HOVR 10-K & 10-Q changes, risk factors and insider trading

eVTOL aircraft involve a complex set of technologies and are subject to evolving regulations, many of which were originally not intended to apply to electric and/or VTOL aircraft. Before any eVTOL aircraft can fly passengers, manufacturers and operators must receive requisite regulatory approvals, including, but not limited to, aircraft type certificate and certification related to production of the aircraft. As of now, there are no eVTOL aircraft that have passed certification by TCCA, EASAthe European Union Aviation Safety Agency, or the FAA for commercial operations in Canada, Europe or the United States, respectively, and there is no assurance that our current serial prototype for the Cavorite X7 aircraft will receive government certification in a way that is market-viable or commercially successful, in a timely manner or at all. Gaining government certification requires us to prove the performance, reliability and safety of its Cavorite X7 aircraft, which cannot be assured. Any of the foregoing risks and challenges could adversely affect our prospects, business, financial condition and results of operations.

The success of our business depends on the the safety and positive perception of our aircraft, the establishment of strategic relationships, and of our ability to effectively market and sell aircraft that will be used in Regional Air MobilityRAM services.

We expect that the success of selling our aircraft will be highly dependent on our target customers’ embrace of Regional Air MobilityRAM and eVTOL vehicles, which we believe will be influenced by the public’s perception perception of the safety, convenience and cost of our Cavorite X7 specifically but also of the industry as a whole. As a new industry, the public has low awareness of Regional Air MobilityRAM and eVTOL vehicles, which will require substantial publicity and marketing campaigns in a cost-effective manner to effectively and adequately target and engage our potential customers. If we are unable to demonstrate the safety of our aircraft, the convenience of our aircraft, and the cost-effectiveness of our use in Regional Air MobilityRAM services as compared with other commuting, goods transportation, airport shuttle, or regional transportation options, our business may not develop as we anticipate we could, and our business, revenue and operations may be adversely affected. Further, our sales growth will depend on our ability to develop relationships with infrastructure providers, airline operators, other commercial entities, municipalities and regional governments and landowners, which may not be effective in generating anticipated sales, and marketing campaigns can be expensive and may not result in the acquisition of customers in a cost-effective manner, if at all. If conflicts arise with our strategic counterparties, the other party may act in a manner adverse to us and could limit our ability to implement our strategies. Our strategic counterparties may develop, either alone or with others, products or services in related fields that are competitive with our products and services.

We have a limited operating history and face significant challenges to develop, certify, and manufacture our aircraft. Our Cavorite X7 eVTOL aircraft remains in development, and we do not expect to deliver any aircraft until prior to 2030,2029, at the earliest, if at all.

We were incorporated in 2013, and we are developing an aircraft for the emerging Regional Air MobilityRAM market, which is continuously evolving. Although our team has experience designing, building and testing new aircraft, we have no experience as an organization in volume manufacturing of our planned Cavorite X7 aircraft. We cannot assure that us or our suppliers and other commercial counterparties will be able to develop efficient, cost-effective manufacturing capability and processes, and reliable sources of component supplies that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully produce and maintain Cavorite X7 aircraft. Based on our current testing and projections, we believe that we can achieve our business plan and forecasted performance model targets in terms of aircraft range, speed, energy system capacity, and payload for our full-scale Cavorite X7 aircraft.

Detailed designbuild and build of our full-scale Cavorite X7 aircraft has not yet been completed, and many of the systems, the aerodynamics, the structure, and other critical elements of the design have yet to be designed, produced, and tested at full-scale. As such, we might not achieve all, or any, of our performance targets, which would materially impact our business plan and results of operations.

The Regional Air MobilityRAM market for eVTOL passenger and goods transport services does not exist; whether and how it develops is based on assumptions, and the RegionalRAM Air Mobility market may not achieve the growth potential we expect or may grow more slowly than expected.

