Filing Compare · New Horizon Aircraft Ltd.

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, ~~2024~~2025

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

For the transition period from to

Commission File Number 001-41607

NEW HORIZON AIRCRAFT LTD.

(Exact name of registrant as specified in its charter)

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

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

(613) 866-1935

(Registrant’s telephone number, including area code)

~~Former~~Not ~~Fiscal Year End December 31~~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

Warrants, each warrant exercisable for one Class A Ordinary Shares at an exercise price of $11.50 per share	HOVRW	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 30, ~~2023~~2024, based on the closing price of $100.5867 for shares of the Registrant’s Class A ordinary shares as reported by The Nasdaq Global Market, was approximately USD $~~121~~14,~~670~~218,~~000~~259. 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 August 1521, ~~2024~~2025, there were 1839,~~607~~210,~~931~~651 of the registrant’s Class A ordinary shares, issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I		1	1
Item 1.	Business	3	2
Item 1A.	Risk Factors	12	11
Item 1B.	Unresolved Staff Comments	33	34
Item 1C.	Cyber Security	33	35
Item 2.	Properties	35	37
Item 3.	Legal Proceedings	35	37
Item 4.	Mine Safety Disclosures	35	37
PART II		36	38
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	36	38
Item 6.	Reserved	36	39
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36	39
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	44	46
Item 8.	Financial Statements and Supplementary Data	44	46
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	44	46
Item 9A.	Controls and Procedures	44	46
Item 9B.	Other Information	45	47
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	45	47
PART III		46	48
Item 10.	Directors, Executive Officers and Corporate Governance	46	48
Item 11.	Executive Compensation	53	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63	65
Item 13.	Certain Relationships and Related Transactions, and Director Independence	65	67
Item 14.	Principal Accountant Fees and Services	67	70
PART IV		68	71
Item 15.	Exhibits and Financial Statement Schedules	68	71
Item 16.	Form 10-K Summary	68	71
SIGNATURES		71	73

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. 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.

PART I

CERTAIN TERMS AND CONVENTIONS

All references to “we,” “us,” “our,”, “~~New~~ 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 $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 $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 $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.

“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 $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 $11.50 per share.

~~SPAC Continuance~~“SEC” ~~refers~~means to the ~~domestication~~U.S. ofSecurities ~~Pono~~and asExchange ~~a British Columbia company in connection with the Business Combination~~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.

1“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, and the Placement Warrants.

Item 1. Business.

Overview

We are an advanced aerospace Original Equipment Manufacturer (“OEM”) that is designing 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 scale (i.e., from 50 to 500 miles), help to connect remote communities, and will advance our ability to deal with an increasing number of climate -related natural disasters such as wildfires, floods, or droughts.

The product we are designing and delivering is a hybrid electric 7-seat aircraft, ~~called~~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 it will ~~return~~fly toin a configuration much like a traditional aircraft. This would allow the Cavorite X7 to fly faster, farther, and operate more efficiently than a traditional helicopter. Expected to travel at speeds upsurpassing to 250 miles per hour at a range over 500 miles, we believe ~~that~~ 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, immense strength of light materials, computing power, simulation, and propulsion technology have all crossed a critical threshold to enable viable aircraft designs such 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 eVTOL aircraft 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~~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 ~~a demanding~~ vertical takeoff, the aircraft accelerates forward. At a safe speed, the wings close to conceal the fans ininside the wings and the aircraft returns to a highly efficient configuration. The ability to take off and land like a helicopter ~~but~~and fly forward like aan ~~normal~~airplane ~~aircraft~~ is the key differentiator to its performance.

A picture of Horizon’s 50%-scale prototype that ishas ~~currently~~successfully completed ~~in active~~ flight testing

The aircraft is ~~also~~ powered by a hybrid -electric main engine. For vertical flight, electrical power for the powerful ducted fans in the wings and canards comes ~~from~~ 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 is 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 ~~cheaper~~significantly less expensive to own and operate than legacy helicopters with similar payload characteristics and will travel almost twice as fast. The specifications for the aircraft call for it to be able to carry seven people with a useful load of 1,500 lbs., almost twice the carriage capacity of many of our ~~competitors~~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 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 ~~initiated~~completed flight testing of a 50%-scale prototype of our Cavorite ~~concept~~X7 aircraft. This sub-scale prototype has been through hover testing and ~~the~~successfully ~~team is~~transitioned ~~currently working towards transition~~ to forward flight. We have received a Special Flight Operations Certificate (SFOC) from Transport Canada Civil Aviation (“TCCA”) that allows outdoor untethered flight of our sub-scale prototype. Our SFOC #930370 will remain effective until its expiry on August 1st of 2025 at which point Horizon will require a formal extension to allow continued untethered test flying. 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 TCCA. Receiving a Type Certificate in accordance with stated regulatory standards will certify compliance to ~~the~~ applicable airworthiness standards for the Cavorite X7, ~~something that is~~ a ~~necessary~~ prerequisite for ~~using~~ using the aircraft in commercial operations. We believe our aircraft will be one of the first eVTOL aircraft to be certified for flight ~~into~~ into known icing conditions (“FIKI”), dramatically increasing ~~its~~ operational utility. We ~~believe~~are wetargeting ~~can receive~~ Type Certification inprior ~~2027~~to 2030.

Patents and other Intellectual Property

In order to protect the novel technologies that underpin the Cavorite X7 design, we have accumulated 2231 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 have 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”).

3Furthermore, in its 2021 Regional Air Mobility 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.

~~Furthermore,~~1 ~~in its 2021 Regional Air Mobility report~~NASA, ~~NASA~~REGIONAL ~~has~~AIR ~~highlighted~~MOBILITY ~~that while the United States has over 5~~(2021),~~000~~ ~~airports, only 30 of them support 70% of all travelers~~https://sacd.~~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~~larc. ~~It is little wonder that 73% of Americans prefer road travel over flying, even if that means spending hours in gridlocked traffic~~nasa. ~~We believe there is a significant opportunity to improve regional travel through the use of intelligently designed VTOL aircraft~~gov/wp-content/uploads/sites/167/2021/04/2021-04-20-RAM.pdf.

Regional Air Mobility

Regional Air Mobility (“RAM”) is ~~simply~~ 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 Aircraft’s Cavorite X7 ~~concept~~ 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 “~~[t]hrough~~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 ~~simply too~~ 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 ~~fundamentally~~ 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 ~~announced~~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 Aircraft could be an ideal match for the recent government funding opportunities and has benefited from awards via government grants already exceeding $CAD 2 million.

The History of Horizon Aircraft

Horizon was founded in 2013 to develop an innovative prototype amphibious aircraft. However, as we investigated the latest advancements in the areas of electric motor and battery technologies, we ~~began~~realized ~~to understand~~ that a new high-utility type of aircraft concept was ~~possible~~feasible. ~~With~~The ~~this realization, the~~ experienced aircraft development team shifted to developing the unique Cavorite X-series concept, ~~eventually~~specifically ~~settling on~~ a 7-~~place~~person hybrid eVTOL aircraft. In June of 2021, Horizon was acquired by Astro Aerospace Ltd. (“Astro”), an OTCQB-listed company, in an all-stock deal. In August of 2022, Astro ~~after~~and ~~funding~~Horizon ~~challenges, Astro~~ agreed to unwind the deal and Horizon was sold back to its original shareholders. ~~In subsequent events, Astro Aerospace Ltd. became a revoked public company after failing to submit timely financial information.~~

1 NASA, REGIONAL AIR MOBILITY (2021), https://sacd.larc.nasa.gov/wp-content/uploads/sites/167/2021/04/2021-04-20-RAM.pdf.

After re-privatizing from Astro, Horizon successfully raised funding to support the continued development and testing of its sub-scale prototypes as well as to continue progress on the detailed design of a full-scale technical demonstrator aircraft.

Sub-Scale Prototypes

We have built many sub-scale prototype aircraft. ~~Starting~~Commencing with a smaller 1/7th-scale aircraft, we ~~are~~have now completed flight testing on a half-scale prototype. This large prototype has a 2022-foot wingspan, and weighs ~~almost~~approximately ~~500~~600 lbs., ~~and is roughly 15 feet long.~~ This aircraft has been through successful testing in hover, ~~testing~~wind tunnel, and ~~the team has investigated~~ forward transition ~~speeds up to 70 mph in a wind tunnel~~flight. All testing ~~has~~ yielded positive results, and the aircraft ishas ~~performing~~performed significantly above initial expectations ~~for~~in respect to both power and stability.

Full-Scale Cavorite X7 Aircraft Concept

Based on positive initial testing results, the team ishas ~~actively~~transitioned ~~improving~~to ~~the~~building ~~design of~~ a full-scale technical demonstrator aircraft. ~~For~~This ~~example,~~demonstrator ~~the~~ aircraft will be designed to 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 upthat tomay surpass 250 mph and carry 1,500 lbs. of useful load over 500 miles with the appropriate fuel reserves. ~~The team has identified and begun negotiating with key suppliers globally to meet the specifications of the Cavorite X7.~~

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 the extraordinary 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 ~~redomesticated~~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:

●

More Efficient: Ducted fans are significantly more efficient than open propellers of similar diameter, using much less power for the same levels of thrust. Our unique HOVR Wing system also generates significant induced lift over the wing, further reducing the amount of momentum lift required by the electric ducted fans and improving efficiency.

●

Lower Noise: The presence of ducts around the fans stops the noise from radiating freely into the environment. Furthermore, we will employ acoustic liners within the fan duct that lower the noise further. We expect this to enable the Cavorite X7 aircraft to land at a large number of locations close to high population densities.

● Fly Enroute Like a Normal Aircraft: The HOVR Wing has the ability to return to a configuration ~~exactly~~similar ~~like~~to a ~~normal~~traditional ~~aircraft~~airplane for efficient enroute flight. This aerodynamically efficient enroute configuration is the key to its impressive performance metrics.

●

CTOL, STOL, VTOL: The HOVR Wing concept also naturally supports Conventional Takeoff and Landing (“CTOL”), able to take off and land from a conventional runway like a traditional aircraft, should that be required. It can also conduct Short Takeoff and Landing (“STOL”) operations, something that is anticipated to be very useful for regional flight operators. In CTOL and STOL operations the aircraft will also be able to carry more payload. Finally VTOL operations will open up remote landing opportunities, special missions, and dramatically expand its unique utility.

●

Flight into Known Icing: We believe the Cavorite X7 will be one of the first VTOL aircraft that could be successfully certified for flight into known icing conditions. Being able to operate in poor weather should expand the operational capability of the aircraft and further reinforce strong commercial business cases.

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 ~~clean~~new ~~sheet~~ aircraft types and have ~~combined~~deep industry experience ~~of more than 200 years~~. The leadership team within ~~New~~ Horizon also includes personnel with significant experience in 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 ~~unique~~innovative aircraft in the real world. Design considerations for easy field repair, safety, performance, and a focus on ~~lowering~~ lowering operational costs has been foundational to the Cavorite X7 ~~concept~~design and development. We believe this deep operational experience and design consideration has led to a machine concept that will support for-profit 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 Regional Air Mobility. 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:

●

Medical Evacuation: Able to travel almost twice the speed as a traditional helicopter and at significantly lower operating costs. Delivering people or other time sensitive materials to a hospital in half the time of current helicopters has the potential to save many lives.

●

Remote Resupply: Many remote communities around the world suffer from anxiety about delivery of critical goods. Without the runway infrastructure to support traditional aircraft remote deliveries, the Cavorite X7 will be able to deliver critical medical supplies, food, and other important goods directly to these areas.

●

Disaster Relief: As global climate conditions become more extreme, a hybrid electric eVTOL like the Cavorite X7 offers a unique way to save lives when a weather disaster strikes. Able to land almost anywhere and operate without power infrastructure due to its hybrid electric architecture, the Cavorite X7 could help people when climate disaster strikes.

●

Military Missions: An aircraft capable of travelling at speeds almost twice that of a traditional helicopter offers unique military capability. Casualty evacuation, forward operating base resupply and other Special Operations will help Allied Servicepeople around the world.

Develop Unique Technologies That Can be Broadly Licensed to Generate Revenue

We ~~feel~~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 ~~boost~~ enhance revenue.

Our Cavorite X7 Hybrid eVTOL Aircraft Concept

Our full-scale Cavorite X7 Hybrid eVTOL aircraft is incurrently ~~the~~being ~~detailed design phase~~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 upthat tomay surpass 250 miles per hour.

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.

~~Not~~This ~~only~~design is ~~this~~both ~~concept extremely~~ efficient and ~~enroute, but it is also very~~ safe. During hover, multiple fans can fail with the aircraft ~~still~~maintaining ~~able to maintain~~ hover. For example, during flight testing the 50%-scale prototype aircraft ishovered ~~able to hover~~ with 20% of its fans disabled. ~~Furthermore~~In addition, as ~~discussed~~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 a dramatic full battery array failure. For increased durability, each fan unit is electrically, mechanically, and thermally isolated from the others, ~~reducing~~mitigating the ~~chances~~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 ~~precious~~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.

For remote operations, the aircraft effectively becomes 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 ~~(e.g.~~, for example during a disaster relief mission where the power grid is offline). ~~For~~The ~~example, in a disaster relief mission the~~ Cavorite X7 could land in a parking lot and provide charging ~~and/~~or power for communications that has been disrupted.

The hybrid power system will ~~also~~emit ~~be more efficient, emitting~~ less greenhouse gas emissions than a traditional turbine engine when compared to a traditional helicopter. ~~This~~ isThe ~~for two reasons. First, the~~ aircraft draws significant electrical energy from the battery array during vertical takeoff and landing, reducing emissions during this phase. ~~Second~~In addition, enroute the aircraft is in aan ~~very~~ aerodynamically efficient configuration as compared to a helicopter, dramatically lowering the power required to travel ~~at a given speed and therefore reduce emissions enroute~~. 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:

●

The hybrid electric system will be designed to provide two sources of electrical power for the vertical lifting fans.

● The aircraft can hover with more than 20% of the fans disabled, returning the aircraft to safety in the case of a fan failure.

●

Each vertical lifting fan is mechanically contained, preventing catastrophic blade loss from damaging adjacent fan units.

●

Each vertical lifting fan is both electrically and thermally isolated. This will help to avoid any cascading electrical problems or thermal runaways from reaching adjacent fan units.

●

With only moderate forward speed, the generator can support all electrical demand for the vertical fan array. This provides additional safety in the event of a catastrophic battery failure.

●

The aircraft is able to fly normally with all of the wings and canards in the open position, should any of them fail to move as commanded.

●

In the event of a vertical lift system failure, the aircraft can land (or take off) conventionally. It can also operate in STOL mode, should that be required.

●

With the wings closed during ground operations there will be no exposed fans, increasing passenger safety.

●

An early focus in the design process on human factors will ensure that the aircraft is easy to fly, increasing safety in all flight operations.

Performance

The Cavorite X7 ~~concept~~ will also ~~benefit~~ 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 ~~calculations also~~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~~ could increase to 1,800 lbs. when the aircraft operates in STOL or CTOL modes. Finally, our initial estimates indicate the aircraft will be be able to travel 500 miles with medium payloads with full operational fuel reserves. This is an aircraft ~~concept~~design that was designed to do do work in the real world, and we believe our customers will recognize and appreciate this.

Flight into Known Icing and Other Operational Challenges

We believe that ~~this concept~~the Cavorite X7 design may be one of the only viable VTOL designs that could be certified for Flight ~~Into~~into Known Icing ~~(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, ~~(VMC)–~~essentially clear of any clouds ~~— so~~. 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 ~~very~~ 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.

~~Bad~~Challenging weather is ~~also a challenge~~often difficult for regional commercial flight operations. The Cavorite X7’s hybrid power system and efficient enroute configuration will ~~likely~~ likely make it more resilient in the face of bad weather. Increased speed and range over pure electric VTOL regional aircraft should allow ~~for~~ for increased versatility, able to divert to a backup airfield or vertiport, go around unexpected storms, or deal with unexpected winds ~~that~~ that could negatively impact slower designs. We feel that this, coupled with FIKI certification, could offer a significant operational ~~advantage~~ 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 ~~are~~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 ~~wishing~~using ~~to use~~ our aircraft for commercial ~~use~~operations will require an AOC.

~~Since~~As we will not be permitted to deliver commercially produced aircraft to customers until we have obtained TCCA type certification, no material sales revenue ~~will~~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.

910

Marketing

Our marketing strategy is intended to build industry and consumer awareness of our technology. We are working with several external firms 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~~ maintaining the highest of safety standards. We also believe that the striking visual design of the aircraft coupled with market leading utility will be aan important point of differentiation from our competition.

Competition

WeThe ~~acknowledge the competitive nature of the~~ current ~~VTOL~~eVTOL landscape in North America and ~~around~~more ~~the~~broadly ~~world~~from a global perspective is competitive. Alternative technologies, either known or unknown, could bring more attractive ~~VTOL~~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 Regional Air Mobility may offer a more compelling initial business case ~~for~~as ~~early~~compared ~~VTOL~~to early eVTOL designs. These companies could employ similar design architectures alongside hybrid -electric power systems and challenge our Cavorite X7. However, at present the vast majority of our eVTOL competition are pursuing purely electric flight, which currently leaves most lagging behind from a speed, range and cargo -carrying capability.

Human ~~Capital~~Resources

As of August 1521, ~~2024~~2025, we had 1428 employees in Canada and 2 employees outside of Canada. None of our employees isare subject to a collective bargaining agreement or represented by a trade or labor union. We consider our relationship with our employees to be ~~good~~suitable. We believe that our turnover and productivity levels are at acceptable levels.

Properties

~~New~~ Horizon leases office space and an aircraft hangar in Lindsay, Ontario, which serves as the corporate headquarters, and office space and light composite manufacturing space in Haliburton, Ontario. ~~New~~ 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 ~~on or~~ that can be accessed through such website ~~are~~does not form part of this ~~prospectus~~report.

Legal Proceedings

As of August 1521, ~~2024~~2025, 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.

1011

Item 1A. Risk Factors.

The following risk factors apply to the business and operations of ~~New~~ Horizon and its consolidated subsidiaries. The occurrence of one or more of the events or ~~circumstances~~ 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 ~~Business~~Company ~~Combination~~ and may have an adverse effect on the business, cash flows, financial condition and results of operations of ~~New~~ 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 ~~have~~expect ~~incurred~~to incur significant operating losses. ~~Our~~We ~~operating~~have ~~losses~~not ~~were~~yet ~~$8,160~~started ~~and~~commercial $1operations,~~247~~ making it difficult for ~~the years~~us ~~ended~~to ~~May~~predict ~~31,~~our ~~2024~~future ~~and~~operating ~~2023~~results, ~~respectively.~~and we Webelieve ~~expect to~~that we will continue to incur operating losses ~~for~~until ~~the~~at ~~foreseeable~~least ~~future~~the astime we ~~develop~~begin ~~our~~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 ~~have~~expect ~~not~~our ~~yet~~operating ~~started commercial~~expenses ~~operations,~~to ~~making~~significantly itincrease ~~difficult~~over ~~for~~the usnext toseveral years ~~predict~~as we complete our ~~future~~aircraft ~~operating~~design, ~~results~~build, testing, and wemanufacturing. ~~believe~~We ~~that we will continue to incur operating~~expect ~~losses~~the ~~until~~rate at ~~least~~which ~~the time~~ we ~~begin~~incur ~~commercial operations. As a result, our~~ losses ~~may~~will be ~~larger~~significantly ~~than~~higher ~~anticipated,~~in ~~and~~fiscal we2026 ~~may not achieve profitability when expected, or at all,~~ and ~~even~~beyond ifas we ~~do,~~engage wein ~~may~~the ~~not~~following ~~be able to maintain or increase profitability.~~activities:

We● ~~expect~~continuing ~~our operating expenses~~ to ~~significantly~~design ~~increase~~and ~~over~~build ~~the~~our ~~next~~Cavorite ~~several years~~X7 ashybrid weeVTOL ~~complete our~~ aircraft ~~design,~~with ~~build, testing and manufacturing. We expect~~ the ~~rate~~goal atof ~~which~~having wesuch ~~incur~~aircraft ~~losses~~certified ~~will~~and beultimately ~~significantly higher for 2024 through at least 2027 as we engage in the following activities:~~produced;

● continuing to design our Cavorite X7 hybrid eVTOL aircraft with the goal of having such aircraft certified and ultimately produced;

●

engaging suppliers in the development of aircraft components and committing capital to serial production of those components;

● building our production capabilities to assemble and test the major components of our aircraft : propulsion systems, energy system assembly and aircraft integration, as well as incurring costs associated with outsourcing production of subsystems and other key components;

●

hiring additional employees across design, production, marketing, administration and commercialization of our business;

●

engaging with third party providers for design, testing, certification and commercialization of our products;

●

building up inventories of parts and components for our aircraft;

●

further enhancing our research and development capacities to continue the work on our aircraft’s technology, components, hardware and software performance;

●

testing and certifying the performance and operation of our aircraft;

●

working with third-party providers to train our pilots, mechanics and technicians in our proprietary aircraft operation and maintenance;

●

developing and launching our digital platform and customer user interface;

1112

●

developing our sales and marketing activities and developing our vertiport infrastructure; and

●

increasing our general and administrative functions to support our growing operations and our responsibilities as a public company.

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 (i.e. As of now, athere ~~Production Certificate).~~are Nono eVTOL aircraft that have passed certification by TCCA, EASA 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 Regional Air Mobility services.

We expect that the success of selling our aircraft will be highly dependent on our target customers’ embrace of Regional Air Mobility 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 Regional Air Mobility 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 Regional Air Mobility 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 weus 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 ~~2027~~prior to 2030, at the earliest, if at all.

We were incorporated in 2013, and we are developing an aircraft for the emerging Regional Air Mobility 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~~; however, we currently only have a 50%-scale prototype aircraft completed and undergoing flight testing~~.

1213

Detailed design and 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:

●

design, build, test and produce safe, reliable and high-quality Cavorite X7 aircraft and scale that production in a cost- effective manner;

●

obtain the necessary certification and regulatory approvals in a timely manner;

●

build a well-recognized and respected brand;

●

establish and expand our customer base;

●

properly price our aircraft, and successfully anticipate the demand by our target customers;

●

improve and maintain our manufacturing efficiency;

●

maintain a reliable, secure, high-performance and scalable technology infrastructure;

●

predict our future revenues and appropriately budget for our expenses;

●

anticipate trends that may emerge and affect our business;

●

anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape;

●

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 Regional Air Mobility market for eVTOL passenger and goods transport services does not exist; whether and how it develops is based on assumptions, and the Regional Air Mobility 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 Regional Air Mobility, 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.

1314

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 $~~880~~3,660 and $~~676~~880 in ~~2024~~2025 and ~~2023~~ 2024, respectively, and we expect to continue to incur significant expenses which will impact our profitability, including continuing ~~research and development~~ expenses, manufacturing, maintenance and procurement costs, marketing, customer and payment system expenses, and general and administrative expenses as we scale our operations. Our ability to become profitable in the future will not only depend on our ability to successfully market our aircraft for global use but also our ability to control our costs. If we are unable to ~~cost~~ efficiently design, certify, manufacture, market, and deliver our aircraft on time, our margins, profitability and prospects would be materially and adversely affected.

We are a relatively small company in comparison to current industry leaders in the Regional Air Mobility market. We may experience difficulties in managing our growth.

~~With~~We ~~under 20 employees currently, we~~ expect to experience significant growth in team size as we experience an increase in the scope and nature of our research and development, manufacturing, testing, and certification of our aircraft. Our ability to manage our future growth will require us to continue to improve our operational, financial and management controls, compliance programs and reporting systems. We are currently in the process of strengthening our compliance programs, including our compliance programs related to internal controls, intellectual property management, privacy and cybersecurity. We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results. We also may not be able to grow the team in a timely manner or hire the expertise required in order to successfully continue our aircraft development.

Our forward-looking operating information and business plan forecast relies in large part upon assumptions and analyses that we have developed or obtained from respected third parties. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.

Our management has prepared our projected financial performance, operating information and business plan, which reflect our current estimates of future performance. Whether our actual financial results and business develops in a way that is consistent with our expectations and assumptions as reflected in our forecasts depends on a number of factors, many of which are outside our control. Our estimates and assumptions may prove inaccurate, causing the actual amount to differ from our estimates. These factors include, but are not limited to, the risk factors described herein and the following factors:

●

our ability to obtain sufficient capital to sustain and grow our business;

●

our effectiveness in managing our costs and our growth;

●

our ability to meet the performance and cost targets of manufacturing our aircraft;

●

our ability to effectively develop our fan-in-wing eVTOL technology that underpins our Cavorite X7 aircraft design and operation;

●

establishing and maintaining relationships with key providers and suppliers;

●

the timing, cost and ability to obtain the necessary certifications and regulatory approvals;

●

the development of the Regional Air Mobility market and customer demand for our aircraft;

●

the costs and effectiveness of our marketing and promotional efforts;

1415

●

competition from other companies with compelling aircraft that may emerge to compete directly or indirectly with our Cavorite X7 aircraft;

●

our ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;

●

the overall strength and stability of domestic and international economies;

●

regulatory, legislative and political changes; and

●

consumer spending habits.

Unfavorable changes in any of these or other factors, most of which are beyond our control, could materially and adversely affect our business, results of operations and financial results. It is difficult to predict future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. If actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

We do not anticipate delivering our first ~~Cavorite~~ Cavorite X7 eVTOL aircraft to customers inuntil ~~2027~~sometime prior to 2030 at the earliest, pending receipt of regulatory approval and certification;. The ~~however, the~~ aircraft remains in the detailed design and building phase and has yet to complete any flight testing ~~and~~or ~~certification~~go through a certification process. Any delay in the design, production, or completion or requisite testing and certification, and any design changes that may be required to be implemented in order to receive certification, ~~would~~ could adversely impact our business plan and strategic growth plan and our financial condition.

~~We are currently in rigorous testing of our 50%-scale prototype and are still refining the detailed design of a full-scale aircraft.~~ While we currently have an ~~experienced~~ experienced aircraft prototyping team, there are many important milestones to achieve prior to being able to deliver our first commercial aircraft, including completing the detailed design, sub-system assembly, airframe manufacturing, systems integration, testing, design refinement, type certification of the aircraft, and production certification of our manufacturing facility. Our inability to properly plan, execute our operations, and analyze and contain the risk associated with each step could negatively impact our ability to successfully ~~operate~~ operate our business.

Any delays in the development, certification, manufacture and commercialization of our Cavorite X7 aircraft and related technology, such as battery technology or electric motors, may adversely impact our business, financial condition and results of operations.

We may experience future delays or other complications in the design, certification, manufacture, and production of our aircraft and related technology. These delays could negatively impact our progress towards commercialization or result in delays in increasing production capacity. If we encounter difficulties in scaling our production, if we fail to procure the key enabling technologies from our suppliers (e.g., batteries, power electronics, electric motors, etc.) which meet the required performance parameters, if our aircraft technologies and components do not meet our expectations, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived as less safe than those of our competitors, we may not be able to achieve our performance targets in aircraft range, speed, payload and noise or launch products on our anticipated timelines, and our business, financial condition and results of operations could be materially and adversely impacted.

1516

Adverse publicity stemming from any incident involving us or our competitors, or an incident involving any air travel service or unmanned flight based on eVTOL technologies, could have a material adverse effect on our business, financial condition and results of operations.

Electric aircraft are based on complex technology that requires skilled pilot operation and maintenance. Like any aircraft, they may experience operational or process failures and other problems, including adverse weather conditions, unanticipated collisions with foreign objects, manufacturing or design defects, pilot error, software malfunctions, cyber-attacks or other intentional acts that could result in potential safety risks. Any actual or perceived safety issues with our aircraft, other electric aircraft or eVTOL aircraft, unmanned flight based on autonomous technology or the Regional Air Mobility industry generally may result in significant reputational harm to our business, in addition to tort liability, increased safety infrastructure and other costs that may arise. The electric aircraft industry has ~~had~~faced ~~several~~multiple ~~accidents involving prototypes. Lilium’s first Phoenix demonstrator was destroyed by a ground-maintenance fire in February 2020; Eviation’s~~ prototype ~~eVTOL vehicle caught fire during testing in January 2020; a small battery~~-~~operated~~related plane operated by Avinor and built by Slovenia’s Pipistrel crashed in Norway in August 2019; and an electric-motor experimental aircraft built by Siemens and Hungarian company Magnus crashed in Hungary in May 2018, killing both occupantsaccidents.

We are also subject to risk of adverse publicity stemming from any public incident involving the company, our employees or our brand. If our personnel, our ~~50%-scale~~ prototype aircraft, or the personnel or vehicles of one of our competitors, were to be involved in a public incident, accident or catastrophe, ~~the~~ the public perception of the Regional Air Mobility industry or eVTOL vehicles specifically could be adversely affected, resulting in decreased customer demand for our aircraft, significant reputational harm or potential legal liability, which could cause a material adverse effect on sales, business and financial condition. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident or catastrophe. If our insurance is inapplicable or not adequate, we may be forced to bear substantial losses from an incident or accident.

Our business plans require a significant amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may adversely affect the market price of our shares and dilute our shareholders or introduce covenants that may restrict its operations.

We expect our expenditures to continue to be significant in the foreseeable future as we expand our development, certification, production and commercial launch, and that our level of capital expenditures will be significantly affected by customer demand for our services. The fact that we have a limited operating history and are entering a new industry means we have no historical data on the demand for its aircraft. As a result, our future capital requirements will be uncertain and actual capital requirements may be different from those we currently anticipate. We may seek equity or debt financing to finance a portion of its capital expenditures. Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all.

Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our industry and business model. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure. We might not be able to obtain any funding, and we might not have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations. We may seek to raise such capital through the issuance of additional shares or debt securities with conversion rights (such as convertible bonds and option rights). An issuance of additional shares or debt securities with conversion rights could potentially reduce the market price of our shares, and we currently cannot predict the amounts and terms of such future offerings.

