hovr-20260531
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 2026
or
☐ 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)
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
(Address of principal executive offices) (Zip Code)
(613)866-1935
(Registrant’s telephone number, including area code)
Not applicable
(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 Shares, no par value HOVR The Nasdaq Stock Market LLC
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of voting stock held by non-affiliates of the Registrant on November 28, 2025, based on the closing price of $1.65 for shares of the Registrant’s Class A ordinary shares as reported by The Nasdaq Global Market, was approximately $USD 72,477,248. Class A ordinary shares beneficially owned by each executive officer, director, and holder of more than 10% of our common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of July 16, 2026, there were 66,825,837 of the registrant’s Class A ordinary shares, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PART I 1
Item 1. Business 3
Item 1A. Risk Factors 12
Item 1B. Unresolved Staff Comments 35
Item 1C. Cyber Security 35
Item 2. Properties 37
Item 3. Legal Proceedings 37
Item 4. Mine Safety Disclosures 37
Item 6. Reserved 38
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 48
Item 8. Financial Statements and Supplementary Data 49
Item 9A. Controls and Procedures 49
Item 9B. Other Information 50
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 50
PART III 51
Item 10. Directors, Executive Officers and Corporate Governance 51
Item 11. Executive Compensation 59
Item 14. Principal Accountant Fees and Services 74
Item 15. Exhibits and Financial Statement Schedules 75
SIGNATURES 78
i
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Various statements in this Annual Report on Form 10-K of New Horizon
Aircraft Ltd. are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995
and “forward-looking information” within the meaning of the Ontario Securities Act (collectively, “forward-looking statements”).
Forward-looking statements involve substantial risks and uncertainties. All statements, other than statements of historical facts, included
in this report, including statements regarding our strategy, future operations, future financial position, future revenues, projected
costs, prospects, plans and objectives of management are forward-looking statements. These statements are subject to risks and uncertainties
(some of which are beyond our control) and are based on information currently available to our management. Words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “contemplates,”
“predict,” “project,” “target,” “likely,” “potential,” “continue,”
“ongoing,” “will,” “would,” “should,” “could,” or the negative of these terms
and similar expressions or words, identify forward-looking statements. The events and circumstances reflected in our forward-looking statements
may not occur and actual results could differ materially from those projected in our forward-looking statements. Such forward-looking
statements are based on current expectations and involve inherent risks and uncertainties, including risks and uncertainties that could
delay, divert or change these expectations, and could cause actual results to differ materially from those projected in these forward-looking
statements. These risks and uncertainties include, but are not limited to, those factors described under Part I, Item 1A: “Risk
Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual
results may vary in material respects from those projected in these forward-looking statements.
This report contains market
data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations,
and you are cautioned not to give undue weight to such estimates. We have not independently verified any third-party information. While
we believe the market position, market opportunity and market size information included in this report is generally reliable, such information
is inherently imprecise and subject to change.
All written and oral forward-looking
statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We caution investors not to rely on the forward-looking statements we make or that are made
on our behalf as predictions of future events. We undertake no obligation and specifically decline any obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable
securities laws.
We encourage you to read the
management’s discussion and analysis of our financial condition and results of operations and our consolidated financial statements
contained in this Annual Report on Form 10-K. There can be no assurance that we will in fact achieve the actual results or developments
we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore,
we can give no assurances that we will achieve the outcomes stated in those forward-looking statements, projections and estimates.
ii
PART I
CERTAIN TERMS AND CONVENTIONS
All
references to “we,” “us,” “our,”, “Horizon”, the “Company” or similar terms
used in this annual report refer to New Horizon Aircraft Ltd., a British Columbia company, including its consolidated subsidiaries, unless
the context otherwise indicates.
All
references in this document to “Dollars” are expressed in Canadian Dollars (“CAD”, “$CAD”) and in
’000s (except per share data), unless otherwise indicated.
“2023 Equity Incentive
Plan” means the New Horizon Aircraft Ltd. 2023 Equity Incentive Plan, as amended.
“Amalgamation”
refers to the amalgamation of Merger Sub and Horizon in connection with the Business Combination, the resulting company, “Amalco,”
with Amalco being the wholly owned subsidiary of Pono.
“Articles”
refers to the governing documents of New Horizon Aircraft Ltd., adopted on January 11, 2024 in connection with the SPAC Continuance, as
amended.
“BCBCA”
refers to the Business Corporations Act (British Columbia), as now in effect and as it may be amended from time to time.
“Board”
refers to the board of directors of New Horizon Aircraft Ltd.
“Business
Combination Agreement” refers to the business combination agreement, dated, August 15, 2023, by and among Pono, Pono Three Merger
Acquisitions Corp., a British Columbia company and wholly-owned subsidiary of Pono (“Merger Sub”) and Robinson Aircraft Ltd.,
d/b/a Horizon Aircraft (“Legacy Horizon”).
