UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~February~~August 2831, 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)		(Postal Code)

(613) 866-1935

(Registrant’s telephone number, including area code)

N/A

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

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

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

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

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

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

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

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

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

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

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

As of ~~April~~October 1410, 2025, there were 3140,~~385~~967,~~147 of~~563 of the registrant’s Class A ordinary shares, issued and outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1412
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2319
Item 4.	Controls and Procedures	2319
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	2420
Item 1A.	Risk Factors	2420
Item 2.	Unregistered Sales of Equity Securities, and Use of Proceeds	2520
Item 3.	Defaults Upon Senior Securities	2520
Item 4.	Mine Safety Disclosures	2520
Item 5.	Other Information	2520
Item 6.	Exhibits	2621
SIGNATURES		2722

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

NEW HORIZON AIRCRAFT LTD.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

AS AT ~~FEBRUARY~~AUGUST 2831, 2025 AND MAY 31, ~~2024~~ 2025

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

	February 28, 2025			May 31, 2024
	August 31, 2025			May 31, 2025
Assets:
Current assets:
Cash and cash equivalents	$	916,~~196~~267		$	17,~~816~~547
Prepaid expenses		~~741~~372			~~2,431~~530
Accounts receivable		~~149~~81			~~417~~96
Total current assets		1016,~~086~~720			48,~~664~~173
Operating lease assets		3725			7530
Property and equipment, net		~~205~~298			~~205~~209
Total Assets	$	1017,~~328~~043		$	48,~~944~~412
Liabilities and Shareholders’ Equity:
Current liabilities:
Accounts payable	$	~~832~~382		$	~~715~~679
Accrued liabilities		~~565~~1,692			~~574~~625
Operating lease liabilities		2123			4422
Total current liabilities		12,~~418~~097			1,~~333~~326
Forward Purchase Agreement		-			20,938
Warrant liabilities		4,131			4,488
Warrant liabilities		1,899			576
Operating lease liabilities		2			8
Operating lease liabilities		14			30
Total Liabilities		6,230			5,822
Total Liabilities		3,331			22,877
Shareholders’ Equity (Deficit):
Class A ordinary shares, no par value; 100,000,000 shares authorized; 31,230,914 issued and outstanding (18,607,931 as of May 31, 2024)		83,079			74,406
Class A ordinary shares, no par value; unlimited shares authorized; 39,558,366 issued and outstanding (32,325,709 as of May 31, 2025)		96,587			84,562
Preferred shares, no par value; unlimited authorized; 4,500 issued and outstanding (nil as of May 31, 2024)		6,264			-
Preferred shares, no par value; unlimited shares authorized; 4,500 issued and outstanding (4,500 as of May 31, 2025)		6,277			6,277
Additional paid-in capital		(7971,~~473~~665	)		(7778,~~656~~766	)
Accumulated deficit		(220,~~873~~386	)		(149,~~683~~483	)
Total Shareholders’ Equity (Deficit)		610,~~997~~813			~~(17~~2,~~933~~590	)
Total Liabilities and Shareholders’ Equity (Deficit)	$	1017,~~328~~043		$	48,~~944~~412

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

NEW HORIZON AIRCRAFT LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

	For the three months ended						~~For the nine months ended~~
	February 28, 2025			February 29, 2024			February 28, 2025			February 29, 2024
	August 31, 2025			August 31, 2024
Operating expenses
Research and development	$	~~443~~2,719		$	~~270~~297		$	~~1,167~~		$	~~635~~
General and administrative		3,~~111~~190			~~989~~2,408			~~8,365~~			~~1,829~~
Total operating expenses		35,~~554~~909			12,~~259~~705			~~9,532~~			~~2,464~~
Loss from operations		(35,~~554~~909	)		(12,~~259~~705	)		~~(9,532~~	)		~~(2,464~~	)
Other expenses (income)		11(25	)		629			(7	)		~~(222~~	)
Interest expense (income), net		(51118	)		15(11	)		~~(75~~	)		~~195~~
Change in fair value of Warrants		15,~~429~~137			-5			~~(601~~	)		-
Change in fair value of Forward Purchase Agreement		-			~~4,026~~183			~~740~~			~~4,026~~
Termination of Forward Purchase Agreement		-			-			(21,400	)		-
Total other expenses		4,994			206
Total other expenses		1,389			4,047			(21,343	)		3,999
Loss before income taxes		(10,903	)		(2,911	)
Income (Loss) before income taxes		(4,943	)		(5,306	)		11,811			(6,463	)
Income tax expense		-			-
Income tax expense		-			-			-			-
Net Loss	$	(10,903	)	$	(2,911	)
Net Income (Loss)	$	(4,943	)	$	(5,306	)	$	11,811		$	(6,463	)
Basis and diluted weighted average Class A ordinary shares outstanding		37,135,908			19,246,089
Income (loss) per share:
Basic and diluted net loss per Class A ordinary share	$	(0.29	)	$	(0.15	)
Basic:	$	(0.17	)	$	(0.45	)	$	0.49		$	(0.80	)
Diluted:	$	(0.17	)	$	(0.45	)	$	0.45		$	(0.80	)
Shares used in computing Income (loss) per share:
Basic:		29,474,362			11,698,789			23,959,175			8,075,238
Diluted:		29,474,362			11,698,789			26,517,135			8,075,238

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

NEW HORIZON AIRCRAFT LTD.

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

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

	Class A Ordinary Shares				~~Class~~Preferred ~~B Ordinary~~ Shares				~~Preferred~~Additional ~~Shares~~Paid-in						~~Additional~~Total ~~Paid-in~~Shareholders’ Equity						~~Total Shareholders’ Equity~~
	Shares		Amount		Shares		Amount		~~Shares~~Capital			~~Amount~~Deficit			~~Capital~~(Deficit)			~~Deficit~~			~~(Deficit)~~
Balance at May 31, 2024		18,607,931	$	74,406		—	$	—		—		$	—		$	(77,656	)	$	(14,683	)	$	(17,933	)
Balance at May 31, 2025		32,325,709	$	84,562		4,500	$	6,277	$	(78,766	)	$	(9,483	)	$	2,590
Stock-based Compensation		—		—		—		—		—1,608			—			261,608			—			26
Net Loss		—		—		—		—		—			—(10,903	)		—(10,903	)		~~(2,911~~	)		~~(2,911~~	)
Incentive Shares Issued		66887,~~316~~447		74802		—		—		—			—			—802			—			74
Class A Shares Issued		2,800,000		1,799		—		—		—			—			—			—			1,799
Warrant Exercises		2,900,000		2,970		—		—		5,493			—			8,463
Warrant Exercise		45,000		44		—		—		—			—			—			—			44
Class A Ordinary Shares Issued under Sales Agreement		3,445,210		8,253		—		—		—			—			8,253
Pre-Funded Warrants		—		—		—		—		—			—			1,925			—			1,925
Balance at August 31, 2025		39,558,366	$	96,587		4,500	$	6,277	$	(71,665	)	$	(20,386	)	$	10,813
Warrant Issuance		—		—		—		—		—			—			(5,157	)		—			(5,157	)
Balance at August 31, 2024		21,519,247	$	76,323		—	$	—		—		$	—		$	(80,862	)	$	(17,594	)	$	(22,133	)
Stock-based Compensation		—	$	—		—	$	—		—		$	—		$	13		$	—		$	13
Net Income		—		—		—		—		—			—			—			19,664			19,664
Warrant Exercise		55,000		59		—		—		—			—			44			—			103
Pre-Funded Warrants Exercised		3,000,000		1,925		—		—		—			—			(1,925	)		—			—
Balance at November 30, 2024		24,574,247	$	78,307		—	$	—		—		$	—		$	(82,730	)	$	2,070		$	(2,353	)
Stock-based Compensation		—	$	—		—	$	—		—		$	—		$	71		$	—			71
Net Loss		—		—		—		—		—			—			—			(4,943	)		(4,943	)
Warrant Exercise		2,490,000		2,684		—		—		—			—			3,186			—			5,870
Class A Shares Issued		4,166,667		2,088		—		—		—			—			—			—			2,088
Preferred Shares Issued		—		—		—		—		4,500			6,264			—			—			6,264
Balance at February 28, 2025		31,230,914	$	83,079		—	$	—		4,500		$	6,264		$	(79,473	)	$	(2,873	)	$	6,997

