New Horizon Aircraft Ltd. — FY2024 Form 10-K
Reporting period: Fiscal year ended May 31, 2024; comparative period ended May 31, 2023. Amounts are in Canadian dollars (CAD), generally in thousands unless stated otherwise. The company completed its business combination and became New Horizon Aircraft Ltd. on January 12, 2024; the statements include Legacy Horizon’s historical results and the post-combination company.
Business context
New Horizon is a pre-revenue aerospace developer designing the Cavorite X7, a seven-seat hybrid-electric eVTOL aircraft for regional air mobility. Its 50%-scale prototype had completed hover testing and was undergoing flight testing; the full-scale aircraft remained in detailed design. Management describes expected aircraft performance—including speeds up to 250 mph and range exceeding 500 miles—as estimates, not demonstrated full-scale results. The company intends to sell aircraft and potentially license its technology.
Financial performance and position
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $880 | $676 |
| General and administrative expense | $3,744 | $787 |
| Total operating expenses / loss from operations | $4,624 | $1,463 |
| Net loss | $8,160 | $1,247 |
| Basic and diluted loss per share | $0.76 | $0.17 |
| Cash used in operating activities | $3,308 | $1,087 |
| Cash used in investing activities | $209 | None |
| Cash provided by financing activities | $5,105 | $1,311 |
| Cash and cash equivalents at year-end | $1,816 | $228 |
Operating expenses rose mainly because of professional fees, hiring, and public-company, transaction, and growth-related costs. G&A included $1,101 of non-cash related-service fees. The net loss included a $4,342 non-cash expense from the change in fair value of the Forward Purchase Agreement, partly offset by $394 of warrant income and $575 of other income, primarily grants and subsidies.
At May 31, 2024, total assets were $4,944, including $2,431 of prepaid expenses and $417 of other receivables. Current liabilities were $1,333; current assets were $4,664. The balance sheet included $20,938 of Forward Purchase Agreement derivative liabilities and $576 of warrant liabilities. The company states it has no monetary obligations under the Forward Purchase Agreement, despite recognizing it as a fair-value liability. Convertible notes and debentures had converted to shares; the company reported no term loan or promissory-note balance at year-end. Operating lease liabilities totaled $74. Shareholders’ deficit was $17,933.
Changes, outlook, and material matters
- Net loss increased to $8,160 from $1,247, while operating expenses increased to $4,624 from $1,463. Operating cash use also increased.
- Management expects no material sales revenue before aircraft certification. It anticipates certification and first customer deliveries in 2027, subject to design completion, testing, production readiness, and regulatory approval. It expects development and operating expenses to increase significantly through at least 2027.
- The auditor highlighted substantial doubt about the company’s ability to continue as a going concern. Management said cash, business-combination proceeds, and an anticipated August 2024 securities offering of approximately $4.8 million gross were expected to fund its current plan for at least 12 months from the financial statements’ issuance; additional capital is expected to be needed for longer-term plans. The filing provides no assurance that further financing will be available on acceptable terms.
- The company restated FY2023 audited statements and the August 2023 interim statements after determining that previously capitalized development costs should have been expensed as research and development. Those periods were declared no longer reliable; the restatement also resulted in additional accounting and legal costs.
- Management concluded disclosure controls and internal control over financial reporting were not effective as of May 31, 2024. The identified material weakness involved inadequate separation of financial responsibilities. The company reported progress on remediation, including hiring a full-time CFO to address a previously identified shortage of technical accounting resources; remediation of the remaining weakness requires further implementation and testing.
- Nasdaq notified the company on July 19, 2024 that its share price had been below the $1 minimum bid requirement for at least 30 consecutive business days. The initial compliance deadline was January 15, 2025; the company said it was evaluating options and expected to cure the deficiency, with no assurance of success.
- Key risks include certification delays or failure, unproven full-scale performance and manufacturing capability, uncertain customer adoption and market size, supplier and battery risks, the need for additional capital and potential dilution, and safety, cybersecurity, regulatory, and competitive risks. No material legal proceedings were reported.
Important facts for investors to verify
- Whether the anticipated $4.8 million offering closed, its net proceeds, and the company’s current cash runway and financing needs.
- Progress against full-scale design, prototype transition and flight-test milestones, and the assumptions supporting the stated performance targets and 2027 certification and delivery timeline.
- The status of the Forward Purchase Agreement, its valuation assumptions and any potential effect on reported results or capital structure.
- Whether the company remediated the financial-control weakness and improved disclosure controls after year-end.
- Whether the company regained Nasdaq’s minimum bid-price compliance by the applicable deadline and the effect of potential share sales, warrants, and equity awards on dilution and trading liquidity.