“Business
Combination” refers to the transactions related to the Business Combination Agreement, pursuant to which Pono was continued and
de-registered from the Cayman Islands and redomesticated as a British Columbia company on January 11, 2024, Merger Sub and Legacy Horizon
were subsequently amalgamated under the laws of British Columbia, and Pono changed its name to New Horizon Aircraft Ltd.
“$,”
“$CAD,” “CAD,” or “Dollars” refers to the lawful currency of Canada (expressed in Canadian dollars).
“Class
A ordinary shares” refers to the Class A ordinary shares, no par value per share, of New Horizon Aircraft Ltd.
“Code”
means the United States Internal Revenue Code, as amended.
“Exchange Act”
means the United States Securities Exchange Act of 1934, as amended.
“General Warrants” means the warrants included within August
2024 registered share offering. Each General Warrant entitles the holder thereof to purchase one Class A ordinary share for $USD
0.75 per share.
“Initial Public Offering” or “IPO” refers
to the initial public offering of 11,500,000 units, with each unit consisting of one Class A ordinary share, par value $USD 0.0001 per
share (the “Pono Class A ordinary shares”) and one warrant to purchase one Pono Class A ordinary share, and each unit being
sold at an offering price of $USD 10.00 per unit, which closed on February 14, 2023 and the registration statement on Form S-1 of which
was declared effective by the SEC on February 9, 2023.
1
“Legacy
Horizon” refer to Robinson Aircraft, Ltd. d/b/a Horizon Aircraft, a British Columbia company, prior to the Business Combination.
“Merger Sub”
means Pono Three Merger Acquisitions Corp., a British Columbia company and a wholly-owned subsidiary of Pono.
“Placement Units”
means 563,375 units issued to the Sponsor in the Private Placement. Each Placement Unit consisted of one Placement Share and one
Placement Warrant.
“Placement Warrants” means the warrants included within
the Placement Units. Each Placement Warrant entitles the holder thereof to purchase one Pono Class A ordinary share for $USD 11.50
per share.
“Pono”
refers to Pono Capital Three, Inc., a Cayman Islands blank check company incorporated for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which in connection with
the Business Combination, was continued and de-registered from the Cayman Islands and redomesticated as a British Columbia company and
changed its name to New Horizon Aircraft Ltd.
“Pono
IPO,” “IPO” or “Initial Public Offering” means Pono’s initial public offering that was consummated
on February 14, 2023.
“Pre-funded
Warrants” refers to warrants to purchase the Class A ordinary shares at an exercise price of $0.0001 per share.
“Public
Warrants” refers to warrants to purchase the Class A ordinary shares at an exercise price of $USD 11.50 per share.
“RDO
I Warrants” refers to placement agent warrants included in the May 8, 2026, registered direct offering. Each RDO I Warrant entitles
the holder thereof to purchase one Class A ordinary share for $USD 2.47 per share.
“RDO
II Warrants” refers to placement agent warrants included in the May 27, 2026, registered direct offering. Each RDO I Warrant entitles
the holder thereof to purchase one Class A ordinary share for $USD 2.89 per share.
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities
Act” means the United States Securities Act of 1933, as amended.
“SPAC
Continuance” refers to the domestication of Pono as a British Columbia company in connection with the Business Combination.
“Sponsor”
means Mehana Capital LLC.
“$USD,” “USD” or “U.S. Dollars”
refers to the legal currency of the United States.
“Warrant Agreement”
means the Warrant Agreement, dated February 9, 2023, by and between Pono and Continental Stock Transfer & Trust Company.
“Warrants”
means any of the Public Warrants, General Warrants, Pre-funded Warrants, RDO I Warrants, RDO II Warrants, and the Placement Warrants.
2
Item 1. Business.
Overview
We are an advanced aerospace
Original Equipment Manufacturer (“OEM”) that is designing and building a next generation hybrid-electric Vertical Takeoff
and Landing (“eVTOL”) aircraft for the Regional Air Mobility (“RAM”) market. Our aircraft aims to offer a more
efficient way to move people and goods at a regional level, from 50 to 500 miles, help to connect remote communities, and improve our
ability to deal with an increasing number of climate-related natural disasters such as wildfires, floods, and droughts.
The product we are building
is a hybrid electric 7-seat aircraft, coined the Cavorite X7, that can take-off and land vertically like a helicopter. However, unlike
a traditional helicopter, for the majority of its flight the aircraft will fly in a configuration much like a traditional airplane. This
would allow the Cavorite X7 to fly faster, farther, and operate more efficiently than a traditional helicopter. Expected to travel at
speeds surpassing 250 miles per hour at a range over 500 miles, we believe this aircraft will be a disruptive force to RAM travel.
