New Horizon Aircraft Ltd.

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

AS AT AUGUST 31, 2026 AND MAY 31, 2026

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

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 was incorporated on March 11, 2022.

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 and non-dilutive government grants.

Horizon is a pre-revenue organization that is currently building a full-scale technical demonstrator aircraft in pursuit of certifying its Cavorite X7 aircraft. While management estimates that cash on-hand of more than $70 million 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 Securities and Exchange Commission (“SEC”). These unaudited condensed interim consolidated financial statements include all the accounts of the Company and its wholly owned subsidiaries. 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. 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, 2026, filed with the SEC on July 16, 2026 (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, 2026, set forth in the Company’s Annual Report.

Recent Accounting Standards

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of additional information about specific expense categories in the notes to the financial statements. The update is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The update can be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures within its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes the accounting for government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. The update is effective for annual periods beginning after December 15, 2028, and interim periods beginning within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. If a business entity adopts the amendments in this update in an interim reporting period, it must adopt them as of the beginning of the annual reporting period that includes that interim reporting period. The Company is currently evaluating the impact of ASU 2025-10 on its disclosures within its consolidated financial statements.

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

NOTE 4. Balance Sheet Components

Property and Equipment, net

Property and equipment consist of the following:

Depreciation expenses of $128 for the three months ended August 31, 2026 (August 31, 2025 - $51) has been recorded in Operating expenses in the unaudited condensed interim consolidated statements of operations.

Prepaid Expenses

Prepaid Expenses consisted of the following:

Prepaid aircraft development costs represent components, tools, equipment, and services that relate to the assembly of the Company’s full-scale technical demonstrator aircraft that have not yet been received as of August 31, 2026.

Accrued Liabilities

Accrued Expenses consisted of the following:

NOTE 5. Segment 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. Shareholders’ Equity

The Company’s Class A ordinary shares and warrants trade on the NASDAQ stock exchange 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 Class A ordinary share is entitled toone vote.

Registered Direct Offering II

On May 27, 2026, the Company completed a registered direct offering (“RDO II”) by issuing 5,385,646 Class A ordinary shares and 4,574,514 pre-funded warrants to purchase Class A ordinary shares (each, a “PFW”). There were 298,805 warrants issued to the placement agent to purchase an equivalent number of Class A ordinary shares at an exercise price of $USD 2.89. Proceeds received by the Company are summarized below:

PFWs may be exercised by warrant holders at any time at a nominal exercise price as they were funded in connection with RDO II. Upon exercise, each PFW may be exchanged forone Class A ordinary share. During the year-ended May 31, 2026,2,413,617 PFWs were exercised. The Class A ordinary shares related to these exercised PFWs were not yet issued as of May 31, 2026, and were classified as Class A ordinary shares to be issued in the Company’s consolidated balance sheets. The corresponding Class A ordinary shares were issued in June 2026. The remainder of these PFWs were exercised on July 14, 2026, with the corresponding Class A ordinary shares issued on the same date. No PFWs remain outstanding as of August 31, 2026.

Preferred Shares

On December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued an aggregate of 4,500 Series A preferred shares of the Company at a price of $USD 1,000 per share. The Series A Preferred Shares are convertible, at the option of the holder and without additional consideration, into Class A ordinary Shares on a one for 2222.222222 basis.

At-the-Market Program

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.

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.

On August 28, 2026, the Company filed a new shelf registration statement on Form S-3 with the SEC and a related prospectus to which it may, from time to time, sell shares of its Class A ordinary shares, having an aggregate value of up to $50 million USD, pursuant to the Sales Agreement. There wereno sales made from this shelf registration statement duringthe three months ended August 31, 2026.

NOTE 7. 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, 2026, and May 31, 2026, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Level 1 Fair Value Measurements - Public Warrant Liabilities

The measurement of the public warrants is classified as Level 1 due to the use of an observable market quote in an active market under the ticker “HOVRW”. The quoted price of the public warrants was $USD 0.31 and $USD 0.54 per warrant as of August 31, 2026, and May 31, 2026, respectively. There were 11,500,000 Public Warrants outstanding for all periods presented, with an exercise price of $USD 11.50 and expiry on January 12, 2029. Based on the values of the Public Warrants on each measurement date, the Company recorded a Change in fair value of Warrants in the unaudited condensed interim consolidated income statements of $3,626 for the three months ended August 31, 2026 (August 31, 2025 - $2,137).

