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 April 14, 2025, there were
TABLE OF CONTENTS
| PART I — FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 23 |
| Item 4. | Controls and Procedures | 23 |
| PART II — OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 24 |
| Item 1A. | Risk Factors | 24 |
| Item 2. | Unregistered Sales of Equity Securities, and Use of Proceeds | 25 |
| Item 3. | Defaults Upon Senior Securities | 25 |
| Item 4. | Mine Safety Disclosures | 25 |
| Item 5. | Other Information | 25 |
| Item 6. | Exhibits | 26 |
| SIGNATURES | 27 | |
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
NEW HORIZON AIRCRAFT LTD.
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
AS AT FEBRUARY 28, 2025 AND MAY 31, 2024
EXPRESSED IN CANADIAN DOLLAR 000’S, EXCEPT PER SHARE AMOUNTS; UNAUDITED
| February 28, 2025 | May 31, 2024 | |||||||
| 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 | ||||||||
| Forward Purchase Agreement | ||||||||
| Warrant liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total Liabilities | ||||||||
| Shareholders’ Equity (Deficit): | ||||||||
| Class A ordinary shares, par value; | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Shareholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed interim consolidated financial statements.
1
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 nine months ended | |||||||||||||||
| February 28, 2025 | February 29, 2024 | February 28, 2025 | February 29, 2024 | |||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses (income) | ( | ) | ( | ) | ||||||||||||
| Interest expense (income), net | ( | ) | ( | ) | ||||||||||||
| Change in fair value of Warrants | ( | ) | ||||||||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||||||||||
| Termination of Forward Purchase Agreement | ( | ) | ||||||||||||||
| Total other expenses | ( | ) | ||||||||||||||
| Income (Loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ||||||||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Income (loss) per share: | ||||||||||||||||
| Basic: | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Diluted: | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Shares used in computing Income (loss) per share: | ||||||||||||||||
| Basic: | ||||||||||||||||
| 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 B Ordinary Shares | Preferred Shares | Additional Paid-in | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||
| Balance at May 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Stock-based Compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Incentive Shares Issued | ||||||||||||||||||||||||||||||||||||
| Class A Shares Issued | ||||||||||||||||||||||||||||||||||||
| Warrant Exercise | ||||||||||||||||||||||||||||||||||||
| Pre-Funded Warrants | — | — | — | |||||||||||||||||||||||||||||||||
| Warrant Issuance | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at August 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Stock-based Compensation | — | $ | — | $ | — | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Net Income | — | — | — | |||||||||||||||||||||||||||||||||
| Warrant Exercise | ||||||||||||||||||||||||||||||||||||
| Pre-Funded Warrants Exercised | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at November 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||||
| Stock-based Compensation | — | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Warrant Exercise | ||||||||||||||||||||||||||||||||||||
| Class A Shares Issued | ||||||||||||||||||||||||||||||||||||
| Preferred Shares Issued | ||||||||||||||||||||||||||||||||||||
| Balance at February 28, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Stock-based Compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at August 31, 2023 | $ | $ | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based Compensation | — | $ | — | $ | — | $ | $ | $ | ||||||||||||||||||||||||||||
| Conversion of Convertible Debentures | ||||||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at November 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Conversion of Convertible Notes Payable | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||
| Issuance of Service Shares | ||||||||||||||||||||||||||||||||||||
| Legacy Horizon Share Exchange | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| New Horizon Shares on Effective Date | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Incentive Shares | ||||||||||||||||||||||||||||||||||||
| Capital Markets Advisory Shares | ||||||||||||||||||||||||||||||||||||
| Underwriter Shares Issued | ||||||||||||||||||||||||||||||||||||
| Stock-based Compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance at February 29, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
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
| Nine months ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Non-cash interest | ||||||||
| Registered Share Offering Costs | ||||||||
| Change in fair value of Forward Purchase Agreement | ||||||||
| Gain on Termination of Forward Purchase Agreement | ( | ) | ||||||
| Change in Warrant liability | ( | ) | ||||||
| Changes in working capital: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued liabilities | ( | ) | ||||||
| Operating leases | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows used in Investing Activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Finance lease payments | ||||||||
| Proceeds from issuance of Convertible debentures | ||||||||
| Outflow from Business Combination | ( | ) | ||||||
| Repayment of Term loan | ( | ) | ||||||
| Proceeds from Registered Securities Offering | ||||||||
| Registered Share Offering Costs | ( | ) | ||||||
| Proceeds from Issuance of Class A Ordinary Shares | ||||||||
| Proceeds from Issuance of Preferred Shares | ||||||||
| Forward Purchase Agreement termination | ( | ) | ||||||
| Proceeds from warrants exercised | ||||||||
| Net cash provided by financing activities | ||||||||
| Net Change in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents - Beginning of period | ||||||||
| Cash and Cash Equivalents - End of period | $ | $ | ||||||
| Taxes paid | $ | $ | ||||||
| Conversion of Convertible debentures | $ | $ | ||||||
| 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”
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
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 Class A ordinary shares and Preferred shares as well as the issuance of related and third-party convertible debt.