Our estimates for the total addressable market for eVTOL Regional Air Mobility,RAM, regional passenger and goods transport, and military use are based on a number of internal and third-party estimates, including customers who have expressed interest, assumed prices at which we can offer our services, assumed aircraft development, estimated certification and production costs, our ability to manufacture, obtain regulatory approval and certification, our internal processes and general market conditions. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors. As a result, our estimates may prove to be incorrect, which could negatively affect our operating revenue, costs, operations and potential profitability.

We will require significant capital to develop and grow our business, including designing, developing, testing, certifying and manufacturing our aircraft, educating customers of the safety, efficiency and cost-effectiveness of our unique aircraft and building our brand. Our research and development expenses were $3,660$13.2 million and $880$3.7 million in 2025fiscal year 2026 and 2024, 2025, respectively, and we expect to continue to incur significant expenses which will impact our profitability, including continuing expenses, manufacturing, maintenance and procurement costs, marketing, customer and payment system expenses, and general and administrative expenses as we scale our operations. Our ability to become profitable in the future will not only depend on our ability to successfully market our aircraft for global use but also our ability to control our costs. If we are unable to efficiently design, certify, manufacture, market, and deliver our aircraft on time, our margins, profitability and prospects would be materially and adversely affected.

We are a relatively small company in comparison to current industry leaders in the Regional Air MobilityRAM market. We may experience difficulties in managing our growth.

We do not anticipate delivering our first Cavorite X7 eVTOL aircraft to customers until sometime prior to 20302029 at the earliest, pending receipt of regulatory approval and certification. The aircraft remains in the detailed design and building phase and has yet to complete any flight testing or go through a certification process. Any delay in the design, production, or completion or requisite testing and certification, and any design changes that may be required to be implemented in order to receive certification, could adversely impact our business plan and strategic growth plan and our financial financial condition.

Electric aircraft are based on complex technology that requires skilled pilot operation and maintenance. Like any aircraft, they may experience operational or process failures and other problems, including adverse weather conditions, unanticipated collisions with foreign objects, manufacturing or design defects, pilot error, software malfunctions, cyber-attacks or other intentional acts that could result in potential safety risks. Any actual or perceived safety issues with our aircraft, other electric aircraft or eVTOL aircraft, unmanned flight based on autonomous technology or the Regional Air MobilityRAM industry generally may result in significant reputational harm to our business, in addition to tort liability, increased safety infrastructure and other costs that may arise. The electric aircraft industry has faced multiple prototype-related accidents.

We are also subject to risk of adverse publicity stemming from any public incident involving the company, our employees or our brand. If our personnel, our prototype aircraft, or the personnel or vehicles of one of our competitors, were to be involved in a public incident, accident or catastrophe, the public perception of the Regional Air MobilityRAM industry or eVTOL vehicles specifically could be adversely affected, resulting in decreased customer demand for our aircraft, significant reputational harm or potential legal liability, which could cause a material adverse effect on sales, business and financial condition. The insurance we carry may be inapplicable or inadequate to cover any such incident, accident or catastrophe. If our insurance is inapplicable or not adequate, we may be forced to bear substantial losses from an incident or accident.

Our business and prospects heavily depend on our ability to develop, maintain and strengthen our brand and sell consumers on the safety, convenience and cost-effectiveness of our Regional Air MobilityRAM services. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers. Our ability to develop, maintain and strengthen our brand will depend heavily on the success of our marketing efforts. When it launches, we expect the Regional Air MobilityRAM industry to be intensely competitive, with a strong first-mover advantage, and we will not be the first to deliver viable eVTOL aircraft to service this market. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.

Companies, organizations, or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell, lease, or market our vehiclesaircraft or components, which could make it more difficult for us to operate our business. From time to time, we may receive communications from holders of patents (including non-practicing entities or other patent licensing organizations), trademarks or other intellectual property regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. Our applications and uses of trademarks relating to our design, software or artificial intelligence technologies could be found to infringe upon existing trademark ownership and rights. In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

Our eVTOL aircraft, our planned operation of Regional Air MobilityRAM services, and in certain jurisdictions our local AOCs, will be subject to substantial regulation in the jurisdictions in which we intend our eVTOL aircraft to operate. We expect to incur significant costs in complying with these regulations. Regulations Regulations related to the eVTOL industry, including aircraft certification, production certification, passenger operation, flight operation, airspace airspace operation, security regulation and vertiport regulation are currently evolving, and we face risks associated with the development and and evolution of these regulations.