	Class A Ordinary Shares				~~Class~~Preferred ~~B Ordinary~~ Shares						~~Non-Voting~~Additional ~~Common Shares~~Paid-in						~~Additional~~Total ~~Paid-in~~Shareholders’ Equity						~~Total Shareholders’ Equity~~
	Shares		Amount		Shares			Amount			~~Shares~~Capital			~~Amount~~Deficit			~~Capital~~(Deficit)			~~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		—		—		—			—			—26			—			1326			—			13
Net Loss		—		—		—			—			—			—(2,911	)		—(2,911	)		~~(417~~	)		~~(417~~	)
Balance at August 31, 2023		5,075,420		5,083		1,062,244		$	—			168,832		$	—			68			(6,940	)		(1,789	)
Warrant Issuance		—		—		—			—			(5,157	)		—			(5,157	)
Stock-based Compensation		—	$	—		—		$	—			—		$	—		$	33		$	—			33
Pre-Funded Warrants		—		—		—			—			1,925			—			1,925
Conversion of Convertible Debentures		—		—		517,352			1,496			—			—			—			—			1,496
Class A ordinary shares issued		2,800,000		1,799		—			—			—			—			1,799
Net Loss		—		—		—			—			—			—			—			(740	)		(740	)
Warrant Exercises		45,000		44		—			—			—			—			44
Balance at November 30, 2023		5,075,420	$	5,083		1,579,596		$	1,496			168,832		$	—		$	101		$	(7,680	)	$	(1,000	)
Incentive Shares Issued		66,316		74		—			—			—			—			74
Conversion of Convertible Notes Payable		—	$	—		1,253,770		$	6,843			—		$	—		$	—		$	—			6,843
Balance at August 31, 2024		21,519,247	$	76,323		—		$	—		$	(80,862	)	$	(17,594	)	$	(22,133	)
Issuance of Service Shares		—		—		385,297			1,558			—			—			—			—			1,558
Legacy Horizon Share Exchange		3,588,689		9,897		(3,218,663	)		(9,897	)		(168,832	)		—			—			—			—
New Horizon Shares on Effective Date		7,251,939		55,531		—			—			—			—			(75,619	)		—			(20,088	)
Incentive Shares		954,013		—		—			—			—			—			—			—			—
Capital Markets Advisory Shares		740,179		1,840		—			—			—			—			—			—			1,840
Underwriter Shares Issued		385,016		—		—			—			—			—			—			—			—
Stock-based Compensation		—		—		—			—			—			—			10			—			10
Net Loss		—		—		—			—			—			—			—			(5,306	)		(5,306	)
Balance at February 29, 2024		17,995,436	$	72,351		—		$	—			—		$	—		$	(75,508	)	$	(12,986	)	$	(16,143	)

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

NEW HORIZON AIRCRAFT LTD.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

EXPRESSED IN CANADIAN DOLLAR 000’S; UNAUDITED

	Nine months ended
	Three months ended
	February 28, 2025			February 29, 2024
	August 31, 2025			August 31, 2024
Cash Flows from Operating Activities:
Net Income (loss)	$	11,811		$	(6,463	)
Net Loss	$	(10,903	)	$	(2,911	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9851			4130
Stock-based compensation		~~189~~2,410			56100
Non-cash interest		—			195
Registered Share Offering Costs		—			290
Registered Share Offering Costs		290			—
Change in fair value of Forward Purchase Agreement		—			183
Change in fair value of Forward Purchase Agreement		740			4,026
Change in Warrant liability		5,137			5
Gain on Termination of Forward Purchase Agreement		(21,400	)		—
Changes in operating assets and liabilities:
Change in Warrant liability		(601	)		—
Prepaid expenses		157			313
Changes in working capital:
Accounts receivable		14			358
Prepaid expenses		1,690			(176	)
Accounts payable		(297	)		520
Accounts receivable		268			(112	)
Accrued liabilities		1,067			(362	)
Accounts payable		118			917
Operating leases		—			(1	)
Accrued liabilities		(9	)		756
Net cash used in operating activities		(2,364	)		(1,475	)
Operating leases		(1	)		—
Net cash used in operating activities		(6,807	)		(760	)
Cash Flows used in Investing Activities:
Purchase of property and equipment		(98139	)		~~(158~~—	)
Net cash used in investing activities		(98139	)		~~(158~~—	)
Cash Flows from Financing Activities:
Finance lease payments		—			18
Proceeds from Sales Agreement		8,253			—
Proceeds from issuance of Convertible debentures		—			6,700
Proceeds from Registered Securities Offering		—			3,947
Outflow from Business Combination		—			(1,573	)
Registered Share Offering Costs		—			(510	)
Repayment of Term loan		—			(40	)
Proceeds from warrants exercised		2,970			44
Proceeds from Registered Securities Offering		3,947			—
Net cash provided by financing activities		11,223			3,481
Registered Share Offering Costs		(510	)		—
Net Change in Cash and Cash Equivalents		8,720			2,006
Proceeds from Issuance of Class A Ordinary Shares		2,088			—
Cash and Cash Equivalents - Beginning of period		7,547			1,816
Proceeds from Issuance of Preferred Shares		6,264			—
Cash and Cash Equivalents - End of period	$	16,267		$	3,822
Forward Purchase Agreement termination		(278	)		—
Proceeds from warrants exercised		2,774			—
Net cash provided by financing activities		14,285			5,105
Net Change in Cash and Cash Equivalents		7,380			4,187
Cash and Cash Equivalents - Beginning of period		1,816			228
Cash and Cash Equivalents - End of period	$	9,196		$	4,415
Taxes paid	$	—		$	—
Conversion of Convertible debentures	$	—		$	1,496
Interest paid	$	1		$	1
Interest paid	$	1		$	—

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

NEW HORIZON AIRCRAFT LTD.
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1. Organization and Nature of Business

Organization and Nature of Business

New Horizon Aircraft Ltd. (the “Company”, “Horizon”, “we,” “us” or “~~Horizon~~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~~ is todesigning ~~significantly advance the benefits of sustainable air mobility. In connection with this objective, we have designed~~ and ~~developed~~developing a ~~cost-effective and energy efficient~~ hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks.

Business Combination

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

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

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

NOTE 2. Going Concern and Liquidity

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

Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. While management estimates that cash and cash equivalents on-hand as of August 31, 2025, will be sufficient to fund our current operating plan for at least the next 12 months from the date these unaudited condensed interim consolidated financial statements were available to be issued, there is substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.

~~Horizon~~There iscan abe ~~pre-revenue~~no ~~organization~~assurance inthat awe ~~research~~will be successful ~~and~~in ~~development~~achieving ~~and~~our ~~flight-testing~~business ~~phase~~plans, ofthat ~~operations.~~our ~~While~~current ~~management~~capital ~~estimates~~will ~~that~~be ~~the~~sufficient ~~net~~to ~~cash~~support ~~proceeds~~our ~~from~~ongoing ~~fiscal~~operations, ~~2025~~or ~~sales~~that ofany additional ~~securities~~financing will be ~~sufficient~~available toin ~~fund~~a ~~our~~timely ~~current~~manner ~~operating~~or ~~plan~~on ~~for~~acceptable terms, if at ~~least~~all. ~~the~~If ~~next~~events 12or ~~months~~circumstances ~~from~~occur ~~the~~such ~~date~~that ~~these~~we ~~unaudited~~do ~~condensed~~not ~~interim~~meet ~~consolidated~~our ~~financial~~business ~~statements~~plans, ~~were~~we ~~available~~may be required to beraise ~~issued~~additional capital, ~~there~~alter, isor ~~substantial~~scale ~~doubt~~back ~~around~~our ~~the~~aircraft ~~Company’s~~design, ~~ability~~development, and certification programs, or be unable to fund capital expenditures. Any such events could have a material adverse effect on our financial position, results ~~meet~~of ~~the~~operations, ~~going~~cash ~~concern~~flows, ~~assumption~~and ~~beyond~~ability ~~that~~to ~~period~~achieve ~~without~~our ~~raising~~intended ~~additional~~business ~~capital~~plans.

