New Horizon Aircraft Ltd. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing was signed March 28, 2024. Although it describes Horizon Aircraft’s aircraft-development business, the audited FY2023 financial statements and MD&A primarily report the pre-combination SPAC, Pono Capital Three, Inc.; they do not present clear FY2023 operating results for Legacy Horizon. The business combination closed January 12, 2024, after year-end. The company subsequently changed its fiscal year-end to May 31.
Business context and outlook
Horizon designs the Cavorite X7, a seven-seat hybrid-electric vertical takeoff and landing aircraft for regional passenger and cargo transport. The full-scale aircraft remains in detailed design; a 50%-scale prototype has completed hover testing and is undergoing flight testing. Proposed performance targets include speeds up to 250 mph, range over 500 miles, and a 1,500-pound useful load; these are projections, not demonstrated full-scale results.
Management expects first customer deliveries in 2027 at the earliest, subject to development and regulatory approvals, and believes type certification could be achieved in 2028. The filing also says material sales revenue will not be generated before certification. The 2027 delivery and 2028 certification expectations therefore warrant clarification. No quantitative financial guidance for the operating business is provided.
Financial results and liquidity
| Metric | FY2023 | Comparable period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating and formation costs | $1.666 million | $8,687 |
| Net income (loss) | $8.615 million | $(8,687) |
| Net cash used in operating activities | $(2.125) million | $(10,059) |
The comparable 2022 period covers March 11, 2022 (inception) through December 31, 2022, so it is not a full-year comparison. FY2023 net income was not operating profit: it reflected $5.216 million of trust-account interest and a $6.160 million gain from a change in the fair value of the forward purchase agreement, partly offset by $1.666 million of costs and $1.095 million of income tax expense. No meaningful operating margin can be calculated because the SPAC generated no revenue.
- Cash flow: Investing activities used $116.745 million, principally reflecting cash placed in the trust account, net of tax withdrawals. Financing activities provided $118.798 million, largely from the public offering and placement units.
- Year-end balance sheet: $121.961 million in trust investments, $16,138 in cash, and $122.083 million in total assets. The trust balance was subject to the SPAC transaction and redemption arrangements, not ordinary unrestricted operating cash.
- Liabilities and equity: Total liabilities were $7.086 million, including $3.450 million of deferred underwriting fees and a $2.650 million forward purchase agreement liability. Current liabilities were $986,158, including $175,000 of related-party borrowing. Shareholders’ equity was a deficit of $6.864 million; redeemable public shares were classified outside permanent equity.
- Pre-combination liquidity: Cash was $16,138 and working capital deficit was $864,387 at December 31, 2023. Management said the SPAC faced substantial doubt about continuing as a going concern absent the business combination; the January 12, 2024 closing alleviated that specific concern.
Material changes and subsequent events
- At the January 2024 combination, $105.151 million of public shares were redeemed and $16.749 million was released from the trust to the company. A $2.0 million PIPE subscription also closed. The filing does not provide a clear post-closing operating cash balance in the supplied text.
- On January 16, 2024, the company announced a letter of intent with JetSetGo for 50 aircraft at up to $5 million each, with an option for 50 more. This is an announced LOI, not evidence of completed sales or recognized revenue.
- In February 2024, the company amended the Meteora forward purchase agreement. The amendment includes potential shortfall payments, share-sale mechanics, and warrants that could represent significant dilution; assess the full agreement and subsequent disclosures.
- The filing’s explanatory note describes the combination as a common-control transaction, while the MD&A and financial-statement note describe it as a reverse recapitalization. The filing also says Horizon is the predecessor for future reporting. The accounting presentation should be confirmed in subsequent consolidated filings.
Management commentary, risks, and contingencies
The central risks are development and certification execution, financing needs, and whether a regional eVTOL market and customer demand develop as expected. No eVTOL aircraft had then been certified for commercial operations by the cited Canadian, U.S., or European authorities. Horizon had only a 50%-scale prototype; the full-scale design, manufacturing capability, suppliers, and key battery and propulsion systems remained in development. Certification delays could defer sales and increase costs.
The prototype’s Special Flight Operations Certificate was due to expire August 1, 2024, and continued untethered flight testing would require an extension. Other stated risks include reliance on third-party and potentially single-source suppliers, lithium-ion battery safety, aircraft performance and safety, competition, intellectual-property protection, cybersecurity, and the need for additional capital. The company reported no material legal proceedings as of January 31, 2024 and no material cybersecurity incident to date.
Management reported effective disclosure controls and effective internal control over financial reporting as of December 31, 2023; the independent auditor did not attest to internal-control effectiveness. The financial statements received an unqualified audit opinion. The company had no cash dividend history and reported no plans for foreseeable-future dividends.
Key facts investors should verify
- That FY2023 financial results are Pono SPAC results, not the operating financial history of Horizon; review the company’s subsequent consolidated financial statements for Horizon’s revenue, expenses, cash burn, and funding needs.
- The final post-combination cash, restricted cash, liabilities, and available funding after redemptions, the PIPE, transaction costs, and the Meteora agreement.
- The status, binding terms, customer deposits, conditions, and cancellation rights for the JetSetGo LOI; do not treat its stated potential value as contracted or recognized revenue without confirmation.
- Progress on full-scale design, prototype testing, certification, and production, including reconciliation of the stated 2027 earliest delivery and 2028 type-certification expectations.
- The economic and dilution effects of the forward purchase agreement amendment, outstanding warrants, equity incentive plan, registration rights, and share lock-up expirations.
- The applicable accounting treatment and reporting basis for the business combination, given the filing’s differing descriptions.