The new and developing eVTOL aircraft market has been made possible
by a convergence of innovation across many different technologies. Batteries, strength of light materials, computing power, simulation,
and propulsion technology have all crossed a critical threshold to enable viable aircraft designs such as our Cavorite X7. This has resulted
in the establishment and rapid growth of the Advanced Air Mobility (“AAM”) market. Morgan Stanley has projected that the AAM
market could reach $USD 1 trillion (in the base case) by 2040 and $USD 9 trillion by 2050.
The Cavorite X7 architecture
is based on our patented fan-in-wing (“Horizon Omni-modal Vertical (HOVR) Wing” or “HOVR Wing”) technology, which
has been developed and tested over the last several years. While most of our competitors in the AAM industry rely on open rotor designs,
our HOVR Wing uses a series of ducted electric fans located inside the wings to produce vertical lift. After vertical takeoff, the aircraft
accelerates forward. At a safe speed, the wings close to conceal the fans inside the wings and the aircraft returns to a highly efficient
configuration. The ability to take off and land like a helicopter and fly forward like an airplane is the key differentiator to its performance.
A rendering of Horizon’s full-scale
demonstrator aircraft that is currently being built.
3
The aircraft is powered by a hybrid-electric main engine. For vertical
flight, electrical power for the powerful ducted fans in the wings and canards comes from two sources: an on-board generator driven by
an internal combustion engine and an array of batteries. Augmenting the battery power with generator power allows us to reduce battery
size, recharge the aircraft after vertical takeoff or landing, and increase safety. This aircraft will be able to operate in austere locations
without power, unlike other pure electric AAM aircraft designs that will be forced to fly from charging station to charging station.
We believe that the technology
and configuration advantages of our Cavorite X7 aircraft will represent a significant market advantage. It is anticipated that our aircraft
will be significantly less expensive to own and operate as compared to legacy helicopters with similar payload characteristics and will
travel almost twice as fast. The specifications for the aircraft include the capability to transport seven people with a useful load of
1,500 lbs., almost twice the carriage capacity of many of our AAM peers. We believe the combination of carrying more people or goods,
traveling faster, and operating more efficiently will provide a strong economic model for broad adoption.
Our business operating model
is predicated on building and selling the Cavorite X7 aircraft for both civilian and military use. We also believe that the extensive
intellectual property developed to enable the successful operation of our aircraft could be licensed to third parties to generate significant
profit.
We have designed, built, and completed flight testing of a 50%-scale
prototype of our Cavorite X7 aircraft. This large-scale prototype has been through hover testing and successfully transitioned to forward
flight. We have also partnered with Cert Centre Canada (“3C”) for development of a certification basis that will be used to
form the foundation for Type Certification with Transport Canada Civil Aviation (“TCCA”). Receiving a Type Certificate
in accordance with stated regulatory standards will certify compliance to applicable airworthiness standards for the Cavorite X7, a prerequisite
for using the aircraft in commercial operations. We believe our aircraft will be one of the first eVTOL aircraft to be certified for flight
into known icing conditions (“FIKI”), dramatically increasing operational utility. We are targeting Type Certification prior
to 2030.
Patents and other Intellectual Property
In order to protect the novel
technologies that underpin the Cavorite X7 design, we have accumulated 31 issued and allowed patents thus far, the earliest expiry of
which will be 2035. The most significant of these patents are US non-provisional utility patents that protect the core fan-in-wing invention
and various other novel details required to enable its practical use. Amongst these issued patents are several design patents that seek
to protect the shape of the Cavorite X7 with its distinct forward swept main wings, unique empennage, and forward canards. Other intellectual
property exists in the areas of hybrid-electric propulsion; ducted fan propulsion unit blade and stator design, cooling, and electrical
control; control systems including novel yaw control software and hardware; and digital twin simulation.
The eVTOL Industry, Total Addressable Market
and its Drivers
The eVTOL aircraft market is a developing sector within the transportation
industry. This market sector is dependent on the successful development and implementation of eVTOL aircraft and networks, none of which
are currently in commercial operation. Morgan Stanley has projected that the eVTOL market for moving people and moving goods could be
between $USD 1 trillion by 2040 and $USD 9 trillion by 2050, as set forth in the “Morgan Stanley Research, eVTOL/Urban
Air Mobility TAM Update” report released in May 2021 (the “Morgan Stanley Report”).
Furthermore, in its 2021 RAM report, NASA has highlighted that while
the United States has over 5,000 airports, only 30 of them support 70% of all travelers.1 This report highlights that
the average American lives within 16 minutes of an airport yet must travel hours to larger hubs for even shorter regional travel.
73% of Americans prefer road travel over flying, even if that means spending hours in gridlocked traffic. Accordingly, we believe
there is a significant opportunity to improve regional travel through the use of intelligently designed eVTOL aircraft.