Level 3 Fair Value Measurements - Other Warrant Liabilities

Other Warrant Liabilities include the following two components:

General Warrants

In connection with the Company’s underwritten offering that closed on August 21, 2024,5,800,000 warrants were issued of which 10,000 remain outstanding as of August 31, 2026 (May 31, 2026 -10,000). These warrants were classified as a liability. The Company used the Black-Scholes model to value these warrants, and the following table provides quantitative information regarding Level 3 fair value measurement inputs related to these Warrant liabilities at their measurement dates:

Placement Warrant Liabilities

The Company has 565,375 Placement Warrants outstanding at the same terms and conditions as the Public Warrants. Accordingly, they have been estimated at the same value as the Public Warrants.

Summary of Level 3 fair value instruments

The change in the fair value of the assets and liabilities measured with Level 3 inputs, for the three months ended August 31, 2026, is summarized as follows:

NOTE 8. Stock-based Compensation

In August 2022, the Company established a stock option plan, superseded by a 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, Performance Share Units (“PSUs”), or other equity awards to its directors, officers, consultants and employees of the Company.

Stock Options

Stock options outstanding typically vest in equal tranches over a period of three years. During the three months ended August 31, 2026, the Company granted 660,000 stock options (August 31, 2025 -278,000). 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, 2026, the Company recorded stock-based compensation expenses of $264 (August 31, 2025 - $194) relating to stock options, of which $132 and $132 (August 31, 2025 - $97 and $97) was recorded in general and administrative and research and development expenses in the unaudited condensed consolidated interim financial statements, respectively.

Performance Share Units

On February 10, 2026, the Company issued 1,625,000 PSUs that vest in two separate and equal tranches; i) a scaled vesting upon achievement of the Company achieving a market capitalization of $USD 200-250 million; and ii) upon outperforming the Russell Microcap index over a two-year period. Included in general and administrative expenses and research and development expenses in the unaudited condensed interim consolidated statement of operation during the three months ended August 31, 2026, was $260 and $261, respectively (2025 –nil andnil).

In June 2026,488,394 Class A ordinary shares were issued to satisfy partial vesting of 674,272 of these PSUs. The Company withheld 185,878 Class A ordinary shares to settle related tax liabilities.

Shares for Services

The Company periodically issues Class A ordinary shares for services provided by third parties. During the three months ended August 31, 2026, the Company recorded $96 of operating expenses relating to 78,480 Class A ordinary shares issued for services (August 31, 2025 – $604). Included in general and administrative expenses and research and development expenses in the unaudited condensed interim consolidated statements of operations during the three months ended August 31, 2026, was $83 and $13 (August 31, 2025 – $593 and $12), respectively.

During the three months ended August 31, 2026, the Company incurred $21 (August 31, 2025 - $410) in general and administrative costs in the unaudited condensed interim consolidated statements of operations relating to 8,204 (August 31, 2025 –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 9. Net loss per Share Attributable to Class A ordinary shareholders

The Company computes net loss per share using the two-class method. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net 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, PSUs, and warrants. Potentially dilutive securities were excluded from the computation of diluted net loss per share as including them would have been anti-dilutive.

The following outlines the Company’s basic and diluted loss per share for the three months ended August 31, 2026, and August 31, 2025:

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. In October 2025, the Company was informed that this application was successful. As of August 31, 2026, the Company has submitted $1,495 of project costs, of which $442 is anticipated to be reimbursed by INSAT and has recorded $442 in accounts receivable in the unaudited condensed interim consolidated balance sheets as of August 31, 2026. Of this amount, $134 was recorded in Other income in the unaudited condensed interim consolidated income statements during the three months ended August 31, 2026 (2025 –nil).

Scientific Research and Experimental Development

In connection with the year-ended May 31, 2026, the Company plans to file an application for Scientific Research and Experimental Development (“SR&ED”) credits with the Canadian federal government. As the specific SR&ED amount has not yet been determined, the Company did not accrue any credits in connection with the year-ended May 31, 2026.

NOTE 11. Related Party Transactions

There wereno identifiable related party transactions or balances for the period.

NOTE 12. Subsequent Events

The Company has evaluated subsequent events from September 1, 2026, through to the filing of this Form 10-Q and determined that there have been no reportable subsequent events.