There can be no assurance that we will be successful in achieving our business plans, that our current capital will be sufficient to support our ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that we do not meet our business plans, we may be required to raise additional capital, alter, or scale back our aircraft design, development, and certification programs, or be unable to fund capital expenditures. Any such events would have a material adverse effect on our financial position, results of operations, cash flows, and ability to achieve our intended business plans.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Principles of Consolidation and Financial Statement Presentation

The accompanying unaudited condensed interim consolidated financial statements are presented in Canadian dollars in conformity with GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These unaudited condensed interim consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries., ~~All~~New ~~intercompany~~Horizon ~~balances~~Aircraft ~~and~~Operations ~~transactions have been eliminated on consolidation~~Ltd., ~~These unaudited~~a ~~condensed~~British ~~interim~~Columbia ~~consolidated~~company, ~~financial~~and ~~statements~~HOVR ~~include all adjustments necessary for the fair presentation of the Company’s~~Technologies ~~financial~~Corp. ~~position~~(“HTC”), ~~results~~a ofDelaware ~~operations,~~company. ~~and~~HTC ~~cash~~is ~~flows~~a ~~for~~dormant ~~the periods presented~~subsidiary. ~~Certain~~All ~~prior~~intercompany ~~period~~balances ~~amounts~~and transactions have been ~~reclassified~~eliminated toon ~~conform to the current year’s presentation~~consolidation. ~~All figures are in thousands of Canadian dollars unless noted otherwise.~~

~~There~~These ~~have~~unaudited ~~been~~condensed nointerim ~~changes~~consolidated financial tostatements include all adjustments necessary for the ~~Company’s~~fair ~~significant~~presentation ~~accounting policies~~of ~~described~~the inCompany’s ~~Note~~financial 3position, ~~“Summary~~results of operations, ~~Significant~~and ~~Accounting~~cash ~~Policies”~~flows tofor the ~~audited~~periods ~~Consolidated~~presented. ~~Financial~~Certain ~~Statements in~~prior ~~the~~period ~~Company’s~~amounts ~~annual~~have ~~report~~been onreclassified ~~Form~~to ~~10-K/A~~conform ~~for~~to the current year’s presentation. ~~ended~~The ~~May~~Company’s ~~31,~~functional ~~2024,~~and ~~that~~reporting ~~have~~currency ~~had~~is aCanadian ~~material~~dollars. ~~impact~~All onfigures ~~the~~are ~~Condensed Consolidated~~in ~~Financial~~thousands ~~Statements~~of ~~and~~Canadian ~~related~~dollars unless ~~notes~~noted otherwise.

~~Certain~~There ~~information~~have ~~and~~been ~~footnote~~no ~~disclosures~~changes ~~normally~~to ~~included in~~ the Company’s significant ~~annual~~accounting ~~audited~~policies ~~Consolidated~~described ~~Financial Statements and accompanying notes have been condensed or omitted~~ in ~~these~~Note ~~accompanying interim~~3 ~~Condensed~~“Summary ~~Consolidated~~of ~~Financial~~Significant ~~Statements~~Accounting ~~and~~Policies” ~~footnotes.~~to ~~Accordingly,~~the ~~these~~audited ~~interim Condensed Consolidated Financial Statements~~consolidated ~~should~~financial bestatements ~~read~~ in ~~conjunction with~~ the Company’s ~~audited~~annual ~~consolidated~~report ~~financial~~on ~~statements~~Form as10-K ~~of and~~ for the ~~fiscal~~ year -ended May 31, ~~2024~~2025, ~~set~~filed ~~forth~~with in the ~~Company’s~~SEC on August 22, 2025 (the “Annual Report”) onthat ~~Form~~have ~~10-K/A~~had ~~filed~~a ~~with~~material ~~the~~impact ~~SEC~~ on ~~March~~these ~~17,~~unaudited ~~2025~~condensed interim consolidated financial statements.

Certain information and footnote disclosures typically included in the Company’s annual audited Consolidated Financial Statements and accompanying notes have been condensed or omitted in these accompanying unaudited condensed interim consolidated financial statements and footnotes. Accordingly, these unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year-ended May 31, 2025 set forth in the Company’s Annual Report.

Recent Accounting Standards

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

NOTE 4. Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following:

	February 28, 2025			May 31, 2024
	Year-Ended
Computer Equipment	$	89		$	66
	August 31, 2025			May 31, 2025
Leasehold Improvements		92			17
Computer Equipment	$	135		$	103
Tools and Equipment		48			48
Leasehold Improvements		150			123
Equipment		32			—
Website Development		152			152
Vehicles		16			16
		397			299
Software		48			—
Accumulated Depreciation		(192	)		(94	)
		533			394
Total Property and Equipment, net	$	205		$	205
Accumulated Depreciation		(235	)		(185	)
Total Property and Equipment, net	$	298		$	209

Depreciation expenses of $3751 ~~and $98~~ for the three ~~and~~ ~~nine~~ months -ended August ~~February 28~~31, 2025 (~~February~~August 2931, 2024 - $~~21 and $41~~30), ~~respectively,~~ has been recorded in ~~General~~Operating ~~and Administrative~~ expenses in the unaudited condensed interim consolidated statements of operations.

Prepaid Expenses

Prepaid Expenses consisted of the following:

	February 28, 2025		May 31, 2024
	August 31, 2025		May 31, 2025
Prepaid insurance	$	~~541~~331	$	~~482~~436
Prepaid rent		1		1
Prepaid software		62		104
Prepaid capital market services		~~193~~38		~~1,938~~89
Total Prepaid expenses	$	~~741~~372	$	~~2,431~~530

Accrued Expenses

Accrued Expenses consisted of the following:

	February 28, 2025		May 31, 2024
	August 31, 2025		May 31, 2025
Accrued professional fees	$	~~125~~101	$	~~406~~439
Accrued employee costs		~~330~~1,537		84171
Other accrued expenses		~~110~~54		8415
Total Accrued expenses	$	~~565~~1,692	$	~~574~~625

NOTE 5. ~~Convertible~~Segmented ~~Promissory Notes~~Reporting

InOperating ~~May~~segments ~~2022,~~are ~~the~~defined ~~Company~~as ~~approved the issuance~~components of aan ~~series~~entity offor ~~Convertible~~which ~~Promissory~~separate ~~Notes~~financial ~~(collectively,~~information is available and that is regularly reviewed by the Chief Operating Decision Maker (“~~Notes~~CODM”) ~~carrying~~in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates as a single operating segment and one~~-year~~ ~~term~~reportable ~~with~~segment, ~~interest~~as the CODM reviews financial information presented on ~~the~~a ~~outstanding~~consolidated basis. The CODM uses net income (loss) ~~principal~~for ~~amount~~purposes ~~from~~of making operating decisions, allocating resources, and evaluating financial performance. The Company’s segmented results are consistent with those presented in the ~~date~~unaudited ofcondensed ~~issuance~~interim ~~accrued~~consolidated atfinancial statements. As the Company ~~rate~~is ofin ~~10%~~a ~~per~~pre-revenue ~~annum~~operating stage, it currently has no concentration exposure to products, services, or customers. Segmented asset information is not used by the CODM to allocate resources.

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

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

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

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

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

There was $nil and $15 of interest recorded in the three and nine months ended February 29, 2024, respectively.