4
Regional Air Mobility
RAM is a term that represents a faster, more efficient way of moving
people and goods between 50 and 500 miles. With the development of more economical, versatile, and safe aircraft like Horizon’s
Cavorite X7 that can flexibly travel between regional locations, it is little wonder that the market demand is high for these types of
machines.
NASA highlights that RAM has
the potential to fundamentally change how we travel and receive our goods by “bringing the convenience, speed, and safety of
air travel to all Americans, regardless of their proximity to a travel hub or urban center” and “through targeted investments,
RAM will increase the safety, accessibility, and affordability of regional travel while building on the extensive and underutilized federal,
state, and local investment in our nation’s local airports.”
New types of aircraft capable
of operating with very limited ground infrastructure can deliver critical supplies to remote communities, transport critically injured
people to the hospital faster and more efficiently, help with disaster relief operations, and can help service people around the world
in special military missions.
Another report from Morgan
Stanley projects that eVTOL technology is expected to revolutionize logistics due to advantages in speed, efficiency and accessibility
over current trucks, airplane and train freight transportation. In addition, the Morgan Stanley Report cites the potential for eVTOL technology
to provide a viable and affordable transportation solution in geographic locations without a current viable solution (such as rural or
island communities) and to expand the possibilities for 24-hour delivery or overnight parcel delivery in regions where existing transport
modes are slow.
The large RAM market opportunity is precipitated by a transportation
system that is insufficient to handle increasing demand without time delays, high infrastructure and maintenance costs and adverse environmental
impact. Since 1990, global passenger flows have increased by more than 125% across all major modes of travel while global trade volume
has increased by approximately 200%. To counter the rapidly increasing demand for mobility and logistics, governments worldwide are investing
a total of approximately $USD 1 trillion per annum into transport infrastructure, which is three times more as compared to twenty years
ago. Despite these investments, our regional transport systems have not fundamentally improved.
In response, governments are increasing their support for the development
of both urban and regional eVTOL networks, and sustainable aviation more generally, through regulatory incentives and investment. For
example, the Canadian government recently introduced the Initiative for Sustainable Aviation Technology (INSAT) where $350M will be invested
into innovative companies focused on sustainable aviation solutions. We believe that Horizon could be an ideal match for the recent government
funding opportunities and has benefited from project awards via government grants already exceeding $CAD 12 million.
The History of Horizon
Horizon was founded in 2013
to develop an innovative prototype amphibious aircraft. As we evaluated the latest advancements in the areas of electric motor and battery
technologies, we realized that a new high-utility type of aircraft concept was feasible. The experienced aircraft development team shifted
to developing the unique Cavorite X-series concept, specifically a 7-person hybrid eVTOL aircraft.
Horizon successfully raised
funding to support the continued development and testing of its sub-scale prototypes and is currently building a full-scale technical
demonstrator aircraft.
Sub-Scale Prototypes
We have built many sub-scale
prototype aircraft. Commencing with a smaller 1/7th-scale aircraft, and in 2025 we successfully completed flight testing on
a half-scale prototype. This large prototype has a 22-foot wingspan and weighs approximately 600 lbs. This aircraft has been through successful
testing in hover, wind tunnel, and forward transition flight. All testing yielded positive results, and the aircraft has performed significantly
above initial expectations in respect to both power and stability.
5
Full-Scale Cavorite X7 Aircraft Concept
Based on positive initial
testing results, the team transitioned to building a full-scale technical demonstrator aircraft. This demonstrator aircraft will hold
seven (7) people: six (6) passengers and one (1) pilot. Updated performance estimates from early sub-scale testing indicate
that the full-scale hybrid-electric Cavorite X7 will be able to travel at speeds that may surpass 250 mph and carry 1,500 lbs. of useful
load over 500 miles with the appropriate fuel reserves.
Business Combination
On February 14, 2023, Pono
consummated its Initial Public Offering. On January 12, 2024 (the “Closing Date”), we consummated the Business Combination
which resulted in the combination of Pono with Legacy Horizon, pursuant to the previously announced Business Combination Agreement, following
the approval at a general meeting of the shareholders of Pono held on January 4, 2024. On January 10, 2024, pursuant to the Business Combination
Agreement, the Company initiated the SPAC Continuance when Pono was continued and de-registered from the Cayman Islands when the Cayman
Islands Registrar of Companies issued a Certificate of De-Registration. On January 11, 2024, the Company completed the SPAC Continuance
and re-domesticated as a British Columbia company and in connection therewith, effected the Articles, under the laws of British Columbia.
Pursuant to the Business Combination Agreement, on January 12, 2024, Merger Sub and Legacy Horizon were amalgamated under the laws of
British Columbia, and Pono changed its name to New Horizon Aircraft Ltd.