In addition, our future capital needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity or equity-linked securities could dilute our shareholders. In addition, such dilution may arise from the acquisition or investments in companies in exchange, fully or in part, for newly issued shares, options granted to our business partners or from the exercise of stock options by our employees in the context of existing or future share option programs or the issuance of shares to employees in the context of existing or future employee participation programs. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations.

If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected.

1617

If we are unable to successfully design and manufacture our aircraft, our business will be harmed.

We are currently developing plans to expand our primary manufacturing infrastructure near Toronto, Ontario, and we plan to begin production of our certified aircraft in ~~2027;~~2028 ~~however,~~at ~~currently~~the ~~we have 50%-scale prototype aircraft in active flight testing and are in an early design phase of our full-scale aircraft~~earliest. We may not be able to successfully develop and certify a full-scale aircraft. We may also not be able to successfully ~~develop~~ develop commercial-scale manufacturing capabilities internally or supply chain relationships with our intended Tier 1 suppliers. Our production facilities and the production facilities of our outsourcing parties and suppliers may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics, ~~such as the COVID-19 pandemic,~~ which may render it difficult or impossible for us to manufacture our aircraft for some period of time.

If the Cavorite X7 eVTOL aircraft we build fails to perform as expected our ability to develop, market, and sell our aircraft could be harmed.

We have not yet produced a full-scale Cavorite X7 aircraft. Although we are satisfied with ~~early~~the flight testing of our 50%-scale prototype, there is no guarantee ~~that~~ that the full-scale aircraft will perform as we anticipate. Our aircraft may contain defects in design and manufacture that may cause ~~them~~ them not to perform as expected or that may require design changes and/or repairs. ~~Further,~~Our ~~our~~ Cavorite X7 aircraft may be impacted by various performance factors that could impair customer satisfaction, such as excessive noise, turbulent air during flight, foreign object damage, fan stall or wing flutter, overloading, hail and bird strike, or adverse icing accumulation. If our Cavorite X7 aircraft fails to perform as expected, we may need to delay delivery of initial aircraft, which could adversely affect our brand in our target markets and could adversely affect our business, prospects, and results of operations.

Our Cavorite X7 aircraft require complex software, hybrid electric power systems, battery technology and other technology systems that remain in development and need to be commercialized in coordination with our vendors and suppliers to complete serial production. The failure of advances in technology and of manufacturing at the rates we project may impact our ability to increase the volume of our production or drive down end user pricing.

Our Cavorite X7 will use a substantial amount of third-party and in-house software codes and complex hardware to operate. Our software and hardware may contain errors, bugs or vulnerabilities, and our systems are subject to certain technical limitations that may compromise our ability to meet our objectives. Some errors, bugs or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been implemented. We have a limited frame of reference by which to evaluate the long-term performance of our software and hardware systems and our aircraft, and we may be unable to detect and fix any defects in the aircraft prior to commencing commercial operations. The development and on-going monitoring of such advanced technologies is inherently complex, and we will need to coordinate with our vendors and suppliers in order to complete full-scale production. Our potential inability to develop the necessary software and technology systems may harm our competitive position or delay the certification or manufacture of our aircraft.

We are relying on third-party suppliers to develop a number of emerging technologies for use in our products, including lithium-~~ion~~based battery technology. Many of these technologies are already commercially viable, and our survey of commercially available products has already yielded promising results. However, the final cell design of our potential suppliers may not be able to meet the safety, technological, economical or operational requirements to support the regulatory requirements and performance assumed in our business plan.

We are also relying on third-party suppliers to commercialize these technologies (such as battery cell technology) at the volume and costs they require to launch and ramp-up our production. Our suppliers may not be able to meet the production timing, volume requirements or cost requirements we have assumed in our business plan. Our third-party suppliers could face other challenges, such as the lack of raw materials or machinery, the breakdown of tools in production or the malfunctioning of technology as they ramp up production. As a result, our business plan could be significantly impacted, and we may incur significant delays in production and full commercialization, which could adversely affect our business, prospects, and results of operations.

Our Cavorite X7 aircraft will make extensive use of lithium-~~ion~~based battery cells, which have been observed to catch fire or vent smoke and flame.

The battery packs within our Cavorite X7 aircraft will use lithium-~~ion~~based cells. On rare occasions, lithium-~~ion~~based cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-~~ion~~based cells. While the battery pack is designed to contain any single cell’s release of energy without spreading to neighboring cells, a failure of battery packs in our aircraft could occur or batteries could catch fire during production or testing, which could result in bodily injury or death and could subject us to lawsuits, regulatory challenges or redesign efforts, all of which would be time consuming and expensive and could harm our brand image. Also, negative public perceptions regarding the suitability of lithium-~~ion~~based cells for automotive applications, the social and environmental impacts of cobalt mining, or any future incident involving lithium-~~ion~~based cells, such as a vehicle or other fire, could seriously harm our business and reputation.

1718

We will rely on third-party suppliers and strategic parties for the provision and development of key emerging technologies, components and materials used in our Cavorite X7 aircraft, such as the lithium-~~ion~~based batteries that will help to power the aircraft, a significant number of which may be single or limited source suppliers. If any of these prospective suppliers or strategic parties choose to not do business with us at all, or insist on terms that are commercially disadvantageous, we may have significant difficulty in procuring and producing our aircraft, and our business prospects would be harmed.

Third-party suppliers and strategic parties will provide key components and technology to the Cavorite X7 aircraft. Collaborations with strategic parties are necessary to successfully commercialize our existing and future products. If we are unable to identify or enter into agreements with strategic parties for the development of key technology or if such strategic parties insist on terms that are commercially disadvantageous, including for example the ability to freely commercialize jointly owned intellectual property, we may have significant difficulty in procuring and producing our aircraft or technologies, components or materials used in our aircraft.

In addition to our collaborations, we will be substantially reliant on our relationships with our suppliers for the parts and components in our aircraft. If any of these prospective suppliers choose to not do business with us at all, or insist on terms that are commercially disadvantageous, we may have significant difficulty in procuring and producing our aircraft, and our business prospects would be harmed. If our suppliers experience any delays in providing us with or developing necessary components, or if our suppliers are unable to deliver necessary components in a timely manner and at prices and volumes acceptable to us, we could experience delays in manufacturing our aircraft and delivering on our timelines, which could have a material adverse effect on our business, prospects and operating results.

While we plan to obtain components from multiple sources whenever possible, we may purchase many of the components used in our Cavorite X7 aircraft from a single source. While we believe that we may be able to establish alternate supply relationships and can obtain replacement components for our single source components, we may be unable to do so in the short term, or at all, at prices or quality levels that are acceptable to us. In addition, we could experience delays if our suppliers do not meet agreed upon timelines or experience capacity constraints. Any disruption in the supply of components, whether or not from a single source supplier, could temporarily disrupt production of our aircraft until an alternative supplier is able to supply the required material. Changes in business conditions, unforeseen circumstances, governmental changes, and other factors beyond our control or which we do not presently anticipate, could also affect our suppliers’ ability to deliver components to us on a timely basis. Any of the foregoing could materially and adversely affect our results of operations, financial condition and prospects.

If any of our suppliers become economically distressed or go bankrupt, we may be required to provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase our costs, affect our liquidity or cause production disruptions.

We expect to purchase various types of equipment, raw materials and manufactured component parts from our suppliers. If these suppliers experience substantial financial difficulties, cease operations, or otherwise face business disruptions, we may be required to provide substantial financial support to ensure supply continuity or may have to take other measures to ensure components and materials remain available. Any disruption could affect our ability to deliver aircraft and could increase our costs and negatively affect our liquidity and financial performance.

We may not succeed in establishing, maintaining and strengthening our brand, which would materially and adversely affect customer acceptance of our services, reducing our anticipated sales, revenue and forecasts.

Our business and prospects heavily depend on our ability to develop, maintain and strengthen our brand and sell consumers on the safety, convenience and cost-effectiveness of our Regional Air Mobility services. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers. Our ability to develop, maintain and strengthen our brand will depend heavily on the success of our marketing efforts. When it launches, we expect the Regional Air Mobility industry to be intensely competitive, with a strong first-mover advantage, and we will not be the first to deliver viable eVTOL aircraft to service this market. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.

1819

Our business depends substantially on the continuing efforts of our key employees and qualified personnel; our operations may be severely disrupted if we lose their services.

Our success depends substantially on the continued efforts of our key employees and qualified personnel, and our operations may be severely disrupted if we lose their services. As we build our brand and become more well known, the risk that competitors or other companies may poach our key talented personnel increases. The failure to attract, integrate, train, motivate and retain these personnel could seriously harm our business and prospects. The design, assembly, testing, production and certification of our aircraft requires highly skilled personnel for which there is currently a shortage in the aerospace workforce in North America. We intend to work with third parties to attract talented workers; however, if we are unable to hire, train, and retain qualified personnel, our business could be harmed, and we may be unable to implement our growth plans.

Our business may be adversely affected by labor and union activities in the future.

Although none of our employees are currently represented by a labor union, it is not uncommon throughout the aircraft industry generally for many employees at aircraft companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. weWe may also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results.

Failure of information security and privacy concerns could subject weus to penalties, damage our reputation and brand, and harm our business and results of operations.

We expect to face significant challenges with respect to information security and privacy, including the storage, transmission and sharing of confidential information. weWe will transmit and store confidential and private information of our customers, such as personal information, including names, accounts, user IDs and passwords, and payment or transaction related information.

We intend to adopt strict information security policies and deploy advanced measures to implement the policies, including, among others, advanced encryption technologies. However, advances in technology, an increased level of sophistication of our services, an increased level of expertise of hackers, new discoveries in the field of cryptography or others can still result in a compromise or breach of the measures that we use. If we are unable to protect our systems, and hence the information stored in our systems, from unauthorized access, use, disclosure, disruption, modification or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners of confidential information or even subject us to fines and penalties. In addition, complying with various laws and regulations could cause us to incur substantial costs or require that we change our business practices, including our data practices, in a manner adverse to our business.

Compliance with required information security laws and regulations could be expensive and may place restrictions on the conduct of our business and the manner in which we interact with our customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against weus by governmental entities or others, and damage to our reputation and credibility, and could have a negative impact on revenues and profits.

Significant capital and other resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online retail and other online services generally, which may reduce the number of orders we receive.

1920

We are subject to cybersecurity risks to our operational systems, security systems, infrastructure, integrated software in our aircraft and customer data processed by us or third-party vendors.

We are at risk for interruptions, outages and breaches of the following systems, which are either owned by us or operated by our third-party vendors or suppliers:

●

operational systems, including business, financial, accounting, product development, data processing or production processes;

●

facility security systems;

●

aircraft technology including powertrain, avionics and flight control software;

●

the integrated software in our aircraft; or

●

customer data.

The occurrence of any such incident could disrupt our operational systems, result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information, compromise personal information of customers, employees, suppliers, or others, jeopardize the security of our facilities or affect the performance of in-product technology and the integrated software in our aircraft.

Moreover, there are inherent risks associated with developing, improving, expanding and updating the current systems, such as the disruption of our data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts or supplies or manufacture, deploy, and deliver our aircraft, adequately protect our intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We cannot be sure that these systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If these systems do not operate as we expect them to, we may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

Any unauthorized access to or control of our aircraft or our systems or any loss of data could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our aircraft, their systems or data, as well as other factors that may result in the perception that our aircraft, their systems or data are capable of being “hacked,” could negatively affect our brand and harm our business, prospects, financial condition and operating results.

Although we plan to have a formal cybersecurity committee organized by the Board, as well as third party security specialists on contract, there is no guarantee that this additional layer of corporate governance will be sufficient to mitigate the posed by motivated cybersecurity criminals.

We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.

Our manufacturing or customer service facilities or operations could be adversely affected by events outside of our control, such as natural disasters, wars, health epidemics ~~like COVID-19~~, and other calamities. Although we have servers that are hosted in an offsite location, our backup system does not capture data on a real-time basis, and we may be unable to recover certain data in the event of a server failure. We cannot ~~assure you~~necessarily ~~that~~ensure that any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services.

2021

Risks Related to our Intellectual Property

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.

We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position. We rely on a combination of patents, trade secrets ~~(including know-how)~~, employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses, and other contractual rights to establish and protect our rights in our technology. Despite our efforts to protect our proprietary rights, third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe upon our intellectual property rights or those rights are not enforceable. Monitoring unauthorized use of our intellectual property is difficult and costly, and the steps we have taken or will take are aimed to prevent misappropriation. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources, including significant amounts of time from our key executives and management, and may not have the desired outcome.

Patent, trademark, and trade -secret laws vary significantly throughout the world. Some countries do not protect intellectual property rights to the same extent as do the laws of the United States, Canada, and European Union. Therefore, we may not be able to secure certain intellectual property rights in some jurisdictions, and our intellectual property rights may not be as strong or as easily enforced outside of ~~the~~North ~~United States~~ America and the European Union. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue which, ~~would~~could adversely affect our business, prospects, financial condition and operating results.

Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

We cannot be certain that we are the first inventor of the subject matter to which we have filed or ~~plans~~plan to file a particular patent application, or if we are ~~the~~ the first party to file such a patent application. If another party has filed a patent application for the same subject matter as we have, or similar subject matter is otherwise publicly disclosed, we may not be entitled to the protection sought by the patent application.

Further, the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that the patent applications that we file will issue, or that our issued patents will afford protection against competitors with similar technology or will cover certain aspects of our products. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition or operating results.

As our patents may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights may not protect weus effectively. In particular, we may not be able to prevent others from developing or exploiting competing technologies.

We cannot assure you ~~that~~ that we will be granted patents pursuant to our pending applications or those we plan to file in the future. Even if our patent ~~applications~~ applications succeed and we are issued patents in accordance with them, these patents could be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide meaningful protection or competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to us. The intellectual property rights of others could also bar us from licensing and exploiting any patents that ~~issue~~are issued from our pending applications. Numerous patents and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology. These patents and patent applications might have priority over our patent applications and could result in refusal of or invalidation of our patent applications. Finally, in addition to those who may claim priority, any of our existing or pending patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

2122

We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

Companies, organizations, or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell, ~~leasing~~lease, or market our vehicles or components, which could make it more difficult for us to operate our business. From time to time, we may receive communications from holders of patents (including non-practicing entities or other patent licensing organizations), trademarks or other intellectual property regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. Our applications and uses of trademarks relating to our design, software or artificial intelligence technologies could be found to infringe upon existing trademark ownership and rights. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

●

cease manufacturing our aircraft, or discontinue use of certain components in our aircraft, or offering services that incorporate or use the challenged intellectual property;

●

pay substantial damages;

●

seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all;

●

redesign our aircraft; or

●

establish and maintain alternative branding for our aircraft or services.

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.

Many of our employees were previously employed by other aeronautics, aircraft or transportation companies or by suppliers to these companies. We may be subject to claims that us or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of ~~our~~ former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to ~~paying~~ paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or our work -product could ~~hamper~~ hamper or prevent our ability to commercialize our products, which could severely harm our business. Even if we are successful in defending ~~against~~ against these claims, litigation could result in substantial costs and demand on management resources.

Risks Related to the Regulatory Environment in Which We Operate

We are subject to substantial regulation and unfavorable changes to, or our failure to comply with, these regulations could substantially harm our business and operating results.

Our eVTOL aircraft, ~~and~~ our ~~planned~~ planned operation of Regional Air Mobility services, orand in certain jurisdictions by our local AOCs, will be subject to substantial regulation in in the jurisdictions in which we intend our eVTOL aircraft to operate. We expect to incur significant costs in complying with these regulations. Regulations related to the eVTOL industry, including aircraft certification, production certification, passenger operation, flight operation, airspace operation, security regulation and vertiport regulation are currently evolving, and we face risks associated with the development and evolution of these regulations.

2223

Our aircraft must be initially certified by the Transport Canada Civil Aviation organization in order to be used for commercial purposes in Canada. Furthermore, we must also seek type certification under the Federal Aviation Administration for the aircraft to be used for commercial services in the United States. For commercial use in Europe, the European Union Aviation Safety Agency must also grant type certification for our aircraft. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving certification. Our failure to obtain or maintain certification for our aircraft or infrastructure would have a material adverse effect on our business and operating results. In addition to obtaining and maintaining certification of our aircraft, our third-party air carriers will need to obtain and maintain operational authority necessary to provide the envisioned Regional Air Mobility services. A transportation or aviation authority may determine that we and/or our third-party air carriers cannot manufacture, provide, or otherwise engage in the services as we contemplated and upon which we based our projections. The inability to implement the envisioned Regional Air Mobility services could materially and adversely affect our results of operations, financial condition, and prospects.

To the extent the laws change, our aircraft may not comply with applicable American, European, international, federal, provincial, state or local laws, which would have an adverse effect on our business. Compliance with changing regulations could be burdensome, time -consuming, and expensive. To the extent compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results would be adversely affected.

It is intended for third-party air carriers to operate the Cavorite X7 aircraft in Canada, the U.S. and Europe. These third-party air carriers are subject to substantial regulation and laws, and unfavorable changes to, or the third-party air carriers’ failure to comply with, these regulations and/or laws could substantially harm our business and operating results.

Third-party air carriers are subject to substantial regulation and laws, and unfavorable changes to, or the third-party air carriers’ failure to comply with, these regulations or laws could substantially harm our business and operating results. Further, although third-party air carriers may have experience in providing air transportation services, they will initially have limited experience in operating our unique Cavorite X7 hybrid eVTOL aircraft. Although we will screen potential air operators who wish to purchase and use our aircraft, our arrangements with third-party air carriers may not adequately address the operating requirements of our customers to their satisfaction. Given that our business and our brand will be affiliated with these third-party air carriers, we may experience harm to our reputation if these third-party air carriers provide customers with poor service, receive negative publicity, or experience accidents or safety incidents.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.

We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various jurisdictions in which we conduct or in the future may conduct activities, including Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTA), U.S. Foreign Corrupt Practices Act (FCPA), European anti-bribery and corruption laws, and other anti-corruption laws and regulations. The PCMLTA, FCPA and European anti-bribery and corruption laws prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to a “foreign official” for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The PCMLTA also requires companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. ~~our~~Our policies and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

2324

Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in our shares.

We may be subject to governmental export and import control laws and regulations as we expand our suppliers and commercial operations outside Canada, the U.S. and Europe.

Our Cavorite X7 aircraft may be subject to export control and import laws and regulations, which must be made in compliance with these laws and regulations. For example, we may require licenses to import or export our aircraft, components or technologies to our production facilities and may experience delays in obtaining the requisite licenses to do so. Audits in connection with the application for licenses may increase areas of noncompliance that could result in delays or additional costs. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to additional audits, substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.

Risks Related to Our Organization and Structure

British Columbia law and our Articles contain certain provisions, including anti-takeover provisions, that limit the ability of shareholders to take certain actions and could delay or discourage takeover attempts that shareholders may consider favorable.

Our Articles and the BCBCA contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our Board and therefore depress the trading price of our Class A ordinary shares. These provisions could also make it difficult for shareholders to take certain actions, including electing directors who are not nominated by the current members of the Board or taking other corporate actions, including effecting changes in our management. Among other things, our Articles include provisions regarding:

●

the limitation of the liability of, and the indemnification of, our directors and officers;

● the exclusive right of our Board to ~~appoint~~expand athe ~~director~~Board toby ~~fill~~appointing aone ~~vacancy~~or ~~created~~more bydirectors to the ~~expansion of our~~ Board by up to 1/3; of the number of current directors ~~who were elected~~ or ~~appointed~~to asfill ~~directors~~casual atvacancies ~~the~~created ~~last~~upon ~~shareholder meeting or~~ the resignation, death, or removal of a director up to the number of directors who were elected or appointed as directors at the last shareholder meeting, which prevents shareholders from being able to fill vacancies on our Board;

●

the procedures for the conduct and scheduling of Board and shareholder meetings; and

●

advance notice procedures with which shareholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a shareholders’ meeting, which could preclude shareholders from bringing matters before annual or special meetings of shareholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management.

Any provision of our Articles or British Columbia law that has the effect of delaying or preventing a change in control could limit the opportunity for shareholders to receive a premium for their ~~Common~~Class A ordinary Shares and could also affect the price that some investors are willing to pay for ~~Common~~Class A ordinary Shares.

2425

Our management team may not successfully or efficiently manage its transition to being a public company.

As a public company, we have incurred ~~new~~increased obligations relating to our reporting, procedures, and internal controls. These ~~new~~ obligations and attendant scrutiny ~~will~~ require investments of significant time and energy from our executives and could divert their attention away from the day-to-day management of our business, which in turn could adversely affect our financial condition or operating results.

The members of our management team have extensive experience leading complex organizations. However, they have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that specifically govern public companies.

We will incur significant ~~increased~~ expenses and administrative burdens as a public company, which could have an adverse effect on ~~its~~our business, financial condition and results of operations.

As a ~~result~~public ofcompany ~~the consummation of the Business Combination,~~ we face increased legal, accounting, administrative and other costs and expenses ~~as a public company that we did not incur as a private company~~. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, Public Company Accounting Oversight Board (the “PCAOB”) and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements ~~will~~increases ~~increase~~ costs and ~~make~~makes certain activities more time-consuming. A number of those requirements have and will require us to carry out activities we have not done previously. For example, we have created new board committees and will adopt new internal controls and disclosure controls and procedures. In addition, expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified, we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of us. It may also be more expensive to obtain director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on the Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations increases ~~will increase~~ legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect our billing and reporting.

To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures, and controls and continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect our manufacturing operations, customer billing and reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our customers, cause harm to our reputation and brand and could also result in errors in our financial ~~and~~reporting, as well as other reporting obligations. We expect that complying with these rules and regulations ~~will~~may substantially increase our legal and financial compliance costs and will make some activities more time-consuming and costly. ~~These increased costs will increase our net loss and we cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.~~

Our management has limited experience in operating a U.S.-listed public company.

Our management has limited experience in the management of a U.S.-listed public company. Our management team may not successfully or effectively manage our transition to a U.S.-listed public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the combined company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of U.S.-listed public companies. The development and implementation of the standards and controls necessary for the combined company to achieve the level of accounting standards required of a public company listed on a public exchange in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company, which will increase our operating costs in future periods.

We will be an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors.

We will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the ~~Business~~Initial ~~Combination~~Public Offering, (b) in which we ~~has~~have total annual gross revenue of at least ~~USD~~ USD $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares held by non-affiliates exceeds USD $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than USD $1.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, such as an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares less attractive because we intend to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find our shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for our shares and the market price and trading volume of our shares may be more volatile and decline significantly.

If we qualify as a foreign private issuer, we will be exempt from a number of rules under the U.S. securities laws and will be permitted to file less information with the SEC than a U.S. domestic public company, which may limit the information available to our shareholders.

We may qualify as a foreign private issuer, as such term is defined in Rule 405 under the Securities Act. If a foreign private issuer, we will not be subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we will be exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the U.S. proxy rules under Section 14 of the Exchange Act. As long as we are a foreign private issuer, we will not be required to obtain shareholder approval for certain dilutive events, such as the establishment or material amendment of certain equity-based compensation plans, we will not be required to provide detailed executive compensation disclosure in our periodic reports, and we will be exempt from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition, our officers and directors will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities.

If we qualify as a foreign private issuer, we intend to submit quarterly interim consolidated financial data to the SEC under cover of the SEC’s Form 6-K, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. domestic public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K under the Exchange Act.

Also, as a foreign private issuer, we will be permitted to follow home country practice in lieu of certain Nasdaq corporate governance rules, including those that permit a lower quorum requirement and require listed companies to have a majority of independent directors (although all of the members of the audit committee must be independent under the Exchange Act) and independent director oversight of executive compensation, nomination of directors and corporate governance matters; have regularly scheduled executive sessions with only independent directors; and adopt and disclose a code of ethics for directors, officers and employee. Accordingly, our shareholders may not have the same protections afforded to shareholders of listed companies that are subject to all of the applicable corporate governance requirements.

Risks Related to Taxes

Our ability to utilize our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations, including losses as a result of the Business Combination.

We have incurred, and we are likely to continue incurring significant tax losses, which may be limited in our usability under Canadian and other tax laws, in particular following the Amalgamation and other significant shareholder changes. Although we neither expect the Business Combination nor any of the ownership changes in the course of past financing rounds to result in a forfeiture of our Canadian tax loss attributes, the realization of future tax savings from such tax loss attributes will be limited under the Tax Act following the Amalgamation and will depend on the tax authorities’ acceptance of their continued availability and our ability to generate future taxable income in Canada against which such losses can be offset.

We are subject to Canadian and United States tax on our worldwide income.

We are deemed to be a resident of Canada for Canadian federal income tax purposes by virtue of existing under the BCBCA, subject to the application of an applicable tax treaty or convention. Accordingly, subject to an applicable tax treaty or convention, we will be subject to Canadian taxation on our worldwide income, in accordance with the rules set forth in the Income Tax Act (Canada) (the “Tax Act”) generally applicable to corporations residing in Canada.

Notwithstanding that we will be deemed to be a resident of Canada for Canadian federal income tax purposes, we will also be treated as a U.S. corporation for U.S. federal income tax purposes, pursuant to Section 7874(b) of the Code, and will be subject to U.S. federal income tax on our worldwide income under applicable U.S. inversion rules. As a result, subject to an applicable tax treaty or convention, we will be subject to taxation both in Canada and the U.S., which could have a material adverse effect on our business, financial condition and results of operations. Accordingly, all prospective shareholders and investors should consult with their own tax advisors in this regard.

Dividends, if ever paid, on our ~~Common~~Class ~~Shares~~A ~~will~~ordinary shares will be subject to Canadian or United States withholding tax.

It is currently anticipated that we will not pay any dividends on the ~~Common~~Class ~~Shares~~A ordinary shares in the foreseeable future. To the extent dividends are paid, dividends ~~received~~ received by holders of our ~~Common~~Class ~~Shares~~A ordinary shares who are not residents of the U.S. and who are residents of Canada for purposes of the Tax Act will be subject to U.S. withholding tax. Any dividends may not qualify for a reduced rate of withholding tax under the U.S.-Canada income tax treaty (“Canada-U.S. Tax Convention”). In addition, a Canadian foreign tax credit or a deduction in respect of such U.S. withholding taxes paid may not be available.

Dividends received by shareholders who are residents of the U.S. will not be subject to U.S. withholding tax but will be subject to Canadian withholding tax. Any dividends may not qualify for a reduced rate of withholding tax under the Canada-U.S. Tax Convention. For U.S. federal income tax purposes, a U.S. holder may elect for any taxable year to receive either a credit or a deduction for all foreign income taxes paid by the holder during the year. Dividends paid by us will be characterized as U.S. source income for purposes of the foreign tax credit rules under the Code. Accordingly, U.S. holders generally will not be able to claim a credit for any Canadian tax withheld unless, depending on the circumstances, they have an excess foreign tax credit limitation due to other foreign source income that is subject to a low or zero rate of foreign tax. Subject to certain limitations, a U.S. holder should be able to take a deduction for the U.S. holder’s Canadian tax paid, provided that the U.S. holder has not elected to credit other foreign taxes during the same taxable year.

Dividends received by non-U.S. holders who are not residents of Canada for purposes of the Tax Act will be subject to U.S. withholding tax and will also be subject to Canadian withholding tax. These dividends may not qualify for a reduced rate of U.S. withholding tax under any income tax treaty otherwise applicable to our shareholders, subject to examination of the relevant treaty. These dividends may, however, qualify for a reduced rate of Canadian withholding tax under any income tax treaty otherwise applicable to our shareholders, subject to examination of the relevant treaty.

Each holder of our ~~Common~~Class A ordinary Shares should seek tax advice, based on such shareholder’s particular facts and circumstances, from an independent tax advisor.

The transfer of our ~~Common~~Class ~~Shares~~A ordinary shares may be subject to U.S. estate and generation-skipping transfer tax.

Because our ~~Common~~Class ~~Shares~~A ordinary shares will be treated as shares of a U.S. domestic corporation for U.S. federal income tax purposes, the U.S. estate and generation-skipping transfer tax rules generally may apply to a non-U.S. holder’s ownership and transfer of our ~~Common~~Class ~~Shares~~A ordinary shares.

Changes in tax laws may affect our shareholders and other investors.

There can be no assurance that our Canadian and U.S. federal income tax treatment or an investment in us will not be modified, prospectively or retroactively, by legislative, judicial or administrative action, in a manner adverse to us or our shareholders or other investors.

Risks Related to Ownership of Our Securities

An active market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

The price of our securities may vary significantly due to factors specific to us as well as to general market or economic conditions. ~~Furthermore~~Our Class A ordinary shares may be thinly traded; therefore, our share price may fluctuate more than the stock market as a whole. Without a larger public float, our Class A ordinary shares will be less liquid than the shares of companies with broader public ownership. Trading of a relatively small volume of our Class A ordinary shares may have a greater effect on the trading price than would be the case if our public float were larger. Accordingly, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.

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

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

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

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

IfOn weJanuary do22, ~~not~~2025, ~~regain~~we ~~compliance~~received ~~with~~a ~~the~~written ~~Bid~~notification ~~Price~~from ~~Rule~~Nasdaq byindicating ~~January~~that ~~15,~~the ~~2025,~~Staff wedetermined ~~may~~that bewe ~~eligible~~had ~~for~~received an additional 180~~-day~~ ~~compliance~~calendar ~~period.~~days, Toor ~~qualify~~until July 14, we2025, ~~would~~to beregain ~~required to~~compliance ~~meet~~with the ~~continued~~Bid ~~listing~~Price ~~requirement~~Rule. ~~for~~On ~~market~~June ~~value~~26, of2025, ~~publicly~~we ~~held~~received ~~shares~~notice ~~and~~from ~~all~~Nasdaq ~~other~~informing ~~initial~~us ~~listing~~that ~~standards~~we ~~for the Nasdaq~~had ~~Capital~~regained ~~Market,~~compliance with the ~~exception of the~~ Bid Price Rule, and ~~would~~that ~~need to provide written notice of our intention to cure~~ the ~~bid~~matter ~~price deficiency~~is ~~during~~now ~~the second compliance period, by effecting a reverse stock split, if necessary~~closed.