5
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.
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/A 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/A filed with the SEC on March 17, 2025.
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.
6
NOTE 4. Balance Sheet Components
Property and Equipment, net
Property and equipment consist of the following:
| February 28, 2025 | May 31, 2024 | |||||||
| Computer Equipment | $ | $ | ||||||
| Leasehold Improvements | ||||||||
| Tools and Equipment | ||||||||
| Website Development | ||||||||
| Vehicles | ||||||||
| Accumulated Depreciation | ( | ) | ( | ) | ||||
| Total Property and Equipment, net | $ | $ | ||||||
Depreciation expenses of $
Prepaid Expenses
Prepaid Expenses consisted of the following:
| February 28, 2025 | May 31, 2024 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid rent | ||||||||
| Prepaid software | ||||||||
| Prepaid capital market services | ||||||||
| Total Prepaid expenses | $ | $ | ||||||
Accrued Expenses
Accrued Expenses consisted of the following:
| February 28, 2025 | May 31, 2024 | |||||||
| Accrued professional fees | $ | $ | ||||||
| Accrued employee costs | ||||||||
| Other accrued expenses | ||||||||
| Total Accrued expenses | $ | $ | ||||||
7
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
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 $
During the year ended May 31, 2023, the Company
issued Convertible Promissory Notes in the amount of $
During the year ended May 31, 2024, the Company
issued an additional Convertible Promissory Note in the amount of $
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 | $ | |||
| Issuance of additional Convertible Promissory Notes | ||||
| Accrued interest | ||||
| Convertible Promissory Notes May 31, 2023 | $ | |||
| Issuance of additional Convertible Promissory Notes | ||||
| Accrued interest | ||||
| Conversion of Promissory Notes | ( | ) | ||
| Convertible Promissory Notes May 31, 2024 | $ | |||
There was $ and $
In October 2023, the Company completed a Qualified
Financing and based on the terms of the Notes all Convertible Promissory Notes were converted into
8
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 February 28, 2025, 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 | ||||||||||||
| February 28, 2025 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Description | Amount at Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
| May 31, 2024 | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Forward Purchase Agreement | $ | $ | $ | $ | ||||||||||||
| Derivative Liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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) | $ | $ | ||||||
| Stock Price (USD) | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free rate | % | % | ||||||
As outlined in note warrants were
issued on August 21, 2024, of which
| February 28, 2025 | August 21, 2024 | |||||||
| Redemption Price (USD) | $ | $ | ||||||
| Stock Price (USD) | $ | $ | ||||||
| Volatility | % | % | ||||||
| Term (years) | ||||||||
| Risk-free rate | % | % | ||||||
9
The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the nine months ended February 28, 2025, is summarized as follows:
| February 28, 2025 | ||||
| Fair value Derivative Liability - May 31, 2024 | $ | |||
| Change in fair value of Forward Purchase Agreement | ||||
| Termination of Forward Purchase Agreement | ( | ) | ||
| Additional Warrant Liabilities incurred | ||||
| Change in fair value of Warrant Liabilities | ( | ) | ||
| Fair value Derivative Liability – February 28, 2025 | $ | |||
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 $
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; (ii) an unlimited number
of Class B ordinary shares; and (iii) an unlimited number of preferred shares. The holder of each ordinary share is entitled to
On August 21, 2024, the Company completed a registered
securities offering (“RSO”) by issuing
| Gross Proceeds - Class A Shares | $ | |||
| Gross Proceeds - PFW’s | ||||
| Gross Proceeds - Warrant Exercises | ||||
| Direct costs | ( | ) | ||
| Net Proceeds | $ |
10
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
Warrant holders exercised
As of February 28, 2025, there were warrants outstanding
of
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 | $ | $ | ||||||||||||||
| Issued August 21, 2024 | $ | - | ||||||||||||||
| Exercised | ( | ) | $ | - | ||||||||||||
| Expired | $ | $ | ||||||||||||||
| Outstanding warrants February 28, 2025 | $ | $ | ||||||||||||||
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.
