an agreement and plan of merger, dated as of August 15, 2023, (as amended by a Business Combination Agreement Waiver, dated as of December 27, 2023) by and among Pono, Merger Sub, Horizon, and Robinson.

The Merger and other transactions contemplated thereby (collectively, the “Business Combination”) closed on January 12, 2024, when, pursuant to the Business Combination Agreement, Merger Sub merged with and into Robinson, surviving the Merger as a wholly owned subsidiary of Pono. Pono changed its name to “New Horizon Aircraft Ltd.” and the business of Robinson became the business of New Horizon Aircraft Ltd.

The unaudited condensed interim consolidated financial statements reflect (i) the historical operating results of Robinson prior to the Business Combination (“Legacy Horizon”); (ii) the combined results of Pono and Legacy Horizon following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Horizon at their historical cost; and (iv) the Company’s equity structure for all periods presented.

NOTE 2. Going Concern and Liquidity

The accompanying unaudited condensed interim 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. We have devoted many resources to the design and development of our eVTOL prototype. Funding of these activities has primarily been through the net proceeds received from the issuance of related and third-party debt and the sale of Class A ordinary shares to related and third parties.

Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management estimates that the net cash proceeds from fiscal 2025 sales of securities 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. On December 20, 2024, the Company received an investment of $8.4 million in exchange for a combination of common and preferred shares.

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 would 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 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. Certain prior period amounts have been reclassified to conform to the current year’s presentation. 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, 2024, that have had a material impact on the Condensed Consolidated Financial Statements and related notes.

Certain information and footnote disclosures normally included in the Company’s annual audited Consolidated Financial Statements and accompanying notes have been condensed or omitted in these accompanying interim Condensed Consolidated Financial Statements and footnotes. Accordingly, these interim Condensed 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, 2024, set forth in the Company’s Annual Report on Form 10-K filed with the SEC on August 15, 2024.

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.

NOTE 4. Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following:

	November 30, 2024			May 31, 2024
Computer Equipment	$	66		$	66
Leasehold Improvements		24			17
Tools and Equipment		48			48
Website Development		152			152
Vehicles		16			16
		306			299
Accumulated Depreciation		(155	)		(94	)
Total Property and Equipment, net	$	151		$	205

Depreciation expenses of $31 and $61 for the three and six months ended November 30, 2024 (November 30, 2023 - $6 and $19), respectively, has been recorded in General and Administrative expenses in the unaudited condensed interim consolidated statements of operations.

Prepaid Expenses

Prepaid Expenses consisted of the following:

	November 30, 2024		May 31, 2024
Prepaid insurance	$	272	$	482
Prepaid rent		1		1
Prepaid software		4		10
Prepaid capital market services		574		1,938
Total Prepaid expenses	$	851	$	2,431

Accrued Expenses

Accrued Expenses consisted of the following:

	November 30, 2024		May 31, 2024
Accrued professional fees	$	60	$	406
Accrued employee costs		7		84
Other accrued expenses		169		84
Total Accrued expenses	$	236	$	574

NOTE 5. Convertible Promissory Notes

In May 2022, the Company approved the issuance of a series of Convertible Promissory Notes (collectively, the “Notes”) carrying a one-year term with interest on the outstanding principal amount from the date of issuance accrued at the rate of 10% per annum.

On or before the date of the repayment in full of the Notes, in the event the Company issued shares of its equity securities to investors (the “Investors”) in gross proceeds of at least $2.0 million (a “Qualified Financing”), the outstanding principal and unpaid accrued interest balance of the Notes would convert into common shares at a conversion price equal to the lesser of (i) 80% of the per share price paid by the Investors; and (ii) a price equal to $15.0 million divided by the aggregate number of outstanding common shares of the Company immediately prior to the closing of the Qualified Financing on the same terms and conditions as provided to the Investors.

During the year ended May 31, 2023, the Company issued Convertible Promissory Notes in the amount of $1,035 (2022 - $50).