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

NOTE 6. Fair Value Measurements

The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of ~~February~~August 2831, 2025, and ~~May~~ May 31, ~~2024~~2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description

Amount at Fair Value

Level 1

Level 2

Level 3

February 28, 2025

August 31, 2025

Liabilities

Derivative Liability - Warrants

14,~~899~~131

~~611~~3,401

—

~~1,288~~730

Total

14,~~899~~131

~~611~~3,401

—

~~1,288~~730

Description	Amount at Fair Value		Level 1		Level 2		Level 3
May 31, 2024
May 31, 2025
Liabilities
Derivative Liability - Forward Purchase Agreement	$	20,938	$	—	$	—	$	20,938
Derivative Liability - Warrants	$	4,488	$	1,264	$	—	$	3,224
Derivative Liability - Warrants	$	576	$	549	$	—	$	27
Total	$	4,488	$	1,264	$	—	$	3,224
Total	$	21,514	$	549	$	—	$	20,965

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

	November 1, 2024			May 31, 2024
	August 31, 2025			May 31, 2025
Redemption Price (USD)	$	100.6175		$	100.6175
Stock Price (USD)	$	01.2875		$	01.8006
Volatility		76	%		5376	%
Term (years)		13.769			24.182
Risk-free rate		4.4023	%		4.5142	%

As outlined in note 7, 5,800,000 warrants were issued on August 21, 2024, of which 3,210,000 remain outstanding as of February 28, 2025. The following table provides quantitative information regarding Level 3 fair value measurements inputs related to these Warrant liabilities at their measurement dates:8

	February 28, 2025			August 21, 2024
Redemption Price (USD)	$	0.75		$	0.75
Stock Price (USD)	$	0.51		$	0.96
Volatility		76	%		76	%
Term (years)		4.5			5.0
Risk-free rate		4.23	%		3.61	%

The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the three months ended August 31, 2025, is summarized as follows:

	May 31, 2025
Fair value Derivative Liability - May 31, 2025	$	3,224
Warrant Exercises		(5,492	)
Change in fair value of Warrant Liabilities		2,998
Fair value Derivative Liability – August 31, 2025	$	730

The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the nine months ended February 28, 2025, is summarized as follows:

	February 28, 2025
Fair value Derivative Liability - May 31, 2024	$	20,965
Change in fair value of Forward Purchase Agreement		740
Termination of Forward Purchase Agreement		(21,678	)
Additional Warrant Liabilities incurred		5,157
Change in fair value of Warrant Liabilities		(3,896	)
Fair value Derivative Liability – February 28, 2025	$	1,288

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

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

NOTE 7. Common Stock

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

OnAs of August 2131, ~~2024~~2025, ~~the~~there ~~Company~~were ~~completed~~warrants ~~a registered~~outstanding ~~securities~~of ~~offering~~12,065,375 ~~(“RSO”)~~at byan ~~issuing~~exercise ~~2,800,000~~price ~~Class~~of A$11.50 ~~ordinary~~USD ~~shares,~~and 3310,000~~,000~~ ~~Pre-Funded~~at ~~Warrants~~an ~~(“PFW’s”), and~~exercise ~~5,800,000~~price ~~warrants~~of $0.75 ~~The~~USD ~~proceeds~~to ~~received~~purchase byan ~~the~~equivalent ~~Company~~number ~~are~~of ~~summarized~~Class A ~~below:~~ordinary shares.

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

Warrant holders exercised 2,900,000 warrants in exchange for 2,900,000 Class A ordinary shares for proceeds of $2,970 during the three months-ended August 31, 2025.

PFW’s may be exercised by warrant holders at any time at a nominal exercise price as they were funded in connection with the RSO. Upon exercise, each PFW may be exchanged for one Class A ordinary share. All 3 million PFW’s were exercised in the nine months ended February 28, 2025.

Warrant holders exercised 2,590,000 warrants in exchange for 2,590,000 Class A ordinary shares for proceeds of $2,774 during the nine months ended February 28, 2025.

As of February 28, 2025, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 3,210,000 at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.

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	$	-
Outstanding warrants May 31, 2025		15,275,375		$	9.24		3.7	$	995
Issued August 21, 2024		8,800,000		$	0.49		4.5		-
Exercised		2,900,000		$	0.75		4.0		3,065
Exercised		(5,590,000	)	$	0.35		4.9		-
Outstanding warrants August 31, 2025		12,375,375		$	11.23		3.7	$	310
Expired		-		$	-		-	$	-
Outstanding warrants February 28, 2025		15,275,375		$	9.24		4.1	$	-

Terms and related estimates connected with the RSO have been outlined in note 6. The Company has retroactively adjusted the number of shares issued and outstanding prior to January 12, 2024, to give effect to the Exchange Ratio.9

OnIn March ~~December~~2025 ~~18, 2024,~~ the Company ~~entered~~filed ~~into~~a ~~subscription~~shelf ~~agreements~~registration statement on Form S-3 with the SEC and a ~~third-party~~related ~~investor~~prospectus pursuant to which ~~the~~it ~~Company~~may, ~~issued~~from antime ~~aggregate~~to time, sell shares of ~~4,166,667~~its Class A ordinary shares, ofhaving ~~the~~an ~~Company~~aggregate atvalue ~~a price~~ of ~~USD~~up to $06.3625 ~~per~~million ~~share~~USD, ~~and~~pursuant anto ~~aggregate~~a ~~of 4,500 Series~~Capital Aon ~~preferred~~Demand™ ~~shares~~Sales ofAgreement (the ~~Company~~“Sales atAgreement”) with a ~~price~~placement ofagent ~~USD~~for ~~$1,000~~the ~~per~~sale ~~share.~~of ~~The~~its ~~financing~~Class ~~closed~~A onordinary ~~December 19, 2024~~shares.

~~The~~On ~~Series~~June A27, ~~Preferred~~2025, ~~Shares~~the ~~are~~Company ~~convertible, at~~filed ~~the~~a ~~option~~prospectus supplement ofto increase the ~~holder~~maximum ~~and~~aggregate ~~without~~offering ~~additional~~price ~~consideration,~~of ~~into~~the Class A ordinary ~~Shares~~shares onissuable aunder ~~one~~the ~~for~~Sales ~~2222.222222~~Agreement ~~basis.~~to ~~The~~up ~~proceeds~~to ~~received~~an byadditional ~~the~~aggregate ~~Company~~$16.5 ~~are~~million ~~summarized~~USD ~~below:~~of Class A ordinary shares.

Gross Proceeds - Class A Shares	$	2,100
Gross Proceeds - Preferred Shares		6,300
Direct costs		(50	)
Net Proceeds	$	8,350

During the three months-ended August 31, 2025, the Company sold 3,445,210 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $8,253. As of August 31, 2025, the Company had $14.8 million USD remaining eligible for sales under the Sales Agreement.

11During the three months-ended August 31, 2025, the Company incurred $410 in general and administrative costs relating to 264,095 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.

On February 14, 2025, we entered into a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with an institutional services company (the “Sales Agent”) relating to our Class A ordinary shares. In accordance with the terms of the Sales Agreement, we may offer and sell Class A ordinary shares having an aggregate offering price of up to $6,250,000 USD from time-to-time through the Sales Agent, acting as our agent or principal. As of February 28, 2025, we have raised gross proceeds of $ nil and issued no Class A ordinary shares through this program.

NOTE 8. Stock-based Compensation

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

Stock options outstanding vest in equal tranches over a period of three years. During the three ~~and nine~~ months ended ~~February~~August 2831, 2025, the Company granted 1278,~~340,~~000 ~~and 1,520,000~~ stock options (~~February~~August 2931, 2024 – ~~nil and nil)~~150, ~~respectively~~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:

	October 4, 2024			February 3, 2025
	August 31, 2025			August 31, 2024
Stock price	$USD	02.2701		$USD	0.6127
Number of Options issued		180,000			1,340,000
Risk-free interest rate		4.2	%		3.6	%
Risk-free interest rate		3.8	%		4.5	%
Term (years)		5			5
Volatility		76	%		76	%
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, 2024		685,230	$	0.60		6.5	$	139
Outstanding stock options May 31, 2025		2,205,230	$	0.58		8.4	$	1,340
Exercised		-		-		-		-
Issued June 24, 2025		278,000	$	2.01		9.8	$	-
Expired		-		-		-		-
Outstanding stock options August 31, 2025		2,483,230	$	0.74		8.4	$	3,552
Issued October 4, 2024		180,000	$	0.27		9.6	$	61
Exercisable as of August 31, 2025		668,563	$	0.55		5.5	$	1,106
Issued February 3, 2025		1,340,000	$	0.61		9.9	$	-
Outstanding stock options February 28, 2025		2,205,230	$	0.58		8.8	$	68
Exercisable as of February 28, 2025		391,396	$	0.59		5.3	$	8

During the three ~~and nine~~ months -ended ~~February 28~~August 31, 2025, the Company recorded stock-based compensation expenses of $71194 ~~and $189~~ (~~February~~August 2931, 2024 - $~~10 and $56~~26), ~~respectively,~~ relating to stock options and $802 relating to shares issued for services ~~of $74 in the quarter ended~~ (August 31, 2024 - $74).