Our aircraft must be initially certified by the Transport Canada Civil AviationTCAA organization in order to be used for commercial purposes in Canada. Furthermore, we must also seek type certification under the Federal Aviation AdministrationFAA for the aircraft to be used for commercial services in the United States. For commercial use in Europe, the European Union Aviation Safety Agency must also grant type certification for our aircraft. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving certification. Our failure to obtain or maintain certification for our aircraft or infrastructure would have a material adverse effect on our business and operating results. In addition to obtaining and maintaining certification of our aircraft, our third-party air carriers will need to obtain and maintain operational authority necessary to provide the envisioned Regional Air Mobility RAM services. A transportation or aviation authority may determine that we and/or our third-party air carriers cannot manufacture, provide, or otherwise engage in the services as we contemplated and upon which we based our projections. The inability to implement the envisioned Regional Air Mobility RAM services could materially and adversely affect our results of operations, financial condition, and prospects.

Our management team may not successfully or efficiently manageoperate its transition to beingas a public company.

We will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Initial Public Offering, (b) in which we have total annual gross revenue of at least USD $1.235$USD 1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A ordinary shares held by non-affiliates exceeds $USD USD $700700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than USD$USD $1.01.0 billion in non-convertible debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, such as an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our shares less attractive because we intend to rely on certain of these exemptions and benefits under the JOBS Act. If some investors find our shares less attractive as a result, there may be a less active, liquid and/or orderly trading market for our shares and the market price and trading volume of our shares may be more volatile and decline significantly.

An active market for our securities may not develop,persist, which would adversely affect the liquidity and price of our securities.

The trading price of our Class A ordinary shares is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your Class A ordinary shares at an attractive price due to a number of factors such as those listed in “Risks Related to Our Business and Industry” and the following:

We currently have an effective shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”), which we may use to to offer from time to time Class A ordinary shares, preferred shares, debt securities, warrants, units and any combination of the foregoing securities (the “Shelf Registration Statement”, and the prospectus contained therein, the “Prospectus”). On February 14, 2025, we entered into a sales agreement (the “Sales Agreement”) relating to the offer and sale of our Class A ordinary shares from time to time through or to JonesTrading Institutional Services LLC (“Jones”), acting as sales agent in “at the market” offerings as defined in Rule 415 under the Securities Act (the “ATM Offering”). In connection with the entry entry into the Sales Agreement, we filed a prospectus supplement, dated March 25, 2025 (the “Original Prospectus Supplement”) to to the accompanying Prospectus dated March 25, 2025 (collectively, the “Prior Prospectus”) to register Class A ordinary shares issuable pursuant to the Sales Agreement. Under the Prior Prospectus, we registered up to USD$USD $6.256.25 million of our Class A ordinary shares to be sold in the ATM Offering. On June 27, 2025, we filed a prospectus supplement to the Prospectus to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to up to an additional aggregate USD$USD $16.516.5 million of Class A ordinary shares, which did not include any prior sales made pursuant to the Sales Agreement. On October 31, 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 $USD 50 million of Class A ordinary shares. On May 26, 2026, the Company filed a prospectus supplement to decrease the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to $USD 28 million of Class A ordinary shares.

Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to curtail or cease our operations. Raising additional funding through debt or equity financing is likely to be difficult or unavailable altogether given the early stage of our technology. Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline further and existing stockholders may not agree with our financing plans or the terms of such financings.

In the future, we may also issue itsour securities in connection with investments or acquisitions. The amount of Class A ordinary shares issued in connection with an investment or acquisition could constitute a material portion of the then-outstanding Class A ordinary shares. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to our shareholders.

The exercise price for the Public Warrants is USD$USD $11.5011.50 per Class A ordinary share. There is no guarantee that the Public Warrants will ever be in the money prior to their expiration, and as such, the Public Warrants may expire worthless.