During the year ended May 31, 2024, the Company issued an additional Convertible Promissory Note in the amount of $300, with the same terms as the previously issued convertible promissory notes.

The following table presents the principal amounts and accrued interest of the Convertible Promissory Notes as of May 31, 2024:

	Amount
Convertible Promissory Notes May 31, 2022	$	50
Issuance of additional Convertible Promissory Notes		1,035
Accrued interest		57
Convertible Promissory Notes May 31, 2023	$	1,142
Issuance of additional Convertible Promissory Notes		300
Accrued interest		54
Conversion of Promissory Notes		(1,496	)
Convertible Promissory Notes May 31, 2024	$	-

There was $24 and $30 of interest recorded in the three and six months ended November 30, 2023, respectively.

In October 2023, the Company completed a Qualified Financing and based on the terms of the Notes all Convertible Promissory Notes were converted into 517,532 common shares at of the Company.

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 November 30, 2024, and May 31, 2024, 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
November 30, 2024
Liabilities
Derivative Liability - Warrants	$	3,657	$	352	$	—	$	3,305
Total	$	3,657	$	352	$	—	$	3,305

Description	Amount at Fair Value		Level 1		Level 2		Level 3
May 31, 2024
Liabilities
Derivative Liability - Forward Purchase Agreement	$	20,938	$	—	$	—	$	20,938
Derivative Liability - Warrants	$	576	$	549	$	—	$	27
Total	$	21,514	$	549	$	—	$	20,965

The following table provides quantitative information regarding Level 3 fair value measurements inputs related to the Forward Purchase Agreement at their measurement dates:

	November 1, 2024			May 31, 2024
Redemption Price (USD)	$	10.61		$	10.61
Stock Price (USD)	$	0.28		$	0.80
Volatility		76	%		53	%
Term (years)		1.76			2.18
Risk-free rate		4.40	%		4.51	%

As outlined in note 7, 5,800,000 warrants were issued on August 21, 2024. The following table provides quantitative information regarding Level 3 fair value measurements inputs related to these Warrant liabilities at their measurement dates:

	November 30, 2024			August 21, 2024
Redemption Price (USD)	$	0.75		$	0.75
Stock Price (USD)	$	0.67		$	0.96
Volatility		76	%		76	%
Term (years)		4.7			5.0
Risk-free rate		4.18	%		3.61	%

The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the three and six months ended November 30, 2024, is summarized as follows:

	November 30, 2024
Fair value Derivative Liability - May 31, 2024	$	20,965
Change in fair value of Forward Purchase Agreement		740
Termination of Forward Purchase Agreement		(21,678	)
Additional Warrant Liabilities incurred		5,157
Change in fair value of Warrant Liabilities		(1,879	)
Fair value Derivative Liability - November 30, 2024	$	3,305

The estimated fair value of the Forward Purchase Agreement was measured at fair value using a simulation model, which was determined using Level 3 inputs. Inherent in a simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its Class A ordinary shares based on implied volatility from the Company’s traded Class A ordinary shares and from historical volatility of select peer company’s shares that matches the expected remaining life of the Forward Purchase Agreement. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the Class A ordinary shares. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. Any changes in these assumptions could change the valuation significantly.

The Company mutually agreed to terminate the Forward Purchase Agreement with its counterparty on November 1, 2024, for a cost of $278. In connection with this termination, the Company recorded a $21,400 gain.

NOTE 7. Common Stock

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; and (ii) an unlimited number of Class B ordinary shares. The holder of each ordinary share is entitled to one vote.

On August 21, 2024, the Company completed a registered securities offering (“RSO”) by issuing 2,800,000 Class A ordinary shares, 3,000,000 Pre-Funded Warrants (“PFW’s”), and 5,800,000 warrants. As of November 30, 2024, proceeds received by the Company are summarized below:

Gross Proceeds - Class A Shares	$	1,906
Gross Proceeds - PFW’s		2,041
Gross Proceeds - Warrant Exercises		103
Direct costs		(510	)
Net Proceeds	$	3,540

PFW’s may be exercised by warrant holders at any time at a nominal exercise price as they were funded in connection with the RSO. Upon exercise, each PFW may be exchanged for one Class A ordinary share. All 3 million PFW’s were exercised in the quarter ended November 30, 2024.