On ~~February~~August 327, 2025, the Company issued ~~335~~1,~~000~~ 160,001 Performance Share Units (“PSU’s”) that vest upon achievement of ~~100%~~the ~~Total~~Company ~~Shareholder~~achieving ~~Return~~a market capitalization of $100 million USD. The Company has ~~determined~~recorded ~~that~~$2,709 ~~this~~of ~~vesting~~compensation expenses related to these PSU’s based on a Monte Carlo simulation model ~~condition~~applied ison ~~not~~the ~~yet~~grant ~~probable~~date, ~~and~~of ~~accordingly~~which ~~has~~$1,295 ~~not~~is ~~recognized~~recorded ~~any~~in ~~compensation~~accrued ~~cost~~liabilities ~~related~~and to$1,414 ~~these~~as ~~PSU~~a component of shareholders’s equity.

1210

~~NOTE~~The 9.following ~~Net~~assumptions ~~Income~~were ~~(Loss)~~used ~~per~~to ~~Share Attributable~~estimate tothe ~~Common~~fair ~~Stockholders~~value of the PSUs:

The Company computes net income (loss) per share using the two-class method. Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities consist of stock options, Convertible debentures, PSU’s, and Warrants. Certain Stock options, Convertible debentures, PSU’s, and Warrants were excluded from the computation of diluted net income (loss) per share as including them would have been anti-dilutive.

	August 27, 2025
Stock price	$USD	1.83
Risk-free interest rate		3.3	%
Term (years)		3.3
Volatility		76	%
Dividend yield		0	%

~~The~~NOTE ~~following~~9. ~~outlines~~Net ~~the~~Loss ~~Company’s basic and diluted income (loss)~~ per ~~share~~Share ~~for~~Attributable ~~the~~to ~~three~~Common ~~and nine months ended February 28, 2025, and February 29, 2024:~~Stockholders

	Quarter-Ended						Nine Months Ended
	February 28, 2025			February 29, 2024			February 28, 2025		February 29, 2024
Income (loss) per share:
Basic:	$	(0.17	)	$	(0.45	)	$	0.49	$	(0.80	)
Diluted:	$	(0.17	)	$	(0.45	)	$	0.45	$	(0.80	)
Shares used in computing Income (loss) per share:
Basic:		29,474,362			11,698,789			23,959,175		8,075,238
Diluted:		29,474,362			11,698,789			26,517,135		8,075,238

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 securities outstanding during the period. Potentially dilutive securities consist of stock options, preferred shares, PSU’s, and warrants. Certain stock options, preferred shares, PSU’s, and warrants 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.

The following outlines the Company’s basic and diluted loss per share for the three months-ended August 31, 2025, and August 31, 2024 (000’s CAD, except share amounts):

	Quarter-Ended
	August 31, 2025			August 31, 2024
Net Loss	$	(10,903	)	$	(2,911	)
Basic weighted-average common shares outstanding		37,135,908			19,246,089
Basic and diluted net loss per common share	$	(0.29	)	$	(0.15	)

NOTE 10. Grants and Subsidies

~~DAIR Green Fund~~INSAT

InThe ~~November~~Canadian ~~2022,~~government recently announced the Initiative ~~Company~~for ~~entered~~Sustainable Aviation Technology (“INSAT”) fund whereby $350 million will be invested into ainnovative ~~funding~~companies ~~agreement~~focused ~~with~~on ~~the~~sustainable ~~Downsview~~aviation ~~Aerospace~~solutions. ~~Innovation~~The ~~and~~Company ~~Research~~submitted ~~Centre~~an ~~(“DAIR”).~~initial InINSAT ~~June~~proposal ~~2022,~~in ~~DAIR~~April ~~entered~~2025 ~~into~~along awith ~~Contribution~~its application partners ~~Agreement~~for ~~with~~a ~~the~~project ~~Federal~~size ~~Economic~~of ~~Development~~$10.5 ~~Agency~~million, ~~for~~of ~~Southern~~which ~~Ontario~~up to ~~launch~~40% aof ~~Green~~project ~~Fund~~costs tomay ~~financially~~be ~~support~~reimbursed. ~~projects~~The ~~led~~Company expects to receive information byrelated ~~small~~to ~~and~~the ~~medium~~success ~~size~~of ~~enterprises~~this initial INSAT application in 2025.

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

In August 2024, the ~~nine~~Company ~~months~~entered ~~ended~~into ~~February~~a ~~28,~~funding agreement ~~2025,~~with the Downsview Aerospace Innovation and Research Centre (“DAIR”). DAIR selected the Company ~~received~~with ~~approval~~a ~~for~~project on the Engineering of an ~~additional~~eVTOL ~~project~~wing. ~~with~~The funding upapproved to athe ~~maximum~~Company ofwas $75, of which $3050 was ~~received~~recorded ~~during~~as ~~the~~a ~~nine~~reduction ~~months~~in Research and Development costs during the year-ended ~~February~~May 2831, 2025. ~~and~~As of August 31, 2025, $3050 ~~remains~~of inthis ~~accounts~~grant ~~receivable~~has been received.

Air Force Grant

In January 2022, the Company entered into a Market Research Investment Agreement (the “Agreement”) with Collaboration.Ai, a company engaged with the United States Operations Command and the U.S. Air Force to administer selection and awards for the AFWERX Challenge program to foster innovation within the services. In connection with the Agreement, the Company will provide research, development, design, manufacturing, services, support, testing, integration, and equipment in aid of delivery of market research in accordance with one or more statements of work or market research plans. During the year ended May 31, 2023, a fixed fee fund of $366 was approved. As of February 28, 2025, the Company had received $235 of this amount, which was received in prior quarters.

Scientific Research and Experimental Development

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

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

NOTE 11. Related Party Transactions

During the three ~~and nine~~ months -ended ~~February 28~~August 31, 2025, the Company paid $830 (August 31, 2024 - $nil) to Cert Centre Canada (“3C”) for ~~facility~~certification ~~design~~planning services. toOne of the ~~spouse~~Company’s Board of anDirectors ~~executive~~is ~~officer~~the Chief Executive Officer of 3C. There were no other identifiable related party transactions or balances for the periods presented.

NOTE 12. Subsequent Events

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

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to New Horizon Aircraft Ltd. References to our “management” or our “management team” refer to our officers and directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed interim consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

All figures noted are in thousands of Canadian dollars unless noted otherwise.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties ~~that~~ that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Quarterly Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s Form 10-K/A filed with the U.S. Securities and Exchange Commission (the “SEC”) on ~~March~~August 1722, 2025 (the “Annual Report”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

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

Business Combination

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

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

Organization and Nature of Business

The Company’s objective is to significantly advance the benefits of sustainable air mobility. In connection with this objective, we ~~have~~are ~~designed~~designing and ~~developed~~developing a cost effective ~~and~~ and energy efficient hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional ~~air~~ air mobility (“RAM”) networks. The Company has built several small-scale prototypes including a 50%-scale aircraft that has completed flight testing. We are now building a full-scale demonstrator aircraft that is expected to commence flight testing in 2027.

~~Robinson~~Horizon ~~was~~intends ~~incorporated~~to insell ~~2013.~~these ~~Initially,~~Cavorite X7 aircraft ~~the~~to ~~company~~third ~~was~~parties, ~~focused~~air onoperators, ~~development~~lessors, ofindividual aconsumers, ~~hybrid~~and ~~electric~~NATO ~~amphibious~~military ~~aircraft,~~customers. The Company plans to manufacture its aircraft and license its patented fan-in-wing ~~2018~~technology ~~the~~and ~~Company~~other ~~pivoted~~core innovations to ~~developing~~other anOriginal ~~innovative~~Equipment Manufacturers (“OEM’s”). ~~eVTOL~~Manufacturing ~~concept~~will ~~that~~be isaccomplished ~~identified~~with asa ~~the~~heavy ~~Cavorite~~reliance X7on experienced aircraft manufacturing partners and supply chain vendors. ~~The~~Horizon believes ~~Company~~this ~~has~~highly ~~built~~focused ~~several~~business ~~small-scale~~model ~~prototypes~~will ~~and~~provide ~~now~~the ~~has~~most aefficient ~~50%-scale~~use of capital to produce an aircraft that ishas ~~undergoing~~a ~~active~~variety ~~flight testing~~of applications.