On
December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued
an aggregate of
The Series A Preferred Shares are convertible,
at the option of the holder and without additional consideration, into Class A ordinary Shares on a one for 2222.222222 basis.
| Gross Proceeds - Class A Shares | $ | |||
| Gross Proceeds - Preferred Shares | ||||
| Direct costs | ( | ) | ||
| Net Proceeds | $ |
11
On February 14, 2025, we entered
into a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with an institutional services company (the “Sales
Agent”) relating to our Class A ordinary shares. In accordance with the terms of the Sales Agreement, we may offer and sell Class
A ordinary shares having an aggregate offering price of up to $
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
| October 4, 2024 | February 3, 2025 | |||||||
| Stock price | $USD | | $USD | | ||||
| Number of Options issued | ||||||||
| 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, 2024 | $ | $ | ||||||||||||||
| Exercised | - | - | ||||||||||||||
| Expired | - | - | ||||||||||||||
| Issued October 4, 2024 | $ | $ | ||||||||||||||
| Issued February 3, 2025 | $ | $ | ||||||||||||||
| Outstanding stock options February 28, 2025 | $ | $ | ||||||||||||||
| Exercisable as of February 28, 2025 | $ | $ | ||||||||||||||
During the three and nine months ended February
28, 2025, the Company recorded stock-based compensation expenses of $
On February 3, 2025, the Company issued
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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, PSU’s, and Warrants. Certain Stock options, Convertible debentures, PSU’s, and Warrants 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 nine months ended February 28, 2025, and February 29, 2024:
| Quarter-Ended | Nine Months Ended | |||||||||||||||
| February 28, 2025 | February 29, 2024 | February 28, 2025 | February 29, 2024 | |||||||||||||
| Income (loss) per share: | ||||||||||||||||
| Basic: | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Diluted: | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
| Shares used in computing Income (loss) per share: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Diluted: | ||||||||||||||||
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 $
In the nine months ended February 28, 2025, the
Company received approval for an additional project with funding up to a maximum of $
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 $
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 $
In connection with the year ended May 31, 2024,
the Company filed an application for SRED credits in the amount of $
NOTE 11. Related Party Transactions
During the three and nine months ended February
28, 2025, the Company paid $
NOTE 12. Subsequent Events
The Company has evaluated subsequent events from March 1, 2025, through to the date of this filing Form 10-Q and determined that there have been no reportable subsequent events.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to New Horizon Aircraft Ltd. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
All figures noted are in thousands of Canadian dollars unless noted otherwise.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Form 10-K/A filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 17, 2025. 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.
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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 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.
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Key Factors Affecting Operating Results
See the section entitled “Risk Factors” in the Company’s Form 10-K/A filed with the SEC on March 17, 2025, 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 2028, 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.
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Typically, the certification of a new aircraft design by TCCA or the FAA is a long and complex process, often spanning more than five years and 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 Class A ordinary shares and Preferred shares as well as the issuance of related and third-party convertible debt.
Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management 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.
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.
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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, 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 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 $21,400 gain.
Change in fair value of Warrants
Changes in fair value of Warrants consists of fluctuations in the fair value of warrants outstanding as of the end of each reporting period.
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Results of Operations
This data should be read in conjunction with Horizon’s unaudited condensed interim consolidated financial statements and notes thereto. These results of operations are not necessarily indicative of the future results of operations that may be expected for any future period.
Comparison of the Three Months Ended February 28, 2025 to the Three Months Ended February 29, 2024
Meaningful variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the quarters ended February 28, 2025 and February 29, 2024 (000’s).