Our Competitive Strengths
We believe that our business
benefits from several competitive strengths, including the following:
Proprietary Ducted Fan-in-Wing Technology — the
“HOVR Wing” System
The majority of our competitors
use “open propeller” eVTOL vertical lift architectures. We employ our own proprietary HOVR Wing technology that provides a
number of important advantages:
6
Agile Team with Significant Aerospace and
Operational Experience
We were founded by a team
with deep experience in the aerospace industry. Our team boasts individuals who have led the design, construction and testing of new aircraft
types and have deep industry experience. The leadership team within Horizon also includes personnel with significant experience in finance,
human resources, and information technology which we believe will facilitate cohesion, effectiveness and security as the company continues
to grow.
Operational Experience
Many of our principal engineers
and technicians have significant operational experience. Many are active pilots. For example, our CEO was an active CF-18 fighter pilot
for nearly 20 years and holds a commercial Airline Transport Pilot’s License. This experience allows the team to visualize
operating this innovative aircraft in the real world. Design considerations for easy field repair, safety, performance, and a focus on
lowering operational costs has been foundational to the Cavorite X7 design and development. We believe this deep operational experience
and design consideration has led to a machine concept that will support safe and cost-efficient flight for operators, thereby increasing
demand for the aircraft.
Our Strategy
Build Aircraft for the Rapidly Growing Regional
Air Mobility Market
We are focusing our initial services on RAM. Beyond simple movement
of cargo and people at the regional level — 50 to 500 miles — the aircraft will be able to economically
conduct a number of unique missions such as:
Develop Unique Technologies That Can be
Broadly Licensed to Generate Revenue
We expect that the technology
we are developing for the Cavorite X7 aircraft may be broadly useful across the industry. For example, the unique HOVR Wing concept could
support other designs across the industry or within military applications. These technologies offer potential to significantly enhance
revenue, including potential licensing sales in specific geographic regions.
Our Cavorite X7 Hybrid eVTOL Aircraft Concept
Our full-scale Cavorite X7
Hybrid eVTOL aircraft is currently being built. The combination of unique architecture, hybrid power, and proprietary ducted fan-in-wing
technology enables it to take off and land vertically while also flying at speeds much greater than a typical helicopter. We anticipate
that the final production aircraft will be able to carry six (6) passengers and one (1) pilot at ranges over 500 miles and at
speeds that may surpass 250 miles per hour.
7
Ducted Fan-in-Wing “HOVR Wing”
Technology
Our unique HOVR Wing technology
is described above and is protected by a US non-provisional utility patent. This technology allows the aircraft to return to an aerodynamically
efficient configuration enroute. The ability to fly as a traditional aircraft enroute has many operational advantages and may offer a
faster route to certification for commercial use.
During a vertical takeoff,
an array of electrically powered ducted fans located in the wings and canards provide the required lift. For transition to forward flight,
the aircraft starts its rear pusher propeller and accelerates forward to a safe speed at which point the canards and wings close systematically
to conceal the fans within the wings. At this point, the aircraft is in a normal configuration much like a traditional aircraft. The balance
of the mission can then be conducted in a highly efficient manner. For landing, the reverse process occurs.
This design is both efficient
and safe. During hover, multiple fans can fail with the aircraft maintaining hover. For example, during flight testing the 50%-scale prototype
aircraft hovered with 20% of its fans disabled. In addition, as outlined below, there are two sources of electricity for the fans: an
onboard generator and a battery array. Even at moderate forward speed the generator can support the full electrical power requirements
in the unlikely event of dramatic full battery array failure. For increased durability, each fan unit is electrically, mechanically, and
thermally isolated from the others, mitigating the chance of a cascading failure.
This aircraft concept also
naturally allows for Conventional Takeoff and Landing (CTOL) as well as Short Takeoff and Landing (STOL). If one end of the mission calls
for loading of important cargo at an airport logistics hub or delivery to an airport, the Cavorite X7 can easily operate like a traditional
aircraft. Notably, in CTOL and STOL operational modes, the aircraft’s payload would also increase.
The Cavorite X7 hybrid eVTOL during transition
to forward flight
Hybrid Electric Power System
By their very nature, VTOL
aircraft will excel at delivering critical goods and services to remote locations. These remote locations may not have the charging infrastructure
to support purely electric VTOL aircraft. The Cavorite X7 will use a hybrid power system. This system will provide two sources of electrical
power during demanding vertical takeoff and landing operations and will allow the battery array to re-charge in flight and after a mission.
The batteries will be designed for high power draw, so they will naturally support quick charging.
8
For remote operations, the
aircraft can effectively become a power generation station. After landing, the aircraft can recharge itself in minutes and will be able
to produce usable power should that be required, for example during a disaster relief mission where the power grid is offline. The Cavorite
X7 could land in a parking lot and provide charging or power for communications that has been disrupted.