IfOn August 28, 2024, we dowere notified ~~not~~by ~~regain~~Nasdaq ~~compliance~~that we had failed to maintain a net income from continuing operations of USD $500,000 in our most recently completed ~~with~~fiscal year or in two of the ~~Bid~~last ~~Price~~three ~~Rule~~of ~~when~~our most recently completed fiscal years required, for continued listing under Nasdaq ~~will~~Listing Rule ~~provide~~5550(b)(3) ~~written~~(the ~~notification~~“Net toIncome usStandard”). The Nasdaq Qualifications Listing Staff (the “Staff”) notified us that we 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 our ~~Class~~listed Asecurities ~~ordinary~~be ~~shares~~at ~~are~~least ~~subject~~$35 tomillion) or Nasdaq Listing ~~delisting~~Rule 5550(b)(1) (the “Equity Standard,” which requires us to maintain stockholders’ equity of at least $2.5 Atmillion) (the ~~that~~Net ~~time~~Income Standard, wethe ~~may~~Market ~~appeal~~Value of Listed Securities Standard, and the ~~delisting~~Equity ~~determination~~Standard, tocollectively the “Continued Listing Standards”). We requested a hearing before the Nasdaq ~~hearings~~Hearings ~~panel~~Panel (the “Panel”) to appeal the Nasdaq Qualifications Listing Staff’s (the “Staff”) determination, which took place on December 12, 2024.

~~The~~On ~~notice~~January ~~from~~24, ~~Nasdaq~~2025, ~~has~~we received noa ~~immediate~~letter ~~effect~~from on the ~~listing~~Nasdaq Office of ~~our~~General ~~Class~~Counsel Aconfirming ~~ordinary~~the ~~shares,~~decision ~~and~~of ~~our~~the ~~Class~~Panel Athat ~~ordinary~~the ~~shares~~Company ~~will~~had ~~continue~~regained tocompliance ~~be listed on~~ with the ~~Nasdaq Capital~~Continued ~~Market~~Listing ~~under~~Standards ~~the~~by ~~symbol~~demonstrating ~~“HOVR”.~~compliance Wewith ~~are~~the ~~currently~~Equity ~~evaluating~~Standard ~~our~~and ~~options~~that ~~for~~the ~~regaining~~matter ~~compliance~~was closed. ~~While~~Pursuant ~~there~~to ~~can~~Nasdaq beListing noRule ~~assurance~~5815(d)(4)(B), ~~that~~ we will ~~regain~~be ~~compliance~~subject ~~with~~to ~~the~~a ~~Bid~~panel ~~Price~~monitor ~~Rule,~~for wea ~~expect~~period toof ~~cure~~one ~~this~~year ~~deficiency~~from ~~within~~ the ~~180~~date ~~day~~of ~~period~~the letter.

InThere ~~the~~can ~~event~~be ofno ~~a delisting,~~assurance that we ~~can~~will ~~provide~~be noable ~~assurance~~to ~~that~~maintain ~~any~~compliance ~~action~~with ~~taken~~Nasdaq’s bycontinued uslisting tostandards. ~~restore~~In the event that we are unable to sustain compliance with ~~listing~~all applicable requirements ~~would~~for ~~allow~~continued listing on Nasdaq, our Class A ordinary shares tomay ~~become~~be delisted from Nasdaq. ~~listed~~If ~~again,~~Nasdaq ~~stabilize~~delists ~~the~~our ~~market~~securities ~~price~~from ortrading ~~improve~~on ~~the~~its ~~liquidity~~exchange ofand ~~our~~we ~~shares,~~are ~~prevent~~not able to list our ~~shares~~securities ~~from~~on ~~dropping~~another ~~below~~national ~~Nasdaq’s~~securities ~~minimum~~exchange, ~~bid~~we ~~price~~expect ~~requirement~~our orsecurities ~~prevent~~could ~~future~~be ~~non-compliance~~quoted ~~with~~on ~~Nasdaq’s~~an ~~listing~~over-the-counter ~~requirements~~market. If this were to occur, we could face significant material adverse consequences, including:

If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect 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 ~~Common~~Class ~~Shares~~A ordinary shares are “penny stock” which will require brokers trading in the ~~Common~~Class ~~Shares~~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.

We reached a determination to restate certain of our previously issued audited financial statements, which resulted in unanticipated costs and may affect investor confidence and raise reputational issues.

In connection with the preparation of our unaudited condensed interim consolidated financial statements for the period ended February 29, 2024, we determined that based on the application of U.S. generally accepted accounting principles (“GAAP”), the deferred development costs recorded by Robinson Aircraft Ltd. ~~f/k/a~~ ~~Robinson Aircraft ULC~~ in the fiscal year ended May 31, 2023 and prior are more appropriately classified as research and development costs. On April 19, 2024, the Audit Committee of the Board of Directors of the Company, concluded that the Company’s previously issued audited financial statements for the year ended May 31, 2023, and unaudited condensed consolidated interim financial statements for the period ended August 31, 2023 (collectively, the “Non-Reliance Periods”), should no longer be relied upon. The audited financial statements ~~for~~ for the year ended May 31, 2023, were restated to reflect a reclassification of previously capitalized deferred development costs to ~~operating~~Research ~~research~~ and ~~development~~Development costs in the statements of operations (the “Restated Financial Statements”). We filed the Restated Financial Statements in a Current Report on Form 8-K with the SEC on April 22, 2024. Any previously furnished or filed reports, related earnings releases, investor presentations that reference deferred development costs or research and development expenses, or similar communications describing our financial results for the Non-Reliance Periods should no longer be relied upon.

As a result, we ~~have~~ incurred ~~unanticipated~~ unanticipated costs for accounting and legal fees in connection with or related to the restatement and have become subject to a number of additional risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise ~~reputational~~ reputational issues for our business.

If securities or certain industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume ~~could~~ could decline.

The trading market for our shares will depend on the research and reports that securities or industry analysts publish about us or our business. ~~Currently,~~We wewill do not have ~~any analyst coverage and may not obtain analyst coverage in the future. In the event we obtain analyst coverage, we will not~~ ~~have~~ any control over such analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares, the share price would likely decline. If one or more of these analysts cease coverage of us or we or fail to regularly publish ~~reports~~ reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

The price of our Class A ordinary shares may decline, and you could lose all or part of your investment as a result.

The trading price of our Class A ordinary shares is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your ~~Common~~Class ~~Shares~~A atordinary shares at an attractive price due to a number of factors such as those listed in “— Risks Related to Our Business and Industry” and the following:

●

results of operations that vary from the expectations of securities analysts and investors;

●

results of operations that vary from our competitors;

●

changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

●

declines in the market prices of stocks generally;

●

strategic actions by us or our competitors;

●

announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

●

announcements of estimates by third parties of actual or anticipated changes in the size of our customer base or the level of customer engagement;

●

any significant change in our management;

●

changes in general economic or market conditions or trends in our industry or markets;

●

changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

●

additional securities being sold or issued into the market by us or any of the existing shareholders or the anticipation of such sales, including if we issue shares to satisfy restricted stock unit related tax obligations or if existing shareholders sell shares into the market when applicable “lock-up” periods end;

●

investor perceptions of the investment opportunity associated with our Class A ordinary shares relative to other investment alternatives;

●

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

●

litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

●

guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

●

the development and sustainability of an active trading market for our Class A ordinary shares;

●

actions by institutional or activist shareholders;

●

developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies;

●

changes in accounting standards, policies, guidelines, interpretations or principles; and

●

other events or factors, including those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events.

These broad market and industry fluctuations may adversely affect the market price of our Class A ordinary shares, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Class A ordinary shares is low. In the past, following periods of market volatility, shareholders have instituted securities class action litigation. If we are involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

Because there are no current plans to pay cash dividends on our Class A ordinary shares for the foreseeable future, you may not receive any return on investment unless you sell your Class A ordinary shares at a price greater than what you paid for it.

We intend to retain future earnings, if any, for future operations, expansion and debt repayment, and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on our Class A ordinary shares will be at the sole discretion of our Board. Our Board may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications of the payment of dividends by us to our shareholders or by our subsidiaries to us and such other factors as our Board may deem relevant. As a result, you may not receive any return on an investment in our Class A ordinary shares unless you sell your Class A ordinary shares for a price greater than that which you paid for it.

~~Our shareholders may experience dilution in the future.~~30

~~The~~If ~~percentage of~~ our ~~Class A~~company ~~ordinary~~were ~~shares~~to ~~owned~~dissolve ~~by current shareholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions~~ or ~~otherwise,~~wind-up ~~including~~operations, ~~without limitation, equity awards that we may grant to our directors, officers and employees, and~~holders ~~exercise~~ of our ~~warrants,~~Class ~~including~~A ~~the~~ordinary ~~warrants~~shares ~~sold~~would innot ~~this~~receive ~~offering. Such issuances may have~~ a ~~dilutive~~liquidation ~~effect on our earnings per share, which could adversely affect the market price of our Class A ordinary shares~~preference.

If ~~securities~~we orwere ~~industry~~to ~~analysts~~wind doup ~~not~~or dissolve ~~publish~~and ~~research~~liquidate orand ~~reports~~distribute ~~about~~ our ~~business~~assets, ifour ~~they~~Class ~~change~~A ~~their~~ordinary ~~recommendations~~shares ~~regarding~~would share in our ~~Class~~assets only after we satisfy any amounts we owe to our creditors and preferred equity holders, including the holders of our Series A ~~ordinary~~Preferred ~~shares~~Shares (described below). If our liquidation or ifdissolution were attributable to our ~~operating~~inability to profitably operate our business, then it is likely that we would have material liabilities ~~results~~at dothe ~~not~~time ~~meet~~of ~~their~~liquidation ~~expectations~~or dissolution. Accordingly, it is unlikely that sufficient assets would remain available after the payment of our creditors and preferred equity holders to enable holders of Class A ordinary shares ~~price~~to ~~and~~receive ~~trading~~any ~~volume~~liquidation ~~could~~distribution ~~decline~~with respect to any Class A ordinary shares.

~~The~~We ~~trading~~may ~~market~~require ~~for~~substantial ~~our Class~~additional ~~A ordinary shares will depend in part on the research and reports that securities or industry analysts publish about us or our businesses~~funding. IfRaising noadditional ~~securities~~capital ~~or industry analysts commence coverage of us, the trading price for our Class A ordinary shares~~ could because ~~negatively~~dilution impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish unfavorable research about its businesses, or if our operating results do not meet analyst expectations, the trading price of our Class A ordinary shares would likely decline. If one or more of these analysts cease coverage of us or fail to ~~publish reports on us regularly, demand for~~ our ~~Class~~existing ~~A ordinary shares could decrease, which might cause our Common Share price and trading volume to decline~~shareholders.

The percentage of our Class A ordinary shares owned by current shareholders may be diluted in the future because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may grant to our directors, officers and employees, and exercise of our Warrants.

To the extent that we raise additional capital through the sale of equity or convertible debt, the ownership interests of our shareholders will be diluted. In addition, the terms of any equity or convertible debt we agree to issue may include liquidation or other preferences that adversely affect the rights of our shareholders. Convertible debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring dividends, and may impose limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

We currently have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”), which we may use to offer from time to time Class A ordinary shares, preferred shares, debt securities, warrants, units and any combination of the foregoing securities (the “Shelf Registration Statement”, and the prospectus contained therein, the “Prospectus”). On February 14, 2025, we entered into a sales agreement (the “Sales Agreement”) relating to the offer and sale of our Class A ordinary shares from time to time through or to JonesTrading Institutional Services LLC (“Jones”), acting as sales agent in “at the market” offerings as defined in Rule 415 under the Securities Act (the “ATM Offering”). In connection with the entry into the Sales Agreement, we filed a prospectus supplement, dated March 25, 2025 (the “Original Prospectus Supplement”) to the accompanying Prospectus dated March 25, 2025 (collectively, the “Prior Prospectus”) to register Class A ordinary shares issuable pursuant to the Sales Agreement. Under the Prior Prospectus, we registered up to USD $6.25 million of our Class A ordinary shares to be sold in the ATM Offering. On June 27, 2025, we filed a prospectus supplement to the Prospectus to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to an additional aggregate USD $16.5 million of Class A ordinary shares, which did not include any prior sales made pursuant to the Sales Agreement.

Furthermore, based on the aggregate market value of our Class A ordinary shares held by non-affiliates (“public float”) as of the date of the filing of this Annual Report, and for so long as our public float is less than USD $75 million, the amount we can raise through primary public offerings of securities, including sales under the Sales Agreement, in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float. If our public float meets or exceeds $75 million at any time, we will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3. Unless and until our public float meets or exceeds USD $75 million, our ability to raise capital using the Shelf Registration Statement will be constrained by General Instruction I.B.6 of Form S-3, which may affect the timing of and amounts we can raise; however, we will still maintain the ability to raise funds through other means, such as through the filing of a registration statement on Form S-1 or via private placements.

Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to curtail or cease our operations. Raising additional funding through debt or equity financing is likely to be difficult or unavailable altogether given the early stage of our technology. Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline further and existing stockholders may not agree with our financing plans or the terms of such financings.

Pursuant to our Articles, we are also authorized to issue an unlimited number of preferred shares, of which 4,500 preferred shares have been designated as our Series A Preferred Shares, which are convertible into Class A ordinary shares. Such Series A Preferred Shares are senior to our Class A ordinary shares in terms of dividend priority and liquidation preference. Any preferred shares that we issue in the future may rank ahead of our Class A ordinary shares in terms of dividend priority or liquidation preference and may have greater voting rights than our Class A ordinary shares. In addition, such preferred shares may contain provisions allowing those shares to be converted into Class A ordinary shares, which could dilute the value of our Class A ordinary shares to current shareholders and could adversely affect the market price, if any, of our Class A ordinary shares. In addition, the preferred shares could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.

Future sales, or the perception of future sales, by us or our shareholders in the public market could cause the market price for our Class A ordinary shares to decline.

The sale of our Class A ordinary shares in the public market, including Class A ordinary shares issued upon the exercise of ~~warrants~~Warrants, or the perception that such sales could occur, could harm the prevailing market price of our Class A ordinary shares and make it difficult for us to raise funds through securities offerings in the future. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.

In connection with the Amalgamation, former Horizon securityholders, who owned 41.1% of New Horizon Class A ordinary shares following the Business Combination, agreed with us, subject to certain exceptions, not to dispose of or hedge any of their Class A ordinary shares or securities convertible into or exchangeable for our Class A ordinary shares during the period from the date of the Closing continuing through the earliest of: (i) the six-month anniversary of the Closing, (ii) the date on which the Closing price of our Class A ordinary shares equals or exceeds $12.00 per share for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing, and (iii) such date on which we complete a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the our shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. The six-month anniversary of the Closing elapsed on July 12, 2024 and the associated restrictions were removed. In connection with the Closing, Pono, Horizon, and the Sponsor also waived lockup restrictions on approximately 1.69 million shares held by a non-affiliate Horizon shareholder.

In addition, the Class A ordinary shares reserved for future issuance under the 2023 Equity Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to any applicable vesting requirements, lockup agreements and other restrictions imposed by law. A total number of shares equal to 1,697,452 have been reserved for future issuance under the 2023 Equity Incentive Plan. We have filed registration statements on Form S-8 under the Securities Act to register Class A ordinary shares or securities convertible into or exchangeable for Class A ordinary shares issued pursuant to the 2023 Equity Incentive Plan, which registration statements automatically became effective upon filing. Accordingly, shares registered under the registration statements will be available for sale in the open market.

In the future, we may also issue its securities in connection with investments or acquisitions. The amount of Class A ordinary shares issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding Class A ordinary shares. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our shareholders.

There may be sales of a substantial amount of our Class A ordinary shares after the Business Combination by current shareholders, and these sales could cause the price of our Class A ordinary shares to fall.31

~~Future~~On ~~sales~~April of4, ~~our~~2025, ~~Class~~a registration statement on Form S-3 was declared effective by the SEC, registering certain Class A ordinary shares for resale (the “Resale Registration Statement”). Certain securityholders may ~~cause~~sell large amounts of our Class A ordinary shares in the open market ~~price~~or ofin ~~its~~privately ~~securities~~negotiated transactions pursuant to ~~drop~~the ~~significantly~~Resale Registration Statement, ~~even~~which ifcould ~~its~~have ~~business~~the iseffect ~~doing~~of ~~well~~increasing the volatility in our Class A ordinary share price or putting significant downward pressure on the price of our Class A ordinary shares.

~~Pono~~There ~~entered~~is ~~into~~no ~~a registration~~guarantee ~~rights~~that ~~agreement with respect to~~ the ~~Pono~~Public ~~Class~~Warrants Bwill ~~ordinary~~ever ~~shares~~be ~~and~~in ~~Pono Class A ordinary shares issued or issuable upon~~ the ~~conversion of~~money; ~~the~~they ~~Class~~may Bexpire ~~ordinary~~worthless ~~shares, par value $0.0001 per share of Pono (the “Class B ordinary shares”~~ or ~~“Founder Shares”),~~ the ~~placement~~terms ~~units~~ of ~~Pono sold in a private placement concurrently with the IPO (the “Placement Units”), including the Pono Class A ordinary shares and~~ warrants ~~(the~~may ~~“Placement~~be Warrants”) underlying the Placement Units, Pono Class A ordinary shares underlying the Placement Warrants, and all shares issued to a holder with respect to the securities referred above by way of any stock split, stock dividend, recapitalization, combination of shares, acquisition, consolidation, reorganization, share exchange, or similar event, which securities Pono collectively referred to as “registrable securitiesamended.” Under the registration rights agreement, Pono agreed to register for resale under a registration statement all of the shares held by holders of Founder Shares and issuable upon conversion of the Public Warrants. The Sponsor is also entitled to three (3) demand registrations. Holders of registrable securities will also have certain “piggyback” registration rights with respect to registration statements filed subsequent to the Business Combination.

~~On May 10, 2024, a registration~~The ~~statement~~exercise onprice ~~Form~~for ~~S-1~~the ~~was~~Public ~~declared~~Warrants ~~effective~~is ~~pursuant~~USD to$11.50 ~~the~~per ~~registration~~ordinary ~~rights agreements~~share. ~~These~~There ~~parties~~is ~~may~~no ~~sell~~guarantee ~~large~~that ~~amounts~~the ofPublic ~~our Class~~Warrants Awill ~~ordinary~~ever ~~shares~~be in the ~~open~~money ~~market~~prior orto intheir ~~privately negotiated transactions~~expiration, ~~which~~and ~~could~~as ~~have~~such, the ~~effect~~Public ofWarrants ~~increasing~~may ~~the~~expire ~~volatility in our Class A ordinary share price or putting significant downward pressure on the price of our Class A ordinary shares~~worthless.

~~Sales~~In addition, our Public Warrants were issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and Pono. The Warrant Agreement provides that the terms of ~~substantial~~the ~~amounts~~warrants may be amended without the consent of ~~our~~any ~~Class~~holder Ato ~~ordinary~~cure ~~shares~~any inambiguity or correct any defective provision, but requires the ~~public~~approval ~~market~~by ~~after~~the holders of at least a majority of the ~~Business~~then ~~Combination~~outstanding Public Warrants to make any other change. Accordingly, orwe may amend the ~~perception~~terms ~~that~~of the warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding Public Warrants approve of such ~~sales~~amendment. ~~will~~Although ~~occur~~our ability to amend the terms of the warrants with the consent of at least a majority of the then outstanding Public Warrants is unlimited, ~~could~~examples ~~adversely~~of ~~affect~~such amendments could be amendments to, among other things, increase the ~~market~~exercise price of ~~our~~the ~~Class~~warrants, Ashorten ~~ordinary~~the exercise period or decrease the number of shares and ~~make~~their itrespective ~~difficult~~affiliates ~~for~~and usassociates tohave ~~raise~~of ~~funds~~ordinary ~~through~~shares ~~securities~~purchasable ~~offerings in~~upon ~~the~~exercise ~~future~~of a Public Warrant.

~~There~~Our isWarrant ~~no guarantee~~Agreement ~~that~~designates the ~~warrants~~courts ~~will~~of ~~ever~~the beState inof New York or the ~~money;~~United States ~~they~~District ~~may~~Court ~~expire~~for ~~worthless~~the orSouthern District of New York as the ~~terms~~sole and exclusive forum for certain types of ~~warrants~~actions and proceedings that may be ~~amended~~initiated by holders of our Public Warrants, which could limit the ability of Public Warrant holders to obtain a favorable judicial forum for disputes with us.

~~The~~Our ~~exercise~~Warrant ~~price~~Agreement ~~for~~provides that, subject to applicable law, (i) any action, proceeding or claim against the ~~warrants~~Company isarising ~~$11.50~~out ~~per~~of or ~~ordinary~~relating ~~share.~~in ~~There~~any isway noto ~~guarantee~~the ~~that~~Warrant agreement, including under the ~~Public~~Securities ~~Warrants~~Act, will ~~ever~~ be brought and enforced in the ~~money~~courts of the ~~prior~~State toof ~~their~~New York ~~expiration~~or the United States District Court for the Southern District of New York, and as(ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the ~~warrants~~exclusive ~~may~~forum ~~expire~~for ~~worthless~~any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

InNotwithstanding ~~addition~~the foregoing, ~~our~~these ~~warrants~~provisions ~~were~~of ~~issued~~the inWarrant ~~registered~~Agreement ~~form~~will ~~under~~not aapply ~~warrant~~to ~~agreement~~suits ~~between~~brought ~~Continental~~to ~~Stock~~enforce ~~Transfer &~~any ~~Trust~~liability ~~Company, as~~or ~~warrant~~duty ~~agent,~~created ~~and~~by ~~Pono.~~the Exchange Act ~~The~~or ~~warrant~~any ~~agreement~~other ~~provides~~claim ~~that~~for which the ~~terms~~federal district courts of the ~~warrants~~United States ~~may~~of beAmerica ~~amended~~are ~~without~~ the ~~consent~~sole ofand ~~any holder~~exclusive toforum. ~~cure~~Any ~~any~~person ~~ambiguity~~ or ~~correct~~entity ~~any~~purchasing ~~defective~~or ~~provision,~~otherwise ~~but~~acquiring ~~requires~~any ~~the~~interest ~~approval~~in byany ~~the~~of ~~holders~~our ofwarrants atshall ~~least~~be adeemed ~~majority~~to ofhave ~~the~~notice ~~then~~of and ~~outstanding~~to ~~Public~~have ~~Warrants~~consented to ~~make~~the ~~any~~forum ~~other~~provisions ~~change~~in the Warrant Agreement. ~~Accordingly~~If any action, wethe ~~may~~subject ~~amend~~matter of which is within the ~~terms~~scope the forum provisions of the ~~warrants~~Warrant Agreement, is filed in a ~~manner~~court ~~adverse~~other tothan a ~~holder if~~court ~~holders~~of the State of atNew York ~~least~~or athe ~~majority~~United States District ofCourt for the ~~then~~Southern ~~outstanding~~District ~~Public~~of ~~Warrants~~New York ~~approve~~(a “foreign action”) in the name of ~~such~~any ~~amendment.~~holder ~~Although~~of our ~~ability~~Public Warrants, such holder shall be deemed to ~~amend~~have ~~the terms~~consented ofto: (x) the ~~warrants~~personal ~~with~~jurisdiction of the ~~consent~~state ofand atfederal ~~least~~courts alocated ~~majority~~in the State of ~~the~~New York ~~then~~in ~~outstanding~~connection ~~Public~~with ~~Warrants~~any isaction ~~unlimited,~~brought ~~examples~~in ofany such ~~amendments could~~court beto ~~amendments~~enforce ~~to,~~the ~~among~~forum ~~other~~provisions ~~things,~~(an ~~increase~~“enforcement ~~the~~action”), and ~~exercise~~(y) having ~~price~~service of ~~the~~process ~~warrants,~~made ~~shorten~~upon ~~the~~such ~~exercise~~Public ~~period~~Warrant orholder ~~decrease~~in ~~the~~any ~~number of~~such ~~shares~~enforcement ~~and~~action ~~their~~by ~~respective~~service ~~affiliates~~upon ~~and~~such ~~associates~~Public Warrant ~~have~~holder’s ofcounsel ~~ordinary~~in ~~shares~~the ~~purchasable~~foreign ~~upon~~action ~~exercise~~as ofagent afor ~~warrant~~such Public Warrant holder.

32This choice-of-forum provision may limit a Public Warrant holder’s ability to bring a claim in a judicial forum that we find favorable for disputes with the Company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board.

Our Warrant Agreement designates the courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.

Our Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against Pono arising out of or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

Notwithstanding the foregoing, these provisions of the Warrant Agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.

This choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that we find favorable for disputes with Pono, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board.

We may redeem the unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless.

We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable by us, we may exercise its redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Additionally, ninety (90) days after the warrants become exercisable, we may redeem all (but not less than all) of the outstanding warrants at $0.01 per warrant upon a minimum of 30 days’ prior written notice of redemption (during which time the holders may exercise their warrants prior to redemption for the number of shares set forth in the table under the section captioned “Description of Securities — Warrants — Redemption of Warrants — Redemption of Warrants for Class A Ordinary Shares”) if the following conditions are satisfied: (i) the last reported sale prices of the Class A ordinary shares equals or exceeds $18.00 per share (as may be adjusted for stock splits, stock dividends, reorganizations, recapitalizations or the like) on the trading day prior to the date of the notice; (ii) the private placement warrants are also concurrently exchanged at the same price as the outstanding Public Warrants; and (iii) there is an effective registration statement covering the issuance of Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given. In either case, redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.

3332

The future exercise of registration rights may adversely affect the market price of our Class A ordinary shares.

Pursuant to a Registration Rights Agreement entered into at the time of the IPO, the Sponsor, holders of our Placement Units, and their permitted transferees can demand that we register the Class A ordinary shares issuable upon conversion of the Placement Warrants in the Placement Units, the Class A ordinary shares issuable upon conversion of the Founder Shares, the Class A ordinary shares included in the Placement Units, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants, or the Class A ordinary shares issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares.

Prior to Closing, we entered into a registration rights agreement that obligate us to register the common shares received by certain significant former Legacy Horizon shareholders as part of the Business Combination. We will be obligated to fulfill three demands, excluding short form demands, that we register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial business combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act. Sales of a substantial number of Class A ordinary shares pursuant to a resale registration statement in the public market could occur at any time the registration statement remains effective. In addition, certain registration rights holders can request underwritten offerings to sell their securities. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our ordinary shares.

A Registration Statement on Form S-1 (the “Registration Statement”) has been declared effective and we intend to maintain such Registration Statement in order to facilitate registration of those sales. The registration of these securities will permit the public resale of such securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our securities.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

Risk Management and Strategy

~~New~~ Horizon recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data.

Managing Material Risks & Integrated Overall Risk Management

We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making processes at every level. Our management team works closely with our IT department to continuously evaluate and address cybersecurity risks in alignment with our business objectives and operational needs.

Engage Third~~-parties~~ Parties on Risk Management

Recognizing the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including cybersecurity assessors, consultants, and auditors in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these third-parties includes regular audits, threat assessments, and consultation on security enhancements.

Oversee Third-party Risk

Because we are aware of the risks associated with third-party service providers, we implement stringent processes to oversee and manage these risks. We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure compliance with our cybersecurity standards. At a minimum the monitoring includes annual assessments by our Chief Information Security Officer (“CISO”). This approach is designed to mitigate risks related to data breaches or other security incidents originating from third-parties.

Risks from Cybersecurity Threats

We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

Governance

The Board is acutely aware of the critical nature of managing risks associated with cybersecurity threats. The Board has established robust oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance of these threats to our operational integrity and stakeholder confidence,

Board of Directors Oversight

The Audit Committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this domain. The Audit Committee is composed of independent board members with diverse expertise including, risk management, technology, and finance, equipping them to oversee cybersecurity risks effectively.

3533

Management’s Role Managing Risk

The CISO and our Chief Executive Officer play a pivotal role in informing the Audit Committee on cybersecurity risks. They provide comprehensive briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year. These briefings encompass a broad range of topics, including:

●

Current cybersecurity landscape and emerging threats;

●

Status of ongoing cybersecurity initiatives and strategies;

●

Incident reports and learnings from any cybersecurity events; and

●

Compliance with regulatory requirements and industry standards.

In addition to our scheduled meetings, the Audit Committee, CISO and Chief Executive Officer maintain an ongoing dialogue regarding emerging or potential cybersecurity risks. Together, they receive updates on any significant developments in the cybersecurity domain, ensuring the Board’s oversight is proactive and responsive. The Audit Committee actively participates in strategic decisions related to cybersecurity, offering guidance and approval for major initiatives. This involvement ensures that cybersecurity considerations are integrated ~~our~~into ~~broader~~our broader strategic objectives. The Audit Committee conducts an annual review of the Company’s cybersecurity posture and the effectiveness of its risk management strategies. This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity efforts with the overall risk management framework.

Risk Management Personnel

Primary responsibility for assessing, monitoring, and managing our cybersecurity risks rests with the CISO, Jason O’Neill. With over 25 years of experience in the field of IT Technology and enterprise security, Mr. O’Neill brings a wealth of expertise to his role. His background includes extensive experience achieving bank and government-level compliant security practices in high-performance technology companies. His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our CISO oversees our governance programs, communicates cyber security threats, remediates known risks, and oversees our employee training program.

