New Horizon Aircraft Ltd.

Previous wording

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.

Current wording

References in this report (the “Quarterly Report”) to “we,” “us,” “Horizon,” 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.

Previous wording

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 significant, it is currently immature and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft prior to 2030, and its business will require significant investment leading up to commercialization, including, but not limited to, final engineering designs, prototyping and flight testing, manufacturing, software development, certification, and pilot training.

Current wording

The Company’s revenue will be directly tied to the continued development of regional aerial transportation and related technologies. While the Company believes the market for RAM will be significant, it is currently immature and there is no guarantee of future demand. Horizon anticipates commercialization of its aircraft beginning in 2028 or 2029, and its business will require significant investment leading up to commercialization, including, but not limited to, final engineering designs, prototyping and flight testing, manufacturing, software development, certification, and pilot training.

Previous wording

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 almost twice as fast, and operate with much lower direct operating costs. Additional factors impacting adoption of eVTOL technology 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 cargo transport, business travel, and air-taxi services. If the market for RAM does not develop as expected, this could significantly impact the Company’s ability to generate revenue or grow its business.

Current wording

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 almost twice as fast, and operate with much lower direct operating costs. Additional factors impacting adoption of eVTOL technology 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, and 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 could significantly impact the Company’s ability to generate revenue or grow its business.

Previous wording

We believe that the primary sources of competition for our aircraft sales are traditional helicopters, ground-based mobility solutions, and other eVTOL developers. While we expect to produce a versatile aircraft that can be useful in a variety of air mobility missions, we believe this industry will be dynamic and increasingly competitive. It is possible that 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 may face increased competition.

Current wording

The markets in which we intend to operate are highly competitive and characterized by significant capital requirements and rapid technological change. We expect to compete with traditional helicopter manufacturers, fixed-wing aircraft manufacturers, ground-based mobility solutions, and other eVTOL developers, many of whom have substantially greater financial, technical, and manufacturing resources than we do. While we expect to produce a versatile aircraft that can be useful in a variety of air mobility missions, we believe this industry will be dynamic and increasingly competitive. It is possible that 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 serve and obtain large-scale capital investment, we may face increased competition.

Previous wording

For 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 is leading certification efforts for the Company. Horizon expects the FAA to participate during this process which we expect will reduce the traditional amount of time required to achieve FAA certification.

Current wording

Commercial operation of Horizon’s Cavorite X7 aircraft will require Type Certification and related regulatory approvals. We have initiated engagement with Transport Canada Civil Aviation (“TCCA”) in Canada and the Federal Aviation Administration (“FAA”) in the United States to discuss potential certification pathways. As a Canadian company, we expect TCCA to serve as the primary certification authority, with participation from the FAA as the program progresses, which we expect will reduce the traditional amount of time required to achieve FAA certification.

Previous wording

Horizon 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 support the Company’s certification basis for the certification of Horizon’s eVTOL aircraft.

Current wording

Horizon maintains a partnership with Cert Centre Canada (“3C”) to support aspects of our certification planning and development activities. 3C is leveraging their deep experience with TCCA and FAA certification programs and is assisting us in developing our certification basis and advancing regulatory engagement.

Previous wording

Horizon intends to 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 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 includes numerous parts and manufacturing processes unique to eVTOL aircraft, particularly its product design. 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.

Current wording

Present projections indicate that sales volume of this dual use aircraft will result in a viable business model over the 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 require TCCA, FAA, or other related jurisdictional 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 numerous parts and manufacturing processes unique to eVTOL aircraft, particularly its product design. Significant efforts have been made to estimate costs in the Company’s planning projections; however, the cost associated with assembling its aircraft at scale remains uncertain at this stage of development.

Previous wording

The accompanying 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. Horizon has incurred and expects to continue to incur significant costs in pursuit of the Company’s commercialization plans. We have devoted many resources to the design and development of our eVTOL prototype aircraft. Funding of these activities has primarily been through the net proceeds received from the issuance of Class A ordinary shares, preferred shares, government grants, and the issuance of related and third-party convertible debt.

Current wording

The accompanying 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 commercialization plans. We have devoted many resources to the design and development of our eVTOL prototype aircraft. Funding of these activities has primarily been through the net proceeds received from the issuance of Class A ordinary shares, preferred shares, and the issuance of related and third-party convertible debt.

Previous wording

Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. With approximately $20 million of cash and cash equivalents on-hand as of February 28, 2026, management expects to be in a position to fund our current operating plan for at least the next 12 months; however there remains substantial doubt around the Company’s ability to meet the going concern assumption beyond that period without raising additional capital.

Current wording

Horizon is a pre-revenue organization focused on research and development and flight-testing of our eVTOL aircraft. With more than $70 million of cash on-hand as of August 31, 2026, management expects that the Company has sufficient funds for its current operating plan for at least the next 12 months from the date the unaudited condensed interim consolidated financial statements were available to be issued. There remains substantial doubt regarding the Company’s ability to meet the going concern assumption beyond that period without securing additional capital.