In addition, our Public Warrants were issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and Pono. The Warrant Agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then outstanding Public Warrants to make any other change. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least a majority of the then outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise period or decrease the number of shares and their respective affiliates and associates have of Class A ordinary shares purchasable upon exercise of a Public Warrant.

This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and “forward-looking information” within the meaning of the Ontario Securities Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Annual Report including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Annual Report, words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to the Company’s management. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of this Annual Report.

On February 14, 2023, we consummated the Initial Public Offering (“IPO”). On January 12, 2024 (the “Closing date”), we consummated a merger (the “Merger”) with Pono Three Merger Acquisitions Corp., a British Columbia company (“Merger Sub”) and wholly-owned subsidiary of Pono, with and into Robinson Aircraft Ltd. (“Robinson”) pursuant to an agreement and plan of merger, dated as of August 15, 2023, (as amended by a Business Combination Agreement Waiver, dated as of December 27, 2023) by and among Pono, Merger Sub, Horizon, and Robinson.

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 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.

WeThe believemarkets thatin thewhich primarywe sourcesintend to of competition for our aircraft salesoperate are highly competitive and characterized by significant capital requirements and rapid technological change. We expect to compete with traditional helicopters,helicopter manufacturers, fixed-wing aircraft manufacturers, ground-based mobility solutions, and other eVTOL developers.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 service and obtain large-scale capital investment, we may face increased competition.

Horizon may receive an advantage from following well-funded competitors that are paying to create certification programs, raise awareness of eVTOL advantagesadvantages, and advocate for enhanced government funding programs.

ForCommercial commercialoperation operations,of Horizon’s Horizon’s Cavorite X7 aircraft will require Type Certification.Certification Horizonand hasrelated hadregulatory initialapprovals. conversationsWe have initiated engagement with applicable regulators Transport Canada Civil Aviation (“TCCA”) in Canada and the Federal Aviation Association (“FAA”) in the United States ofto America.discuss potential certification pathways. As a Canadian company, we expect TCCA isto leadingserve as the primary certification efforts.authority, Horizonwith expectsparticipation from the FAA toas participatethe duringprogram thisprogresses, process which we expect will likely reduce the traditional amount of time required to achieve FAA certification.

The CompanyHorizon maintains a partnership with Cert3C Centreto Canada (“3C”) for the purpose of collaborating onsupport aspects of theour continuedcertification planning and development and path to certification of Horizon’s eVTOL program.activities. 3C is leveraging their deep experience with TCCA and FAA certification programs toand developis aassisting certification basisus forin thedeveloping our certification ofbasis Horizon’sand eVTOLadvancing aircraft.regulatory engagement.

Horizon’s business model to serve 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 neednecessarily to achieverequire TCCA, FAA, or similarrelated other 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 variable cost associated with assembling its aircraft at scale remains uncertain at this stage of development.

Horizon is a pre-revenue organization in afocused on research and development and flight-testing phase of operations.our eVTOL aircraft. With more than $15$78.3 million of cash on-hand as of theMay date31, of2026, filing, management expects that the proceedsCompany from recent sales of securities will be has sufficient tofunds fundfor ourits current operating plan for at least the next 12 months from the date the consolidated financial statements were available to be issued,issued. however thereThere remains substantial doubt aroundregarding the Company’s ability to meet the going concern assumption beyond that period without raisingsecuring 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 wouldcould have a material adverse effect on our financial position, results of operations, cash flows, and ability to achieveexecute our intended business plans.

The Company is working to design, develop, certify, and manufacture our eVTOL aircraft and has not yet generated revenues in any of the periods presented. We do not expect to begin generating significant revenues until we are able to complete the design,certification development, and certifyof our eVTOL aircraft.

Research and development expenses consist primarily of personnel expenses, including salaries, benefits, other compensation costs and costs of consulting, as well as equipment, engineering, data analysis, and materials.

We expect our selling, general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations, including the Sarbanes-Oxley Act (“SOx”) and other SEC rules and regulations.

Interest expense is related to the Company’s leases. Interest income consists primarily of interest earned on the Company’s cash.cash and cash equivalents.