Monitor Cybersecurity Incidents

The CISO is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management techniques. This ongoing knowledge acquisition is crucial for ~~the~~ effective prevention, detection, mitigation, and remediation of cybersecurity incidents. The CISO implements and oversees processes for the regular monitoring of our information systems. This includes the deployment of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident, the CISO is equipped with a well-defined incident response plan. This plan includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents.

Business Continuity Plan

Access to company files and data is critical to our effective operation and financial performance. The Company is aware that cybersecurity treats including ransomware must be identified and mitigated with minimal impact to corporate objectives. We employ a secure data governance policy that includes off-site, secure, multi-cloud data storage to ensure that risks to critical business operations are mitigated in the rare case of an incident.

3634

Reporting to Board of Directors

The CISO, in his capacity, regularly informs the Chief Financial Officer and Chief Executive Officer of all aspects related to cybersecurity risks and incidents. This ensures that the senior management team is kept abreast of the cybersecurity posture and potential risks facing ~~New~~ Horizon. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board, ensuring that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.

Item 2. Properties.

~~New~~ Horizon’s principal executive offices are located at 3187 Highway 35, Lindsay, Ontario, K9V 4R1. ~~New~~ Horizon leases office space and an aircraft hangar in Lindsay Ontario, which serves as the corporate headquarters, and office space and light composite manufacturing space in Haliburton Ontario. ~~New~~ Horizon believes that these properties are sufficient for its business and operations as currently conducted. Horizon is currently exploring locations for future scalable manufacturing operations.

Item 3. Legal Proceedings.

From time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows.

Item 4. Mine Safety Disclosures.

Not applicable.

3735

PART II

Market Information

Our Class A ordinary shares and Public Warrants are each traded on the Nasdaq Capital Market under the symbols “HOVR,” and “HOVRW,” respectively.

As of August 1521, ~~2024~~2025, there were 3652 holders of record of our Class A ordinary shares and 2nil holders of record of our Public Warrants.

Dividends

We have not paid any cash dividends on our Class A ordinary shares to date. The payment of cash dividends by us in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our Board.

Securities Authorized for Issuance Under Equity Compensation Plans

The information contained Part III, Item 12. “Securities Authorized for Issuance Under Equity Compensation Plans” is incorporated by reference herein.

Recent Sales of Unregistered Securities

~~Initial Public Offering~~None.

As previously reported, on February 14, 2023, Pono completed its IPO (the “Offering”) of 10,000,000 units (“Units”). Each Unit consists of one Class A ordinary share and one redeemable warrant (“Public Warrant”), each whole Public Warrant entitling the holder thereof to purchase one Class A ordinary share at an exercise price of $11.50 per share, subject to adjustment, pursuant to Pono’s registration statement on Form S-1 (File No. 333-268283). The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of USD $100,000,000.

Subsequently, on February 14, 2023, the underwriters exercised the over-allotment option in full and the closing of the issuance and sale of the additional Units occurred (the “Overallotment Option Units”). The total aggregate issuance by Pono of 1,500,000 units at a price of $10.00 per unit resulted in total gross proceeds of USD $15,000,000. On February 14, 2023, simultaneously with the sale of the Overallotment Option Units, Pono consummated the private sale of an additional 54,000 Placement Units, generating gross proceeds of USD $540,000. The Placement Units were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, as the transactions did not involve a public offering.

No payments for Pono’s expenses were made in the Offering described above directly or indirectly to (i) any of our directors, officers or their associates, (ii) any person(s) owning 10% or more of any class of our equity securities or (iii) any of our affiliates, except in connection with the repayment of outstanding loans and pursuant to the administrative support agreement disclosed herein which we entered into with our Sponsor.

The PIPE Financing

On December 27, 2023, Pono entered into a subscription agreement (the “Subscription Agreement”), pursuant to which Pono obtained a commitment from a certain investor (the “Subscriber”) to purchase Pono’s Class A ordinary shares (such shares, collectively, “Subscription Shares”) in an aggregate value of USD $2,000,000 (as of the date hereof), representing 200,000 Subscription Shares at a price of $10.00 per share. The purpose of the sale of the Subscription Shares is to raise additional capital for use in connection with the Business Combination. The closing of the sale of the Subscription Shares occurred substantially concurrent with the consummation of the Business Combination. Such Subscription Shares were issued in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933.

Underwriter and Vendor Shares

At the closing of the Business Combination, New Horizon issued an aggregate of 103,500 Class A ordinary shares to EF Hutton LLC at $10.00 per share and 265,734 Class A ordinary shares issued at a value of $1.63 per share, in partial satisfaction of deferred underwriting commissions. New Horizon agreed to customary registration rights with respect to such shares. Such shares were issued in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933.

In connection with the closing of the Business Combination, New Horizon also issued 40,179 Class A ordinary shares to MZHCI, LLC at a value of $3.36 per share in satisfaction of fees earned in connection with the Business Combination, 400,000 Class A ordinary shares to Roth Capital Partners, LLC at a value of $2.50 per share in satisfaction of fees earned in connection with the Business Combination, 15,000 Class A ordinary shares to Benjamins Securities in satisfaction of fees owed to them for services provided in connection with the Business Combination at $5.00 per share, and 300,000 Class A ordinary shares at a value of $2.26 per share and 225,000 Class A ordinary shares issued at a value of $2.85 per share to Spartan Crest Capital Corp. as consideration for fees earned in connection with continuing consulting services. Such shares were issued in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933.

Issuance Pursuant to the Forward Purchase Agreement

On April 2, 2024, New Horizon issued an aggregate of 387,495 Class A ordinary shares to affiliates of Meteora Capital Partners LP at a value of $10.00 per share, pursuant to the terms of the forward purchase agreement, dated August 15, 2024 (as amended by the forward purchase agreement confirmation amendment, dated February 14, 2024, the “Forward Purchase Agreement”), by and between New Horizon, Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”), and Meteora Strategic Capital, LLC (“MSC”) (with MCP, MSTO and MSC collectively as “Meteora”). Such shares were issued in reliance upon exemption from the registration requirements under Section 4(a)(2) under the Securities Act of 1933.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Item 6. Reserved.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References in this report (the “Annual 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 consolidated financial statements and the notes thereto contained elsewhere in this Annual 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 Annual 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 Annual 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 Annual 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 this Annual Report.

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

Business Combination

On February 14, 2023, we consummated the anInitial ~~initial public~~Public ~~offering~~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.

3937

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 ~~hybrid~~ ~~electric Vertical Takeoff and Landing (“~~eVTOL”) concept that is identified as the Cavorite X7. The Company has built several small-scale prototypes ~~and~~including a ~~now~~50%-scale aircraft that has completed flight testing. We are now building a ~~50%~~full-scale demonstrator aircraft that is ~~undergoing~~expected ~~active~~to commence flight testing in 2026 or 2027.

Horizon intends to sell these Cavorite X7 aircraft to third parties, air operators, lessors, individual consumers, and NATO military customers. The Company plans to manufacture its aircraft and license its patented fan-in-wing technology and other core innovations to other Original Equipment Manufacturers (“OEM’s”). Manufacturing will be accomplished with a heavy reliance on experienced aircraft manufacturing partners and supply chain vendors. Horizon believes this highly focused business model will provide the most efficient use of capital to produce an aircraft that has a variety of applications.

Key Factors Affecting Operating Results

See the section entitled “Risk Factors” 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~~significant, it ~~remains~~is ~~undeveloped~~currently immature and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft beginning in ~~2027~~2028 or 2029, and its business will require significant investment leading up to ~~launching services~~commercialization, including, but not limited to, final engineering designs, prototyping and flight testing, manufacturing, software development, certification, ~~pilot~~ ~~training~~ and ~~commercialization~~pilot training.

Horizon believes one of the primary drivers for adoption of its aircraft is the value proposition enabled by its aircraft that can take-off and land similar to a helicopter, fly almost twice as fast, and operate with much lower direct operating costs. Additional factors impacting adoption of eVTOL technology include, but are not limited to: perceptions about eVTOL quality, safety, performance and cost; perceptions about the environmental impact of hybrid-electric machines; volatility in the cost of oil and gasoline; availability of competing forms of transportation, such as ground or unmanned drone services; consumers perception about the convenience and cost of transportation using eVTOL relative to ground-based alternatives; and increases in fuel efficiency, autonomy, or electrification of vehicles. In addition, macroeconomic factors could impact demand for RAM services, particularly if customer pricing is at a premium to ground-based transportation. Horizon anticipates initial aircraft sales to be used for medevac services, firefighting services, disaster relief services, remote medical services, military operations, followed by sales to air operators and lessors for air cargo, business travel and air-taxi services. If the market for RAM does not develop as expected, this would significantly impact the Company’s ability to generate revenue or grow its business.

Competition

~~The~~We ~~Company~~believe ~~believes~~ that the primary sources of competition for ~~its~~our aircraft sales are traditional helicopters, ground-based mobility solutions, and other eVTOL developers. While it ~~expects~~we expect to produce a versatile aircraft that can be useful in a variety of air mobility missions, ~~the~~we ~~Company~~believe ~~expects~~ this industry to will be dynamic and increasingly competitive. It is possible that ~~its~~our competitors could gain significant market share. Horizon may not fully realize the sales it anticipates, and it may not receive any competitive advantage from its design or may be overcome by other competitors. If new companies or existing aerospace companies produce competing aircraft in the markets in which Horizon intends to service and obtain large-scale capital investment, it we may face increased competition. Horizon may receive an advantage from well-funded competitors that are paying to create certification programs, raise awareness of eVTOL advantages and advocating to kickstart government funding programs.

40Horizon may receive an advantage from well-funded competitors that are paying to create certification programs, raise awareness of eVTOL advantages and advocate for enhanced government funding programs.

Government Certification

ToFor ~~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~~is ~~initially~~leading ~~lead~~ certification efforts. Horizon expects the FAA to participate during this process which will likely reduce the traditional amount of time required to achieve FAA certification.

The Company maintains a partnership with Cert Centre Canada (“3C”) for the purpose of collaborating on aspects of the continued development and path to certification of of Horizon’s eVTOL program. 3C is leveraging their deep experience with TCCA and FAA certification programs to develop a certification basis for the certification of Horizon’s ~~hybrid-electric~~ eVTOL aircraft.

Typically, the certification of a new aircraft design by TCCA or the FAA is a long and complex process, often spanning more than five years and costing hundreds of millions of dollars. The Company has never undergone such a process, and there is no guarantee that its Cavorite X7 design will eventually achieve certification ~~despite its best efforts~~. The Company will need to obtain ~~authorizations~~authorization and certifications related to the production of its aircraft. ~~While~~ While it anticipates being able to meet the requirements of such ~~authorizations~~authorization and certifications, the Company may be unable to obtain such authorization ~~authorizations~~ and certifications, or to do so on the timeline it projects. Should the Company fail to obtain any of the required ~~authorizations~~ authorization or certifications, or do so in a timely manner, or any of these ~~authorizations~~authorization or certifications are modified, suspended or revoked after it obtains them, the Company may be unable to fulfill sales of its commercial aircraft or do so on the timelines it projects, which 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 for both civilian and military applications. Present projections indicate that sales volume of this dual use aircraft will result in a viable business model over the ~~long~~longer-term as production volumes scale and unit economics improve to support sufficient market adoption. The advantage of military application of Horizon’s aircraft in addition to sales volumes leads to a reduction in the risk of certification as aircraft used for military purposes do not need to achieve TCCA, FAA, or similar certification approval. As with any new industry and aerospace product, numerous risks and uncertainties exist. The Company’s financial results are dependent on delivering aircraft on-time and at a cost that supports returns at prices that support sufficient sales to customers who are willing to purchase based on value arising from time and versatility from utilizing regional eVTOL aircraft. Horizon’s civilian sector financial results are dependent on achieving certification on its expected timeline. Our aircraft include numerous parts and manufacturing processes unique to eVTOL aircraft, inparticularly ~~general, and~~ its product design~~, in particular~~. ~~Best~~Significant efforts have been made to estimate costs in the Company’s planning projections; however, the variable cost associated with assembling its aircraft at scale remains uncertain at this stage of development.

Going Concern and Liquidity

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), ~~which~~ 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~~ commercialization plans. We have devoted many resources to the design and development of our eVTOL prototype aircraft. Funding of these activities has primarily been through the net proceeds received from the issuance of ~~related~~Class ~~and~~A ~~third-party~~ordinary ~~debt~~shares, preferred shares, and the issuance ~~sale~~of ~~common stock to~~ related and third ~~parties~~-party convertible debt.

~~Through May 31, 2024, we have incurred cumulative losses from operations, negative cash flows from operating activities, and have an accumulated deficit of $14.7 million.~~ Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. ~~While~~With ~~management~~more ~~expects~~than ~~that the~~$15 ~~net~~million ~~impact~~ of ~~the~~cash ~~Business~~on-hand ~~Combination~~as ~~along~~of ~~with~~the ~~our~~date ~~cash~~of ~~balances~~filing, management ~~held~~expects ~~prior~~that to the ~~Closing Date and~~ proceeds from anrecent ~~anticipated August~~sales ~~2024~~of ~~offering~~securities will be sufficient to fund our current operating plan for at least the next 12 months from the date ~~these~~the consolidated financial statements were available to be issued, however there isremains substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.

4139

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.

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,~~certify ~~and manufacture~~ our eVTOL aircraft.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of personnel expenses, including salaries, benefits, costs of consulting, equipment, engineering, data analysis, and materials.

We expect our research and development expenses to increase as we increase staffing to support aircraft engineering and software development, build aircraft, and continue to explore and develop our eVTOL aircraft and technologies.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of personnel expenses, including salaries, benefits, and stock-based compensation, related to executive management, finance, legal, and human resource functions. Other costs include business development, investor relations, contractor and professional services fees, audit and compliance expenses, insurance costs and general corporate expenses, including depreciation, rent, information technology costs and utilities.

We expect our selling, general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations, including the Sarbanes-Oxley Act (“SOx”) and other SEC rules and regulations.

Other Income

Other income consists of grants and subsidies received for developmental work and foreign exchange gains and losses.

Interest Expense, net

Interest expense ~~consists~~is ~~primarily of interest~~related onto the Company’s ~~Convertible Notes, Promissory Notes, and Convertible Debentures that have converted into common shares of the Company on or prior to the closing of the Business Combination~~leases. ~~Additional interest expense includes the cost of equipment financing.~~ Interest income consists primarily of interest earned on the Company’s cash.

Change in fair value 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 ~~will~~mutually ~~not~~agreed ~~have~~to ~~any~~terminate ~~monetary~~the ~~obligations~~Forward inPurchase ~~connection~~Agreement with its counterparty on November 1, 2024, at a cost of $278. In connection with this termination, the ~~Forward~~Company ~~Purchase~~recorded ~~Agreement~~a $21,400 gain.

~~Warrant~~Change ~~expense~~in ~~(income)~~fair value of Warrants

~~Change~~Changes in ~~warrant~~fair ~~expense and~~value ~~income~~of Warrants consists of fluctuations in the fair value of ~~warrants~~the Company’s General Warrants outstanding as of the end of each reporting period.

4240

Results of Operations

We believe the following information ~~includes~~ includes all adjustments necessary to state fairly ~~its~~the results of operations for all periods presented. This data should be read in conjunction with Horizon’s 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 Year Ended May 31, ~~2024~~2025 to the Year Ended May 31, ~~2023~~2024

~~Meaningful~~Significant variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the years -ended May 31, ~~2024~~2025, and May 31, ~~2023~~2024 (000’s CAD).

	Year Ended
Operating expenses	May 31, ~~2024~~2025			May 31, ~~2023~~2024			Variance ($)			~~Variance (%)~~
Research and development	$	~~880~~3,660		$	~~676~~880		$	(~~204~~2,780	)		~~-30~~	%
General and administrative		39,~~744~~925			~~787~~3,744			(26,~~957~~181	)		~~-376~~	%
Total operating expenses		413,~~624~~585			14,~~463~~624			(38,~~161~~961	)		~~-216~~	%
Loss from operations		(413,~~624~~585	)		(14,~~463~~624	)		38,~~161~~961			~~-216~~	%
Other expenses (income)		~~(575~~10	)		(~~290~~575	)		~~285~~(585	)		98	%
Interest expense (income), net		~~163~~(123	)		74163			~~(89~~286	)		~~-120~~	%
Warrant expense (income)		(394	)		—			394			100	%
Change in fair value of Warrants		1,988			(394	)		(2,382	)
Change in fair value of Forward Purchase Agreement		4,342			—			(4,342	)		-100	%
Change in fair value and Termination of Forward Purchase Agreement		(20,660	)		4,342			25,002
Net income (loss)	$	(8,160	)	$	(1,247	)	$	6,913			-554	%
Net Income (Loss)	$	5,200		$	(8,160	)	$	(13,360	)

Operating Expenses

Operating expenses increased by $38,~~161~~961, from $14,~~463~~ 624 for the year -ended May 31, ~~2023~~2024, to $413,~~624~~585 for the year -ended May 31, ~~2024~~2025. The increase was primarily driven by professional fees, additional staff hired to support research and development activities, and other administrative costs connected with the Company’s growth activities.

Research and Development Expenses

Research and development expenses increased by $~~204~~2, ~~or 30%~~780, from $~~676~~880 during the year -ended May 31, ~~2023~~2024, to $~~880~~3,660 during the year -ended May 31, ~~2024~~2025. The increase was primarily ~~attributable~~ 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:

	Year Ended
	May 31, 2025		May 31, 2024
Compensation Costs	$	2,305	$	774
Engineering costs		1,285		106
Depreciation		70		-
Total Research and Development costs	$	3,660	$	880

General and Administrative

General and Administrative costs increased by $26,~~957~~181, from $~~787~~3,744 during the year -ended May 31, ~~2023~~2024, to $39,~~744~~925 during the year -ended May 31, ~~2024, including $1,101 of non-cash related service fees~~2025. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts and public company status.

4341

Other expenses (income)

Other expenses (income) ~~increased~~ decreased by $~~285~~585, orfrom ~~98%,~~income ~~from~~of $~~290~~ 575 during the year -ended May 31, ~~2023~~2024, to an expense of $~~575~~10 during the year -ended May 31, ~~2024~~2025. The ~~increase~~ decrease primarily reflected foreign exchange losses and the change in grants and subsidies received in the comparative periods.

Interest expense, net

Interest expenses increased by $89, from $74 during the year ended May 31, 2023 to $163 during the year ended May 31, 2024. The increase primarily related to interest expenses on the Company’s Convertible Debentures and Convertible Promissory Notes.

Cash Flows

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

	Year Ended
Net cash provided by (used in)	May 31, ~~2024~~2025			May 31, ~~2023~~2024			Variance ($)			~~Variance (%)~~
Operating activities	$	(39,~~308~~312	)	$	(13,~~087~~308	)	$	(26,~~221~~004	)		~~-204~~	%
Investing activities		(~~209~~142	)		—(209	)		~~(209~~67	)		~~-100~~	%
Financing activities		515,~~105~~185			15,~~311~~105			310,~~794~~080			~~289~~	%
Net increase in cash	$	15,~~588~~731		$	~~224~~1,588		$	14,~~364~~143			~~-609~~	%

Net Cash used in Operating Activities

The Company’s cash flows used in operating activities have been primarily comprised of ~~payroll~~compensation costs, software expenses, technology costs, professional services related to research and development and general and administrative activities, insurance, and direct research and development costs for aircraft design, simulation, and ~~prototype~~aircraft manufacturing, partially offset by periodic grants received from various government agencies and interest earned on cash. The Company expects to increase hiring to accelerate its engineering and certification efforts in the coming years.

For the year -ended May 31, ~~2024~~ 2025, the $26,~~221~~004 increase in cash used from operations as compared to the year -ended May 31, ~~2023~~2024, was primarily attributed to increased operating costs in connection to the Company’s growth efforts and changes in working capital.

Net Cash used in Investing Activities

The Company’s cash flows used in investing activities to date have ~~been~~ primarily comprised the acquisition of property and equipment.

For the year -ended May 31, ~~2024~~ 2025, the $~~209~~67 ~~increase~~ decrease in cash used by investing activities as compared to the year -ended May 31, ~~2023~~2024, was primarily attributed to website development ~~and~~costs ~~computer equipment~~incurred in the prior year.

Net Cash provided by 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.

44For the year-ended May 31, 2025, the $10,080 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.

~~For~~On ~~the~~August ~~year ended May 31~~21, 2024, the ~~$3,794~~Company ~~increase in~~completed ~~cash~~a ~~provided~~registered bysecurities ~~financing~~offering (“RSO”) ~~activities~~by asissuing ~~compared to the year ended May 31~~2,800,000 ~~2023~~Class ~~was~~A ~~primarily~~ordinary ~~attributed to the issuance of Convertible Debentures in October 2023 which converted into common~~ shares, of3,000,000 ~~the~~Pre-Funded ~~Company~~Warrants in(“PFW’s”), ~~January~~and ~~2024~~5,800,000 warrants. ~~These~~Proceeds ~~were~~received ~~accompanied~~ by the ~~conversion of~~Company ~~Convertible~~are ~~Notes,~~summarized ~~partially offset by the impact from costs in connection with the Business Combination.~~below:

Gross Proceeds - Class A Shares	$	1,906
Gross Proceeds - PFW’s	$	2,041
Gross Proceeds - Warrant Exercises	$	2,787
Direct costs	$	(510	)
Net Proceeds	$	6,224

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 year-ending May 31, 2025.

Warrant holders exercised 2,590,000 warrants in exchange for 2,590,000 Class A ordinary shares for proceeds of $2,787 in the year-ended May 31, 2025.

As of May 31, 2025, there were 12,065,375 warrants outstanding at an exercise price of $11.50 USD and 3,210,000 General Warrants outstanding at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares. As of the date of this filing, there remains just 310,000 General Warrants outstanding.

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 Class A ordinary 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		(41	)
Net Proceeds	$	8,359

In March 2025 the Company filed a shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to USD $6.25 million, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a placement agent for the sale of its Class A ordinary shares. During the year-ended May 31, 2025, the Company sold 940,562 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $880. As of May 31, 2025, the Company had $7,529 remaining eligible for sales under the Sales Agreement.

On June 27, 2025, the Company filed a prospectus supplement to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to an additional aggregate USD $16.5 million of Class A ordinary shares.

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. AsBeyond of May 31, ~~2024~~2025, the Company’s principal source of liquidity ~~was~~ is expected to be cash and cash equivalents of more than $115,~~816~~000 on-hand as of the date of this filing, future government grants and subsidies, and future sales of securities.

To date, the Company has funded its operations primarily with the issuances of ~~common~~Class A ordinary shares, Series A Preferred Shares, and issuances of convertible debt instruments. Additional funding has been provided through government -backed grants. Imminently following the publication of the Company’s form 10-K for the period ending May 31, 2024, we expect to receive approximately $4.8 million of gross proceeds related to a registered securities offering.

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 ~~Forward~~Sales ~~Purchase~~ Agreement, ~~Warrants~~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~~ additional financing will be required and efforts to raise such working capital will be ongoing through at least the next ~~three~~several years.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of May 31, ~~2024~~2025, and May 31, ~~2023~~2024.

~~Critical~~Significant Accounting Judgements, Estimates, and Assumptions

The preparation of 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 consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For derivative instruments that are classified as equity, the derivative instruments are initially measured at fair value (or allocated value), and subsequent changes in fair value are not recognized so long as the contracts continue to be classified in equity.

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 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 ~~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 and resulting in a gain of $21,400.

4543

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 to be expensed as incurred.

Recent Accounting Standards

Recently Adopted Accounting Pronouncements In ~~August~~November ~~2020~~2023, the Financial Accounting Standards Board (“FASB”) issued ~~ASU 2020-06,~~ Accounting ~~for~~Standards ~~Convertible~~Update ~~Instruments and Contracts in an Entity’s Own Equity. The~~ (“ASU ~~simplifies~~”) ~~the accounting for convertible instruments by removing certain separation models in ASC 470~~2023-2007, ~~Debt—Debt~~Segment ~~with~~Reporting ~~Conversion and Other Options, for convertible instruments. The ASU updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under~~ (Topic ~~815,~~280): ~~Derivatives~~Improvements ~~and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required~~ to beReportable ~~separated~~Segment ~~from the host contract. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. Further~~Disclosures, ~~the~~which ~~ASU~~expands ~~made~~reportable ~~amendments~~segment todisclosure ~~the EPS guidance in Topic~~requirements ~~260,~~through ~~Earnings~~enhanced ~~Per~~disclosures ~~Share,~~about ~~for~~significant ~~convertible~~segment ~~instruments~~expenses, ~~the~~interim ~~most~~segment ~~significant~~profit ~~impact~~or ofloss ~~which~~and ~~is requiring the use of the if-converted method for diluted EPS calculation~~assets, and nohow ~~longer allowing~~ the ~~net~~CODM ~~share~~uses ~~settlement method. The ASU also made revisions to Topic 815-40,~~reported ~~which~~segment ~~provides~~profit guidance on how an entity must determine whether a contract qualifies for a scope exception from derivative accounting. The amendments to Topic 815-40 change the scope of contracts that are recognized as assets or ~~liabilities.~~loss ~~The~~information ~~ASU~~in isassessing ~~effective~~segment ~~for~~performance ~~public business entities, excluding smaller reporting companies, for interim~~ and ~~annual~~allocating ~~periods beginning after December 15, 2021, with early adoption permitted~~resources. For all other entities, the amendments are effective for interim and annual periods beginning after December 15, 2023. Adoption of the ASU can either be on a modified retrospective or full retrospective basis. The Company isadopted ~~currently~~ASU ~~evaluating~~2023-07 ~~the impact~~effective ~~the~~June ~~adoption~~1, ~~of this standard will have on its financial statements and related disclosures~~2024.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of incremental income tax information related to the income tax rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements. The update is effective for annual periods beginning after December 15, 2024 on a prospective basis, and retrospective application is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures within its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories in the notes to the financial statements. The update is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The update can be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any of all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures within its consolidated financial statements.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements and related consolidated financial statement schedules required to be filed are indexed on page F-1 and are incorporated herein.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, 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.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, ~~2024~~2025. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of May 31, ~~2024~~2025, our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective.

4644

Management’s Annual Report on Internal Controls Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of the effectiveness of internal control over financial reporting as of May 31, ~~2024~~2025. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our system of internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management performed an assessment of the effectiveness of our internal control over financial reporting as of May 31, ~~2024~~2025, based upon criteria in in Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway ~~Commission~~ Commission (COSO). Based upon this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Annual 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 consolidated financial statements contained in this Annual Report fairly present, in all material respects, our financial condition, results of operations and cash flows for the fiscal periods 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 our internal controls have been sufficiently remediated. The material weakness, as of May 31, ~~2024~~2025, relates to the inadequate separation of financial responsibilities. Our management, with the oversight of the Audit Committee of our Board of Directors, ~~continue~~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. With additional personnel anticipated to be hired in fiscal year 2026, the Company expects to make significant advances towards remediating the identified material weakness.

Changes in Internal Control Over Financial Reporting

~~In respect~~No torecent changes in ~~the~~our internal control over financial reporting ~~(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)~~ ~~for~~had ~~the quarter ended May 31, 2024 that has materially affected,~~ or isare ~~reasonably~~expected ~~likely~~ to ~~materially~~have ~~affect,~~a ~~our internal control over financial reporting, the Company has remediated one~~ material ~~weakness~~impact ason ~~disclosed during~~ the ~~previous quarter ending February 29, 2024. Specifically, to address the material weakness identified in lacking sufficient accounting resources with deep technical knowledge, the~~ Company’s ~~hired~~internal ~~a full-time Chief Financial Officer and has implemented a plan whereby external parties with relevant skills are retained as needed~~controls.

Item 9B. Other Information.

(a)

None.

(b) During the quarter ended May 31, ~~2024~~2025, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading agreement” or a “non-Rule 10b5-1 trading agreement” (in each case defined in Item 408 of Regulation S-K).

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

4745

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors and Executive Officers

The following table sets forth, as of August 1521, ~~2024~~2025, the name, age and position of each of our executive officers and directors.

Name	Age	Position
Executive Officers
Brandon Robinson(3)	4546	Chief Executive Officer, Director
Jason O’Neill(2)	4647	Chief Operating Officer, Director
Brian Merker	4748	Chief Financial Officer
Stewart Lee	5152	Head of People & Strategy
Non-Employee Directors
Trisha Nomura(1)	4445	Director
John Maris(2)	6667	Director
John Pinsent(1)	6465	Director

(1)	Class I Director

(2)	Class II Director

(3)	Class III Director

Background of Directors and Executive Officers

Executive Officers

Brandon Robinson. Brandon Robinson has served as the Chief Executive Officer and as a member of the Board of ~~New~~ Horizon since the Business Combination, and previously served as the founder and Chief Executive Officer of Horizon and led the Horizon team since its inception in 2013. He has dedicated his life to aviation, initially as a CF-18 pilot in the Canadian Armed Forces (CAF) before moving into large scale military capital projects. Upon leaving the CAF, Mr. Robinson, discovered his passion for the Advanced Air Mobility movement. Mr. Robinson serves on the Board of Directors of the Ontario Aerospace Council. Mr. Robinson has a Bachelor of Mechanical Engineering from Royal Military College, an MBA from Royal Roads University, has co-authored several successful aerospace patents, and holds an Airline Transport Pilots License. His deep operational experience alongside a passion for technical innovation has propelled Horizon to the forefront of the Advanced Air Mobility movement.