Warrant holders exercised 100,000 warrants in exchange for 100,000 Class A ordinary shares for proceeds of $103 during the six months ended November 30, 2024.

As of November 30, 2024, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 5,700,000 at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.

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, 2024		12,065,375		$	11.50		4.3	$	-
Issued August 21, 2024		8,800,000		$	0.49		4.7		-
Exercised		(3,100,000	)	$	0.02		5.0		-
Expired		-		$	-		-	$	-
Outstanding warrants August 31, 2024		17,765,375		$	8.05		4.4	$	-

Terms and related estimates connected with the RSO have been outlined in note 6. The Company has retroactively adjusted the number of shares issued and outstanding prior to January 12, 2024, to give effect to the Exchange Ratio.

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 and six months ended November 30, 2024, the Company granted 180,000 stock options (November 30, 2023 – nil and nil). The Company estimated the fair value of the stock options on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	October 4, 2024
Stock price	$USD	0.27
Risk-free interest rate		3.8	%
Term (years)		5
Volatility		76	%
Forfeiture rate		0	%
Dividend yield		0	%

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 (USD)
Outstanding stock options May 31, 2024		685,230	$	0.60		6.8	$	139
Exercised		-		-		-		-
Expired		-		-		-		-
Issued October 4, 2024		180,000	$	0.27		9.9	$	73
Outstanding stock options November 30, 2024		865,230	$	0.56		6.9	$	103
Exercisable as of November 30, 2024		391,396	$	0.59		5.6	$	33

During the three and six months ended November 30, 2024, the Company recorded stock-based compensation expenses of $13 and $118 (November 30, 2023 - $33 and $47), relating to stock options including $74 relating to shares issued for services in connection with the Company’s Incentive Plan in the quarter ended August 31, 2024.

NOTE 9. Net Income (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 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, Convertible debentures, and Warrants. Stock options, Convertible debentures and certain Warrants and Stock options were excluded from the computation of diluted net income (loss) per share as including them would have been anti-dilutive.

The following outlines the Company’s basic and diluted income (loss) per share for the three and six months ended November 30, 2024, and November 30, 2023:

	Quarter-Ended					Six Months Ended
	November 30, 2024		November 30, 2023			November 30, 2024		November 30, 2023
Income (loss) per share:
Basic:	$	0.83	$	(0.15	)	$	0.79	$	(0.24	)
Diluted:	$	0.80	$	(0.15	)	$	0.76	$	(0.24	)

Shares used in computing Income (loss) per share:
Basic:		23,599,144		5,075,420			21,246,788		5,075,420
Diluted:		24,574,247		5,075,420			21,930,531		5,075,420

NOTE 10. Grants and Subsidies

DAIR Green Fund

In November 2022, the Company entered into a funding agreement with the Downsview Aerospace Innovation and Research Centre (“DAIR”). In June 2022, DAIR entered into a Contribution Agreement with the Federal Economic Development Agency for Southern Ontario to launch a Green Fund to financially support projects led by small and medium size enterprises.

DAIR selected the Company for multiple projects in connection with further aircraft development. The initial funding approved to the Company was $75, of which $50 was issued to the Company during the year ended May 31, 2023, and $25 was received during the year ended May 31, 2024.

In the six months ended November 30, 2024, the Company received approval for an additional project with funding up to a maximum of $75, of which $30 was received during the quarter ended November 30, 2024.

Air Force Grant

In January 2022, the Company entered into a Market Research Investment Agreement (the “Agreement”) with Collaboration.Ai, a company engaged with the United States Operations Command and the U.S. Air Force to administer selection and awards for the AFWERX Challenge program to foster innovation within the services. In connection with the Agreement, the Company will provide research, development, design, manufacturing, services, support, testing, integration, and equipment in aid of delivery of market research in accordance with one or more statements of work or market research plans. During the year ended May 31, 2023, a fixed fee fund of $366 was approved. As of November 30, 2024, the Company had received $235 of this amount, which was received in prior periods.