Change in fair value of Forward Purchase Agreement consists of fluctuations in the deemed value of an agreement between the Company and a shareholder facilitating future purchases of the Company’s stock based on a simulation model. The Company mutually agreed to terminate the Forward Purchase Agreement with its counterparty on November 1, 2024, at a cost of $278. In connection with this termination,transaction, the Company recorded a $21,400 gain.

Changes in fair value of Warrants consists of fluctuations in the fair value of the Company’s General Warrants outstanding as of the end of each reporting period.

Significant variances in the Company’s components of operations are explained below. The following table sets forth Horizon’s statements of operations data for the years-ended May 31, 2025, 2026, and May 31, 20242025 (000’s CAD$CAD).

Operating expenses increased by $8,961,$9,883, from $4,624 for the year-ended May 31, 2024, to $13,585 for the year-ended May 31, 2025.2025, to $23,468 for the year-ended May 31, 2026. The increase was primarily driven by professionalequipment fees,and materials directly related to the build of the full-scale technical demonstrator aircraft, additional staff hired to to support research and development activities, and other administrative costs connected with the Company’s growth activities.

Research and development expenses increased by $2,780,$9,584, from $880$3,660 during the year-ended May 31, 2025, to $13,244 during the year-ended May 31, 2024, to $3,660 during the year-ended May 31, 2025.2026. The increase was primarily attributable to additional labour costs related to flight testing, engineering work, flight software, prototype manufacturing, and data analysis. Research and development costs can be itemized into the following categories for the respective periods:

General and Administrative costs increased by $6,181,$299, from $3,744$9,925 during the year-ended May 31, 2024,2025, to $9,925$10,224 during the year-ended May 31, 2025.2026. The increase was related to legal, accounting, travel, investor relations, compensation costs, marketing, and branding expenses related to the Company’s growth efforts and public company status.efforts.

Other expenses (income) decreased increased by $585,$513, from an expense of $10 during the year-ended May 31, 2025, to income of $575$503 during the year-ended May 31, 2024, to an expense of $10 during the year-ended May 31, 2025.2026. The decrease increase primarily reflected foreign exchange losses and the change in additional grants and subsidies received in the comparative periods.received.

The following tables set forth a summary of our cash flows for the periods indicated (000’s CAD$CAD):

For the year-ended May 31, 2025,2026, the $6,0047,180 increase in cash used from operations as compared to the year-ended May 31, 2024,2025, was primarily attributed to increased operating costs in connection to the Company’s growthengineering efforts and changes in working capital.

The Company’s cash flows used in investing activities to date have primarily been comprised of the acquisition of property and equipment.

For the year-ended May 31, 2025, 2026, the $67$825 decreaseincrease in cash used by investing activities as compared to the year-ended May 31, 2024,2025, was primarily attributed to websitetooling, aircraft rotables and spares, and developmenttechnology costsacquisition incurred in the prior year.costs.

For the year-ended May 31, 2025, 2026, the $10,080$73,006 increase in cash provided by financing activities was primarily attributed to proceeds from the issuance of Class A ordinary shares, the issuance of Preferred shares,shares and warrant exercises.

On August 21, 2024, the Company completed a registered securities offering (“RSO”) by issuing 2,800,000 Class A ordinary shares, 3,000,000 Pre-Funded Warrants (“PFW’s”), and 5,800,000 warrants. General Warrants. Proceeds received by the Company are summarized below:

WarrantDuring the year-ended May 31, 2026, warrant holders exercised 3,200,000 (May 31, 2025 - 2,590,000) warrantsGeneral Warrants in exchange for 3,200,000 (May 31, 2025 - 2,590,000 ) Class A ordinary shares for proceeds of $2,787$3,280 in the year-ended (May 31, 2025.2025 - $2,787).

As of May 31, 2025,2026, there were 12,065,375 warrants outstanding at an exercise price of $11.50 USDUSD, 10,000 General Warrants outstanding at an exercise price of $USD 0.75, 277,647 RDO I Warrants outstanding at an exercise price of $USD 2.47, and 3,210,000298,805 GeneralRDO II Warrants outstanding at an exercise price of $0.75$USD USD2.89 to purchase an equivalent number of Class A ordinary shares. As of the date of this filing, there remains just 310,000 General Warrants outstanding.