We believe that Mr. Robinson, given his extensive experience as a front-line fighter pilot, mechanical engineering knowledge and adept managing acumen, is qualified to serve as a member of our Board due to his unique combination of skills he brings as our co-founder and Chief Executive Officer.

Jason O’Neill. Jason O’Neill has served as Chief Operating Officer and as a member of the Board of ~~New~~ Horizon since the Business Combination. Mr. O’Neill previously served as Horizon’s Chief Operating Officer since January 2019. Mr. O’Neill has more than 20 years of experience in senior roles scaling tech-based start-ups. Prior to joining Horizon, Mr. O’Neill worked at Centtric as the Director of Product and Strategy for 13 years. Most recently he served as the Director of Product and Data for Thoughtwire for nearly 10 years. Mr. O’Neill’s previous organizations were focused on problem solution, leveraging leading edge computer-based technologies. Mr. O’Neill attended both the University of Toronto and the University of Waterloo.

Mr. O’Neill is qualified to serve on our board based on his operational experience scaling businesses, as well as his historical experience as Chief Operating Officer of Horizon.

4846

Brian Merker. Brian Merker has served as Chief Financial Officer of ~~New~~ Horizon since the Business Combination. Mr. Merker has more than 20 years of senior financial management experience including more than 10 years serving in the Aviation sector, most recently as Chief Financial Officer of Skyservice Business Aviation (“Skyservice”) from 2018 to 2022, supporting growth efforts in aircraft management, maintenance, fixed-based operations, charter, and brokerage. Prior to Skyservice ~~Business Aviation~~, Mr. Merker served as Chief Financial Officer of Great Slave Helicopters as well as Vice President of Finance ~~from~~of ~~2013~~its toparent ~~2018~~Company, ~~with~~ Discovery Air, a publicly traded organization ~~that~~from 2013 to 2018. Discovery Air includes a diverse range of aviation related services including fighter jet pilot training, rotary-wing services, a commercial fixed-wing airline, fire suppression support, as well as aircraft engineering and maintenance. Prior to his time at Discovery Air, Mr. Merker served as Vice President of Finance from 2007 to 2012 at Score Media, a publicly traded company focused on sports broadcast and technology innovation. Mr. Merker began his career in the KPMG audit practice, where he served from 2003 to 2006. During this time, he gained significant exposure to SEC registrants at the commencement of the Sarbanes-Oxley legislation. Mr. Merker obtained his Honours Commerce degree in Economics from Guelph University before attending Queen’s University to complete his Chartered Professional Accounting academia requirements.

Stewart Lee. Stewart Lee has served as the Head of People and Strategy at ~~New~~ Horizon since the Business Combination, and previously served as Horizon’s Head of People and Strategy since 2013. Prior to joining Horizon, Mr. Lee formed his own company, providing human resources consulting services to a wide array of clients. Previously, Mr. Lee was the Director of Human Resources for Steel-Craft Door Products, a large Canadian national manufacturing company, for 11 years. Mr. Lee also served in the Canadian Armed Forces as a Logistics Officer for 6 years. Mr. Lee holds a Bachelor of Commerce degree from Royal Roads University. He also holds an MBA in management from Royal Roads University and has been a Chartered Professional in Human Resources since 2009.

Non-Employee Directors

Trisha Nomura. Trisha Nomura has served as independent director and chairperson of the Audit Committee of ~~New~~ Horizon since the Business Combination. Ms. Nomura served as an independent director of Pono and was the chairperson of Pono’s Audit Committee prior to the Business Combination. She ~~currently~~also ~~serves~~served as an independent director of Pono Capital Two, Inc. (Nasdaq: PTWO) and as the Chief Financial Officer of Pono Capital Corp (Nasdaq: PONO). Since July 2018, Ms. Nomura has owned a consulting firm, Ascend Consulting, LLC. Prior to opening her own firm, Ms. Nomura worked in both public accounting and private industry. Ms. Nomura was the Chief Operating Officer of HiHR from July 2015 to December 2016, and the Vice President of Strategic Services from May 2014 to July 2015. Ms. Nomura also served as the Chief People Officer of ProService Hawaii from January 2017 to June 2018. Ms. Nomura began volunteering with the HSCPA since 2010 through the YCPA Squad, has been the Treasurer of Kaneohe Little League since 2013, and is a member of the AICPA, where she was selected to attend the Leadership Academy, has served ason anthe ~~at-large~~Association ~~Council member~~Board of Directors, and ~~also~~is ~~served~~currently onserving ~~the~~as ~~Association~~an ~~Board~~at-large ofCouncil ~~Directors~~member. Ms. Nomura is a CPA, not in public practice, and a CGMA. She is a graduate of Creighton University, where she obtained her Bachelor of Science in Business Administration in accounting, and of the University of Hawaii at Manoa, where she earned her Master of Accountancy degree.

Ms. Nomura’s consulting, accounting and management skills and knowledge make her an important addition to our Board.

John Maris. John Maris has served as an independent director of ~~New~~ Horizon since the Business Combination. Dr. Maris has served as the Chief Executive ~~Officer~~ Officer of ~~Advanced~~Cert ~~Aerospace~~Centre ~~Solutions,~~Canada ~~LLC~~ (“~~Advanced Aerospace~~3C”), a privately held business that provides consulting services in the aerospace industry, since 2008. At ~~Advanced Aerospace~~3C, Dr. Maris has ~~served~~overseen asflight ~~the~~testing, ~~principal~~research ~~flight-test~~and ~~investigator~~development, and ~~test~~ ~~pilot~~certification ~~for~~services ~~NASA’s~~provided ~~Traffic~~to ~~Aware~~aerospace ~~Strategic~~organizations across ~~Aircrew~~the ~~Request (TASAR) technology~~world. Since 1995, Dr. Maris has also served as President and Chief Executive Officer of Marinvent Corporation, a company established to develop procedures and technologies to increase the efficiency and reduce the risk of aeronautical programs, including the Electronic Flight Bag (EFB) technology. Dr. Maris also founded Maris Worden Aerospace in 1986. From 1993 to 1995, Dr. Maris served as the Mobile Servicing System Control Equipment Manager for the International Space Station for the Canadian Space Agency. From 1983 to 1993, Mr. Maris was a project officer and experimental test pilot for the Canadian Department of National Defense. In 1983, Dr. Maris enlisted in the Royal Canadian Air Force and graduated from the United States Air Force Test Pilot Course at Edwards Air Force Base in California in 1989. Dr. Maris subsequently served four years as Project Officer and Experimental Test Pilot at the Aerospace Engineering Test Establishment at Cold Lake, Alberta. In 1995, holding the rank of Major, Dr. Maris retired from the Canadian Forces to devote full-time to Marinvent Corporation. Dr. Maris earned a B.Sc. in Aeronautical Engineering at the Imperial College of Science and Technology at London University in 1979, and subsequently earned a Master of Aeronautical Science degree in 1982 and a Master of Aviation Management degree in 1983, both with Distinction from Embry-Riddle Aeronautical University (ERAU) at Daytona Beach, Florida. In 2017, Dr. Maris received his Ph.D. from ERAU, earning his doctorate in Aviation Safety and Human Factors. In 2018 he was granted Affiliate Professor status at Concordia University in Montréal. Dr. Maris sits on a number of the Concordia University’s boards and is also on the Centre technologique en aérospatiale board.

4947

Dr. Maris’ vast experience in the aerospace industry, both as a pilot and entrepreneur, makes him an important addition to our Board.

John Pinsent. John Pinsent has served as an independent director of ~~New~~ Horizon since the Business Combination. In 2004. Mr. Pinsent founded St. Arnaud Pinsent Steman Chartered Professional Accountants (“SPS”), a chartered professional accounting firm based out of Edmonton, Alberta, Canada. Before founding SPS, Mr. Pinsent worked for ten years at Ernst & Young LLP, earning his Chartered Accountants designation in 1996. From 1986 to 1994, Mr. Pinsent served as the Controller and Vice President Finance of an Alberta based international retail organization. Mr. Pinsent earned his Bachelor of Education and Bachelor of Commerce (AD) degrees at the University of Alberta, has an ICD.D designation from the Institute of Corporate Directors and became an FCPA in 2013. Mr. Pinsent serves as a board member of Enterprise Group, Inc., a Toronto Stock Exchange listed company that provides specialized equipment and services in the build out of infrastructure for energy, pipeline, and construction industries. He also sits on the board of directors of several private companies and supports numerous non-profit and philanthropic initiatives. He has experience serving as board and audit committee chairs and has extensive experience in compliance and corporate governance in the public markets.

Mr. Pinsent’s experience providing accounting, audit, tax and business advisory services, along with his public company and board experience, make him an important addition to our Board.

Family Relationships

Brian Robinson, our Chief Engineer, is the father of Brandon Robinson. Jason O’Neill is the brother-in-law of Brandon Robinson. There are no other family relationships among any of our directors or executive officers.

Board Composition

Our business and affairs are organized under the direction of our Board. The Board consists of five members ~~upon consummation of the Business Combination~~. The primary responsibilities of the Board are to provide oversight, strategic guidance, counseling, and direction to our management. The Board will meet on a regular basis and additionally as required.

In accordance with our Articles, our Board is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. The directors are assigned to the following classes:

● Class I consists of Ms. Nomura and Mr. Pinsent, whose terms will expire at our ~~2025~~2027 annual meeting of shareholders;

● Class II consists of Mr. O’Neill and Mr. Maris, whose terms will expire at our ~~2026~~2025 annual meeting of shareholders; and

● Class III consists of Mr. Brandon Robinson, whose term will expire at our ~~2027~~2026 annual meeting of shareholders.

At each annual meeting of shareholders to be held after the initial classification, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following their election and until their successors are duly elected and qualified. This classification of our Board may have the effect of delaying or preventing changes in our control or management.

5048

Director Independence

As a result of our Class A ordinary shares being listed on the Nasdaq Capital Market, we adhere to the listing rules of ~~the~~ Nasdaq in affirmatively determining whether a director is independent. Our Board has consulted, and will consult, with its counsel to ensure that the board’s determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors. The Nasdaq listing standards generally define an “independent director” as a person, other than an executive officer of a company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Each of the directors other than Mr. Brandon Robinson and Mr. O’Neill qualify as independent directors as defined under the listing rules of Nasdaq, and our board consists of a majority of independent directors, as defined under the rules of the SEC and Nasdaq Listing Rules relating to director independence requirements. In addition, we are subject to the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit committee, the compensation committee, and the nominating and corporate governance committee, as discussed below.

Board Oversight of Risk

One of the key functions of our Board will be informed oversight of its risk management process. The Board does not currently anticipate having a standing risk management committee, but rather ~~anticipates administering this~~ provides oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight. In particular, our Board will be responsible for monitoring and assessing strategic risk exposure and our audit committee will have the responsibility to consider and discuss the combined company’s major financial risk exposures and the steps its management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee will also monitor compliance with legal and regulatory requirements. Our compensation committee will also assess and monitor whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements.

Board Committees

Our Board has established an audit committee, a compensation committee and a nominating and corporate governance committee. Our Board adopted a written charter for each of these committees, which complies with the applicable requirements of current Nasdaq Listing Rules. Copies of the charters for each committee are available on the investor relations portion of ~~New~~ Horizon’s website. The composition and function of each committee will comply with all applicable requirements of the Sarbanes-Oxley Act and all applicable SEC rules and regulations.

Audit Committee

The members of the audit committee are Ms. Nomura (Chair), Mr. Maris, and Mr. Pinsent. Our Board has determined that each of the members of the audit committee will be an “independent director” as defined by, and meet the other requirements of the Nasdaq Listing Rules applicable to members of an audit committee and Rule 10A-3(b)(i) under the Exchange Act, including that each member of the audit committee can read and understand fundamental financial statements in accordance with Nasdaq audit committee requirements. In arriving at this determination, the Board examined each audit committee member’s scope of experience and the nature of their prior and current employment. The audit committee will meet on at least a quarterly basis. Both the combined company’s independent registered public accounting firm and management intend to periodically meet privately with our audit committee.

5149

The primary purpose of the audit committee is to discharge the responsibilities of the Board with respect to our accounting, financial, and other reporting and internal control practices and to oversee our independent registered accounting firm. Specific responsibilities of our audit committee include:

●

selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;

●

helping to ensure the independence and performance of the independent registered public accounting firm;

●

discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results;

●

developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

●

reviewing policies on risk assessment and risk management;

●

reviewing related party transactions;

●

obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and

●

approving (or, as permitted, pre-approving) all audit and all permissible non-audit service to be performed by the independent registered public accounting firm.

Audit Committee Financial Expert

Our Board has determined that Ms. Nomura qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the Nasdaq Listing Rules. In making this determination, our Board considered Ms. Nomura’s formal education, training, and previous experience in financial roles.

Compensation Committee

The members of the compensation committee are Mr. Pinsent (Chair), Ms. Nomura, and Mr. Maris. Our Board has determined that each of the members will be an “independent director” as defined by the Nasdaq Listing Rules applicable to members of a compensation committee. The Board has determined that each of the members of the compensation committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act and satisfy the independence requirements of Nasdaq. The compensation committee will meet from time to time to consider matters for which approval by the committee is desirable or is required by law.

Specific responsibilities of our compensation committee include:

●

reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

●

reviewing and approving the compensation of our other executive officers;

●

reviewing and recommending our Board the compensation of our directors;

●

reviewing our executive compensation policies and plans;

●

reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans, severance agreements, change-of-control protections and any other compensatory arrangements for our executive officers and other senior management, as appropriate;

●

administering our incentive compensation equity-based incentive plans;

5250

●

selecting independent compensation consultants and assessing whether there are any conflicts of interest with any of the committee’s compensation advisors;

●

assisting management in complying with our proxy statement and annual report disclosure requirements;

●

if required, producing a report on executive compensation to be included in our annual proxy statement;

●

reviewing and establishing general policies relating to compensation and benefits of our employees; and

●

reviewing our overall compensation philosophy.

Nominating and Corporate Governance Committee

The members of the nominating and corporate governance committee are Mr. Maris (Chair), Ms. Nomura and Mr. Pinsent. The Board determined that each of the members will be an “independent director” as defined by the Nasdaq Listing Rules applicable to members of a nominating committee. The nominating and corporate governance committee will meet from time to time to consider matters for which approval by the committee is desirable or is required by law.

Specific responsibilities of our nominating and corporate governance committee include:

●

identifying, evaluating and selecting, or recommending that our Board approve, nominees for election to our Board;

●

evaluating the performance of our Board and of individual directors;

●

reviewing developments in corporate governance practices;

●

evaluating the adequacy of our corporate governance practices and reporting;

●

reviewing management succession plans; and

●

developing and making recommendations to our Board regarding corporate governance guidelines and matters.

Code of Ethics

We have adopted a code of ethics that applies to all of our directors, officers and employees. A copy of our code of ethics posted on the “~~Corporate~~ Governance — ~~Governance~~ —Documents” portion under the “Investors” tab of our website at https://www.horizonaircraft.com. Information contained on or accessible through our website is not a part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only. We also intend to disclose future amendments to, or waivers of, its code of ethics, as and to the extent required by SEC regulations, on our website.

Insider Trading Policy

Our Board has adopted an insider trading policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information to other persons who may trade on the basis of that information.

Our insider trading policy prohibits our Board members, officers, employees and consultants from engaging in transactions involving options on our securities, such as puts, calls and other derivative securities, whether on an exchange or in any other markets. Our insider trading policy also prohibits our Board members, officers, employees and consultants from purchasing Company securities on margin, borrowing against Company securities held in a margin account, or pledging Company securities as collateral for a loan.

5351

Our insider trading policy permits our executive officers and directors to enter into trading plans established according to Section 10b5-1 of the Exchange Act. These plans may include specific instructions for a broker to exercise vested options and sell our common stock on behalf of the executive officer or director at certain dates if our stock price is above a specified level or both. Under these plans, the executive officer or director no longer has control over the decision to exercise and sell the securities in the plan, unless he or she amends or terminates the trading plan during a trading window. The purpose of these plans is to enable executive officers and directors to recognize the value of their compensation and diversify their holdings of our stock during periods in which the executive officer or director would be unable to sell our common stock because material information about us had not been publicly released.

Compensation Committee Interlocks and Insider Participation

None of the members of the compensation committee was at any time one of ~~New~~ Horizon’s officers or employees. None of ~~New~~ Horizon’s executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers that will serve as a member of our Board or compensation committee.

Shareholder and Interested Party Communications

Stockholders and interested parties may communicate with our Board, any committee chairperson or the non-management directors as a group by writing to the board or committee chairperson in care of ~~New~~ Horizon Aircraft Ltd., 3187 Highway 35, Lindsay, Ontario K9V 4R1 Canada. Each communication will be forwarded, depending on the subject matter, to the Board, the appropriate committee chairperson or all non-management directors.

Limitations of Liability and Indemnification of Directors and Officers

Under the BCBCA, a director of a company is jointly and severally liable to restore to the company any amount paid or distributed as a result of paying dividends, commissions and compensation, among other things, contrary to the BCBCA. A director of a company will not be found liable under the BCBCA if the director relied, in good faith, on (i) financial statements of the company represented to the director by an officer of the company or in a written report of the auditor of the company, (ii) a written report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by that person, (iii) a statement of fact represented to the director by an officer of the company to be correct, or (iv) any record, information or representation that the court considers provides reasonable grounds for the actions of the director, whether or not the record was forged, fraudulently made or inaccurate, or the information or representation was fraudulently made or inaccurate. Further, a director of a company is not liable under the BCBCA if the director did not know and could not reasonably have known that the act done by the director or authorized by resolution voted for or consented to by the director was contrary to the BCBCA.

We have purchased and intend to maintain director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to the combined company, including matters arising under the Securities Act.

Our Articles provide that we must indemnify all eligible parties (which includes our current, former or alternate directors and officers), and such person’s heirs and legal personal representatives, as set out in the BCBCA, against all eligible penalties to which such person is or may be liable, and we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director is deemed to have contracted with us on the terms of indemnity contained in our Articles. In addition, we may indemnify any other person in accordance with the BCBCA.

There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceedings that may result in a claim for such indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling the combined company, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, certain officers and any beneficial owners of more than 10% of our common stock to file reports relating to their ownership and changes in ownership of our ~~common~~Class ~~stock~~A ordinary shares with the SEC by certain deadlines and furnish copies of such reports to us.

Based solely upon a review of those reports and written representations provided to us by all of our directors and executive officers, we believe that during the year ended May 31, ~~2024~~2025, our directors, executive officers and greater than 10% stockholders timely filed all reports they were required to file under Section 16(a), except ~~for~~that one Form 4 ~~filing~~relating ~~for~~to ~~each~~two oftransactions ~~Trisha~~was filed late by Ms. Nomura,; ~~John~~one Form 4 relating to one transaction was filed late by each of Mr. Maris, and ~~John~~Mr. Pinsent,; one Form 3 and two Form 4s covering an aggregate ~~which~~of 17 transactions were ~~due~~filed onlate ~~May~~by 17Mr. O’Neill; one Form 4 covering 13 transactions was filed late by Mr. Robinson; one Form 4 covering 13 transactions was filed late by Mr. Merker; one Form 4 covering 13 transactions was filed late by Mr. Lee; one Form 4 relating to four transactions was filed late by Mehana Capital LLC, ~~2024~~a 10% shareholder; and two Form 4s covering an aggregate of 20 transactions were filed late by Dustin Shindo.

5452

Item 11. Executive Compensation.

Executive Compensation

We are currently considered an “emerging growth Company” within the meaning of the Securities Act for purposes of the SEC’s executive compensation disclosure rules. Accordingly, we are required to provide a Summary Compensation Table, as well as limited narrative disclosures regarding executive compensation for our last two completed fiscal years and an Outstanding Equity Awards at Fiscal Year End Table for our last completed fiscal year. These reporting obligations extend only to the following “named executive officers,” who are the individuals who served as our principal executive officer and the next two most highly compensated executive officers at the end of the fiscal year ~~2023~~2025.

This section discusses material components of the executive compensation programs for ~~New~~ Horizon’s executive officers who area named in the “Summary Compensation Table” below. In fiscal year ~~2024~~2025, ~~New~~ Horizon’s “named executive officers” and their positions were as follows:

●

Brandon Robinson, Chief Executive Officer;

	●	Jason O’Neill, Chief Operating Officer;

	●	Brian Merker, Chief Financial Officer;

This discussion may contain forward-looking statements that are based on ~~New~~ Horizon’s current plans, considerations, expectations, and determinations regarding future compensation programs.

Summary Compensation Table

The following table contains information pertaining to the compensation of ~~New~~ Horizon’s named executives for the years -ending May 31, ~~2024~~2025, and ~~2023~~May 31, 2024.

Name and Position	Year	Salary ($CAD)		Bonus ($)(1)		Stock Awards ($)(2)		Option Awards ($CAD)(13)		Non-Equity Incentive Plan Compensation ($CAD)		Non-qualified Deferred Compensation Earnings ($CAD)		All Other Compensation ($CAD)		Total ($CAD)
Brandon	~~2024~~2025		~~270~~369,~~985~~036		—52,785		—102,199		—212,000		—		—		—		~~270~~736,~~985~~020
Robinson, Chief Executive Officer(2)	2023		200,384		—		—		34,699		—		—		—		235,083
Robinson, Chief Executive Officer	2024		270,985		—		—		—		—		—		—		270,985
Jason	~~2024~~2025		~~212~~254,~~029~~125		—38,250		—74,273		—156,880		—		—		—		~~212~~523,~~029~~528
O’Neill, Chief Operating Officer(2)	2023		168,346		—		—		35,435		—		—		—		203,781
O’Neill, Chief Operating Officer	2024		212,029		—		—		—		—		—		—		212,029
Brian Merker, Chief Financial Officer(3)(4)	2024		129,108		—		—		59,127		—		—		—		188,235
Brian Merker,	2025		269,583		38,250		84,763		183,320		—		—		—		574,916
Chief Financial Officer	2024		129,108						59,127								188,235

(1) ~~Options~~Amounts ~~vest~~reflect ~~and~~awards ~~become~~under ~~exercisable~~the Company’s short-term incentive plan to be satisfied in ~~three~~the ~~equal~~form ~~installments~~of ~~over~~Class aA ~~3-year~~ordinary ~~period~~shares.

(2) Option grants valued using a Black-Scholes method with a strike price equal to $CAD0.76, vest in three equal installments over a 3-year period, have a risk-free rate of 2.80% and an annualized volatility of 85%.

(2)	Amounts reflect the granting of Performance Share Units and the Company’s contribution to each individual under the ESPP (defined below).

(3)	Options vest and become exercisable in three equal installments over a 3-year period. Options granted in the year-ended May 31, 2025, were issued with a strike price equal to $USD0.61. Options granted in the year-ended May 31, 2024, were issued with a strike price equal to $USD0.85.

(3)	Option grants valued using a Black-Scholes method with a strike price equal to fair market value at $USD0.85, vest in three equal installments over a 3-year period, have a risk-free rate of 4.51% and an annualized volatility of 85%.
(4)	Executive compensation information for the year ended May 31, 2023 is not provided, as the individual was not a named executive officer for that period.

Narrative to the Summary Compensation Table

Annual Base Salary

We pay our named executive officers a base salary to compensate them for services rendered to our company. The base salary payable to our named executive officers is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.

Equity Compensation

We have granted stock options to our employees, including our named executive officers, in order to attract and retain them, as well as to align their interests with the interests of our shareholders. In order to provide a long-term incentive, these stock options vest over three years subject to continued service.

In connection with the Business Combination we adopted the 2023 Equity Incentive Plan, effective January 12, 2024. This plan was amended by the shareholders on December 17, 2024. For additional information about the 2023 Equity Incentive Plan, see the section titled “—Summary of the 2023 Equity Incentive Plan” section of this ~~prospectus~~report.

Other Elements of Compensation

Retirement Savings and Health Spending Account and Group Benefits

All of our full-time employees, including our named executive officers, are eligible to participate in our pension and health plans. The health spending account program will reimburse costs that include medical, dental and vision benefits; a group benefits plan to provide for short-term and long-term disability insurance; life and AD&D insurance will be offered to all full-time employees. In May 2024, the Company established an employee share purchase plan (“ESPP”) whereby employees can elect to allocate between 3-5% of earnings to the purchase of Company stock in the open market, matched equally by Horizon. The first share purchases in connection with this ESPP commenced in June 2024.

Perquisites and Other Personal Benefits

We determine perquisites on a case-by-case basis and will provide a perquisite to a named executive officer when we believe it is necessary to attract or retain the named executive officer. We did not provide any perquisites or personal benefits to our named executive officers not otherwise made available to our other employees in fiscal year 2024.

5654

Executive Compensation Arrangements

Employment Agreements

As a result of the Business Combination, ~~New~~ Horizon entered into employment agreements with the ~~New~~ Horizon’s executive officers: Brandon Robinson (Chief Executive Officer), Jason O’Neill (Chief Operating Officer), and Brian Merker (Chief Financial Officer) (each an “Employment Agreement, and collectively, the “Employment Agreements”).

The Employment Agreements all provide for at-will employment that may be terminated by the employee with thirty days’ notice to ~~New~~ Horizon of resignation from employment; by ~~New~~ Horizon without notice, payment in lieu of notice, benefit continuation (if applicable) or compensation of any kind, where permitted by the Ontario Employment Standards Act, 2000, as amended from time to time (the “ESA”), which includes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by ~~New~~ Horizon; or by ~~New~~ Horizon with notice or pay in lieu of notice by providing the employee (i) the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation (if applicable) and any other entitlements strictly required by the ESA, calculated from the date of the employee’s original employment with Horizon; plus (ii) such additional amount of payment of Base Salary (as defined below) in lieu of notice (“Additional Pay in Lieu of Notice”), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay entitlements under (a) above and the Additional Pay in Lieu of Notice under sub-section (ii), (b), at a minimum equals twelve (12) months, and such aggregate shall increase by additional one (1) month payment of the employee’s Base Salary in lieu of notice for each completed year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus, (iii) payment of a prorated portion of any bonuses that the employee is eligible to receive as of the date of termination, calculated to the end of the Severance Period based upon the average incentive compensation paid to the employee in the two years prior to the year in which notice of termination is communicated. For the purposes of the Employment Agreements, the period for which an employee receives notice and/or payment, calculated from the date the employee is advised of the termination of his employment, is the “Severance Period.”

If following a Change of Control (as defined in the Employment Agreements), ~~New~~ Horizon gives the employee Good Reason to terminate his employment and the related Employment Agreement, and provided the employee exercises that right within two years from the date of the Change of Control, the employee shall be entitled to receive the benefits set forth above, as if the employee’s employment had been terminated on a without cause basis. “Good Reason” means the occurrence of (i) a constructive termination of employment and of the Employment Agreement; (ii) any material and unilateral change in employee’s title, responsibilities, or authority in place at the time of the Change of Control; (iii) any material reduction in the Base Salary paid to employee at the time of the Change of Control; (iv) any termination or material reduction in the aggregate value of the employee benefit programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which the employee participated or under which the employee was covered at the time of Change of Control; or (v) the employee’s assignment to any significant, ongoing duties inconsistent with his skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities, or any other action by ~~New~~ Horizon, which results in material diminution of such position.

The Employment Agreements provide for a base salary of USD $~~230~~300,000 for E. Brandon Robinson; $~~CAD225~~CAD275,000 for ~~each~~Brian ofMerker, and $CAD240,000 for Jason O’Neill ~~and Brian Merker~~ (each a “Base Salary”). Possible annual performance bonuses and equity grants under the 2023 Equity Incentive Plan, as amended, are to be determined by ~~New~~ Horizon’s compensation committee.

Contractor Agreement

In connection with the Closing of the Business Combination, ~~New~~ Horizon entered into a Contractor Agreement (the “Contractor Agreement”), dated January 12, 2024 (the “Effective Date”), by and among ~~New~~ Horizon, 2195790 Alberta Inc. (the “Contractor”) and Stewart Lee (the “Keyman”). Pursuant to the Contractor Agreement, the Contractor will be providing certain services (the “Services”) as the Head of People & Strategy through the Keyman. The term of the Contractor Agreement began on the Effective Date and unless earlier terminated, will automatically expire on December 31, 2025 (the “Expiry Date”) and may be extended by mutual agreement in writing. ~~New~~ Horizon will pay the Contractor for the performance of the Services fees in the amount of $CAD120.00 per hour (the “Fees”).

5755

The Contractor Agreement may be terminated by mutual agreement; for convenience by either party upon the delivery of, (i) if by the Contractor, 90 calendar days’ prior written notice to ~~New~~ Horizon, and if by ~~New~~ Horizon, 60 calendar days’ prior written notice to the Contractor; or by ~~New~~ Horizon for material breach. Upon the expiration or earlier termination of the Contractor Agreement for any reason, ~~New~~ Horizon will provide the Contractor with only the Fees accrued and owing to the Contractor up to and including the Expiry Date or earlier termination date.

Outstanding Equity Awards as of May 31, ~~2024~~2025

The following table sets forth information regarding outstanding option awards held by the named executive officers as of May 31, ~~2023~~2025. The applicable vesting provisions are described in the footnote following the table.

Option Awards									Stock Awards
Name (a)	Number of securities underlying unexercised options (#) exercisable (b)		Number of securities underlying unexercised options (#) unexercisable (c)		Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) (d)		Option exercise price (USD$) (e)		Option expiration date (f)	Number of shares or units of stock that have not vested (#) (g)		Market value of shares or units of stock that have not vested ($) (h)		Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) (i)		Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($) (j)
Brandon Robinson(1)		95,476		47,737		—	$	0.55	August 2, ~~2032~~2030		—	$	—145,835		—		—
Jason O’Neill(1)		97,502		48,750		—	$	0.55	August 2, 2032		—		—		—		—
		—		400,000		—	$	0.61	February 2, 2035		100,000
Brian Merker(1)		—		100,000		—	$	0.85	May 30, 2034		—		—		—		—
Jason O’Neill(1)		97,502		48,750		—	$	0.55	August 2, 2030		74,000		107,918		—		—
		—		296,000		—	$	0.61	February 2, 2035
Brian Merker		33,333		66,667		—	$	0.85	May 30, 2034		86,000		125,420		—		—
		—		344,000		—	$	0.61	February 2, 2035

(1) Stock options that expire in 2032 were granted aat $CAD0.76 per share and converted for purposes of this table at ~~the~~a ~~May 31, 2024~~ foreign exchange rate of USD $1.00 to CAD $1.36.