Scientific Research and Experimental Development

In July 2023, in connection with the year ended May 31, 2023, the Company filed an application for Scientific Research and Experimental Development (“SRED”) credits with the Canadian federal government in the amount of $229. This amount was received in December 2023.

In connection with the year ended May 31, 2024, the Company filed an application for SRED credits in the amount of $307. This amount was received in August 2024.

NOTE 11. Related Party Transactions

There were no identifiable related party transactions or balances for the periods presented.

NOTE 12. Subsequent Events

On December 20, 2024, the Company received an investment of $8.4 million in exchange for a combination of common and preferred shares.

Between December 1, 2024, and the date of this filing, 2.49 million of the Company’s outstanding warrants were exercised with proceeds to the Company of $2,708.

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 15, 2024. 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”) as a Delaware corporation, subsequently redomiciled in the Cayman Islands on October 14, 2022, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses.

Business Combination

On February 14, 2023, we consummated an initial public offering (“IPO”). On January 12, 2024 (the “Closing date”), we consummated a merger (the “Merger”) with Pono Three Merger Acquisitions Corp., a British Columbia company (“Merger Sub”) and wholly-owned subsidiary of Pono, with and into Robinson Aircraft Ltd. (“Robinson”) pursuant to an agreement and plan of merger, dated as of August 15, 2023 (as amended by a Business Combination Agreement Waiver, dated as of December 27, 2023), by and among Pono, Merger Sub, Horizon, and Robinson.

The financial information included in this report reflect (i) the historical operating results of Robinson prior to the Business Combination (“Legacy Horizon”); (ii) the combined results of Pono and Legacy Horizon following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Horizon at their historical cost; and (iv) the Company’s equity structure for all periods presented.

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 have designed and developed a cost effective and energy efficient hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks.

Robinson was incorporated in 2013. Initially, the company was focused on development of a hybrid electric amphibious aircraft, and in 2018 the Company pivoted to developing an innovative eVTOL concept that is identified as the Cavorite X7. The Company has built several small-scale prototypes and now has a 50%-scale aircraft that is undergoing active flight testing.

Horizon intends to sell these 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.

Key Factors Affecting Operating Results

See the section entitled “Risk Factors” in the Company’s Form 10-K filed with the SEC on August 15, 2024, for a further discussion of these considerations.

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 large, it remains undeveloped and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft beginning in 2027, and its business will require significant investment leading up to launching services, including, but not limited to, final engineering designs, prototyping and flight testing, manufacturing, software development, certification, pilot training and commercialization.

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 approximately twice as fast, and operate with significantly 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

The Company believes that the primary sources of competition for its aircraft sales are traditional helicopters, ground-based mobility solutions, and other eVTOL developers. While it expects to produce a versatile aircraft that can be useful in a variety of air mobility missions, the Company expects this industry to be dynamic and increasingly competitive. It is possible that its 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, it 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 advocating to kickstart government funding programs.

Government Certification

To be utilized in for-profit 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 will initially lead certification efforts. Horizon expects the FAA to participate during this process which will likely reduce the 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 develop a certification basis for the certification of Horizon’s hybrid-electric eVTOL aircraft.

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 costing hundreds of millions of dollars. The Company has never undergone such a process, and there is no guarantee that its Cavorite X7 design will eventually achieve certification despite its best efforts. The Company will need to obtain authorizations and certifications related to the production of its aircraft. While it anticipates being able to meet the requirements of such authorizations and certifications, the Company may be unable to obtain such authorizations and certifications, or to do so on the timeline it projects. Should the Company fail to obtain any of the required authorizations or certifications, or do so in a timely manner, or any of these authorizations 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 would have adverse effects on its business, prospects, financial condition, and results of operations.