| Quarter-Ended | ||||||||||||
| Operating expenses | February 28, 2025 | February 29, 2024 | Variance ($) | |||||||||
| Research and development | $ | 443 | $ | 270 | $ | (173 | ) | |||||
| General and administrative | 3,111 | 989 | (2,122 | ) | ||||||||
| Total operating expenses | 3,554 | 1,259 | (2,295 | ) | ||||||||
| Loss from operations | (3,554 | ) | (1,259 | ) | 2,295 | |||||||
| Other expenses (income) | 11 | 6 | (5 | ) | ||||||||
| Interest expense (income), net | (51 | ) | 15 | 66 | ||||||||
| Change in fair value of Warrants | 1,429 | — | (1,429 | ) | ||||||||
| Change in fair value and Termination of Forward Purchase Agreement | — | 4,026 | 4,026 | |||||||||
| Net Income (Loss) | $ | (4,943 | ) | $ | (5,306 | ) | $ | 363 | ||||
Operating Expenses
Operating expenses increased by $2,295, from $1,259 for the quarter ended February 29, 2024, to $3,554 for the quarter ended February 28, 2025. 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 $173, from $270 during the quarter ended February 29, 2024, to $443 during the quarter ended February 28, 2025. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the respective periods:
| Quarter-Ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Compensation Costs | $ | 407 | $ | 243 | ||||
| Engineering costs | 35 | 27 | ||||||
| Depreciation | 1 | - | ||||||
| Total Research and Development costs | $ | 443 | $ | 270 | ||||
General and Administrative
General and Administrative costs increased by $2,122, from $989 during the quarter ended February 29, 2024, to $3,111 during the quarter ended February 28, 2025. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts.
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Comparison of the Nine Months Ended February 28, 2025 to the Nine Months Ended February 29, 2024
Meaningful variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the nine months ended February 28, 2025 and February 29, 2024 (000’s).
| Nine months Ended | ||||||||||||
| Operating expenses | February 28, 2025 | February 29, 2024 | Variance ($) | |||||||||
| Research and development | $ | 1,167 | $ | 635 | $ | (532 | ) | |||||
| General and administrative | 8,365 | 1,829 | (6,536 | ) | ||||||||
| Total operating expenses | 9,532 | 2,464 | (7,068 | ) | ||||||||
| Loss from operations | (9,532 | ) | (2,464 | ) | 7,068 | |||||||
| Other expenses (income) | (7 | ) | (222 | ) | (215 | ) | ||||||
| Interest expense (income), net | (75 | ) | 195 | 270 | ||||||||
| Change in fair value of Warrants | 601 | — | 601 | |||||||||
| Change in fair value and Termination of Forward Purchase Agreement | (20,660 | ) | 4,026 | 24,686 | ||||||||
| Total other income | (21,343 | ) | 3,999 | 25,342 | ||||||||
| Net Income (Loss) | $ | 11,811 | $ | (6,463 | ) | $ | 18,274 | |||||
Operating Expenses
Operating expenses increased by $7,068, from $2,464 for the nine months ended February 29, 2024, to $9,532 for the nine months ended February 28, 2025. 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 $532, from $635 during the nine months ended February 29, 2024, to $1,167 during the nine months ended February 28, 2025. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the period:
| Nine months Ended | ||||||||
| February 28, 2025 | February 29, 2024 | |||||||
| Compensation Costs | $ | 1,070 | $ | 553 | ||||
| Engineering costs | 95 | 82 | ||||||
| Depreciation | 2 | - | ||||||
| Total Research and Development costs | $ | 1,167 | $ | 635 | ||||
General and Administrative
General and Administrative costs increased by $6,536, from $1,829 during the nine months ended February 29, 2024, to $8,365 during the nine months ended February 28, 2025. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts.
Cash Flows
The following tables set forth a summary of our cash flows for the periods indicated (000’s):
| Nine months Ended | ||||||||||||
| Net cash provided by (used in) | February 28, 2025 | February 29, 2024 | Variance ($) | |||||||||
| Operating activities | $ | (6,807 | ) | $ | (760 | ) | $ | (6,047 | ) | |||
| Investing activities | (98 | ) | (158 | ) | 60 | |||||||
| Financing activities | 14,285 | 5,105 | 9,180 | |||||||||
| Net increase (decrease) in cash | $ | 7,380 | $ | 4,187 | $ | 3,193 | ||||||
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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 nine months ended February 28, 2025, the $6,047 increase in cash used from operations as compared to the nine months ended February 29, 2024, 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 nine months ended February 28, 2025, there was $98 of leasehold improvements and computer equipment as compared to $158 during the nine months ended February 29, 2024, primarily composed of website development costs.
Net Cash used in Financing Activities
The Company’s cash flows provided by financing activities to date have primarily been composed of funding raised with convertible instruments and registered securities offerings.
For the nine months ended February 28, 2025, the $9,180 increase in cash provided by financing activities was primarily attributed to proceeds from the issuance of Class A ordinary shares, the issuance of Preferred shares, and warrant exercises.
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 |
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 during the nine months ending February 28, 2025.
Warrant holders exercised 2,590,000 warrants in exchange for 2,590,000 Class A ordinary shares for proceeds of $2,684 in the nine months ended February 28, 2025.