On December 18, 2024, the Company entered into subscription agreements with a third-party investor pursuant to which the Company issued an aggregate of 4,166,667 Class A ordinary shares of the Company, at a price of USD$USD $0.360.36 per share, and an aggregate of 4,500 Series A preferred shares (the “Series A Preferred Shares”) of the Company at a price of $1,000 per share. The financing closed on December 19, 2024.

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 USD$USD $6.256.25 million, pursuant to a Capital on Demand™ Sales Agreement (the “Sales Agreement”) with a placement agent for the sale of its Class A ordinary shares. During the year-ended May 31, 2025, the Company sold 940,562 shares of Class A ordinary shares under the Sales Agreement for net proceeds of $880. As of May 31, 2025, the Company had $7,529 remaining eligible for sales under the Sales Agreement.

On June 27, 2025, thewe Companyfiled filed a prospectus supplement to increase the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement Agreement to up to an additional aggregate USD$USD $16.516.5 million of Class A ordinary shares. On October 31, 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 $USD 50 million of Class A ordinary shares. On May 26, 2026, the Company filed a prospectus supplement to decrease the maximum aggregate offering price of the Class A ordinary shares issuable under the Sales Agreement to $USD 28 million of Class A ordinary shares.

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, contractual obligations, and other commitments. The Company assesses liquidity in terms of its cash flows from financing activities and their sufficiency to fund its operating and development activities. Beyond May 31, 2025,2026, the Company’s principal source of liquidity is expected to be cash and cash equivalents of more than $15,000$78 on-handmillion as of the date of this filing,on-hand, future government grants and subsidies, and future sales of securities.

The Company believes it has sufficient cash to fulfill its business plan for at least the next 12 months from the date of this filing. To the extent the Company is able to raise additional financing, either by way of the Sales Agreement, warrants, or by other means, the Company may be in a position to expedite its business plan including hiring employees at a more rapid pace. To achieve the Company’s long-term objectives, additional financing willmay be required and efforts to raise such working capital will be ongoing through at least the next several years.required.

The Company’s Forward Purchase Agreement and Warrants outstanding that are recognized as a derivative liability in accordance with ASC 815.815 Accordingly,are the Company recognizes the instrumentrecognized as an asset or liability at fair value and with changes in fair value recognized in the Company’s consolidated statements of operations. The estimated fair value of the Forward Purchase Agreement iswas measured at fair value using a simulation model. At the settlement date, the Forward Purchase Agreement will bewas recognized as a derivative asset at the value of cash paid based on the number of shares, with any changes in fair value recognized in the Company’s statements of operations. The Company mutually agreed to terminate the Forward Purchase Agreement with its counterparty on November 1, 2024, at a cost of $278 and resulting in a gain of $21,400.

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 aircargo cargo,transport, business traveltravel, 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.

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.

Horizon is a pre-revenue organization in a research and development and flight-testing phase of operations. With moreapproximately than $24$20 million of cash and cash equivalents on-hand as of NovemberFebruary 30,28, 2025,2026, 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.

Comparison of the Three Months Ended NovemberFebruary 30,28, 2025,2026, to the Three Months Ended NovemberFebruary 30,28, 20242025

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 quarters ended NovemberFebruary 28, 2026, and February 30, 2025, and November 30, 20242025 (000’s).

Operating expenses increased by $1,843,$4,035, from $3,247 $3,554 for the quarter-ended November 30,February 2024,28, 2025, to $5,117$7,589, for the quarter-ended NovemberFebruary 30,28, 2025.2026. 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.

Research and development expenses increased by $2,181, $3,840, from $427 during the quarter-ended November 30, 2024, to $2,608$443 during the quarter-ended NovemberFebruary 30,28, 2025.2026, to $4,283 during the quarter-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:

General and Administrative costs decreasedincreased by $338, $195, from $2,847$3,111 during the quarter-ended NovemberFebruary 30,28, 2024,2025, to $2,509$ 3,306 during the quarter ended NovemberFebruary 30,28, 2025.2026. The decreaseincrease 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.