Dual Use Business Model

Horizon’s business model to serve as a dual use aircraft 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 long-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 include numerous parts and manufacturing processes unique to eVTOL aircraft, in general, and its product design, in particular. Best 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 unaudited condensed interim 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. We have devoted many resources to the design and development of our eVTOL prototype. Funding of these activities has primarily been through the net proceeds received from the issuance of related and third-party debt and the sale of Class A ordinary shares to related and third parties.

Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management expects that the proceeds from fiscal 2025 sales of securities will be sufficient to fund our 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 is substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital. On December 20, 2024, the Company received an investment of $8.4 million in exchange for a combination of common and preferred shares in additional to Warrant exercises resulting in proceeds of $2.7 million between December 1, 2024 and the date of this filing.

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, and manufacture 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 (“SOX”) 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 consists primarily of interest earned on the Company’s cash.

Change in fair value and termination of Forward Purchase Agreement

Change in fair value of Forward Purchase Agreement consists of fluctuations in the deemed value of an agreement between the Company and a shareholder facilitating future purchases of the Company’s stock based on a simulation model. The Company mutually agreed to terminate the Forward Purchase Agreement with its counterparty on November 1, 2024, at a cost of $278. In connection with this termination, the Company recorded a $21,400 gain.

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.

Results of Operations

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 November 30, 2024 to the Three Months Ended November 30, 2023

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 November 30, 2024 and November 30, 2023 (000’s).

	Quarter-Ended
Operating expenses	November 30, 2024			November 30, 2023			Variance ($)
Research and development	$	427		$	219		$	(208	)
General and administrative		2,847			605			(2,242	)
Total operating expenses		3,274			824			(2,450	)
Loss from operations		(3,274	)		(824	)		2,450
Other expenses (income)		(47	)		(227	)		(180	)
Interest expense (income), net		(13	)		143			156
Change in fair value of Warrants		(2,035	)		—			2,035
Change in fair value and Termination of Forward Purchase Agreement		(20,843	)		—			20,843
Net Income (Loss)	$	19,664		$	(740	)	$	(20,404	)

Operating Expenses

Operating expenses increased by $2,450, from $824 for the quarter ended November 30, 2023, to $3,274 for the quarter ended November 30, 2024. The increase was primarily driven by professional fees, additional staff hired to support development activities, and other administrative costs connected with the Company’s growth activities.

Research and Development Expenses

Research and development expenses increased by $208, from $219 during the quarter ended November 30, 2023, to $427 during the quarter ended November 30, 2024. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis.

General and Administrative

General and Administrative costs increased by $2,242, from $605 during the quarter ended November 30, 2023, to $2,847 during the quarter ended November 30, 2024. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts.

Comparison of the Six Months Ended November 30, 2024 to the Six Months Ended November 30, 2023

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 six months ended November 30, 2024 and November 30, 2023 (000’s).

	Six months Ended
Operating expenses	November 30, 2024			November 30, 2023			Variance ($)
Research and development	$	724		$	419		$	(305	)
General and administrative		5,255			840			(4,415	)
Total operating expenses		5,979			1,259			(4,720	)
Loss from operations		(5,979	)		(1,259	)		4,720
Other expenses (income)		(18	)		(229	)		(211	)
Interest expense (income), net		(24	)		181			205
Change in fair value of Warrants		(2,030	)		—			2,030
Change in fair value and Termination of Forward Purchase Agreement		(20,660	)		—			20,660
Total other income		(22,732	)		(48	)		22,684
Net Income (Loss)	$	16,753		$	(1,211	)	$	(17,964	)

Operating Expenses

Operating expenses increased by $4,720, from $1,259 for the six months ended November 30, 2023, to $5,979 for the six months ended November 30, 2024. The increase was primarily driven by professional fees, additional staff hired to support development activities, and other administrative costs connected with the Company’s growth activities.

Research and Development Expenses

Research and development expenses increased by $305, from $419 during the six months ended November 30, 2023, to $724 during the six months ended November 30, 2024. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis.

General and Administrative

General and Administrative costs increased by $4,415, from $840 during the six months ended November 30, 2023, to $5,255 during the six months ended November 30, 2024. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts.