Horizon intends to sell these aircraft to third parties, air operators, lessors, individual consumers, and NATO military customers. The Company plans to manufacture its aircraft and license its patented fan-in-wing technology and other core innovations to other Original Equipment Manufacturers (“OEM’s”). Manufacturing will be accomplished with a heavy reliance on experienced aircraft manufacturing partners and supply chain vendors. Horizon believes this highly focused business model will provide the most efficient use of capital to produce an aircraft that has a variety of applications.12

Key Factors Affecting Operating Results

See the section entitled “Risk Factors” in the Company’s ~~Form~~ ~~10-K/A~~Annual ~~filed with the SEC on March 17, 2025, for a further discussion of these considerations~~Report.

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~~ anticipates commercialization of its aircraft ~~beginning~~prior into ~~2028~~2030, 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, and pilot training ~~and commercialization~~.

Horizon believes one of the primary drivers for adoption of its aircraft is the value proposition enabled by its aircraft that can take-off and land similar to a helicopter, fly ~~approximately~~almost twice as fast, and operate with ~~significantly~~much lower direct operating costs. Additional factors impacting adoption of eVTOL technology ~~include~~ 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, we it may face increased competition. Horizon may receive an advantage from well-funded competitors that are paying to create certification programs, raise awareness of eVTOL advantages and advocating to kickstart government funding programs.

Horizon 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~~we ~~likely~~expect will 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 Horizon’s eVTOL program. 3C is leveraging their deep experience with TCCA and FAA certification programs to ~~develop~~support athe Company’s certification basis for the certification of Horizon’s ~~hybrid-electric~~ eVTOL aircraft.

1613

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~~requiring ~~hundreds~~significant ~~of millions of dollars~~capital. 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 it anticipates being able to meet the requirements of such ~~authorizations~~authorization and certifications, the Company may be unable to obtain such ~~authorizations~~authorization 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~~could have adverse effects on its business, prospects, financial condition, and results of operations.

Dual Use Business Model

Horizon’s ~~business~~intends ~~model~~ to ~~serve~~certify its Cavorite X7 aircraft 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~~includes numerous parts and manufacturing processes ~~unique~~ 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 ~~unaudited condensed interim~~ 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~~Horizon ~~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~~ primarily been through the net proceeds received from the issuance of Class A ordinary shares, ~~and~~preferred ~~Preferred~~ shares, asand ~~well as~~ the issuance of related and third-party convertible debt.

Horizon is a pre-revenue organization in a ~~research~~ research and development and flight-testing phase of operations. ~~While~~With ~~management~~more ~~expects~~than ~~that~~$16 ~~the~~million ~~proceeds~~of ~~from~~cash ~~fiscal~~and ~~2025~~cash ~~sales~~equivalents on-hand as of ~~securities~~August 31, 2025, ~~will~~management expects to be ~~sufficient~~in a position to fund our current operating plan for at least the next 12 months; ~~from~~however ~~the date the unaudited condensed interim consolidated financial statements were available to be issued,~~ there is remains substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.

There can be no assurance that we will be successful in achieving our business plans, that our current capital will be sufficient to support our ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If events or circumstances occur such that we do not meet our business plans, we may be required to raise additional capital, alter, or scale back our aircraft design, development, and certification programs, or be unable to fund capital expenditures. Any such events ~~would~~could have a material adverse effect on our financial position, ~~results~~ results of operations, cash flows, and ability to achieve our intended business plans.

1714

Components of Results of Operations

Revenue

The Company is working to design, develop, certify, and manufacture our eVTOL aircraft and has not yet generated revenues in any of the periods presented. We do not expect to begin generating significant revenues until we are able to complete the design, development, and certification, ~~and~~of ~~manufacture~~ our eVTOL aircraft.

Operating Expenses

Research and Development Expenses

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

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

Selling, General and Administrative Expenses

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

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

Other Income

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

Interest Expense, net

Interest expense is related to the Company’s leases. Interest income ~~consists~~ primarily consists of interest earned on the Company’s cash and cash equivalents.

Change in fair value and termination of Forward Purchase Agreement

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

Change in fair value of Warrants

Changes in fair value of Warrants consists of fluctuations in the fair value of warrants outstanding as of the end of each reporting period.

1815

Results of Operations

We believe the following information includes all adjustments necessary to state fairly the results of operations for all periods presented. This data should be read in conjunction with Horizon’s unaudited condensed interim consolidated financial statements and notes thereto. These results of operations are not necessarily indicative of the future results of operations that may be expected for any future period.

Comparison of the Three Months Ended ~~February~~August 2831, 2025, to the Three Months Ended ~~February~~August 2931, 2024

Meaningful variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the quarters ended ~~February~~August 2831, 2025, and ~~February~~August 2931, 2024 (000’s).

	Quarter-Ended
Operating expenses	~~February~~August 2831, 2025			~~February~~August 2931, 2024			Variance ($)
Research and development	$	~~443~~2,719		$	~~270~~297		$	(~~173~~2,422	)
General and administrative		3,~~111~~190			~~989~~2,408			(~~2,122~~782)	)
Total operating expenses		35,~~554~~909			12,~~259~~705			(23,~~295~~204	)
Loss from operations		(35,~~554~~909	)		(12,~~259~~705	)		23,~~295~~204
Other expenses (income)		11(25	)		629			(554	)
Interest expense (income), net		(51118	)		15(11	)		66107
Change in fair value of Warrants		15,~~429~~137			—5			(15,~~429~~132	)
Change in fair value and Termination of Forward Purchase Agreement		—			~~4,026~~183			~~4,026~~183
Net Income (Loss)	$	(410,~~943~~903	)	$	(52,~~306~~911	)	$	~~363~~7,992

Operating Expenses

Operating expenses increased by $23,~~295~~204, from $12,~~259~~705 for the quarter -ended ~~February~~August 2931, 2024, to $35,~~554~~909 for the quarter ended ~~February~~August 2831, 2025. The increase was primarily driven by ~~professional fees,~~ additional staff hired to support development activities, and ~~other~~engineering ~~administrative~~ costs, ~~connected~~as ~~with~~well ~~the~~as ~~Company’s~~stock-based ~~growth~~compensation, partially offset by reduced ~~activities~~general and administrative costs.

Research and Development Expenses

Research and development expenses increased by $~~173~~2,422, from $~~270~~297 during the quarter -ended ~~February~~August 2931, 2024, to ~~$443~~2,719 during the quarter -ended ~~February~~August 2831, 2025. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the respective periods:

	Quarter-Ended
	February 28, 2025		February 29, 2024
	August 31, 2025		August 31, 2024
Compensation Costs	$	~~407~~2,432	$	~~243~~269
Engineering costs		35261		2728
Depreciation		126		-1
Total Research and Development costs	$	~~443~~2,719	$	~~270~~297

General and Administrative

General and Administrative costs increased by $2782,~~122,~~ from $~~989~~2,408 during the quarter -ended ~~February~~August 2931, 2024, to $3,~~111~~190 during the quarter ended ~~February~~August 2831, 2025. The increase was ~~related~~ due to increased ~~legal,~~stock-based ~~accounting,~~compensation ~~travel,~~relating ~~investor~~to ~~relations,~~both ~~marketing,~~employees and ~~branding~~third ~~expenses~~party ~~related~~service ~~to the Company’s growth efforts~~providers.

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Comparison of the Nine Months Ended February 28, 2025 to the Nine Months Ended February 29, 2024

Meaningful variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the nine months ended February 28, 2025 and February 29, 2024 (000’s).