Director Compensation

Non-employee directors are compensated with a combination of cash and stock. Additionally, we provide reimbursement to our non-employee directors for their reasonable expenses incurred in attending meetings of our Board and its committees.

The following table sets forth information regarding compensation earned during the fiscal year ended May 31, ~~2024~~2025, by each of our non-employee directors who served as a director of the Company during that time, which consists of cash retainers and stock awards:

Name	Fees Earned or Paid in Cash ($)			Stock Awards ($)			All Other Compensation ($)		Total ($)
Trisha Nomura		1250,~~500~~000	(1)		1250,~~500~~000	(1)		—		25100,000	(1)
John Maris		1040,000	(2)		1040,000	(2)		—		2080,000	(2)
Joh Pinsent		1040,000	(2)		1040,000	(2)		—		2080,000	(2)

(1)	Expressed in USD $.

(2)	Expressed in CAD $.

5856

Summary of the 2023 Equity Incentive Plan

General.

The purpose of the 2023 Equity Incentive Plan is to secure for ~~New~~ Horizon and its shareholders the benefits inherent in share ownership by the employees and directors of ~~New~~ Horizon and its affiliates who, in the judgment of the Board, will be largely responsible for its future growth and success, to provide incentives to the interests of employees, officers and directors that align their interests to the interests of the shareholders. These incentives are provided through the grant of stock options, deferred share units, restricted share units (time based or in the form of performance share units) and share awards (collectively, the “Awards”). Capitalized terms used in this section but not defined, shall have the meanings ascribed to them in the 2023 Equity Incentive Plan.

Share Issuance Limits

The aggregate number of ordinary shares that may be subject to issuance under the 2023 Equity Incentive Plan is 15,~~697~~277,452.

Stock Options

Option Grants

The 2023 Equity Incentive Plan authorizes the board of ~~New~~ Horizon to grant options. The number of ordinary shares, the exercise price per ordinary share, the vesting period and any other terms and conditions of options granted pursuant to the 2023 Equity Incentive Plan, from time to time are determined by the board at the time of the grant, subject to the defined parameters of the 2023 Equity Incentive Plan. The date of grant for the Options shall be the date such grant was approved by the Board.

Exercise Price

The exercise price of any Option cannot be less than the closing price on the Nasdaq Capital Market immediately preceding the date of grant (the “Fair Market Value”).

Exercise Period, Blackout Periods and Vesting

Options are exercisable for a period of ten years from the date the option is granted, or such greater or lesser period as determined by the Board. Options may be earlier terminated in the event of death or termination of employment or appointment. Vesting of Options is determined by the Board.

The right to exercise an option may be accelerated in the event a takeover bid in respect of the ordinary shares is made or other change of control transaction.

Pursuant to the 2023 Equity Incentive Plan, with respect to options held by participants who are not U.S. taxpayers, when the expiry date of an Option occurs during, or within nine (9) business days following, a “blackout period”, the expiry date of such option is deemed to be the date that is ten (10) business days following the expiry of such blackout period. Blackout periods are imposed by ~~New~~ Horizon to restrict trading of ~~New~~ Horizon’s securities by directors, officers, employees and certain others who hold options to purchase ordinary shares, in accordance with ~~New~~ Horizon’s insider trading policy and similar policies in effect from time to time, in circumstances where material non-public information exists, including where financial statements are being prepared but results have not yet been publicly disclosed.

Cashless Exercise Rights

Cashless exercise rights may also be granted under the 2023 Equity Incentive Plan, at the discretion of the Board, to an optionee in conjunction with, or at any time following the grant of, an Option. Cashless exercise rights under the 2023 Equity Incentive Plan effectively allow an optionee to exercise an Option on a “cashless” basis by electing to relinquish, in whole or in part, the right to exercise such Option and receive, in lieu thereof, a number of fully paid Class A ordinary shares. The number of Class A ordinary shares issuable on the cashless exercise right is equal to the quotient obtained by dividing the difference between the aggregate Fair Market Value and the aggregate option price of all ordinary shares subject to such option by the Fair Market Value of one (1) Class A ordinary share.

Termination or Death

If an optionee dies while employed by ~~New~~ Horizon, any Option held by him or her will be exercisable for a period of 6 months or prior to the expiration of ~~the~~ the Options (whichever is sooner) by the person to whom the rights of the optionee shall pass by will or applicable laws of descent and distribution. If an optionee is terminated for cause, no Option will be exercisable unless the Board determines otherwise. If an optionee ceases to be employed or engaged by ~~New~~ Horizon for any reason other than cause or death, then the options will be exercisable for a period of 90 days or prior to the expiration of the Options (whichever is sooner).

Restricted Share Units (“RSU”)

RSU Grant

The 2023 Equity Incentive Plan authorizes the Board to grant RSUs, in its sole and absolute discretion, to any eligible employee or director. Each RSU provides the recipient with the right to receive a cash payment equal to the market value of a Share (or, at the sole discretion of the Board, a Share) as a discretionary payment in consideration of past services or as an incentive for future services, subject to the 2023 Equity Incentive Plan and with such additional provisions and restrictions as the Board may determine. Each RSU grant shall be evidenced by a restricted share unit grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan and any other terms and conditions which the Board deem appropriate.

Vesting of RSUs

Concurrent with the granting of the RSU, the Board shall determine the period of time during which the RSU is not vested and the holder of such RSU remains ineligible to receive ordinary shares. Such period of time may be reduced or eliminated from time to time for any reason as determined by the Board. Once the RSU vests, the RSU is automatically settled through a cash payment equal to the market value of a Share (or, at the sole discretion of the Board, a Share).

Retirement or Termination

In the event the participant retires, dies or is terminated during the vesting period, any unvested RSU held by the participant shall be terminated immediately provided however that the Board shall have the absolute discretion to accelerate the vesting date.

Deferred Share Units (“DSU”)

DSU Grant

The 2023 Equity Incentive Plan authorizes the Board to grant DSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible directors. Each DSU grant shall be evidenced by a DSU grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan and any other terms and conditions which the Board, ondeems ~~recommendation of the Committee, deem~~ appropriate. A DSU entitles the recipient to receive, for each DSU redeemed, a cash payment equal to the market value of a share; alternatively, the ~~Combined~~Company ~~Entity~~ may, at its sole discretion, elect to settle all or any portion of the cash payment obligation by the issuance of Shares from treasury.

Vesting of DSUs

A Participant is only entitled to redemption of a DSU when the eligible director ceases to be a director of the Combined Entity for any reason, including termination, retirement or death. DSUs of an eligible director who is a U.S. Taxpayer shall be redeemed and settled by the ~~Combined~~Company ~~Entity~~ as soon as reasonably practicable following the separation from service.

Performance Share Units (“PSU”)

PSU Grant

The 2023 Equity Incentive Plan authorizes the Board to grant PSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible directors. Each PSU grant shall be evidenced by a PSU grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan and any other terms and conditions which the Board deems appropriate. A PSU entitles the recipient to receive, for each PSU redeemed, one Class A ordinary Share.

Vesting of PSUs

A Participant is only entitled to redemption of a PSU when the related PSU vesting conditions have been met, which are defined in the Board’s sole discretion at the time of issuance.

Retirement or Termination

In the event the participant retires, dies or is terminated during the vesting period, any unvested PSU held by the participant shall be terminated immediately, provided, however, that the Board shall have the absolute discretion to accelerate the vesting date.

Share Awards

The Board, on the recommendation of the compensation committee, shall have the right, subject to the limitations set forth in the 2023 Equity Incentive Plan, to issue or reserve for issuance, for no cash consideration, to any eligible person, any number of Shares as a discretionary bonus of Shares subject to such provisos and restrictions as the Board may determine. The aggregate number of Shares that may be issued as Share Awards is 1,000,000.

Provisions Applicable to all Grant of Awards

Participation Limits

The aggregate number of ordinary shares that may be issued and issuable under the 2023 Equity Incentive Plan together with any other securities-based compensation arrangements of ~~New~~ Horizon, as applicable:

(a) to insiders shall not exceed 10% of ~~New~~ Horizon’s outstanding issue from time to time;

(b) to insiders within any one-year period shall not exceed 10% of the ~~New~~ Horizon’s outstanding issue from time to time; and

(c) to insiders within any one-year period, shares issuable under Awards under this 2023 Equity Incentive Plan shall not exceed 5% of ~~New~~ Horizon outstanding issue from time to time.

Any Award granted pursuant to the 2023 Equity Incentive Plan, prior to a participant becoming an insider, shall be excluded from the purposes of the limits set out in (a) and (b) above. The aggregate number of Options that may be granted under the 2023 Equity Incentive Plan to any one non-employee director of the Combined Entity within any one-year period shall not exceed a maximum value of $CAD150,000 worth of securities, and together with any Restricted Share Rights and Deferred Share Units granted under the 2023 Equity Incentive Plan and any securities granted under all other securities-based compensation arrangements, such aggregate value shall not exceed $CAD200,000 in any one-year period.

Transferability

Pursuant to the 2023 Equity Incentive Plan, any Awards granted to a participant shall not be transferable except by will or by the laws of descent and distribution. During the lifetime of a participant, Awards may only be exercised by the Participant.

6159

Amendments to the 2023 Equity Incentive Plan

The Board may amend, suspend or terminate the 2023 Equity Incentive Plan or any Award granted under the 2023 Equity Incentive Plan without shareholder approval, including, without limiting the generality of the foregoing: (i) changes of a clerical or grammatical nature; (ii) changes regarding the persons eligible to participate in the 2023 Equity Incentive Plan; (iii) changes to the exercise price; (iv) vesting, term and termination provisions of Awards; (v) changes to the cashless exercise right provisions; (vi) changes to the authority and role of the Board under the 2023 Equity Incentive Plan; and (vii) any other matter relating to the 2023 Equity Incentive Plan and the Awards granted thereunder, provided however that:

(a)

such amendment, suspension or termination is in accordance with applicable laws and the rules of any stock exchange on which the Combined Entity’s shares are listed;

(b)

no amendment to the 2023 Equity Incentive Plan or to an Award granted thereunder will have the effect of impairing, derogating from or otherwise adversely affecting the terms of an Award which is outstanding at the time of such amendment without the written consent of the holder of such Award;

(c)

the expiry date of an Option shall not be more than ten (10) years from the date of grant of such Option, provided, however, that at any time the expiry date should be determined to occur either during a blackout period or within ten business days following the expiry of a blackout period, the expiry date of such Option shall be deemed to be the date that is the tenth business day following the expiry of the blackout period;

(d)

the Board shall obtain shareholder approval of:

(i)

any amendment to the aggregate number of shares issuable under the 2023 Equity Incentive Plan;

(ii)

any amendment to the limitations on shares that may be reserved for issuance, or issued, to insiders;

(iii)

any amendment that would reduce the exercise price of an outstanding Option other than pursuant to a declaration of stock dividends of shares or consolidations, subdivisions or reclassification of shares, or otherwise, the number of Shares available under the 2023 Equity Incentive Plan; and

(iv)

any amendment that would extend the expiry date of any Option granted under the 2023 Equity Incentive Plan except in the event that such option expires during or within ten (10) business days following the expiry of a blackout period.

If the 2023 Equity Incentive Plan is terminated, the provisions of the 2023 Equity Incentive Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force on the date of termination will continue in effect as long as any Award pursuant thereto remain outstanding.

Administration

The 2023 Equity Incentive Plan is administered by the Board, which may delegate its authority to a committee or plan administrator. Subject to the terms of the 2023 Equity Incentive Plan, applicable law and the rules of Nasdaq, the Board (or its delegate) will have the power and authority to: (i) designate the eligible participants who will receive Awards, (ii) designate the types and amount of Award to be granted to each participant, (iii) determine the terms and conditions of any Award, including any vesting conditions or conditions based on performance of the Corporation or of an individual (“Performance Criteria”); (iv) interpret and administer the 2023 Equity Incentive Plan and any instrument or agreement relating to it, or any Award made under it; and (v) make such amendments to the 2023 Equity Incentive Plan and Awards as are permitted by the 2023 Equity Incentive Plan and the rules of the SEC and Nasdaq.

Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the 2023 Equity Incentive Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular participant may vary based on individual circumstances. The summary assumes that awards granted under the 2023 Equity Incentive Plan to U.S. taxpayers will be exempt from, or will comply with, Section 409A of the Code. If an award is not either exempt from, or in compliance with Section 409A, less favorable tax consequences may apply.

6260

Nonstatutory Stock Options.

Options granted under the 2023 Equity Incentive Plan will be nonstatutory stock options having no special U.S. tax status. An optionee generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonstatutory stock option, the optionee normally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise price and ~~New~~ Horizon generally will be allowed a compensation expense deduction for the amount that the optionee recognizes as ordinary income. If the optionee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss. No tax deduction is available to ~~New~~ Horizon with respect to the grant of a nonstatutory stock option or the sale of the stock acquired pursuant to such grant.

Restricted Share Rights, Performance Awards and Dividend Equivalents.

Recipients of grants of restricted stock units, performance awards or dividend equivalents (collectively, “deferred awards”) will not incur any federal income tax liability at the time the awards are granted. Award holders will recognize ordinary income equal to (a) the amount of cash received under the terms of the award or, as applicable, (b) the fair market value of the shares received (determined as of the date of receipt) under the terms of the award. Dividend equivalents received with respect to any deferred award will also be taxed as ordinary income. Shares to be received pursuant to a deferred award generally become payable on the date or payment event, as specified in the applicable award agreement. For awards that are payable in shares, a participant’s tax basis is equal to the fair market value of the shares at the time the shares become payable. Upon the sale of the shares, appreciation (or depreciation) after the shares are paid is treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.

Share Awards

If a Share Award is payable in Shares that is subject to a substantial risk of forfeiture, unless a special election is made by the holder of the award under the Code, the holder must recognize ordinary income equal to the fair market value of the Shares received (determined as of the first time the Shares become transferable or not subject to substantial risk of forfeiture, whichever occurs earlier). The holder’s basis for the determination of gain or loss upon the subsequent disposition of Shares acquired pursuant to a Share Award will be the amount ordinary income recognized either when the Shares are received or when the Shares are vested.

Section 409A.

Section 409A of the Code provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual’s deferral and distribution elections and permissible distribution events. Except for DSUs, Awards granted under the 2023 Equity Incentive Plan do not have any deferral feature that is subject to the requirements of Section 409A of the Code. If an award is subject to and fails to satisfy the requirements of Section 409A of the Code, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Certain states have enacted laws similar to Section 409A which impose additional taxes, interest and penalties on non-qualified deferred compensation arrangements. The Combined Entity will also have withholding and reporting requirements with respect to such amounts.

6361

Tax Effect for the Combined Entity.

~~New~~ Horizon generally will be be entitled to a tax deduction in connection with an award under the 2023 Equity Incentive Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option). Special rules could limit the deductibility of compensation paid to the Combined Entity’s chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF THE U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMBINED COMPANY UNDER THE 2023 EQUITY INCENTIVE PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

2023 Equity Incentive Plan Benefits

Because awards under the 2023 Equity Incentive Plan are discretionary, the benefits or amounts to be received by or allocated to participants and the number of shares to be granted under the 2023 Equity Incentive Plan cannot be determined at this time except as set forth below.

Upon the completion of the Business Combination, the 2023 Equity Incentive Plan replaced the Prior Plan. We agreed to exchange outstanding awards under the Prior Plan for ~~New~~ Horizon Options that will be governed by the 2023 Equity Incentive Plan.

Compensation Committee Interlocks and Insider Participation

None of the members of the compensation committee was at any time one of ~~New~~ Horizon’s officers or employees. None of ~~New~~ Horizon’s ~~executive~~ executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of of any other entity that has one or more executive officers that will serve as a member of our Board or compensation committee.

6462

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth information regarding the beneficial ownership of our shares of common stock as of August 1521, ~~2024~~2025, based on information obtained from the persons named below, with respect to the beneficial ownership of shares of our Class A ordinary shares by:

	●	each person known by us to be the beneficial owner of more than 5% of ~~New~~ Horizon’s Class A ordinary shares;
	●	each of our named executive officers and directors; and

●

each of our officers and directors as a group.

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

In the table below, percentage ownership is based on 1839,~~607~~210,~~931~~651 Class A ordinary shares outstanding as of August 1521, ~~2024~~2025. This table assumes that there are no additional issuances of equity securities, including equity awards that may be issued under the 2023 Equity Incentive Plan.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all ~~Common~~Class ~~Shares~~A ~~beneficially~~ordinary ~~owned~~shares beneficially owned by them. Unless otherwise noted, the business address of each of the following entities or individuals is 3187 Highway 35, Lindsay A6 A6 K9V 4R1, Ontario Canada.

Name and Address of Beneficial Owner	Number of Shares Beneficially Owned		% of Class
Directors and Named Executive Officers
Brandon Robinson(1)(2)		2,~~547~~545,~~350~~201		~~13.~~6.5	%
Jason O’Neill(3)		~~395~~765,~~815~~567		2.10	%
Brian Merker(9)		106,102		*
Brian Merker(7)		607,294		1.5	%
Stewart Lee(4)		295,553		1.6	%
Trisha Nomura		147,565		*
Trisha Nomura		30,500		*
John Maris		56,654		*
John Maris		17,908		*
John Pinsent		56,654		*
John Pinsent		17,908		*
All executive officers and directors as a group (7 individuals)		4,602,832		11.7	%
All executive officers and directors as a group (7 individuals)		3,411,136		17.9	%
Greater than Five Percent Holders:
Brian Robinson(1)(5)		2,541,212		13.6	%
Canso Investment Counsel Ltd. (6)		13,308,428		33.9	%
Mehana Capital LLC(6)		5,600,997		30.1	%
Dustin Shindo(8)		3,116,293		7.9	%
Entities affiliated with Meteora Capital LLC (7)		1,180,794		6.4	%
William George Brumder II(5)		2,750,000		7.0	%
Robinson Family Ventures(1)		2,395,634		12.9	%
Brian Robinson(1)(4)		2,064,925		5.3	%
Canso Strategic Credit Fund(8)		1,485,228		8.0	%

*	Less than 1%.

(1)

Brandon Robinson and Brian Robinson are the directors of Robinson Family Ventures Inc. Brandon Robinson and Brian Robinson may each be deemed to share beneficial ownership of the securities held of record by Robinson Family Ventures Inc. Each of Brandon Robinson and Brian Robinson disclaims any such beneficial ownership except to the extent of his pecuniary interest.

6563

(2) Includes options to purchase 143,213 shares at a price of $CAD0.76 per share and options to purchase 400,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

(3) Includes options to purchase 146,252 shares at a price of $CAD0.76 per share and options to purchase 296,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

(4) Includes options to purchase 35117,~~455~~001 shares at a price of $CAD0.76 per share and options to purchase 80,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

(5) ~~Includes~~Based ~~options~~on toa ~~purchase~~Schedule ~~117,001~~13G ~~shares~~filed atJuly a2, ~~price~~2025, ofWilliam ~~$CAD0.76~~George ~~per~~Brumder ~~share.~~II ~~The~~is ~~table reflects~~ the ~~options~~record onholder aof ~~fully~~the ~~vested~~securities ~~basis~~reported herein. ~~Also~~Includes ~~includes~~warrants ~~conversion~~to ofpurchase ~~his~~461,788 ~~convertible~~shares ~~note~~at ~~into~~USD$11.50. ~~23,187~~The ~~Class~~address Aof ~~ordinary~~William ~~shares~~George ~~including~~Brumder ~~interest~~II ~~accrued~~is onN. ~~the~~Broadway ~~note~~Avenue, asSte.200, ofOklahoma ~~December~~City, 1OK, ~~2023~~73103.

(6) Based on a ~~Form~~Schedule 413G/A filed ~~January~~on 17March 6, ~~2024~~2025, ~~Mehana~~by ~~Capital~~Canso ~~LLC,~~Investment ~~the~~Counsel ~~Sponsor~~Ltd. (“Canso”). The shares reported as beneficially owned include (i) 4,819,539 isClass ~~the~~A ~~record~~ordinary ~~holder~~shares ofheld ~~the~~by ~~securities~~Canso ~~reported~~and ~~herein.~~(ii) ~~Dustin~~8,488,889 ~~Shindo~~Class isA ~~the~~ordinary ~~managing~~shares ~~member~~issuable to Canso upon the conversion of the ~~Sponsor.~~Series ByA ~~virtue~~Preferred ofShares ~~this~~held ~~relationship,~~by MrCanso. ~~Shindo~~The ~~may~~securities bereported ~~deemed~~ to ~~share~~be ~~beneficial~~beneficially ~~ownership~~owned ofby ~~the~~Canso ~~securities~~are ~~held~~owned of record by ~~the~~certain ~~Sponsor.~~managed Mraccounts of Canso. ~~Shindo~~These ~~disclaims~~managed ~~any~~accounts ~~such~~have ~~beneficial~~the ~~ownership~~right ~~except~~to receive or the power to direct the ~~extent~~receipt of ~~his~~dividends ~~pecuniary~~from, ~~interest~~or the proceeds from the sale of, such securities. The business address of ~~Mehana~~Canso ~~Capital~~is ~~LLC~~100 isYork ~~4348~~Blvd., ~~Waialae~~Suite ~~Ave~~550, ~~Unit~~Richmond ~~632~~Hill, ~~Honolulu~~On, HIL4B ~~96816~~1J8.

(7) ~~Voting~~Includes ~~and~~options ~~investment~~to ~~power~~purchase ~~over the securities held by these entities resides with its investment manager~~100,000 ~~Meteora~~shares ~~Capital,~~at ~~LLC.~~a ~~Mr.~~price ~~Vikas Mittal serves as the managing member~~ of ~~Meteora~~$USD0.85 ~~Capital,~~per ~~LLC~~share and ~~may~~options ~~be deemed~~ to bepurchase ~~the~~344,000 ~~beneficial~~shares ~~owner~~at ~~of the securities held by such entities~~$USD0.61 ~~Mr.~~per ~~Mittal disclaims any beneficial ownership over such securities except to the extent of his pecuniary interest therein~~share. The ~~business~~table ~~address~~reflects ofthe ~~Meteora~~options ~~Entities~~on isa ~~1200~~fully Nvested ~~Federal Hwy, Ste 200, Boca Raton, FL 33432~~basis.

(8) ~~The~~Based ~~business~~on ~~address~~a ofSchedule ~~Canso~~13D ~~Strategic~~filed ~~Credit~~on ~~Fund~~February is26, ~~100~~2025, ~~York~~by ~~Blvd~~Dustin Shindo., ~~Suite~~Includes ~~550~~Placement Warrants to purchase 565,375 ~~Richmond~~shares ~~Hill~~at USD$11.50. The address of Dustin Shindo is 4348 Waialae Ave., On#632, ~~L4B~~Honolulu, ~~1J8.~~HI, 96816

(9) Includes options to purchase 100,000 shares at a price of $USD0.85 per share. The table reflects the options on a fully vested basis.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information, as of August 1521, ~~2024~~2025, with respect to our Class A ordinary shares that may be issued, subject to certain vesting requirements, under existing and future awards under ~~our~~ ~~New Horizon Aircraft Ltd. 2023 Equity Incentive Plan (~~the “2023 Equity Incentive Plan”).

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights

Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (USD)

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A))

Plan Category

Equity compensation plans approved by security holders

~~901~~2,~~546~~483,227

0.6074

12,~~381~~023,~~136~~977

Equity compensation plans not approved by security holders

Total

2,483,227

2,023,977

6664

The following is a description of certain transactions (including a series of transactions) occurring during the preceding two fiscal years in which the amount involved exceeded the lesser of USD $120 or 1% of the average of our total assets for our two prior fiscal year ends in which any directors, director nominees, executive officers, greater than 5% beneficial owners and their respective immediate family members (each, a “Related Person”) had or will have a direct or indirect material interest, other than the compensation arrangements (including with respect to equity compensation) described in the sections entitled “Executive Compensation” ~~beginning on page 55~~ and “Director Compensation” ~~on page 58~~.

We intend to ensure that in accordance with the audit committee charter, that the audit committee shall conduct reasonable prior review and oversight of all related party ~~transaction~~transactions for potential conflicts of interest, except for transactions involving the compensation of executive officers or directors, which shall be overseen by the compensation committee.

Pono Pre-Business Combination Arrangements

On May 17, 2022, the Sponsor acquired 2,875,000 founder shares, and on December 22, 2022, the Sponsor acquired an additional 2,060,622 founder shares for an aggregate purchase price of USD $25,000, or approximately $0.005 per share. Such Class B ordinary shares includes an aggregate of up to 643,777 shares that were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the Sponsor would collectively own at least 30% of Pono’s issued and outstanding shares after the initial public offering (assuming the initial shareholders did not purchase any Public Shares in the Offering and excluding the Placement Units and underlying securities). The underwriters exercised the over-allotment option in full so those shares are no longer subject to forfeiture.

The initial shareholders have agreed not to transfer, assign or sell any of the Class B ordinary shares (except to certain permitted transferees) until, with respect to any of the Class B ordinary shares, the earlier of (i) six months after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of Pono’s ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combination, with respect to the remaining any of the Class B ordinary shares, upon six months after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, Pono consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of Pono’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.

On April 25, 2022, the Sponsor committed to loan Pono an aggregate of up to USD $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and was payable on the earlier of March 31, 2023 or the completion of the Initial Public Offering. Upon Initial Public Offering, the Company had repaid the full amount of USD $300,000 under the Note. As of December 31, 2023 and 2022, there was none and USD $300,000 in borrowings outstanding under the Note, respectively.

In order to finance transaction costs in connection with a Business Combination, the Sponsor may provide Pono with a loan to Pono up to USD $1,500,000 as may be required to cover working capital needs (“Working Capital Loans”). Such Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to USD $1,500,000 of such loans may be converted upon consummation of a Business Combination into additional Placement Units at a price of $10.00 per Unit. As of December 31, 2023 and 2022, there was no amounts outstanding under the Working Capital Loans.

Legacy Horizon Pre-Business Combination Arrangements

During the year ended May 31, 2022, Legacy Horizon’s sole shareholder at the time, Astro Aerospace Ltd (“Astro”), a public company, advanced cash to Legacy Horizon to fund its working capital requirements. As at May 31, 2022, the outstanding balance for the loans from shareholder was $1,979. On June 24th, 2022, the advances from shareholder were fully settled by issuance of 2,196,465 class A common shares of Legacy Horizon to Astro.

During the year ended May 31, 2022, Legacy Horizon’s directors advanced cash to Legacy Horizon in the aggregate amount of $ 5. The cash advances were unsecured, non-interest bearing and fully repaid at May 31, 2023.

E. Brian Robinson loaned Legacy Horizon $50 pursuant to a one-year convertible promissory note with 10% simple interest due on October 23, 2023 as part of a larger issuance of convertible notes. As of August 15, 2023, the accrued but unpaid interest was $4.

Robert Blair Robinson is the brother of E. Brian Robinson. He is a part time employee of Legacy Horizon and received cash compensation of $39 in the 2022 calendar year and a grant of 8,240 stock options.

Transactions Related to the Business Combination

Voting Agreement

Simultaneously with the execution of the Business Combination Agreement, the majority shareholder of Horizon entered into a voting agreement with Pono and Legacy Horizon.

Lock-Up Agreements

Certain significant shareholders of Legacy Horizon entered into lock-up agreements (the “Lock-up Agreements”) providing for a lock-up period commencing at the Closing of the Business Combination and ending on the earlier of (x) six months from the Closing, (y) the date Pono consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated third party that results in all of Pono’s shareholders having the right to exchange their Pono ordinary shares for cash, securities or other property and (z) the date on which the closing sale price of Pono ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations and the like) for any twenty (20) trading days within any thirty (30) trading day period commencing at least one hundred and fifty (150) days after the Closing. In connection with the Closing, Pono, Legacy Horizon, and the Sponsor waived lockup restrictions on approximately 1.69 million shares held by a non-affiliate Horizon shareholder. The six-month anniversary of the Closing elapsed on July 12, 2024, and the associated restrictions were removed.

Director Indemnity Agreements

In connection with the Closing, each of the members of the Board entered into an Indemnity Agreement with ~~New~~ Horizon (collectively, the “Director Indemnity Agreements,” and each, a “Director Indemnity Agreement”).

Pursuant to ~~New~~ Horizon’s Articles, subject to the BCBCA, ~~New~~ Horizon must indemnify a director, former director or alternate director of ~~New~~ Horizon and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and ~~New~~ Horizon must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding.

Non-Competition Agreements

On January 12, 2024, ~~New~~ Horizon, Legacy Horizon, and each of E. Brandon Robinson, Jason O’Neill, Brian Merker, and Stewart Lee entered into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”), pursuant to which such persons and their affiliates agreed not to compete with ~~New~~ Horizon during the two-year period following the Closing and, during such two-year restricted period, not to solicit employees or customers or clients of such entities. The Non-Competition and Non-Solicitation Agreements also contain customary non-disparagement and confidentiality provisions.