Cash Flows

The following tables set forth a summary of our cash flows for the periods indicated (000’s):

	Six months Ended
Net cash provided by (used in)	November 30, 2024			November 30, 2023			Variance ($)
Operating activities	$	(4,184	)	$	(1,340	)	$	(2,844	)
Investing activities		(7	)		(54	)		47
Financing activities		3,262			7,044			(3,782	)
Net increase (decrease) in cash	$	(929	)	$	5,650		$	(6,579	)

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 six months ended November 30, 2024, the $2,844 increase in cash used from operations as compared to the six months ended November 30, 2023, was primarily attributed to increased operating costs, partially offset by 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 six months ended November 30, 2024, there was a $7 acquisition of leasehold improvements.

Net Cash used in Financing Activities

The Company’s cash flows used in financing activities to date have primarily been composed of funding raised with convertible instruments and registered securities offerings.

For the six months ended November 30, 2024, the $3,782 decrease in cash provided by financing activities was primarily attributed to the proceeds from the conversion of the Convertible debentures during the six months ended November 30, 2023, partially offset by the issuance of Class A ordinary shares and Pre-Funded Warrants (“PFW’s”) which may convert into common shares of the Company at the discretion of the warrant holders in the current period.

On August 21, 2024, the Company completed a registered securities offering (“RSO”) by issuing 2,800,000 Class A ordinary shares, 3,000,000 PFW’s, and 5,800,000 warrants. Proceeds received by the Company is summarized below:

Gross Proceeds - Class A Shares	$	1,906
Gross Proceeds - PFW’s	$	2,041
Gross Proceeds - Warrant Exercises	$	103
Direct costs	$	(510	)
Net Proceeds	$	3,540

Warrant holders exercised 100,000 warrants in exchange for 100,000 Class A ordinary shares for proceeds of $103 in the six months ended November 30, 2024.

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 November 30, 2024, the Company’s principal source of liquidity is expected to be cash and cash equivalents of $887 on-hand as of November 30, 2024, $8.4 million received in connection with a strategic investment made by a legacy investor on December 20, 2024, and Warrant exercises which totaled $2,708 in the period from December 1, 2024, to the date of this filing.

To date, the Company has funded its operations primarily with the issuances of common shares and issuances of convertible debt instruments. Additional funding has been provided through government-backed grants.

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 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 three years.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of November 30, 2024, and May 31, 2024.

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 unaudited condensed interim 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.

The Company’s Forward Purchase Agreement and Warrants outstanding are recognized as a derivative liability in accordance with ASC 815. Accordingly, the Company recognizes the instrument as an asset or liability at fair value and with changes in fair value recognized in the Company’s unaudited condensed interim consolidated statements of operations. The estimated fair value of the Forward Purchase Agreement is measured at fair value using a simulation model. At the settlement date, the Forward Purchase Agreement will be recognized as a derivative asset at the value of cash paid based on the number of shares, with any changes in fair value recognized in the Company’s unaudited condensed interim consolidated statements of operations. The Company mutually agreed to terminate the Forward Purchase Agreement with its counterparty on November 1, 2024, at a cost of $278.

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

As a smaller reporting company, we are not required to provide the information required by this item.

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 Securities and Exchange Commission’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 November 30, 2024, 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.

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 on Form 10-K filed with the SEC on August 15, 2024 (the “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. Except as set forth below, 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.

Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our securities.

If we fail to satisfy Nasdaq’s continued listing requirements, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to delist our securities. Such a delisting would likely have a negative effect on the price of our shares and would impair the ability to sell or purchase our shares.

On July 19, 2024, Nasdaq notified us that for at least the last 30 consecutive business days, the bid price for the Company’s Class A ordinary shares had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have a compliance period of 180 calendar days, or until January 15, 2025, to regain compliance with the Bid Price Rule. If at any time before January 15, 2025, the bid price of our Class A ordinary shares closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide us with a written confirmation of compliance with the Bid Price Rule and the matter deemed closed. On January 10, 2025, the Company completed 10 consecutive business days with our Class A ordinary shares closing at more than $1.00 per share.