The hybrid power system will
emit less greenhouse gas emissions than a traditional turbine engine when compared to a traditional helicopter. The aircraft draws significant
electrical energy from the battery array during vertical takeoff and landing, reducing emissions during this phase. In addition, enroute
the aircraft is in an aerodynamically efficient configuration as compared to a helicopter, dramatically lowering the power required to
travel. The combination of these two factors is a compelling sustainability improvement over current VTOL aircraft.
Safety by Design
The safety, performance, and
reliability of our aircraft will be key factors in achieving customer acceptance of our aircraft for commercial use. First and foremost,
our aircraft design is focused on safety. There are several important considerations in the design concept that augment safety:
Performance
The Cavorite X7 will also
benefit from significant performance. First, due to its aerodynamically efficient configuration enroute, it will be fast. We are anticipating
a maximum dash cruise speed of at least 250 knots, with a more efficient enroute speed likely just over 200 knots. Our initial estimates
also indicate that in VTOL mode it will have a 1,500 lb. useful load, which is the amount of combined fuel and payload it can carry. This
could increase to 1,800 lbs. when the aircraft operates in STOL or CTOL modes. Finally, our initial estimates indicate the aircraft will
be able to travel 500 miles with medium payloads with full operational fuel reserves. This is an aircraft design that was designed to
do work in the real world, and we believe our customers will recognize and appreciate this.
9
Flight into Known Icing and Other Operational
Challenges
We believe that the Cavorite X7 design may be one of the only viable
VTOL designs that could be certified for FIKI. This is due to its unique characteristic of flying like a traditional aircraft for enroute
flight, without multiple open rotors that could accumulate ice. Transition to and from vertical flight would occur in Visual Meteorological
Conditions, essentially clear of any clouds. As a result, enroute there would only be one propeller exposed to icing conditions should
there be a requirement to fly through clouds that could cause ice accumulation. This propeller can be electrically heated for anti-icing
purposes, something that is common in commercial regional turboprop operations. Furthermore, with a significant amount of on-board electrical
power available enroute, electrothermal coatings may be used to help prevent or remove ice on lift surfaces. Finally, with a turbine engine
the aircraft systems will have access to warm bleed air that could be circulated for anti-icing or de-icing.
Bird strikes are also an area
of concern for commercial flight. Our aircraft concept has only one exposed propeller that is partially protected by the fuselage. Unlike
many compound open rotor designs where losing one blade may cause a cascading failure, our aircraft operates like any number of the thousands
of commercial regional aircraft already certified and operating profitably.
Challenging weather is often
difficult for regional commercial flight operations. The Cavorite X7’s hybrid power system and efficient enroute configuration will
likely make it more resilient in the face of bad weather. Increased speed and range over pure electric VTOL regional aircraft should allow
for increased versatility, able to divert to a backup airfield or vertiport, go around unexpected storms, or deal with unexpected winds
that could negatively impact slower designs. We expect that this, coupled with FIKI certification, could offer a significant operational
advantage over our competitors.
Aviation Regulations
In Canada and the U.S., civil aviation is regulated by the TCCA and
the Federal Aviation Administration (“FAA”) respectively. These two regulatory bodies control all aspects of certifying a
new aircraft for commercial flight (Type Certification), production of that aircraft (Production Certification) and issuance of an Air
Operations Certificate (AOC) to organizations who wish to use the aircraft in commercial operations.
We intend to seek approval
for the design of the Cavorite X7 by obtaining a Type Certificate under TCCA using Canadian Air Regulations (CAR) §523 under Normal
Category, Level 2 — for aeroplanes with 2 to 6 passengers. Due to the innovative design of the Cavorite X7, it is expected
that TCCA will invoke certain regulations and standards from CAR §527, (helicopter certification requirements) and
additional Special Conditions. We have engaged Flight Test Centre of Excellence (3C) as partners who will perform the role of
Applicant’s Representative for the certification effort. 3C has extensive expertise in developing and executing aircraft
certification programs and is helping to prepare our formal application to TCCA. We have also had initial discussions with the FAA
and plan to run a parallel program that would greatly expedite certification for use in the United States.
While working towards a Type
Certificate for our aircraft that will enable sales for commercial use, we will also be pursuing a Production Certificate. Once obtained,
this will allow volume manufacturing to meet the demand that we anticipate. Companies using our aircraft for commercial operations will
require an AOC.
As we will not be permitted
to deliver commercially produced aircraft to customers until we have obtained TCCA type certification, no material sales revenue from
aircraft deliveries is expected to be generated before TCCA certification issuance. The process of obtaining a valid type certificate,
production certificate and airworthiness certificate for the Cavorite X7 will take several years. Any delay in the certification
process could negatively impact us by requiring additional funds to be spent on the certification process and by delaying our ability
to sell aircraft.
