Business Context and Reporting Period
Company: New Horizon Aircraft Ltd. (HOVR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended May 31, 2026
Business Overview: New Horizon Aircraft is an advanced aerospace OEM developing the Cavorite X7, a hybrid-electric vertical takeoff and landing (eVTOL) aircraft for the Regional Air Mobility (RAM) market. The company utilizes proprietary "HOVR Wing" technology (ducted fans inside wings) to enable vertical takeoff and efficient forward flight. As of the filing date, the company is pre-revenue, currently building a full-scale technical demonstrator, and targeting Type Certification prior to 2030.
Key Financial Metrics
| Metric (CAD '000s) | Year Ended May 31, 2026 | Year Ended May 31, 2025 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Income (Loss) | $(33,096) | $5,200 |
| Operating Expenses | $23,468 | $13,585 |
| Research & Development | $13,244 | $3,660 |
| General & Administrative | $10,224 | $9,925 |
| Cash and Cash Equivalents (End of Period) | $78,279 | $7,547 |
| Net Cash Used in Operating Activities | $(16,492) | $(9,312) |
| Net Cash Provided by Financing Activities | $88,191 | $15,185 |
| Warrant Liabilities | $9,025 | $4,488 |
Note: All figures are in thousands of Canadian Dollars (CAD) unless otherwise noted. The company reported a net loss in 2026 primarily due to increased operating expenses and a change in the fair value of warrant liabilities, contrasting with a net income in 2025 driven by a gain on the termination of a Forward Purchase Agreement.
Material Changes vs. Prior Period
- Operating Expenses: Increased by $9.9 million (73%) year-over-year. Research and Development (R&D) expenses surged by $9.6 million, driven by labor costs for flight testing, engineering, and the construction of the full-scale technical demonstrator.
- Net Loss: The company swung from a net income of $5.2 million in 2025 to a net loss of $33.1 million in 2026. The 2025 income was significantly influenced by a $21.4 million gain from terminating a Forward Purchase Agreement, which did not recur in 2026.
- Liquidity Position: Cash and cash equivalents increased dramatically from $7.5 million to $78.3 million. This was fueled by $88.2 million in financing activities, including two Registered Direct Offerings (RDO I and RDO II) and sales under an At-The-Market (ATM) program.
- Warrant Liability: The fair value of warrant liabilities increased by $4.5 million to $9.0 million, contributing to the net loss.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Guidance
- Commercialization: The company does not expect to generate significant revenue until aircraft certification is complete. First aircraft deliveries are targeted for 2029 at the earliest.
- Liquidity: Management estimates the $78.3 million cash on hand is sufficient to fund operations for at least the next 12 months. However, the filing explicitly states there is "substantial doubt" regarding the company's ability to continue as a going concern beyond that period without securing additional capital.
- Certification: The company is working with Transport Canada Civil Aviation (TCCA) and the FAA for Type Certification, aiming to be one of the first eVTOLs certified for Flight into Known Icing (FIKI).
Risks and Contingencies
- Going Concern: The company is pre-revenue and expects to incur significant losses until commercial operations begin. Future capital requirements are uncertain.
- Regulatory Approval: Failure to obtain Type Certification or delays in the process could materially adversely affect the business.
- Technology Execution: Risks include the full-scale aircraft failing to meet performance targets, supply chain disruptions for critical components (e.g., batteries), and cybersecurity threats.
- Market Adoption: The Regional Air Mobility market is nascent; demand is not guaranteed, and competition is increasing.
Unusual Items
- Forward Purchase Agreement: Terminated in November 2024, resulting in a $21.4 million gain recorded in the 2025 fiscal year. This non-recurring item significantly distorted the 2025 profitability.
- Warrant Fair Value: Significant volatility in the fair value of public and private warrants impacts the bottom line, creating non-cash losses or gains.
Investor Verification Checklist
- Cash Burn Rate: Verify the sustainability of the $78.3 million cash balance against the projected burn rate for the full-scale demonstrator build and certification process.
- Certification Timeline: Confirm progress with TCCA and FAA regarding the Type Certification basis and the timeline for the 2030 target.
- Capital Raise Plans: Assess the company's strategy for raising additional capital beyond the 12-month runway, given the "substantial doubt" disclosure.
- Warrant Liability Impact: Monitor the fair value of outstanding warrants (HOVRW) and their potential impact on future earnings volatility.
- Government Grants: Verify the status and disbursement of the $10.5 million INSAT grant application and other government subsidies.