On August 28, 2024, Nasdaq notified us that the Company had failed to maintain a net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years required for continued listing under Nasdaq Listing Rule 5550(b)(3) (the “Net Income Standard”). The Nasdaq staff (the “Staff”) also notified the Company it does not meet the alternative continued listing standards under Nasdaq Listing Rule 5550(b)(2) (the “Market Value of Listed Securities Standard,” which requires the market value of the Company’s listed securities be at least $35 million) or Nasdaq Listing Rule 5550(b)(1) (the “Equity Standard,” which requires the Company to maintain stockholders’ equity of at least $2.5 million) (the Net Income Standard, the Market Value of Listed Securities Standard, and the Equity Standard, collectively the “Continued Listing Standards”).

The Company submitted a plan to the Staff to regain compliance (a “Compliance Plan”) with the Continued Listing Standards on October 2, 2024. On October 11, 2024, the Company received a letter from the Staff advising the Company that the Staff did not accept the Company’s Compliance Plan (the “Determination Letter”) as written. In accordance with Nasdaq Listing Rule 5815(a), the Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Staff’s determination and provide additional information. The hearing took place on December 12, 2024, and the Company is currently awaiting the results of this hearing. If the Company’s appeal is successful, the Company may be granted additional time (up to 180 calendar days from the date of the Determination Letter) to evidence compliance with the Continued Listing Standards or outright continued listing on the Nasdaq.

In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our shares to become listed again, stabilize the market price or improve the liquidity of our shares, prevent our shares from dropping below Nasdaq’s minimum bid price requirement or prevent future non-compliance with Nasdaq’s listing requirements.

If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:

●

a limited availability of market quotations for our securities;

●

reduced liquidity for our securities;

●

a determination that our Class A ordinary shares are “penny stock” which will require brokers trading in the Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

●

a limited amount of news and analyst coverage; and

●

a decreased ability to issue additional securities or obtain additional financing in the future.

The notices from Nasdaq have no immediate effect on the listing of our Class A ordinary shares, and our Class A ordinary shares will continue to be listed on the Nasdaq Capital Market under the symbol “HOVR”.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) During the quarter ended November 30, 2024, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K.

(b) Not Applicable.

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 November 30, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading agreement” or a “non-Rule 10b5-1 trading agreement” (in each case defined in Item 408 of Regulation S-K).

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit No.		Description
2.1†		Business Combination Agreement, dated August 15, 2023, by and among Pono Capital Three, Inc., Pono Three Merger Acquisitions Corp., and Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on August 15, 2023).
3.1		New Horizon Articles (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on February 14, 2024).
4.1		Warrant Agreement, dated February 9, 2023, by and between Pono Capital Three, Inc. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023).
4.2		Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
4.3		Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
4.4		Form of First Shortfall Warrant (incorporated by reference to Exhibit 4.4 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on April 8, 2024).
4.5		Form of Warrant (incorporated by reference to Exhibit 4.5 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on June 24, 2024).
4.6		Form of Pre-funded Warrant Form of Warrant (incorporated by reference to Exhibit 4.6 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on June 24, 2024).
10.1		Form of Warrant Amendment (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on September 5, 2024).
10.2		Mutual Termination Agreement, dated November 1, 2024, by and between the Company and Seller (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on November 7, 2024).
31.1*		Rule 13a-14(a) Certification by Principal Executive Officer
31.2*		Rule 13a-14(a) Certification by Principal Financial and Accounting Officer
32.1**		Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.2**		Section 1350 Certification of Principal Financial and Accounting Officer
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101)

*	Filed with this Report.
**	Furnished with this Report.
†	Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request.

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: January 14, 2025		/s/ Brandon Robinson
	Name:	Brandon Robinson
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Date: January 14, 2025		/s/ Brian Merker
	Name:	Brian Merker
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by New Horizon Aircraft Ltd.