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Marketing
Our marketing strategy is
intended to build industry and consumer awareness of our technology. We are working to develop and execute a robust marketing plan. Marketing
efforts will include comprehensive Communication, Investor Relations, and Public Relations plans to ensure consumer understanding, investor
confidence, and entering the public consciousness as developmental operations continue. Our overarching value proposition will focus on
the benefits of our Cavorite X7 platform and its wide array of superior operational capabilities, while maintaining the highest safety
standards. We also believe that the striking visual design of the aircraft coupled with market leading utility will be an important point
of differentiation from our competition.
Competition
The current eVTOL landscape in North America and more broadly from
a global perspective is competitive. Alternative technologies, either known or unknown, could bring more attractive eVTOL designs to the
marketplace. We believe that our primary competition for market share will come from similar minded companies that come to realize that
RAM may offer a more compelling initial business case as compared to early eVTOL designs. These companies could employ similar design
architectures alongside hybrid-electric power systems and challenge our Cavorite X7.
Human Resources
As of July 16, 2026, we had
56 employees in Canada and 2 employees outside of Canada. None of our employees are subject to a collective bargaining agreement
or represented by a trade or labor union. We consider our relationship with our employees to be suitable. We believe that our turnover
and productivity levels are at acceptable levels.
Properties
Horizon leases office space and an aircraft hangar in Lindsay, Ontario,
which serves as the corporate headquarters, as well as office space and light composite manufacturing space in Haliburton, Ontario and
office space in Ottawa, Ontario. Horizon believes that these properties are sufficient for its business and operations as currently conducted.
The Company is currently exploring locations for future scalable manufacturing operations.
Corporate Information
On January 11, 2024, we continued
and de-registered from the Cayman Islands and redomiciled under the laws of the Province of British Columbia, Canada. Our principal executive
offices are located at 3187 Highway 35, Lindsay, Ontario, K9V 4R1, and our telephone number is (613) 866-1935. Our website is https://www.horizonaircraft.com/.
Our website and the related information that can be accessed through such website does not form part of this report.
Legal Proceedings
As of July 16, 2026, we were
not a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary
course of our business. Regardless of the outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion
of management resources, negative publicity and reputational harm and other factors.
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Item 1A. Risk Factors.
The following risk factors
apply to the business and operations of Horizon and its consolidated subsidiaries. The occurrence of one or more of the events or circumstances
described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize
the anticipated benefits of the Company and may have an adverse effect on the business, cash flows, financial condition and results of
operations of Horizon. We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial,
which may also impair our business, cash flows, financial condition and results of operations.
All figures noted are in thousands of Canadian dollars
unless noted otherwise.
Risks Related to Our Business and Industry
We have incurred losses and expect to incur
significant expenses and continuing losses for the foreseeable future, and we may not achieve or maintain profitability.
We expect to incur significant
operating losses. We have not yet started commercial operations, making it difficult for us to predict our future operating results, and
we believe that we will continue to incur operating losses until at least the time we begin commercial operations with aircraft deliveries
or licensing revenues. As a result, our losses may be larger than anticipated, and we may not achieve profitability when expected, or
at all, and even if we do, we may not be able to maintain or increase profitability.
We expect our operating expenses
to significantly increase over the next several years as we complete our aircraft design, build, testing, and manufacturing. We expect
the rate at which we incur losses will be significantly higher in fiscal 2027 and beyond as we engage in the following activities:
● building up inventories of parts and components for our aircraft;
● testing and certifying the performance and operation of our aircraft;
● developing and launching our digital platform and customer user interface;
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Because we will incur the
costs and expenses from these efforts before we receive any associated revenue, our losses in future periods will be significant. In addition,
we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in the revenue we
anticipate, which would further increase our losses. Furthermore, if our future growth and operating performance fails to meet investor
or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring customers or expanding
our operations, this could have a material adverse effect on our business, financial condition and results of operations.
The eVTOL market may not continue to develop,
eVTOL aircraft may not be adopted by the transportation market, eVTOL aircraft may not be certified by transportation and aviation authorities
or eVTOL aircraft may not deliver the expected reduction in operating costs or time savings.
eVTOL aircraft involve a complex set of technologies and are subject
to evolving regulations, many of which were originally not intended to apply to electric and/or VTOL aircraft. Before any eVTOL aircraft
can fly passengers, manufacturers and operators must receive requisite regulatory approvals, including, but not limited to, aircraft type
certificate and certification related to production of the aircraft. As of now, there are no eVTOL aircraft that have passed certification
by TCCA, the European Union Aviation Safety Agency, or the FAA for commercial operations in Canada, Europe or the United States,
respectively, and there is no assurance that our current serial prototype for the Cavorite X7 aircraft will receive government certification
in a way that is market-viable or commercially successful, in a timely manner or at all. Gaining government certification requires us
to prove the performance, reliability and safety of its Cavorite X7 aircraft, which cannot be assured. Any of the foregoing risks and
challenges could adversely affect our prospects, business, financial condition and results of operations.