Previous wording

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.

Current wording

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 execute our business plans.

Previous wording

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, 2026, and February 28, 2025 (000’s).

Current wording

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 three months ended August 31, 2026, and August 31, 2025 (000’s).

Previous wording

Operating expenses increased by $4,035, from $3,554 for the quarter-ended February 28, 2025, to $7,589, for the quarter-ended February 28, 2026. The increase was primarily driven by additional staff hired to support development activities and engineering costs related to building the Company’s full-scale prototype aircraft, partially offset by reduced general and administrative costs.

Current wording

Operating expenses increased by $3,189, from $5,909 for the three months ended August 31, 2025, to $9,098 for the three months ended August 31, 2026. The increase was primarily driven by additional engineering costs related to building the Company’s full-scale prototype aircraft, partially offset by reduced general and administrative costs.

Previous wording

Research and development expenses increased by $8,443, from $1,167 during the nine months-ended February 28, 2025, to $9,610 during the nine months-ended February 28, 2026. The increase was primarily attributable to additional labour related to building the Company’s full-scale prototype aircraft and related engineering costs, flight software, and data analysis.* *Research and development expenses can be itemized into the following categories for the respective periods:

Current wording

Research and development expenses increased by $4,710, from $2,719 during the three months ended August 31, 2025, to $7,429 during the three months ended August 31, 2026. The increase was primarily attributable to additional engineering costs related to building the Company’s full-scale prototype aircraft, flight software, and data analysis. Research and development expenses can be itemized into the following categories for the respective periods:

Previous wording

General and Administrative costs increased by $195, from $3,111 during the quarter-ended February 28, 2025, to $ 3,306 during the quarter ended February 28, 2026. The increase was primarily due to increased recognition of stock-based compensation expenses, partially offset by reduced service fees for consultants, investor relations, public relations, and regulatory fees.

Current wording

General and Administrative costs decreased by $1,521, from $3,190 during the three months ended August 31, 2025, to $1,669 during the three months ended August 31, 2026. The decrease was primarily due to reduced stock-based compensation expenses.

Previous wording

For the nine months-ended February 28, 2026, the $4,982 increase in cash used in operations as compared to the nine months ended February 28, 2025, was primarily attributed to increased operating costs and changes in non-cash working capital.

Current wording

For the three months ended August 31, 2026, the $4,849 increase in cash used in operations as compared to the three months ended August 31, 2025, was primarily attributed to increased operating costs and changes in non-cash working capital.

Previous wording

For the nine months-ended February 28, 2026, the $715 increase in cash used from investing as compared the nine months-ended February 28, 2025, was primarily related to tooling and equipment connected with building the Company’s full-scale demonstrator aircraft and expansion of the Company’s facilities to accommodate additional personnel.

Current wording

For the three months ended August 31, 2026, the $532 increase in cash used from investing activities as compared to the three months ended August 31, 2025, was primarily related to tooling and equipment connected with building the Company’s full-scale demonstrator aircraft and expansion of the Company’s facilities to accommodate additional personnel and aircraft.

Previous wording

Net Cash used in Financing Activities

Current wording

Net Cash provided by (used in) Financing Activities

Previous wording

For the nine months-ended February 28, 2026, the $10,444 increase in cash provided by financing activities was primarily attributed to proceeds from the issuance of Class A ordinary shares and warrant exercises.

Current wording

For the three months ended August 31, 2026, the $11,557 decrease in cash provided by financing activities was primarily attributed to decreased proceeds from the issuance of Class A ordinary shares and warrant exercises.

Previous wording

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.

Current wording

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, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a sales agent for the sale of its Class A ordinary shares.

Previous wording

During the three and nine months-ended February 28, 2026, the Company sold 870,297 and 6,874,234 Class A ordinary shares under the Sales Agreement for net proceeds of $2,327 and $21,419, respectively. As of February 28, 2026, the Company had $33.4 million USD remaining eligible for sales under the Sales Agreement.

Current wording

During the three months ended August 31, 2026, the Company sold 219,624 Class A ordinary shares under the Sales Agreement for net proceeds of $618 (August 31, 2025 - $8,253).

Previous wording

As of February 28, 2026, there were warrants outstanding of 12,065,375 at an exercise price of $11.50 USD and 10,000 remaining at an exercise price of $0.75 USD to purchase an equivalent number of Class A ordinary shares.

Current wording

As of August 31, 2026, there were warrants outstanding of 12,065,375 at an exercise price of $USD 11.50, 277,647 warrants outstanding at a price of $USD 2.47, 298,805 warrants outstanding at a price of $USD 2.89, and 10,000 remaining at an exercise price of $USD 0.75 to purchase an equivalent number of Class A ordinary shares.

Previous wording

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.

Current wording

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