Comparison of the SixNine Months Ended NovemberFebruary 30,28, 2025,2026, to the SixNine Months Ended NovemberFebruary 30,28, 20242025

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 sixnine months ended NovemberFebruary 30,28, 2025,2026, and NovemberFebruary 30,28, 20242025 (000’s).

Operating expenses increased by $5,048,$9,084, from $5,979$9,532 for the nine months-ended February 28, 2025, to $18,616 for the six months-ended November 30, 2024, to $11,027 for the sixnine months-ended NovemberFebruary 30,28, 2025.2026. The increase was primarily driven by additional staff hired to support development activities, engineering costs related to building the Company’s full-scale prototype aircraft, and stock-based compensation.

Research and development expenses increased by $4,603, $8,443, from $724 during the six months ended November 30, 2024, to $5,327$1,167 during the sixnine months-ended NovemberFebruary 30,28, 2025.2025, 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:

General and Administrative costs increased by $445, $641, from $5,255 during the six months ended November 30, 2024, to $5,700$8,365 during the sixnine monthsmonths-ended endedFebruary November28, 30,2025, 2025.to $9,006 during the nine months-ended February 28, 2026. The Company continues to make efforts towards maintaining efficient administrative expenses as research and development costs connected with building the full-scale prototype aircraft grow.

For the sixnine monthsmonths-ended endedFebruary November28, 30, 2025,2026, the $788 $4,982 increase in cash used in operations as compared to the sixnine months ended NovemberFebruary 30,28, 2024,2025, was primarily attributed to increased operating costs,costs partially offset byand changes in non-cash working capital.

For the sixnine monthsmonths-ended endedFebruary November28, 30, 2025,2026, the $666$715 increase in cash used from investing as compared the sixnine monthsmonths-ended endedFebruary November28, 30, 2024,2025, was primarily related to tooling and equipment connected with building the Company’s full-scale prototypedemonstrator aircraft.aircraft and expansion of the Company’s facilities to accommodate additional personnel.

For the sixnine monthsmonths-ended endedFebruary November28, 30, 2025,2026, the $19,140 $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.

Warrant holders exercised 3,200,000 warrants in exchange for 3,200,000 Class A ordinary shares resulting in proceeds of $3,282 during the sixnine months-ended NovemberFebruary 30,28, 2026 (February 28, 2025 (November 30, 2024 - $103$2,684).

As of NovemberFebruary 30,28, 2025,2026, there were warrants outstanding 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 number of Class A ordinary shares.

During the three and sixnine months-ended NovemberFebruary 30,28, 2025,2026, the Company sold 2,558,726870,297 and 6,003,936 shares of6,874,234 Class A ordinary shares under the Sales Agreement Agreement for net proceeds of $10,839$2,327 and $19,092,$21,419, respectively. As of NovemberFebruary 30,28, 2025,2026, the Company had $31.8$33.4 million USD remaining eligible for sales under the Sales Agreement.

Liquidity describes the ability of a company to generate sufficient cash flows to meet the cash requirements of its business operations, including working capital needs, debt service, contractual obligations, and other commitments. The Company assesses liquidity in terms of its cash flows from financing activities and their sufficiency to fund its operating and development activities. Beyond NovemberFebruary 30,28, 2025,2026, the Company’s principal source of liquidity is expected to be cash and cash equivalents of moreapproximately than $24$20 million currently on-hand, future government grants and subsidies, and future sales of securities or convertible debt instruments.

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’s proposal was aligned with three of the four key INSAT technology areas including (1) Hybrid and Alternative Propulsion, (2) Aircraft Architecture and Systems Integration, and (3) Transition to Alternative Fuels. In October 2025, the Company was informed that this application was successful. Funding for this project is anticipated to span the next 61-2 quarters.years.

We did not have any off-balance sheet arrangements as of NovemberFebruary 30,28, 2025,2026, and May 31, 2025.