The success of our business depends on
the safety and positive perception of our aircraft, the establishment of strategic relationships, and of our ability to effectively market
and sell aircraft that will be used in RAM services.
We expect that the success of selling our aircraft will be highly dependent
on our target customers’ embrace of RAM and eVTOL vehicles, which we believe will be influenced by the public’s perception
of the safety, convenience and cost of our Cavorite X7 specifically but also of the industry as a whole. As a new industry, the public
has low awareness of RAM and eVTOL vehicles, which will require substantial publicity and marketing campaigns in a cost-effective manner
to effectively and adequately target and engage our potential customers. If we are unable to demonstrate the safety of our aircraft, the
convenience of our aircraft, and the cost-effectiveness of our use in RAM services as compared with other commuting, goods transportation,
airport shuttle, or regional transportation options, our business may not develop as we anticipate we could, and our business, revenue
and operations may be adversely affected. Further, our sales growth will depend on our ability to develop relationships with infrastructure
providers, airline operators, other commercial entities, municipalities and regional governments and landowners, which may not be effective
in generating anticipated sales, and marketing campaigns can be expensive and may not result in the acquisition of customers in a cost-effective
manner, if at all. If conflicts arise with our strategic counterparties, the other party may act in a manner adverse to us and could limit
our ability to implement our strategies. Our strategic counterparties may develop, either alone or with others, products or services in
related fields that are competitive with our products and services.
We have a limited operating history and
face significant challenges to develop, certify, and manufacture our aircraft. Our Cavorite X7 eVTOL aircraft remains in development,
and we do not expect to deliver any aircraft until 2029, at the earliest, if at all.
We are developing an aircraft for the emerging RAM market, which is
continuously evolving. Although our team has experience designing, building and testing new aircraft, we have no experience as an organization
in volume manufacturing of our planned Cavorite X7 aircraft. We cannot assure that us or our suppliers and other commercial counterparties
will be able to develop efficient, cost-effective manufacturing capability and processes, and reliable sources of component supplies that
will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to
successfully produce and maintain Cavorite X7 aircraft. Based on our current testing and projections, we believe that we can achieve our
business plan and forecasted performance model targets in terms of aircraft range, speed, energy system capacity, and payload for our
full-scale Cavorite X7 aircraft.
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Detailed build of our full-scale
Cavorite X7 aircraft has not yet been completed, and many of the systems, the aerodynamics, the structure, and other critical elements
of the design have yet to be designed, produced, and tested at full-scale. As such, we might not achieve all, or any, of our performance
targets, which would materially impact our business plan and results of operations.
You should consider our business
and prospects in light of the risks and significant challenges we face as a new entrant into a new industry, including, among other things,
with respect to our ability to:
● build a well-recognized and respected brand;
● establish and expand our customer base;
● improve and maintain our manufacturing efficiency;
● predict our future revenues and appropriately budget for our expenses;
● anticipate trends that may emerge and affect our business;
● secure, protect and defend our intellectual property; and
● navigate an evolving and complex regulatory environment.
If we fail to adequately address
any or all of these risks and challenges, our business may be materially and adversely affected.
The RAM market for eVTOL passenger and
goods transport services does not exist; whether and how it develops is based on assumptions, and the RAM market may not achieve the
growth potential we expect or may grow more slowly than expected.
Our estimates for the total addressable market for eVTOL RAM, regional
passenger and goods transport, and military use are based on a number of internal and third-party estimates, including customers who have
expressed interest, assumed prices at which we can offer our services, assumed aircraft development, estimated certification and production
costs, our ability to manufacture, obtain regulatory approval and certification, our internal processes and general market conditions.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct
and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying
factors. As a result, our estimates may prove to be incorrect, which could negatively affect our operating revenue, costs, operations
and potential profitability.
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We may be unable to adequately control the
costs associated with our pre-launch operations, and our costs will continue to be significant after we commence operations.
We will require significant capital to develop and grow our business,
including designing, developing, testing, certifying and manufacturing our aircraft, educating customers of the safety, efficiency and
cost-effectiveness of our unique aircraft and building our brand. Our research and development expenses were $13.2 million and $3.7 million
in fiscal year 2026 and 2025, respectively, and we expect to continue to incur significant expenses which will impact our profitability,
including continuing expenses, manufacturing, maintenance and procurement costs, marketing, customer and payment system expenses, and