Registration Rights Agreement

In connection with the Business Combination, on January 12, 2024, Pono, Legacy Horizon, the Sponsor, the executive officers and directors of Pono immediately prior to the consummation of the Business Combination (with such executive officers and directors, together with the Sponsor, the “Sponsor Parties”), and aan ~~certain~~ existing shareholder of Horizon (such party, together with the Sponsor Parties, ~~the~~ the “Investors”) ~~enter~~entered into a registration rights agreement (the “Registration Rights Agreement”) to provide for the registration of ~~New Horizon’s~~ Class A ordinary shares issued to them in connection with the Business Combination. ~~The~~We ~~Investors are~~filed ~~entitled~~a toregistration ~~(i)~~statement on ~~make~~Form ~~three~~S-1 ~~written~~to ~~demands~~register ~~for~~the ~~registration~~shares ~~under~~covered by the ~~Securities~~Registration ~~Act~~Rights ofAgreement, ~~all~~and oron ~~part~~April of4, ~~their~~2025, ~~shares~~a ~~and~~registration ~~(ii)~~statement ~~“piggy-back”~~on Form ~~registration~~S-3 ~~rights~~was ~~with~~declared ~~respect~~effective toby ~~registration~~the ~~statements~~SEC, ~~filed~~registering ~~following~~such ~~the~~shares ~~consummation~~for ofresale (the ~~Business~~“Resale ~~Combination~~Registration Statement”). ~~New~~ Horizon ~~will~~ ~~bear~~ bore the expenses incurred in connection with the filing of ~~any~~the ~~such~~ registration statements.

Employment Agreements and Other Transactions with Executive Officers

~~New~~ Horizon has entered into employment agreements and contractor agreements with certain of its executive officers and reimburses affiliates ~~for~~ for reasonable travel -related expenses incurred while conducting business on behalf of ~~New~~ Horizon. See the section entitled “Executive Compensation — Executive Compensation Arrangements — Employment Agreements” and ” — “Contractor Agreement.”

Related Party Transactions Policy Following the Business Combination

Upon consummation of the Business Combination, our Board adopted a written Related Party Transactions Policy that sets forth our policies and procedures regarding the identification, review, consideration and oversight of “related party transactions.” For purposes of the policy only, a “related party transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we or any of our subsidiaries are participants involving an amount that exceeds $120,000, in which any “related party” has a material interest.

Transactions involving compensation for services provided to us as an employee, consultant or director will not be considered related party transactions under this policy. A “related party” is any executive officer, director, nominee to become a director or a holder of more than 5% of any class of our voting securities, including any of their immediate family members and affiliates, including entities owned or controlled by such persons.

Under the policy, the related party in question or, in the case of transactions with a holder of more than 5% of any class of our voting securities, an officer with knowledge of a proposed transaction, must present information regarding the proposed related party transaction to our audit committee (or, where review by our audit committee would be inappropriate, to another independent body of our Board) for review.

Our audit committee will approve only those transactions that it determines are fair to us and in our best interests. All of the transactions described above were entered into prior to the adoption of such policy.

Services Proposal with 3C

On April 4, 2025, 3C delivered a services proposal to Horizon in support of the Company’s Cavorite X7 certification program (the “Proposal”). The Proposal outlines pricing for a range of services including certification planning, technical documentation, and regulatory engagement. Horizon is not obligated to engage 3C for any of the services listed in the Proposal and retains full discretion to select specific services or phase their delivery. To date, Horizon has engaged 3C to perform services at a cost of $60. John Maris, one of Horizon’s directors is the Chief Executive Officer of 3C.

Related Party Policy

Our code of ethics requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of ~~Common~~Class ~~Shares~~A ordinary shares, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest ~~situation~~ can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.

Our audit committee, pursuant to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval by our audit committee and a majority of our uninterested “independent” directors, or the members of the board who do not have an interest in the transaction, in either case who have access, at our expense, to its attorneys or independent legal counsel. We will not enter into any such transaction unless our audit committee and a majority of our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties. Additionally, we will require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.

These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer.

Director Independence

The information contained under the heading “Director Independence” in Part III, Item 10. “Directors, Executive Officers and Corporate Governance” is incorporated by reference herein.

6966

Item 14. Principal Accountant Fees and Services.

On ~~April~~May 220, ~~2024~~2025, ~~New~~ Horizon’s audit committee approved the continued engagement of MNP LLP (“MNP”) as the Company’s ~~independent~~ independent registered public accounting firm for the Company’s fiscal year -ended May 31, ~~2024,~~2025. ~~effective~~As ~~April~~previously 3disclosed, ~~2024.~~on On April 2, 2024, the Company dismissed Marcum LLP (“Marcum”) as the Company’s independent registered public accounting firm.

Fees Paid to Independent Registered Public Accounting Firm

The following table provides information regarding the fees billed by MNP for the fiscal ~~year~~years ended May 31, 2025 and 2024 (000’s CAD).

	2024
	2025		2024
Audit Fees (1)	$166	54	54
Audit-Related Fees (2)	$44	~~nil~~	-
Tax Fees (3)	$17	35	35
All Other Fees (4)	$-	~~nil~~	-

Fees Paid to Prior Independent Registered Public Accounting Firm

The following table provides information regarding the fees billed by the Company’s previous independent registered public accounting firm, Marcum, for the fiscal year ended May 31, 2024 ~~and 2023~~ (000’s CAD).

	2024		~~2023~~
Audit Fees (1)	$	271	$	~~146~~
Audit-Related Fees (2)	$	55	$	~~nil~~
Tax Fees (3)	$	nil	$	~~nil~~
All Other Fees (4)	$	nil	$	~~nil~~

(1)	Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.

(2)

Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.

(3)	Tax Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice.

(4)	All Other Fees. All other fees consist of fees billed for all other services.

Audit Committee Pre-Approval Policy and Procedures

~~Pono’s~~The audit committee was formed upon the consummation of its IPO. As a result, Pono’s audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of the audit committee were approved by the Pono board of directors. Since the formation of the Pono audit committee, the audit committee has pre-approved all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).

~~Pono~~ Horizon’s audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm, the scope of services provided by our independent registered public accounting firm and the fees for the services to be performed. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent registered ~~public~~ public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by by our independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

~~Upon the consummation of the Transactions, our~~ Our audit committee adopted its committee charter (the “Audit Committee Charter”) that sets forth the authority and procedures pursuant to which the audit committee shall pre-approve (or, where permitted under SEC rules to subsequently approve) audit and non-audit services proposed to be performed by the independent auditor.

7067

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)

The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

Financial Statements. See Index to Financial Statements under Item 8 of this Annual Report on Form 10-K.

Financial Statement Schedules. All schedules have been omitted because the information required to be presented in them is not applicable or is shown in the financial statements or related notes.

Exhibits. We have filed, or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the accompanying Exhibit Index immediately following the financial statements contained in this Annual Report on Form 10-K.

(b)

Exhibits. See Item 15(a)(3) above.

(c)

Financial Statement Schedules. See Item 15(a)(2) above.

Item 16. Form 10-K Summary.

None.

7168

NEW HORIZON AIRCRAFT LTD.

INDEX TO FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1930)		F-2
Consolidated Balance Sheets as at May 31, 2024 and May 31, 2023		F-3
Consolidated Balance Sheets as at May 31, 2025 and May 31, 2024		F-3
Consolidated Statements of Operations for the years ended May 31, 2024 and May 31, 2023		F-4
Consolidated Statements of Operations for the years ended May 31, 2025 and May 31, 2024		F-4
Consolidated Statements of Stockholder’s Equity for the years ended May 31, 2024 and May 31, 2023		F-5
Consolidated Statements of Stockholder’s Equity for the years ended May 31, 2025 and May 31, 2024		F-5
Consolidated Statements of Cash Flows for the years ended May 31, 2024 and May 31, 2023		F-6
Consolidated Statements of Cash Flows for the years ended May 31, 2025 and May 31, 2024		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of New Horizon Aircraft Ltd.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance ~~sheet~~sheets of New Horizon Aircraft Ltd. (the “Company”) as at May 31, 2025 and 2024, and the related consolidated statements of of operations, changes in shareholders’ equity (deficit), and cash flows for each of the years in the two-year period ended May 31, ~~2024~~2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at May 31, 2025 and 2024, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended May 31, ~~2024~~2025, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty Related to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ MNP LLP

Chartered Professional Accountants

Licensed Public Accountants

We have served as the Company’s auditor since 2024.

Mississauga, Canada

August 1521, ~~2024~~2025

F-2

NEW HORIZON AIRCRAFT LTD.

CONSOLIDATED BALANCE SHEETS

AS AT MAY 31, ~~2024~~2025 AND ~~2023~~MAY 31, 2024

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

	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Assets:
Current assets:
Cash and cash equivalents	$	17,~~816~~547		$	~~228~~1,816
Prepaid expenses		~~2,431~~530			32,431
Other receivables		417			15
Accounts receivable		96			417
Total current assets		48,~~664~~173			~~246~~4,664
Finance lease assets		-			21
Operating lease assets		30			75
Operating lease assets		75			121
Property and equipment, net		209			205
Property and equipment, net		205			52
Total Assets	$	8,412		$	4,944
Total Assets	$	4,944		$	440
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	~~715~~679		$	~~172~~715
Accrued liabilities		~~574~~625			48574
Finance lease liabilities		-			3
Operating lease liabilities		22			44
Operating lease liabilities		44			46
Total current liabilities		1,326			1,333
Term loan		-			40
Forward Purchase Agreement		—			20,938
Promissory note payable		-			37
Warrant liabilities		4,488			576
Convertible debentures		-			1,142
Operating lease liabilities		8			30
Total current liabilities		1,333			1,488
Total Liabilities		5,822			22,877
Forward Purchase Agreement		20,938			-
Warrant liabilities		576			-
Promissory note payable		-			263
Operating lease liabilities		30			74
Total Liabilities		22,877			1,825
Shareholders’ Equity (Deficit):
Class A ordinary shares, no par value; 100,000,000 shares authorized; 18,607,931 issued and outstanding (5,075,420 as of May 31, 2023)		74,406			5,083
Class A ordinary shares, no par value; 100,000,000 shares authorized; 32,325,709 issued and outstanding (18,607,931 as of May 31, 2024)		84,562			74,406
Additional paid-in capital		(77,656	)		55
Preferred shares, no par value; unlimited authorized; 4,500 issued and outstanding (nil as of May 31, 2024)		6,277			—
Accumulated deficit		(14,683	)		(6,523	)
Additional paid-in capital		(78,766	)		(77,656	)
Total Shareholders’ Deficit		(17,933	)		(1,385	)
Accumulated deficit		(9,483	)		(14,683	)
Total Liabilities and Shareholders’ (Deficit)	$	4,944		$	440
Total Shareholders’ Equity (Deficit)		2,590			(17,933	)
Total Liabilities and Shareholders’ Equity (Deficit)	$	8,412		$	4,944

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

F-3

NEW HORIZON AIRCRAFT LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	For the Year-ended
	For the year-ended
	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Operating expenses
Research and development	$	~~880~~3,660		$	~~676~~880
General and administrative		39,~~744~~925			~~787~~3,744
Total operating expenses		413,~~624~~585			14,~~463~~624
Loss from operations		(413,~~624~~585	)		(14,~~463~~624	)
Other income		(575	)		(290	)
Other expenses (income)		10			(575	)
Interest expenses (income), net		163			74
Interest (income) expense, net		(123	)		163
Warrant income		(394	)		-
Change in fair value of Warrants		1,988			(394	)
Change in fair value of Forward Purchase Agreement		~~4,342~~740			-4,342
Total other expenses		3,536			(216	)
Termination of Forward Purchase Agreement		(21,400	)		-
Loss before income taxes		(8,160	)		(1,247	)
Total other (income) expenses		(18,785	)		3,536
Income (Loss) before income taxes		5,200			(8,160	)
Income tax expense		-			-
Net Loss	$	(8,160	)	$	(1,247	)
Net Income (Loss)	$	5,200		$	(8,160	)
Basic and diluted weighted average Common shares outstanding		10,717,378			7,326,310
Income (loss) per share:
Basic and diluted net loss per share, Common shares	$	(0.76	)	$	(0.17	)
Basic:	$	0.20		$	(0.76	)
Diluted:	$	0.17		$	(0.76	)
Shares used in computing Income (loss) per share:
Basic:		25,844,200			10,717,378
Diluted:		30,760,145			10,717,378

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

F-4

NEW HORIZON AIRCRAFT LTD.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

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

	Class A Ordinary Shares				Class B Ordinary Shares						~~Non-Voting~~Preferred ~~Common~~ Shares					Additional Paid-in						Total Shareholders'’ Equity
	Shares		Amount		Shares			Amount			Shares			Amount		Capital			Deficit			(Deficit)
Balance at May 31, 2023		5,075,420	$	5,083		1,062,244		$	—			168,832		$	-	$	55		$	(6,523	)	$	(1,385	)
Balance at May 31, 2024		18,607,931	$	74,406		—		$	—			—		$	—	$	(77,656	)	$	(14,683	)	$	(17,933	)
Stock-based Compensation		—		—		—			—			—			—		66815			—			66815
Net Loss		—		—		—			—			—			—		—			(8,160	)		(8,160	)
Net Income		—		—		—			—			—			—		—			5,200			5,200
Conversion of Convertible Debentures		—		—		517,352			1,496			—			—		—			—			1,496
Incentive Shares Issued		220,549		677		—			—			—			—		—			—			677
Conversion of Convertible Notes Payable		—		—		1,253,770			6,843			—			—		—			—			6,843
General Warrant Issuance		—		—		—			—			—			—		(5,157	)		—			(5,157	)
Issuance of Service Shares		—		—		385,297			1,558			—			—		—			—			1,558
Pre-Funded Warrants Exercised		3,000,000		1,925		—			—			—			—		—			—			1,925
Legacy Horizon Share Exchange		3,588,869		9,897		(3,218,663	)		(9,897	)		(168,832	)		—		—			—			—
General Warrant Exercise		2,590,000		2,787		—			—			—			—		3,232			—			6,019
New Horizon Shares on Effective Date		7,639,434		56,720		—			—			—			—		(76,807	)		—			(20,087	)
Class A Shares ordinary Issued under Sales Agreement		940,562		880		—			—			—			—		—			—			880
Warrant Issuance		—		—		—			—			—			—		(970	)		—			(970	)
Other Class A ordinary Shares Issued		6,966,667		3,887		—			—			—			—		—			—			3,887
Capital Markets Advisory Shares		965,179		2,706		—			—			—			—		—			—			2,706
Preferred Shares Issued		—		—		—			—			4,500			6,277		—			—			6,277
Underwriter Shares Issued		385,016		—		—			—			—			—		—			—			—
Balance at May 31, 2025		32,325,709	$	84,562		—		$	—			4,500		$	6,277	$	(78,766	)	$	(9,483	)	$	2,590
Incentive Shares		954,013		—		—			—			—			—		—			—			—
Balance at May 31, 2024		18,607,931	$	74,406		—		$	-			—		$	-	$	(77,656	)	$	(14,683	)	$	(17,933	)

	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, 2022		3,221,252	$	3,104		1,062,244		$	—			168,832		$	—	$	—		$	(5,276	)	$	(2,172	)
Balance at May 31, 2023		5,075,420	$	5,083		1,062,244		$	—			168,832		$	—	$	55		$	(6,523	)	$	(1,385	)
Settlement of Shareholder Advances		1,854,168		1,979		—			—			—			—		—			—			1,979
Stock-based Compensation		—		—		—			—			—			—		66			—			66
Stock-based Compensation		—		—		—			—			—			—		55			—			55
Net Loss		—		—		—			—			—			—		—			(8,160	)		(8,160	)
Net Loss		—		—		—			—			—			—		—			(1,247	)		(1,247	)
Placement Warrant Issuance		—		—		—			—			—			—		(970	)		—			(970	)
Balance at May 31, 2023		5,075,420		5,083		1,062,244			—			168,832			—		55			(6,523	)		(1,385	)
Conversion of Convertible Debentures		—		—		517,352			1,496			—			—		—			—			1,496
Conversion of Convertible Notes Payable		—		—		1,253,770			6,843			—			—		—			—			6,843
Issuance of Service Shares		—		—		385,297			1,558			—			—		—			—			1,558
Legacy Horizon Share Exchange		3,588,869		9,897		(3,218,663	)		(9,897	)		(168,832	)		—		—			—			—
New Horizon Shares on Effective Date		7,639,434		56,720		—			—			—			—		(76,807	)		—			(20,087	)
Incentive Shares		954,013		—		—			—			—			—		—			—			—
Capital Markets Advisory Shares		965,179		2,706		—			—			—			—		—			—			2,706
Underwriter Shares Issued		385,016		—		—			—			—			—		—			—			—
Balance at May 31, 2024		18,607,931	$	74,406		—		$	—			—		$	—	$	(77,656	)	$	(14,683	)	$	(17,933	)

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

F-5

NEW HORIZON AIRCRAFT LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

EXPRESSED IN CANADIAN DOLLAR 000’S

	Year-ended
	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Cash Flows used in Operating Activities:
Cash Flows from Operating Activities:
Net Loss	$	(8,160	)	$	(1,247	)
Net Income (loss)	$	5,200		$	(8,160	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		56138			2756
Non-cash lease expense		—			56
Stock-based compensation		1,492			66
Stock-based compensation		66			55
Non-cash interest		—			196
Non-cash interest		196			57
Registered Share Offering Costs		290			—
Change in fair value of Forward Purchase Agreement		~~4,342~~740			—4,342
Change in Warrant liability		(394	)
Gain on Termination of Forward Purchase Agreement		(21,400	)		—
Change in Warrant liability		1,988			(394	)
Changes in operating assets and liabilities:
Prepaid expenses		~~278~~1,901			—278
Other receivables		(402	)		(15	)
Accounts receivable		321			(402	)
Accounts payable		~~184~~(36	)		36184
Accrued liabilities		~~526~~51			(2526	)
Operating leases		—3			~~(54~~—	)
Net cash used in operating activities		(39,~~308~~312	)		(13,~~087~~308	)
Cash Flows used in Investing Activities:
Purchase of property and equipment		(~~209~~142	)		—(209	)
Net cash used in investing activities		(~~209~~142	)		—(209	)
Cash Flows from Financing Activities:
Finance lease payments		18—			~~(19~~18	)
Proceeds from issuance of Convertible debentures		~~6,700~~—			16,~~035~~700
Outflow from Business Combination		~~(1,573~~—	)		—(1,573	)
Proceeds from issuance of note payable		—			300
Repayment of Term loan		—			(40	)
Repayment of Shareholder loans		—			(5	)
Net Proceeds from Sales Agreement		880			—
Repayment of Term loan		(40	)		—
Proceeds from Registered Securities Offering		3,947			—
Net cash provided by financing activities		5,105			1,311
Registered Share Offering Costs		(510	)		—
Net Change in Cash and Cash Equivalents		1,588			224
Net Proceeds from Issuance of Class A Ordinary Shares		2,082			—
Cash and Cash Equivalents - Beginning of year	$	228			4
Net Proceeds from Issuance of Preferred Shares		6,277			—
Cash and Cash Equivalents - End of year	$	1,816		$	228
Forward Purchase Agreement termination		(278	)		—
Supplemental cash flow information
Proceeds from warrants exercised		2,787			—
Conversion of Convertible debentures	$	1,496		$	—
Net cash provided by financing activities		15,185			5,105
Net Change in Cash and Cash Equivalents		5,731			1,588
Cash and Cash Equivalents - Beginning of year		1,816			228
Cash and Cash Equivalents - End of year	$	7,547		$	1,816
Taxes paid	$	—		$	—
Interest paid	$	23		$	14
Conversion of Convertible debentures	$	—		$	1,496
Settlement of Shareholder Advances	$	—		$	1,979
Interest paid	$	1		$	23

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

F-6

NEW HORIZON AIRCRAFT LTD.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1. Organization and Nature of Business

Organization and Nature of Business

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

The Company’s ~~objective~~has ~~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, wethe ~~consummated~~Company consummated an initial public offering (“IPO”). On January 12, 2024 (the “Closing date”), wethe Company 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 consolidated financial statements 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.

NOTE 2. Going Concern and Liquidity

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred and expects to continue to incur significant costs in pursuit of the Company’s development plans. ~~We have devoted many resources to the design and development of our eVTOL prototype.~~ Funding of these activities has primarily been through the net proceeds received from the issuance of ~~related~~Class ~~and~~A ~~third-party~~ordinary ~~debt~~shares and Preferred ~~the~~shares ~~sale~~as ofwell ~~common~~as ~~stock~~the toissuance of related and third ~~parties~~-party convertible debt.

F-7

~~Through May 31, 2024, we have incurred cumulative losses from operations, negative cash flows from operating activities, and have an accumulated deficit of $14.7 million.~~ Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management ~~expects~~estimates that the net cash proceeds from ~~the~~fiscal ~~Business Combination~~2025 ~~and~~sales ~~anticipated August 2024 sale~~ of securities, ~~along with our cash balances held prior to the Closing Date~~ will be sufficient to fund our current operating plan for at least the next 12 months from the date these 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.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Principles of Consolidation and Financial Statement Presentation

The accompanying 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 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 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.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2 (a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (specifically, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

F-8

Reverse Recapitalization

Pursuant to Accounting Standards Codification (“ASC”) 805, for financial accounting and reporting purposes, Robinson was deemed the accounting acquirer with Pono being treated as the accounting acquiree, and the Merger was accounted for as a reverse recapitalization (the “Reverse Recapitalization”). Accordingly, the consolidated financial statements of the Company represent a continuation of the financial statements of Robinson, with the Merger being treated as the equivalent of Robinson issuing stock for the net assets of Pono, accompanied by a recapitalization. The net assets of Pono were stated at historical costs, with no goodwill or other intangible assets recorded, and were consolidated with Robinson financial statements on the Closing Date. Operations prior to the Closing Date are presented solely as those of Legacy Horizon. The number of Legacy Horizon common shares for all periods prior to the Closing Date have been retrospectively decreased using an exchange ratio that was established in accordance with the Merger Agreement (the “Exchange Ratio”).

Upon the consummation of the Merger, the Company gave effect to the issuance of 7,251,939 shares of Common Stock for the previously issued Pono common stock and Private Investment in Public Equity (“PIPE”) Shares that were outstanding at the Closing Date. The Company raised $4 in proceeds, net of redemptions of Pono public stockholders of $140.0 million and reimbursements for Pono’s expenses of $4.5 million, and $2.7 million of cash in connection with the PIPE Financing.

Robinson incurred $3.1 million ofin transaction costs, satisfied by a combination of cash and common stock, consisting of banking, legal, and other professional fees, and assumed a $16.6 million derivative liability related to a Forward Purchase Agreement, $1.0 million warrant liability, and $0.4 million of accounts payable from Pono.

	January 12, 2024
Forward Purchase Agreement	$	16,596
Warrant Liability		970
Accounts Payable		360
Net Liabilities Assumed	$	17,926

Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires the Company’s management to make judgements, estimates, and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial ~~statements~~ statements and the reported amounts of expenses during the reporting period.

Making judgements, estimates, and assumptions requires management to exercise significant ~~judgment~~approximations. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating an ~~its~~ estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ from those estimates.

Management believes the most significant judgements, estimates, and assumptions for the period include those in connection with Financial Instruments, Business Combinations, Going Concern, and stock-based compensation.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of May 31, ~~2024~~2025, and May 31, ~~2023~~2024.

F-9

Income Taxes

Income taxes are provided in accordance with ASC Topic 740, Income Taxes (“ASC 740”). A deferred tax asset or liability is recorded for all temporary differences between income for financial statement purposes and income for tax purposes as well as operating loss carry forwards. Deferred tax expenses or recovery result from the net change during the year of deferred tax assets and liabilities. Any interest and penalties are recorded as part of income tax expense.

Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred taxes are adjusted for the effects of changes in tax laws and rates. Interest and penalties, if applicable, are recorded in the Company’s statement of operations.

F-9

Net Income (loss) Per Share

Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Stock options, Convertible debentures, and Convertible promissory notes were excluded from the computation of diluted net income (loss) per share for the year-ending May 31, 2024, as including them would have been anti-dilutive. ~~As we reported net losses for all periods presented, diluted loss per share is the same as basic loss per share.~~

Fair Value of Financial Instruments

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

The carrying amounts reflected in the balance sheet for current assets and current liabilities approximate fair value due to their short-term nature.

Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.

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.

F-10

Stock-based Compensation

Our stock-based compensation awards consist of stock options and performance share units (“PSU’s”) granted to employees and non-employees. We recognize stock-based compensation expense in accordance with the provisions of ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires the measurement and recognition of compensation expense for all stock-based compensation awards to be based on the grant date fair values of the awards. We estimate the fair value of share options using the Black-Scholes option-pricing model. The value of the award is recognized as expense over the requisite service period on a straight-line basis. Determining the grant date fair value of the awards using the Black-Scholes option-pricing model requires management to make assumptions and judgments, including but not limited to the following:

Expected term — The estimate of the expected term of employee awards is determined in accordance with the simplified method, which estimates the term based on an averaging of the vesting period and contractual term of the option grant.

Expected volatility — Expected volatility used is based on the volatility of similar entities (referred to as “guideline companies”) for a period consistent with the expected term of the award.

F-10

Risk-free interest rate — The risk-free interest rate used to value awards is based on the Treasury yields in effect at the time of grant for a period consistent with the expected term of the award.

Dividend yield — We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future.

Forfeiture rate — We have elected to account for forfeitures as they occur and will record stock-based compensation expense assuming all option holders will complete the requisite service period. If an employee forfeits an award because they fail to complete the requisite service period, we will reverse stock-based compensation expense previously recognized in the period the award is forfeited.

Vesting conditions — We have evaluated the likelihood of vesting in recognition of stock-based compensation awards.

Property and Equipment, Net

Property and equipment is stated at historical cost less accumulated depreciation. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance, and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related accumulated depreciation is removed from the accounts, and any difference between the selling price and net carrying amount is recorded as a gain or loss in the statements of operations and comprehensive loss. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets.

Impairment of Long-Lived Assets

We review our long-lived assets, consisting primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Such triggering events or changes in circumstances may include: a significant decrease in the market price of a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being or intended to be used, a significant adverse change in legal factors or in the business climate, the impact of competition or other factors that could affect the value of a long-lived asset, a significant adverse deterioration in the amount of revenue or cash flows expected to be generated from an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets including any cash flows upon their eventual disposition to their carrying value. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then the assets are written down to their fair value. We determined there was no impairment of long-lived assets during all periods presented.

Derivative Financial Instruments

The Company’s Forward Purchase Agreement is 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 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 consolidated statements of operations.

F-11

The Company’s Forward Purchase Agreement was recognized as a derivative liability in accordance with ASC 815. Accordingly, the Company recognized the instrument as an asset or liability at fair value and with changes in fair value recognized in the Company’s consolidated statements of operations. The estimated fair value of the Forward Purchase Agreement was measured at fair value using a simulation model. The Forward Purchase Agreement was terminated on November 1, 2024.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.

The warrants were determined to be recorded as liabilities.

Public Warrants

The measurement of the ~~public~~Public ~~warrants~~Warrants as of May 31, ~~2024~~2025, is classified as Level 1 due to the use of an observable market quote in an active market under the ticker “HOVRW.” The quoted price of the ~~public~~Public ~~warrants~~Warrants was $0.0308 per warrant as of May 31, ~~2024~~2025.

Government Grants

The Company receives payments from government entities primarily for research and development deliverables as part of ongoing development of the Company’s technology and future services offering. Under the Company’s accounting policy for government grants received as a payment for research and development services, grants are recognized on a systematic basis over the periods in which these services are provided and are presented as other income in the statement of operations. Effective June 1, 2021, the Company adopted ASU 832, Government Assistance ~~and has disclosed the transactions with government organizations in Note 15~~.

Recent Accounting Standards

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses, interim segment profit or loss and assets, and how the CODM uses reported segment profit or loss information in assessing segment performance and allocating resources. The Company adopted ASU 2023-07 effective June 1, 2024.

F-12

Recently Issued Accounting Pronouncements Not Yet Adopted

In ~~August~~December ~~2020~~2023, the ~~Financial Accounting Standards~~FASB ~~Board~~ issued ASU ~~2020~~2023-0609, ~~Accounting~~Income ~~for~~Taxes Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies the accounting for convertible instruments by removing certain separation models in ASC 470-20, Debt—Debt with Conversion and Other Options, for convertible instruments. The ASU updates the guidance on certain embedded conversion features that are not required to be accounted for as derivatives under (Topic ~~815,~~740): ~~Derivatives~~Improvements ~~and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, such that those features are no longer required~~ to beIncome ~~separated~~Tax ~~from the host contract. The convertible debt instruments will be accounted for as a single liability measured at amortized cost. Further~~Disclosures, ~~the ASU made amendments to the EPS guidance in Topic 260, Earnings Per Share, for convertible instruments, the most significant impact of~~ which isrequires ~~requiring~~disclosure ~~the use~~ of ~~the~~incremental ~~if-converted~~income ~~method~~tax ~~for~~information ~~diluted~~related ~~EPS~~to ~~calculation, and no longer allowing~~ the ~~net~~income ~~share~~tax ~~settlement~~rate ~~method.~~reconciliation ~~The~~and ~~ASU~~expanded ~~also~~disclosures ~~made~~of ~~revisions~~income totaxes ~~Topic 815-40~~paid, ~~which~~ ~~provides~~among ~~guidance~~other ondisclosure ~~how an entity must determine whether a contract qualifies for a scope exception from derivative accounting~~requirements. The ~~amendments~~update ~~to Topic 815-40 change the scope of contracts that are recognized as assets or liabilities. The ASU~~ is effective for ~~public business entities, excluding smaller reporting companies, for~~ annual periods beginning after December 15, ~~2021~~2024, ~~with~~on ~~early~~a ~~adoption~~prospective ~~permitted. For all other entities~~basis, ~~the amendments are effective for~~ and ~~annual periods beginning after December 15, 2023. Adoption of the ASU can either be on a modified~~ retrospective orapplication ~~full retrospective basis~~is permitted. The Company is currently evaluating the impact ~~the adoption~~ of ~~this standard~~ASU ~~will~~2023-09 ~~have~~ on its ~~financial~~disclosures ~~statements~~within ~~and~~its ~~related~~consolidated ~~disclosures~~financial statements.