	Nine months Ended
Operating expenses	February 28, 2025			February 29, 2024			Variance ($)
Research and development	$	1,167		$	635		$	(532	)
General and administrative		8,365			1,829			(6,536	)
Total operating expenses		9,532			2,464			(7,068	)
Loss from operations		(9,532	)		(2,464	)		7,068
Other expenses (income)		(7	)		(222	)		(215	)
Interest expense (income), net		(75	)		195			270
Change in fair value of Warrants		601			—			601
Change in fair value and Termination of Forward Purchase Agreement		(20,660	)		4,026			24,686
Total other income		(21,343	)		3,999			25,342
Net Income (Loss)	$	11,811		$	(6,463	)	$	18,274

Operating Expenses

Operating expenses increased by $7,068, from $2,464 for the nine months ended February 29, 2024, to $9,532 for the nine months ended February 28, 2025. The increase was primarily driven by professional fees, additional staff hired to support development activities, and other administrative costs connected with the Company’s growth activities.

Research and Development Expenses

Research and development expenses increased by $532, from $635 during the nine months ended February 29, 2024, to $1,167 during the nine months ended February 28, 2025. The increase was primarily attributable to additional labour related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the period:

	Nine months Ended
	February 28, 2025		February 29, 2024
Compensation Costs	$	1,070	$	553
Engineering costs		95		82
Depreciation		2		-
Total Research and Development costs	$	1,167	$	635

General and Administrative

General and Administrative costs increased by $6,536, from $1,829 during the nine months ended February 29, 2024, to $8,365 during the nine months ended February 28, 2025. The increase was related to legal, accounting, travel, investor relations, marketing, and branding expenses related to the Company’s growth efforts.

Cash Flows

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

	Nine months Ended
	Three months Ended
Net cash provided by (used in)	~~February~~August 2831, 2025			~~February~~August 2931, 2024			Variance ($)
Operating activities	$	(62,~~807~~364	)	$	(~~760~~1,475	)	$	(~~6,047~~889	)
Investing activities		(98139	)		~~(158~~-	)		60(139	)
Financing activities		1411,~~285~~223			53,~~105~~481			97,~~180~~742
Net increase (decrease) in cash	$	7,380		$	4,187		$	3,193
Net increase in cash	$	8,720		$	2,006		$	6,714

Net Cash used in Operating Activities

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

For the ~~nine~~three months ended ~~February~~August 2831, 2025, ~~the~~ the $~~6,047~~889 increase in cash used from operations as compared to the ~~nine~~three months ended ~~February~~August 2931, 2024, was primarily attributed to ~~increased~~ increased operating costs, ~~partially~~and ~~offset by~~ changes in working capital.

Net Cash used in Investing Activities

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

For the ~~nine~~three months -ended ~~February~~August 2831, 2025, there was $98139 of ~~leasehold~~capital ~~improvements~~expenditures ~~and computer equipment~~ as compared to $~~158~~nil during the ~~nine~~ three months ended ~~February~~August 2931, 2024~~, primarily composed of website development costs~~.

Net Cash used in Financing Activities

The Company’s cash flows provided by financing activities to date have primarily been composed of funding raised with ~~convertible~~securities ~~instruments~~offerings ~~and~~as ~~registered~~well ~~securities~~as ~~offerings~~related and third-party convertible instruments.

For the ~~nine~~three months ended ~~February~~August 2831, 2025, the $97,~~180~~742 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.

OnWarrant ~~August~~holders ~~21,~~exercised ~~2024~~2,900,000 ~~the~~warrants ~~Company completed a registered~~in ~~securities~~exchange ~~offering~~for ~~(“RSO”) by issuing~~ 2,~~800~~900,000 Class A ordinary shares, ~~3,000,000~~for ~~PFW’s,~~proceeds ~~and~~of 5$2,~~800,000~~970 ~~warrants.~~during ~~Proceeds received~~the bythree ~~the~~months ~~Company~~ended isAugust ~~summarized~~31, ~~below:~~2025 (August 31, 2024 - $nil).

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

As of August 31, 2025, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 310,000 remaining at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.

~~Warrant~~In ~~holders~~March 2025 ~~exercised~~the ~~2,590,000~~Company ~~warrants~~filed ina shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from ~~exchange~~time ~~for~~to 2time,~~590,000~~ sell shares of its Class A ordinary shares, ~~for~~having ~~proceeds~~an aggregate value of up to $26.25 million USD,~~684~~ inpursuant to a Capital on Demand™ Sales Agreement (the ~~nine~~“Sales ~~months~~Agreement”) ~~ended~~with ~~February~~a ~~28,~~placement ~~2025~~agent for the sale of its Class A ordinary shares.

AsOn ofJune ~~February 28~~27, 2025, ~~there~~the ~~were~~Company ~~warrants~~filed ~~outstanding~~a prospectus ofsupplement ~~12,065,375~~to atincrease anthe ~~exercise~~maximum aggregate offering price of ~~$11.50~~the ~~USD~~Class ~~and~~A ~~3,210,000~~ordinary atshares anissuable ~~exercise~~under ~~price~~the ofSales ~~$0.75~~Agreement ~~USD~~ to ~~purchase~~up to an ~~equivalent~~additional ~~number~~aggregate $16.5 million USD of Class A ordinary shares.

21During the three months ended August 31, 2025, the Company sold 3,445,210 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $8,253. As of August 31, 2025, the Company had $14.8 million USD remaining eligible for sales under the Sales Agreement.

On December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued an aggregate of 4,166,667 Class A ordinary shares of the Company, at a price of USD $0.36 per share, and an aggregate of 4,500 Series A preferred shares (the “Series A Preferred Shares”) of the Company at a price of $1,000 per share. The financing closed on December 19, 2024.

The Series A Preferred Shares are convertible, at the option of the holder and without additional consideration, into Common Shares on a one for 2222.222222 basis. The proceeds received by the Company are summarized below:

Gross Proceeds - Class A Shares	$	2,100
Gross Proceeds - Preferred Shares		6,300
Direct costs		(50	)
Net Proceeds	$	8,350

On February 14, 2025, we entered into a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with an institutional services company (the “Sales Agent”) relating to our Class A ordinary shares. In accordance with the terms of the Sales Agreement, we may offer and sell Class A ordinary shares having an aggregate offering price of up to $6,250,000 USD from time-to-time through the Sales Agent, acting as our agent or principal. We implemented this program for the flexibility that it provides to the capital markets and to best time our equity capital needs. As of February 28, 2025, we have raised gross proceeds of $ nil and issued no Class A ordinary shares through this program.

Sources of Liquidity

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, contractual obligations, and other commitments. The Company assesses liquidity in terms of its cash flows from financing activities and their sufficiency to fund its operating and development activities. Beyond ~~February~~August 2831, 2025, the Company’s principal source of ~~liquidity~~ liquidity is expected to be cash and cash equivalents of more than $~~9,196~~16 million currently on-hand, future government grants and subsidies, and future ~~expected sales~~ sales of securities.

To date, the Company has funded its operations primarily with the issuances of Class A ordinary shares, Series A ~~Preferred~~preferred ~~Shares~~shares, and issuances of convertible debt instruments. Additional funding has been provided through government-backed grants.

The ~~Company~~Canadian ~~believes~~government itrecently ~~has~~announced ~~sufficient~~the Initiative ~~cash~~for ~~to fulfill~~Sustainable ~~its~~Aviation ~~business~~Technology ~~plan~~(“INSAT”) ~~for~~fund atwhereby ~~least~~$350 ~~the~~million ~~next~~will 12be ~~months~~invested ~~from~~into ~~the~~innovative ~~date~~companies focused ofon ~~this~~sustainable ~~filing~~aviation solutions. ToThe ~~the~~Company ~~extent~~submitted ~~the~~an ~~Company~~initial isINSAT ~~able~~proposal toin ~~raise~~April ~~additional~~2025 along with its application partners ~~financing,~~for ~~either~~a byproject ~~way~~size of ~~the~~$10.5 ~~Warrants~~million, orof bywhich ~~other~~up ~~means,~~to ~~the~~40% ~~Company~~of project costs may be inreimbursed. aThe ~~position~~Company’s toproposal ~~expedite~~was ~~its~~aligned ~~business plan including~~with ~~hiring~~three ~~employees~~of atthe afour ~~more~~key ~~rapid~~INSAT ~~pace.~~technology Toareas ~~achieve~~including ~~the~~(1) ~~Company’s~~Hybrid ~~long-term~~and ~~objectives~~Alternative Propulsion, ~~additional~~(2) ~~financing~~Aircraft ~~will~~Architecture beand ~~required~~Systems ~~and~~Integration, ~~efforts~~and (3) Transition to ~~raise~~Alternative ~~such~~Fuels. ~~working~~The ~~capital~~Company ~~will~~expects beto ~~ongoing~~receive ~~through~~information atrelated ~~least~~to the ~~next~~success ~~three~~of ~~years~~this initial INSAT application in 2025.

