New Horizon Aircraft Ltd.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

AS AT AUGUST 31, 2025 AND MAY 31, 2025

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

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

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

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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

EXPRESSED IN CANADIAN DOLLAR 000’S; UNAUDITED

**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 “our”), a British Columbia corporation, with 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”).

The Company is designing and developing a hybrid-electric vertical takeoff and landing (“eVTOL”) prototype aircraft for use in future regional air mobility (“RAM”) networks.

NOTE 2. Going Concern and Liquidity

The accompanying unaudited condensed 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. 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.

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 could 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, New Horizon Aircraft Operations Ltd., a British Columbia company, and HOVR Technologies Corp. (“HTC”), a Delaware company. HTC is a dormant subsidiary. All intercompany balances and transactions have been eliminated on consolidation.

These unaudited condensed interim consolidated financial statements include all adjustments necessary for the fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented. Certain prior period amounts have been reclassified to conform to the current year’s presentation. The Company’s functional and reporting currency is Canadian dollars. All figures are in thousands of Canadian dollars unless noted otherwise.

There have been no changes to the Company’s significant accounting policies described in Note 3 “Summary of Significant Accounting Policies” to the audited consolidated financial statements in the Company’s annual report on Form 10-K for the year-ended May 31, 2025, filed with the SEC on August 22, 2025 (the “Annual Report”) that have had a material impact on these unaudited 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:

Depreciation expenses of $51 for the three months-ended August 31, 2025 (August 31, 2024 - $30) has been recorded in Operating expenses in the unaudited condensed interim consolidated statements of operations.

Prepaid Expenses

Prepaid Expenses consisted of the following:

Accrued Expenses

Accrued Expenses consisted of the following:

NOTE 5. Segmented Reporting

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates as asingle operating segment andone reportable segment, as the CODM reviews financial information presented on a consolidated basis. The CODM uses net income (loss) for purposes of making operating decisions, allocating resources, and evaluating financial performance. The Company’s segmented results are consistent with those presented in the unaudited condensed interim consolidated financial statements. As the Company is in a pre-revenue 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.

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 August 31, 2025, and May 31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

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

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:

NOTE 7. Common Stock

The Company’s Class A ordinary shares and public warrants trade on the Nasdaq Capital 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 toone vote.

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

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.

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

In March 2025 the Company filed a shelf registration statement on Form S-3 with the SEC and a related prospectus pursuant to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $6.25 million USD, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a placement agent for the sale of its Class A ordinary shares.

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

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.

During 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.

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 months ended August 31, 2025, the Company granted 278,000 stock options (August 31, 2024 –150,000). 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:

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

During the three months-ended August 31, 2025, the Company recorded stock-based compensation expenses of $194 (August 31, 2024 - $26) relating to stock options and $802 relating to shares issued for services (August 31, 2024 - $74).

On August 27, 2025, the Company issued 1,160,001 Performance Share Units (“PSU’s”) that vest upon achievement of the Company achieving a market capitalization of $100 million USD. The Company has recorded $2,709 of compensation expenses related to these PSU’s based on a Monte Carlo simulation model applied on the grant date, of which $1,295 is recorded in accrued liabilities and $1,414 as a component of shareholders’ equity.

The following assumptions were used to estimate the fair value of the PSUs:

NOTE 9. Net Loss per Share Attributable to Common Stockholders

The Company computes net income (loss) per share using the two-class method. Basic net income (loss) per share is computed using the weighted-average number of shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted-average number of shares and the effect of potentially dilutive 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):

NOTE 10. Grants and Subsidies

INSAT

The Canadian government recently announced the Initiative for Sustainable Aviation Technology (“INSAT”) fund whereby $350 million will be invested into innovative companies focused on sustainable aviation solutions. The Company submitted an initial INSAT proposal in April 2025 along with its application partners for a project size of $10.5 million, of which up to 40% of project costs may be reimbursed. The Company expects to receive information related to the success of this initial INSAT application in 2025.

Green Fund

In August 2024, the Company entered into a funding agreement with the Downsview Aerospace Innovation and Research Centre (“DAIR”). DAIR selected the Company with a project on the Engineering of an eVTOL wing. The funding approved to the Company was $75, of which $50 was recorded as a reduction in Research and Development costs during the year-ended May 31, 2025. As of August 31, 2025, $50 of this grant has been received.

NOTE 11. Related Party Transactions

During the three months-ended August 31, 2025, the Company paid $30 (August 31, 2024 - $nil) to Cert Centre Canada (“3C”) for certification planning services. One of the Company’s Board of Directors is the Chief Executive Officer of 3C. There wereno other identifiable related party transactions or balances for the periods presented.

NOTE 12. Subsequent Events

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