No other recently issued accounting pronouncements had or are expected to have a material impact on the Company’s financial statements.

F-12

NOTE 4. Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following (in 000’s CAD):

	Year Ended
	Year-Ended
	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Computer Equipment	$	66103		$	3766
Leasehold Improvements		17123			1017
Tools and Equipment		48—			2748
Website Development		152			—152
Vehicles		16			16
		299			90
		394			299
Accumulated Depreciation		(94185	)		(3894	)
Total Property and Equipment, net	$	~~205~~209		$	52205

~~The~~Depreciation ~~Company’s~~expenses ~~finance~~of ~~lease~~$138 ~~ended~~for ~~during~~ the year ended May 31, ~~2024.~~2025 ~~The~~(May 31, ~~Company~~2024 ~~exercised~~- ~~the~~$56), ~~permitted~~has ~~purchase~~been ~~option and~~ recorded anin ~~addition~~the toconsolidated ~~tools~~statements ~~and~~of ~~equipment~~operations, ~~in the amount~~ of which $2070 (May 31, ~~2023~~2024 - $~~nil~~29) was recorded in Research and Development expenses with the remainder in General and Administrative expenses.

Depreciation expenses of $56 for the year ended May 31, 2024 (May 31, 2023 - $27), has been recorded in General and Administrative expenses in the consolidated statements of operations.

Prepaid Expenses

Prepaid Expenses consisted of the following (in 000’s CAD):

	May 31, 2024		May 31, 2023
	May 31, 2025		May 31, 2024
Prepaid insurance	$	~~482~~436	$	3482
Prepaid rent		1		-1
Prepaid software		104		-10
Prepaid capital market services		~~1,938~~89		-1,938
Total Prepaid expenses	$	~~2,431~~530	$	32,431

F-13

Prepaid capital market services are assets that have been obtained to support the Company’s operations subsequent to the Business Combination with a combination of cash and common shares and are being expensed in the consolidated statements of operations over the term of the agreements.

Accrued Expenses

Accrued Expenses consisted of the following (in 000’s CAD):

	May 31, 2024		May 31, 2023
	May 31, 2025		May 31, 2024
Accrued professional fees	$	~~406~~439	$	-406
Accrued employee costs		84171		4884
Other accrued expenses		8415		-84
Total Accrued expenses	$	~~574~~625	$	48574

NOTE 5. Leases

The Company has previously entered into multiple lease agreements for the use of certain property and equipment under operating and finance leases. Property leases include hangars, storage, offices, and other space.

The Company records the initial right-to-use asset and lease liability at the present value of lease payments scheduled during the lease term. Unless the rate implicit in the lease is readily determinable, the Company discounts the lease payments using an estimated incremental borrowing rate at the time of lease commencement. The Company estimates the incremental borrowing rate based on the information available at the lease commencement date, including the rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company’s weighted-average discount rate for operating and finance leases during all periods presented was 10%.

~~During~~Operating ~~the~~lease ~~year~~expense ~~ended~~is ~~May~~recognized ~~31,~~on ~~2024~~a straight-line basis over the ~~Company’s finance~~lease term. The weighted-average remaining lease ~~expired,~~term ~~and~~is a1 ~~purchase~~year ~~option~~as ~~was~~of ~~exercised~~May 31, 2025. ~~The~~There ~~purchase~~were ~~price~~no ofnew ~~$20~~leases ~~was~~entered ~~transferred~~into during tothe ~~property~~year-ended ~~and~~May ~~equipment~~31, 2025.

Operating lease expense is recognized on a straight-line basis over the lease term. The weighted-average remaining lease term is 1 year as of May 31, 2024.

The Company’s lease costs were as follows (in 000’s CAD):

	May 31, 2024		May 31, 2023
	May 31, 2025		May 31, 2024
Operating lease cost	$	5158	$	5651
Short-term lease cost		86		98
Total Lease cost	$	5964	$	6559

The Company’s weighted-average remaining lease term and discount rate as of May 31, ~~2024~~2025, and May 31, ~~2023~~2024, was as follows:

F-14

The minimum aggregate future obligations under the Company’s non-cancellable operating leases as of May 31, ~~2024~~2025, were as follows (in 000’s CAD):

	May 31, 2024
fiscal 2025		49
fiscal 2026		24
fiscal 2027 and thereafter		8
fiscal 2027		8
Total future lease payments		81
fiscal 2028 and thereafter		-
Less: imputed interest		(7	)
Total future lease payments		32
Present value of future lease payments	$	74
Less: imputed interest		(2	)
Present value of future lease payments	$	30

NOTE 6. Promissory Note

On October 19, 2022, the Company issued a Promissory Note in the principal amount of $300. The Promissory Note was to mature on October 18, 2027, and bore interest at a rate of 9.7% per annum. The Promissory was securitized by certain patents of the Company. The Promissory Note was being repaid on a monthly basis, with interest only payments until October 15, 2023, and blended payments of $8 thereafter.

During the year ended May 31, ~~2024~~2025, the Company recorded and paid interest expenses of $15nil (May 31, ~~2023~~2024 - $1015). The Company repaid the loan in its entirety including all accrued interest on November 9, 2023.

NOTE 7. Convertible Promissory Notes

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

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

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

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

F-15

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

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

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

F-15

NOTE 8. Convertible Notes Payable

In October 2023, the Company received $6,700 in exchange for Convertible Notes payable bearing interest at 10% per annum. These convertible notes converted into common shares in the event the Company raised more than US $5,000 or successfully listed its securities on a public stock exchange. The Convertible Notes payable converted into common stock of the Company on January 12, 2024.

The Company recorded $~~143~~nil of interest expenses related to these Convertible Notes payable during the year ended May 31, ~~2024~~2025 (May 31, ~~2023~~2024 – $~~nil~~143).

NOTE 9. ~~Advances~~Segmented ~~from Shareholder~~Reporting

AsOperating atsegments ~~May~~are ~~31,~~defined ~~2022,~~as ~~there~~components ~~was~~of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an ~~outstanding~~individual ~~balance~~segment and in assessing performance. The Company’s CODM is its Chief Executive ~~from~~Officer. The Company has determined that it operates as a ~~shareholder~~single ofoperating $1segment and one reportable segment,~~979~~ as the CODM reviews financial information presented on a consolidated basis. OnThe ~~June~~CODM 24uses net income (loss) for purposes of making operating decisions, ~~2022~~allocating resources, ~~this~~and ~~balance~~evaluating ~~was~~financial ~~fully~~performance. ~~settled~~Given bythe ~~issuance~~Company’s ofpre-revenue 2operating stage,~~196~~ it currently has no concentration exposure to products,~~465~~ ~~common~~services, ~~shares~~or ofcustomers. Segmented asset information is not used by the ~~Company~~CODM to allocate resources.

NOTE 10. Term Loan

In May 2020, the Company received a $40 line of credit (“CEBA LOC”) under the Canada Emergency Business Account program funded by the Government of Canada. The CEBA LOC was non-interest bearing and could be repaid at any time prior to January 18, 2024, without interest or penalty. The Company repaid this loan in December 2023.

NOTE 11. Fair Value Measurements

The following ~~table~~tables ~~presents~~present information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of May 31, 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
May 31, 2025
Liabilities
Derivative Liability - Warrants	$	4,488	$	1,264	$	—	$	3,224
Total	$	4,488	$	1,264	$	—	$	3,224

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

As of May 31, 2023, the Company had no financial assets or liabilities measured at fair value on a recurring basis.

F-16

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

	May 31, 2024
	November 1, 2024			May 31, 2024
Redemption Price	$	10.61
Redemption Price (USD)	$	10.61		$	10.61
Stock Price	$	0.80
Stock Price (USD)	$	0.28		$	0.80
Volatility		5376	%		53	%
Term (years)		21.1876			2.18
Risk-free rate		4.5140	%		4.51	%

The ~~change~~estimated ~~in the~~ fair value of the ~~assets~~Forward ~~and~~Purchase ~~liabilities,~~Agreement was measured ~~with~~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 ~~year~~expected remaining ~~ended~~life ~~May~~of ~~31,~~the ~~2024~~Class A ordinary shares. The expected life of the warrants is ~~summarized~~assumed asto ~~follows:~~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.

	May 31, 2024
Fair value Derivative Liabilities as of date of Business Combination	$	16,641
Change in fair value of Forward Purchase Agreement		4,342
Change in fair value of Warrants		(18	)
Fair value Derivative Liabilities as of May 31, 2024	$	20,965

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

~~The~~As ~~estimated~~outlined ~~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 anote ~~simulation are assumptions related to expected stock-price volatility~~12, ~~expected life~~5,800,000 ~~risk-free~~warrants ~~interest rate and dividend yield. The Company estimates~~were ~~the~~issued ~~volatility of its common stock based~~ on ~~implied~~August ~~volatility~~21, ~~from~~2024, ~~the Company’s traded common stock and from historical volatility~~ of ~~select~~which ~~peer~~3,210,000 ~~company’s~~remain ~~shares~~outstanding ~~that~~as ~~matches the expected remaining life~~ of ~~the~~May ~~Forward~~31, ~~Purchase Agreement~~2025. The ~~risk-free~~following ~~interest rate~~table isprovides ~~based~~quantitative ~~on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of~~information ~~the~~regarding ~~common~~Level ~~stock.~~3 ~~The~~fair ~~expected~~value ~~life~~measurements ofinputs ~~the~~related ~~warrants is assumed~~ to bethese ~~equivalent~~Warrant toliabilities ~~their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining~~ at ~~zero.~~their ~~Any~~measurement ~~changes in these assumptions could change the valuation significantly.~~dates:

The Company will not have any monetary obligations in connection with the Forward Purchase Agreement.

	May 31, 2025			August 21, 2024
Redemption Price (USD)	$	0.75		$	0.75
Stock Price (USD)	$	1.06		$	0.96
Volatility		76	%		76	%
Term (years)		4.2			5.0
Risk-free rate		4.42	%		3.61	%

The change in the fair value of the assets and liabilities, measured with Level 3 inputs, for the year ended May 31, 2025, and May 31, 2024, are summarized as follows:

	May 31, 2025			May 31, 2024
Fair value Derivative Liability - Opening	$	20,965		$	16,641
Change in fair value of Forward Purchase Agreement		740			4,342
Termination of Forward Purchase Agreement		(21,678	)		-
Additional Warrant Liabilities incurred		5,157			-
Warrant Exercises		(3,223	)		-
Change in fair value of Warrant Liabilities		1,263			(18	)
Fair value Derivative Liability - Closing	$	3,224		$	20,965

F-17

NOTE 12. Common Stock

The Company’s common stock and warrants trade on the NASDAQ stock exchange under the symbol “HOVR” and “HOVRW”, respectively. Pursuant to the terms of the Company’s Articles and Notice of Articles, the Company is authorized to issue the following shares and classes of capital stock, each with no par value: (i) an unlimited number of Class A ordinary shares; and (ii) an unlimited number of Class B ordinary shares. The holder of each ordinary share is entitled to one vote.

AsOn ofAugust ~~May 31~~21, 2024, ~~there~~the ~~were~~Company ~~warrants~~completed ~~outstanding~~a registered ofsecurities 12offering (“RSO”) by issuing 2,~~065~~800,~~375~~000 atClass anA ~~exercise~~ordinary ~~price~~shares, of3,000,000 ~~$11.50~~Pre-Funded ~~USD~~Warrants to(“PFW’s”), and ~~purchase~~5,800,000 anwarrants. ~~equivalent~~The ~~number~~proceeds ofreceived ~~Class~~by Athe ~~Ordinary~~Company ~~Shares.~~are summarized below:

The Company has retroactively adjusted the shares issued and outstanding prior to January 12, 2024 to give effect to the Exchange Ratio.

Gross Proceeds - Class A Shares	$	1,906
Gross Proceeds - PFW’s		2,041
Gross Proceeds - Warrant Exercises		2,787
Direct costs		(510	)
Net Proceeds	$	6,224

FPFW’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 year-17ended May 31, 2025.

Warrant holders exercised 2,590,000 warrants in exchange for 2,590,000 Class A ordinary shares for proceeds of $2,787 during the year-ended May 31, 2025.

As of May 31, 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.

A summary of warrant activity for the Company is as follows:

	Number of Warrants			Weighted Average Exercise Price (USD)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value (USD)
Outstanding warrants May 31, 2024		12,065,375		$	11.50		4.0	$	-
Issued August 21, 2024		8,800,000		$	0.49		4.3		-
Exercised		(5,590,000	)	$	0.35		4.7		-
Outstanding warrants May 31, 2025		15,275,375		$	9.24		3.7	$	995

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 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 of the Company at a price of USD $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 Class A ordinary 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		(41	)
Net Proceeds	$	8,359

In March 2025 the Company filed a shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $6.25 million USD, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a placement agent for the sale of its Class A ordinary shares. During the year-ended May 31, 2025, the Company sold 940,562 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $880. As of May 31, 2025, the Company had $7,529 remaining eligible for sales under the Sales Agreement.

On June 27, 2025, we filed a prospectus supplement to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to an additional aggregate $16.5 million USD of Class A ordinary shares.

During the year-ended May 31, 2025, the Company incurred $528 in general and administrative costs relating to 689,371 of Class A ordinary shares to be issued at a future date for services rendered. This has been recorded as a component of Shareholders’ Equity.

F-18

NOTE 13. Stock-based Compensation

In August 2022, the Company established a Stock Option Plan, superseded by the 2023 Equity Incentive Plan (the “Option Plan”), under which the Company’s Board of Directors may, from time-to-time, in its discretion, grant stock options to directors, officers, consultants and employees of the Company.

Stock options outstanding vest in equal tranches over a period of three years. During the year -ended May 31, ~~2024~~2025, the Company granted ~~100~~1,520,000 stock options (May 31, ~~2023~~2024 – ~~585~~100,~~230~~000). The Company estimated the fair value of the stock options on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Stock price	USD $	0.8527 - 0.61		USD$~~CAD~~	0.3085
Risk-free interest rate		3.8% - 4.5	%		24.85	%
Term (years)		5			5
Volatility		8576	%		85	%
Forfeiture rate		0	%		0	%
Dividend yield		0	%		0	%

A summary of stock option activity for the Company is as follows:

	Number of Shares		Weighted Average Exercise Price (USD)		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
Outstanding stock options May 31, 2023		585,230	$	0.56		6.2	$	465
Outstanding stock options May 31, 2024		685,230	$	0.60		6.5	$	139
Exercised		-		-		-		-
Issued October 4, 2024		180,000	$	0.27		9.6	$	196
Expired		-		-		-		-
Issued February 3, 2025		1,340,000	$	0.61		9.9	$	830
Issued May 30, 2024		100,000	$	0.85		10.0	$	-
Outstanding stock options May 31, 2025		2,205,230	$	0.58		8.4	$	1,340
Outstanding stock options May 31, 2024		685,230	$	0.60		6.8	$	139
Exercisable as of May 31, 2025		425,820	$	0.57		5.5	$	289
Exercisable as of May 31, 2024		195,077	$	0.56		6.2	$	46

During the year -ended May 31, ~~2024~~2025, the Company recorded stock-based compensation expenses of $66253 (May 31, ~~2023~~2024 - $5566) relating to stock options and $677 relating to shares issued for services (May 31, 2024 – nil). The weighted average grant date fair value of the stock options issued was $0.5961 USD (May 31, ~~2023~~ 2024 - $0.2059 USD). ~~There were no changes to the terms and conditions of the stock options in connection with the Business Combination.~~

On February 3, 2025, the Company issued 335,000 Performance Share Units (“PSU’s”) that vest upon achievement of 100% Total Shareholder Return. The Company has determined that this vesting condition is highly probable and accordingly has recognized the entirety of the associated $562 in compensation costs related to these PSU’s during the year-ended May 31, 2025.

NOTE 14. 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 (loss) per share is computed using the weighted-average number of shares and the effect of potentially ~~dilutive~~ dilutive securities outstanding during the period. Potentially dilutive securities consist of stock options, Convertible debentures, ~~Convertible Notes payable~~PSU’s, and ~~Convertible Promissory notes~~Warrants. Certain Stock options, Convertible ~~Debentures~~debentures, ~~Convertible Promissory notes~~PSU’s, and ~~Convertible Notes~~Warrants ~~payable~~ were excluded from the computation of diluted net income (loss) per share as including them would have been anti-dilutive. ~~As we reported net losses for all periods presented, diluted loss per share is the same as basic loss per share.~~

F-1819

The following outlines the Company’s basic and diluted loss per share for the year -ended May 31, ~~2024~~2025, and May 31, ~~2023~~2024 (000’s CAD, except share amounts):

	Year Ended
	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Net Income (loss)	$	(8,160	)	$	(1,247	)
Income (loss) per share:
Basic weighted-average common shares outstanding		10,717,378			7,326,310
Basic:	$	0.20		$	(0.76	)
Basic and diluted net income (loss) per common share	$	(0.76	)	$	(0.17	)
Diluted:	$	0.17		$	(0.76	)
Shares used in computing Income (loss) per share:
Basic:		25,844,200			10,717,378
Diluted:		30,760,145			10,717,378

NOTE 15. Grants and Subsidies

Green Fund

In ~~November~~August ~~2022~~2024, 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 with a project on the Engineering ~~Design~~ of aan ~~Hybrid~~eVTOL ~~Power System Novel Power Distribution Scheme~~wing. The funding approved to the Company was $75, of which $50 was ~~issued~~invoiced toand ~~the~~recorded ~~Company~~ as ata ~~May~~reduction ~~31,~~in Research ~~2023~~and ~~with the~~Development ~~balance~~costs ofin ~~$25~~the ~~received~~consolidated ~~during~~financial statements for the year -ended May 31, ~~2024~~2025. As of May 31, 2025, $25 of this grant has been received.

Innovation 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~~ and equipment in aid of delivery of market research in accordance with one or more statements of work or market research plans. ~~During~~A ~~the year ended May 31, 2023, a~~ fixed fee fund of $366 was approved. As of May 31, ~~2024~~2025, the Company had received $235 of this amount.

Scientific Research and Experimental Development

In ~~July 2023, in~~ connection with the year -ended May 31, ~~2023~~2024, the Company filed an application for Scientific Research and Experimental Development (“SRED”) credits with the Canadian federal government in the amount of $~~229~~307. This amount was received in ~~December~~August ~~2023~~2024.

In connection with the year ended May 31, 2024, the Company has accrued $305 of SRED credits recorded in Other income and included in Other Receivables as of May 31, 2024 that are expected to be received in the fiscal year ended May 31, 2025.

F-19

NOTE 16. INCOME TAXES

The Company accounts for income taxes according to the provisions of ASC 740, which prescribes an asset and liability approach for computing deferred income taxes. Reconciliations of incomes taxes computed at the statutory combined Canadian federal ~~rate~~and toprovincial statutory income tax ~~expense~~rate ~~(benefit)~~of 26.5% to the effective tax rate for the years ended May 31, ~~2024~~2025, and ~~2023~~2024, are as follows:

	Year Ended
	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Net Income (Loss) before income taxes	$	(8,160	)	$	(1,247	)
Income (Loss) before income taxes	$	5,200		$	(8,160	)
Expected income tax (recovery) expense		(21,~~203~~377	)		(~~320~~2,203	)
Change in fair value of Forward Purchase Agreement and other non-deductible expenses		1,094			11
Change in fair value of Financial Instruments and other non-deductible expenses		(4,660	)		1,094
Change in valuation allowance		13,~~109~~223			~~309~~1,109
Income tax (recovery)	$	-		$	-

F-20

The Company intends to be treated as a United States corporation for United States federal income tax purposes under section 7874 of the U.S. Tax Code and is expected to be subject to United States federal income tax. However, for Canadian tax purposes, the Company is expected, regardless of any application of section 7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Canadian Income Tax Act for Canadian income tax purposes). Accordingly, Horizon will be subject to taxation in both Canada and the United States.

The following table summarized the components of deferred tax:

	May 31, 2024			May 31, 2023
	May 31, 2025			May 31, 2024
Deferred Tax Assets
Finance Lease Liabilities	$	208		$	3120
Operating tax losses carried forward		14,~~742~~885			~~675~~1,742
Property and equipment		19231			419
Other tax pools		9616			7096
Valuation allowance		(15,~~857~~140	)		(~~748~~1,857	)
Net Deferred Tax Assets		208			3220
Deferred Tax Liabilities
Right of Use assets		(208	)		(3220	)
Total Deferred Tax Liabilities		(208	)		(3220	)
Net Deferred Tax Asset (Liability)	$	-		$	-

FA valuation allowance has been recognized to offset the entire effect of the Company’s net deferred tax asset as the realization of this deferred tax benefit is uncertain. The valuation allowance increased by $3,223 for the year-20ended May 31, 2025 (May 31, 2024 - $1,109). This is primarily due to the increase of federal, provincial, and state net operating losses.

A valuation allowance has been recognized to offset the entire effect of the Company’s net deferred tax asset as the realization of this deferred tax benefit is uncertain. The valuation allowance increased by $1,109 for the year-ended May 31, 2024. This is primarily due to the increase of federal, provincial, and state net operating losses.

The Company has analyzed filing positions in all of the federal, provincial, and state jurisdictions where it is required to file income tax returns. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded.

NOTE 17. RELATED PARTY TRANSACTIONS

~~There~~During ~~were~~the noyear-ended ~~identifiable~~May ~~related~~31, ~~party~~2025, ~~transactions~~the Company paid $8 for facility design services to the ~~periods~~spouse ~~presented~~of ~~other~~an ~~than~~executive officer. Also during the ~~Advance~~year-ended ~~from~~May ~~Shareholder~~31, ~~disclosed~~2025, inthe ~~Note~~Company 9paid $60 for aircraft certification services provided by an organization that a Director is the CEO and shareholder.

NOTE 18. SUBSEQUENT EVENTS

The Company has evaluated subsequent events from June 1, ~~2024~~2025, through to the date of this filing Form 10-K and determined that there have been no reportable subsequent events.

F-21

EXHIBIT INDEX

Exhibit No.		Description
2.1†		Business Combination Agreement, dated August 15, 2023, by and among Pono Capital Three, Inc., Pono Three Merger Acquisitions Corp., and Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on August 15, 2023)
3.1		New Horizon Articles (incorporated by reference to Exhibit 3.12 to the ~~Registration~~Current ~~Statement~~Report on Form S8-1K, filed by New Horizon Aircraft Ltd. on ~~February~~December 1420, 2024)
3.2		Notice of Articles (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024)
4.1		Warrant Agreement, dated February 9, 2023, by and between Pono Capital Three, Inc. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023)
4.2		Form of ~~First Shortfall~~ Warrant (incorporated by reference to Exhibit 4.45 to ~~Amendment No. 1 to~~ the Registration Statement on Form S-1/A, filed by New Horizon Aircraft Ltd. on ~~April~~August 815, 2024)
4.3		Description of Securities (incorporated by reference to Exhibit 4.2 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)
4.3*		Description of Securities
10.1		Form of Subscription Agreement for the PIPE investment (incorporated by reference to Exhibit 10.1 of Form 8-K filed by Pono Capital Three, Inc. on January 3, 2024)
10.2+		New Horizon Aircraft Ltd. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.3		Registration Rights Agreement, dated January 12, 2024, by and between Pono Capital Three, Inc. and parties thereto (incorporated by reference to Exhibit 10.3 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.3+*		First Amendment to the New Horizon Aircraft Ltd. 2023 Equity Incentive Plan
10.4		Registration Rights Agreement, dated ~~February~~January 912, ~~2023~~2024, by and ~~among~~between Pono Capital Three, Inc. and ~~certain~~parties ~~security~~thereto ~~holders.~~ (incorporated by reference to Exhibit 10.3 toof ~~the Current Report on~~ Form 8-K, filed by Pono Capital Three, Inc. on ~~February~~January 1519, ~~2023~~2024)
10.5		~~Form~~Registration ofRights ~~Lockup~~ Agreement, dated February 9, 2023, by and among Pono Capital Three, Inc. and certain security holders. (incorporated by reference to Exhibit 10.53 ofto the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on ~~January~~February 1915, ~~2024~~2023)
10.6		~~Placement~~Form ~~Unit~~of ~~Purchase~~Lockup Agreement, ~~dated February 9, 2023, between Pono Capital Three, Inc. and Mehana Capital LLC~~ (incorporated by reference to Exhibit 10.45 toof ~~the Current Report on~~ Form 8-K, filed by Pono Capital Three, Inc. on ~~February~~January 1519, ~~2023~~2024)
10.10		Form of Non-Competition and Non-Solicitation Agreement (incorporated by reference to Exhibit 10.10 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.7		Placement Unit Purchase Agreement, dated February 9, 2023, between Pono Capital Three, Inc. and Mehana Capital LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023)
10.11		Form of Indemnity Agreement (incorporated by reference to Exhibit 10.11 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.8		Form of Non-Competition and Non-Solicitation Agreement (incorporated by reference to Exhibit 10.10 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.12+		Employment Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd. and E. Brandon Robinson (incorporated by reference to Exhibit 10.12 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.9		Form of Indemnity Agreement (incorporated by reference to Exhibit 10.11 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.13+		Employment Agreement, dated January 11, 2024, by and between New Horizon Aircraft Ltd. and Jason O’Neill (incorporated by reference to Exhibit 10.13 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.10+		Employment Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd. and E. Brandon Robinson (incorporated by reference to Exhibit 10.12 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.14+		Employment Agreement, dated January 12, 2024, by and between New Horizon Aircraft Ltd. and Brian Merker (incorporated by reference to Exhibit 10.14 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.11+		Employment Agreement, dated January 11, 2024, by and between New Horizon Aircraft Ltd. and Jason O’Neill (incorporated by reference to Exhibit 10.13 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.15+		Contractor Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd., 2195790 Alberta Inc., and Stewart Lee (incorporated by reference to Exhibit 10.16 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.12+		Employment Agreement, dated January 12, 2024, by and between New Horizon Aircraft Ltd. and Brian Merker (incorporated by reference to Exhibit 10.14 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
10.16		Forward Purchase Agreement Confirmation Amendment, dated February 14, 2024, by and between the Company and Meteora (incorporated by reference to Exhibit 10.1 of Form 8-K filed by New Horizon Aircraft Ltd. on February 21, 2024)
10.13+		Contractor Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd., 2195790 Alberta Inc., and Stewart Lee (incorporated by reference to Exhibit 10.16 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)
19*		New Horizon Aircraft Ltd. Insider Trading Policy
10.14		Forward Purchase Agreement Confirmation Amendment, dated February 14, 2024, by and between the Company and Meteora (incorporated by reference to Exhibit 10.1 of Form 8-K filed by New Horizon Aircraft Ltd. on February 21, 2024)
21		Subsidiaries of New Horizon Aircraft Ltd. (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)
10.15		Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on June 24, 2024)
31.1*		Rule 13a-14(a) Certification by Principal Executive Officer
31.2*		Rule 13a-14(a) Certification by Principal Financial and Accounting Officer
32.1**		Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.2**		Section 1350 Certification of Principal Financial and Accounting Officer
97		Clawback Policy (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101)

Exhibit No.		Description
10.16		Form of Warrant Amendment (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on September 5, 2024)
10.17		Mutual Termination Agreement, dated November 1, 2024, by and between the Company and Seller (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on November 7, 2024)
10.18		Form of Subscription Agreement, dated December 18, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024)
10.19		Amendment to Subscription Agreement, dated January 10, 2025, by and between the Company and the Purchasers (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on January 13, 2025)
10.20		Sales Agreement, by and between the Company and JonesTrading Institutional Services LLC. (incorporated by reference to Exhibit 1.2 to the Registration Statement on Form S-3, filed by New Horizon Aircraft Ltd. on February 14, 2025)
19		New Horizon Aircraft Ltd. Insider Trading Policy (incorporated by reference to Exhibit 19 to the Annual Report on Form 10-K filed by New Horizon Aircraft Ltd. on August 15, 2024)
21		Subsidiaries of New Horizon Aircraft Ltd. (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)
23.1*		Consent of MNP LLP, independent registered public accounting firm
31.1*		Rule 13a-14(a) Certification by Principal Executive Officer
31.2*		Rule 13a-14(a) Certification by Principal Financial and Accounting Officer
32.1**		Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.2**		Section 1350 Certification of Principal Financial and Accounting Officer
97		Clawback Policy (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101)

*	Filed with this Report.
**	Furnished with this Report.
+	Indicates a management or compensatory plan.
†	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.

7270

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: August 15, 2024		/s/ Brandon Robinson
Date: August 22, 2025		/s/ Brandon Robinson
	Name:	Brandon Robinson
	Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Position	Date
/s/ E. Brandon Robinson	Chief Executive Officer and Director	August 1522, ~~2024~~2025
E. Brandon Robinson	(Principal Executive Officer)
/s/ Brian Merker	Chief Financial Officer	August 1522, ~~2024~~2025
Brian Merker	(Principal Financial Officer and Accounting Officer)
/s/ Jason O’Neill	Chief Operating Officer and Director	August 1522, ~~2024~~2025
Jason O’Neill
/s/ Trisha Nomura	Director	August 1522, ~~2024~~2025
Trisha Nomura
/s/ John Maris	Director	August 1522, ~~2024~~2025
John Maris
/s/ John Pinsent	Director	August 1522, ~~2024~~2025
John Pinsent

7371

Year Ended

May 31, 2024

May 31, 2023

May 31, 2025

May 31, 2024

Weighted-average remaining lease term (years)

Weighted-average discount rate