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 Sales Agreement, warrants, or by other means, the Company may be in a position to expedite its business plan including hiring employees at a more rapid pace. To achieve the Company’s long-term objectives, additional financing will be required and efforts to raise such working capital will be ongoing through at least the next several years.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of ~~February~~August 2831, 2025, and May 31, ~~2024~~2025.

Critical Accounting Estimates

The preparation of the unaudited condensed interim consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the unaudited condensed interim consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Derivative Financial Instruments

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

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

Research and Development Costs

The research and development costs are accounted for in accordance with ASC 730, Research and Development, which requires all research and development costs be expensed as incurred.

Recent Accounting Standards

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

AsNot arequired for smaller reporting ~~company, we are not required to provide the information required by this item~~companies.

Item 4. Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission~~SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Our management, under the supervision and with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures at the end of the period covered by this Quarterly Report. Based upon this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Quarterly Report, the design and operation of our disclosure controls and procedures were not effective.

Notwithstanding the identified material weakness, management, including our principal executive officer and principal financial and accounting officer, believe that the unaudited condensed interim consolidated financial statements contained in this Quarterly Report fairly present, in all material respects, our financial condition, results of operations and cash flows for the fiscal period presented in conformity with GAAP.

Remediation of Material Weakness

While significant progress has been made to improve our internal control over financial reporting, not all aspects of have been sufficiently remediated. The material weakness, as of ~~February~~August 2831, 2025, relates to the inadequate separation of financial responsibilities. Our management, with the oversight of the Audit Committee of our Board of Directors, continues to design and implement measures to remediate the material weakness. Remediation of the material weakness will require further validation and testing of the operating effectiveness of the applicable remedial controls over a sustained period of financial reporting cycles. The Company is targeting remediation of this material weakness prior to the end of its current fiscal year-ending May 31, 2026.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not party to any material legal proceedings. From time to time, we may be involved in legal proceedings or subject to claims incident to the ordinary course of business. The outcome of litigation is inherently uncertain, and there can be no assurances that favorable outcomes will be obtained. In addition, regardless of the outcome, such proceedings or claims can have an adverse impact on us, which may be material because of defense and settlement costs, diversion of resources and other factors.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report are any of the risks described in our Annual Report ~~on Form 10-K/A filed with the SEC on March 17, 2025 (the “Annual Report”)~~. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. ~~Except~~As ~~as set forth below, as~~ of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Annual Report filed with the SEC.

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

On August 28, 2024, the Company was notified by Nasdaq that the Company had failed to maintain a net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years required for continued listing under Nasdaq Listing Rule 5550(b)(3) (the “Net Income Standard”). The Nasdaq Qualifications Listing Staff (the “Staff”) notified the Company that it also did not meet the alternative continued listing standards under Nasdaq Listing Rule 5550(b)(2) (the “Market Value of Listed Securities Standard,” which requires the market value of the Company’s listed securities be at least $35 million) or Nasdaq Listing Rule 5550(b)(1) (the “Equity Standard,” which requires the Company to maintain stockholders’ equity of at least $2.5 million) (the Net Income Standard, the Market Value of Listed Securities Standard, and the Equity Standard, collectively the “Continued Listing Standards”). The Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Staff’s determination, which took place on December 12, 2024.

On January 24, 2025, the Company received a letter from the Nasdaq Office of General Counsel confirming the decision of the Panel that the Company had regained compliance with the Continued Listing Standards by demonstrating compliance with the Equity Standard and that the matter is closed. Pursuant to Nasdaq Listing Rule 5815(d)(4)(B), the Company will be subject to a panel monitor for a period of one year from the date of the letter.

The Company reported on July 23, 2024 that it received a written notification from the Staff, dated July 19, 2024, indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), as the Company’s closing bid price for its Common Shares was below $1.00 per share for thirty (30) consecutive business days prior to such letter, and that pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days, or until January 15, 2025, to regain compliance with the Bid Price Rule

On January 22, 2025, the Company received a written notification from Nasdaq indicating that the Staff determined that the Company had received an additional 180 calendar days, or until July 14, 2025 (the “Second Compliance Period”), to regain compliance with the Bid Price Rule. If at any time during the Second Compliance Period, the closing bid price of the Common Shares is at least $1.00 per share for a minimum of ten (10) consecutive business days, Nasdaq will provide the Company with written confirmation of compliance with the Bid Price Rule and the matter will be closed. If compliance cannot be demonstrated by the end of the Second Compliance Period, the Staff will provide written notification that our Common Shares may be subject to delisting from the Nasdaq Capital Market.

The notice from Nasdaq has no immediate effect on the listing of the Common Shares on Nasdaq, and the Common Shares will continue to be listed on the Nasdaq Capital Market under the symbol “HOVR”. While there can be no assurance that the Company will regain compliance with the Bid Price Rule, the Company expects to cure this deficiency within the Second Compliance Period.

On January 27, 2025, the Company issued a press release announcing that the Company had regained compliance with the Continued Listing Standards and that the Company was eligible for the Second Compliance Period.

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

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

● a limited availability of market quotations for our securities;

● reduced liquidity for our securities;

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

● a limited amount of news and analyst coverage; and

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

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

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

(a) ~~During~~On July 9, 2025, the ~~quarter~~Company ~~ended~~issued ~~February~~an ~~28,~~aggregate ~~2025~~of 337,748 Class A ordinary shares to third-party service providers for services rendered ~~there~~at a deemed price of CAD$2.3695 per share. These issuances were nomade ~~unregistered~~in ~~sales~~reliance upon one or more exemptions from the registration requirements of ~~our~~the ~~securities~~Securities ~~that~~Act, including Section 4(a)(2) thereof, Regulation D, and Regulation S promulgated thereunder. The Class A ordinary shares were issued in transactions by the Company not ~~reported~~involving a public offering, to “accredited investors,” or in aoffshore transactions ~~Current~~in ~~Report~~which onno ~~Form~~directed ~~8-K~~selling efforts were made in the United States.

(b) Not Applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

(a) None.

(b) None.

(c) During the quarter ended ~~February~~August 2831, 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).

2520

Item 6. Exhibits

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

Exhibit No.		Description
2.1†		Business Combination Agreement, dated August 15, 2023, by and among Pono Capital Three, Inc., Pono Three Merger Acquisitions Corp., and Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on August 15, 2023).
3.1		New Horizon Articles (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024).
3.1		New Horizon 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).
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		Specimen Class A Ordinary Share Certificate (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
4.3		Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-1, filed by Pono Capital Three, Inc. on November 10, 2022).
4.4		Form of Warrant (incorporated by reference to Exhibit 4.5 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on June 24, 2024).
10.1		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).
10.2		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).
10.3		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).
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
32.1*		Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer
32.2**		Section 1350 Certification of Principal Financial and Accounting Officer
32.2*		Section 1350 Certification of Principal Financial and Accounting Officer
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101)

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

*	Filed or furnished with this Quarterly Report.

2621

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	New Horizon Aircraft Ltd.
Date: April 14, 2025		/s/ Brandon Robinson
Date: October 10, 2025		/s/ Brandon Robinson
	Name:	Brandon Robinson
	Title:	Chief Executive Officer
		(Principal Executive Officer)
Date: April 14, 2025		/s/ Brian Merker
Date: October 10, 2025		/s/ Brian Merker
	Name:	Brian Merker
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

2722

Filing Compare · New Horizon Aircraft Ltd.