As of February 28, 2025, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 3,210,000 at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.
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On December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued an aggregate of 4,166,667 Class A ordinary shares of the Company, at a price of USD $0.36 per share, and an aggregate of 4,500 Series A preferred shares (the “Series A Preferred Shares”) of the Company at a price of $1,000 per share. The financing closed on December 19, 2024.
The Series A Preferred Shares are convertible, at the option of the holder and without additional consideration, into Common Shares on a one for 2222.222222 basis. The proceeds received by the Company are summarized below:
| Gross Proceeds - Class A Shares | $ | 2,100 | ||
| Gross Proceeds - Preferred Shares | 6,300 | |||
| Direct costs | (50 | ) | ||
| Net Proceeds | $ | 8,350 |
On February 14, 2025, we entered into a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with an institutional services company (the “Sales Agent”) relating to our Class A ordinary shares. In accordance with the terms of the Sales Agreement, we may offer and sell Class A ordinary shares having an aggregate offering price of up to $6,250,000 USD from time-to-time through the Sales Agent, acting as our agent or principal. We implemented this program for the flexibility that it provides to the capital markets and to best time our equity capital needs. As of February 28, 2025, we have raised gross proceeds of $ nil and issued no Class A ordinary shares through this program.
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 February 28, 2025, the Company’s principal source of liquidity is expected to be cash and cash equivalents of $9,196 on-hand, future government grants and subsidies, and future expected sales of securities.
To date, the Company has funded its operations primarily with the issuances of Class A ordinary shares, Series A Preferred Shares, and issuances of convertible debt instruments. Additional funding has been provided through government-backed grants.
The 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 February 28, 2025, 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.
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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 February 28, 2025, relates to the inadequate separation of financial responsibilities. Our management, with the oversight of the Audit Committee of our Board of Directors, continues to design and implement measures to remediate the material weakness. Remediation of the material weakness will require further validation and testing of the operating effectiveness of the applicable remedial controls over a sustained period of financial reporting cycles.
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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 on Form 10-K/A filed with the SEC on March 17, 2025 (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.
On August 28, 2024, the Company was notified by Nasdaq 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 Qualifications Listing Staff (the “Staff”) notified the Company that it also did 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 requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Staff’s determination, which took place on December 12, 2024.
On January 24, 2025, the Company received a letter from the Nasdaq Office of General Counsel confirming the decision of the Panel that the Company had regained compliance with the Continued Listing Standards by demonstrating compliance with the Equity Standard and that the matter is closed. Pursuant to Nasdaq Listing Rule 5815(d)(4)(B), the Company will be subject to a panel monitor for a period of one year from the date of the letter.
The Company reported on July 23, 2024 that it received a written notification from the Staff, dated July 19, 2024, indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), as the Company’s closing bid price for its Common Shares was below $1.00 per share for thirty (30) consecutive business days prior to such letter, and that pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days, or until January 15, 2025, to regain compliance with the Bid Price Rule
On January 22, 2025, the Company received a written notification from Nasdaq indicating that the Staff determined that the Company had received an additional 180 calendar days, or until July 14, 2025 (the “Second Compliance Period”), to regain compliance with the Bid Price Rule. If at any time during the Second Compliance Period, the closing bid price of the Common Shares is at least $1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule and the matter will be closed. If compliance cannot be demonstrated by the end of the Second Compliance Period, the Staff will provide written notification that our Common Shares may be subject to delisting from the Nasdaq Capital Market.
The notice from Nasdaq has no immediate effect on the listing of the Common Shares on Nasdaq, and the Common Shares will continue to be listed on the Nasdaq Capital Market under the symbol “HOVR”. While there can be no assurance that the Company will regain compliance with the Bid Price Rule, the Company expects to cure this deficiency within the Second Compliance Period.
On January 27, 2025, the Company issued a press release announcing that the Company had regained compliance with the Continued Listing Standards and that the Company was eligible for the Second Compliance Period.
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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 February 28, 2025, there were no unregistered sales of our securities that were not reported in a Current Report on Form 8-K.
(b) Not Applicable.
(c) None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
(a) None.
(b) None.
(c) During the quarter ended February 28, 2025,
none of our directors or officers
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
| * | Filed 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. |
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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: April 14, 2025 | /s/ Brandon Robinson | |
| Name: | Brandon Robinson | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Date: April 14, 2025 | /s/ Brian Merker | |
| Name: | Brian Merker | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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