UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended May 31, 2025

 or

 TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from
to

 Commission File Number 001-41607

 (Exact name of registrant as specified in its charter)

 British Columbia, Canada

 98-1786743

 (State or other jurisdiction of

 (IRS Employer

 incorporation or organization)

 Identification No.)

 3187 Highway 35
 Lindsay, Ontario

 K9V 4R1

 (Address of principal executive offices)

 (Zip Code)

 (613) 866-1935

 (Registrant's telephone number, including
area code)

 Not applicable

 (Former name, former address and former fiscal
year, if changed since last report)

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Class A Ordinary Shares, no par value

 HOVR

 The Nasdaq Stock Market LLC

 Warrants, each warrant exercisable for one Class A Ordinary Shares at an exercise price of $11.50 per share

 HOVRW

 The Nasdaq Stock Market LLC

 Securities registered pursuant to section 12(g)
of the Act: None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405
of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes
No

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act:

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The aggregate market value of voting stock held by non-affiliates of
the Registrant on November 30 2024, based on the closing price of $0.67 for shares of the Registrant's Class A ordinary shares as
reported by The Nasdaq Global Market, was approximately USD $ 14,218,259. Class A ordinary shares beneficially owned by each executive
officer, director, and holder of more than 10% of our common stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive determination for other purposes.

 As of August 21, 2025, there were 39,210,651 of
the registrant's Class A ordinary shares, issued and outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cyber Security

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Item 6.

 Reserved

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 SIGNATURES

 i

 SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS

 Various statements in this
Annual Report on Form 10-K of New Horizon Aircraft Ltd. are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve substantial risks and uncertainties. All statements, other
than statements of historical facts, included in this report, including statements regarding our strategy, future operations, future financial
position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements
are subject to risks and uncertainties (some of which are beyond our control) and are based on information currently available to our
management. Words such as "anticipate," "believe," "estimate," "expect," "intend,"
"may," "plan," "contemplates," "predict," "project," "target,"
"likely," "potential," "continue," "ongoing," "will," "would,"
"should," "could," or the negative of these terms and similar expressions or words, identify forward-looking statements.
The events and circumstances reflected in our forward-looking statements may not occur and actual results could differ materially from
those projected in our forward-looking statements. Such forward-looking statements are based on current expectations and involve inherent
risks and uncertainties, including risks and uncertainties that could delay, divert or change these expectations, and could cause actual
results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, but are
not limited to, those factors described under Part I, Item 1A: "Risk Factors." Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements.

 This report contains market
data and industry forecasts that were obtained from industry publications. These data involve a number of assumptions and limitations,
and you are cautioned not to give undue weight to such estimates. We have not independently verified any third-party information. While
we believe the market position, market opportunity and market size information included in this report is generally reliable, such information
is inherently imprecise and subject to change.

 All written and oral forward-looking
statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. We caution investors not to rely on the forward-looking statements we make or that are made
on our behalf as predictions of future events. We undertake no obligation and specifically decline any obligation to update or revise
any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable
securities laws.

 We encourage you to read the
management's discussion and analysis of our financial condition and results of operations and our consolidated financial statements
contained in this Annual Report on Form 10-K. There can be no assurance that we will in fact achieve the actual results or developments
we anticipate or, even if we do substantially realize them, that they will have the expected consequences to, or effects on, us. Therefore,
we can give no assurances that we will achieve the outcomes stated in those forward-looking statements, projections and estimates.

 ii

 CERTAIN TERMS AND CONVENTIONS

 All
references to "we," "us," "our,", "Horizon", the "Company" or similar terms
used in this annual report refer to New Horizon Aircraft Ltd., a British Columbia company, including its consolidated subsidiaries, unless
the context otherwise indicates.

 All
references in this document to "Dollars" are expressed in Canadian Dollars ("CAD", "$CAD") and in
'000s (except per share data), unless otherwise indicated.

 "2023 Equity Incentive
Plan" means the New Horizon Aircraft Ltd. 2023 Equity Incentive Plan, as amended.

 "Amalgamation"
refers to the amalgamation of Merger Sub and Horizon in connection with the Business Combination, the resulting company, "Amalco,"
with Amalco being the wholly owned subsidiary of Pono.

 "Articles"
refers to the governing documents of New Horizon Aircraft Ltd., adopted on January 11, 2024 in connection with the SPAC Continuance, as amended.

 "BCBCA"
refers to the Business Corporations Act (British Columbia), as now in effect and as it may be amended from time to time.

 "Board"
refers to the board of directors of New Horizon Aircraft Ltd.

 "Business
Combination Agreement" refers to the business combination agreement, dated, August 15, 2023, by and among Pono, Pono Three Merger
Acquisitions Corp., a British Columbia company and wholly-owned subsidiary of Pono ("Merger Sub") and Robinson Aircraft Ltd.,
d/b/a Horizon Aircraft ("Legacy Horizon").

 "Business
Combination" refers to the transactions related to the Business Combination Agreement, pursuant to which Pono was continued and
de-registered from the Cayman Islands and redomesticated as a British Columbia company on January 11, 2024, Merger Sub and Legacy Horizon
were subsequently amalgamated under the laws of British Columbia, and Pono changed its name to New Horizon Aircraft Ltd.

 "$,"
"$CAD," "CAD," or "Dollars" refers to the lawful currency of Canada (expressed in Canadian dollars).

 "Class
A ordinary shares" refers to the Class A ordinary shares, no par value per share, of New Horizon Aircraft Ltd.

 "Code"
means the United States Internal Revenue Code, as amended.

 "Exchange Act"
means the United States Securities Exchange Act of 1934, as amended.

 "General Warrants"
means the warrants included within August 2024 registered share offering. Each General Warrant entitles the holder thereof to purchase
one Class A ordinary share for $0.75 per share.

 " Initial
Public Offering" or "IPO" refers to the initial public offering of 11,500,000 units, with each unit consisting of one
Class A ordinary share, par value $0.0001 per share (the "Pono Class A ordinary shares") and one warrant to purchase one Pono
Class A ordinary share, and each unit being sold at an offering price of $10.00 per unit, which closed on February 14, 2023 and the registration
statement on Form S-1 of which was declared effective by the SEC on February 9, 2023.

 "Legacy
Horizon" refer to Robinson Aircraft, Ltd. d/b/a Horizon Aircraft, a British Columbia company, prior to the Business Combination.

 "Merger Sub"
means Pono Three Merger Acquisitions Corp., a British Columbia company and a wholly-owned subsidiary of Pono.

 "Placement Units"
means 563,375 units issued to the Sponsor in the Private Placement. Each Placement Unit consisted of one Placement Share and one
Placement Warrant.

 "Placement Warrants"
means the warrants included within the Placement Units. Each Placement Warrant entitles the holder thereof to purchase one Pono Class A
ordinary share for $11.50 per share.

 "Pono"
refers to Pono Capital Three, Inc., a Cayman Islands blank check company incorporated for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which in connection with
the Business Combination, was continued and de-registered from the Cayman Islands and redomesticated as a British Columbia company and
changed its name to New Horizon Aircraft Ltd.

 "Pono
IPO," "IPO" or "Initial Public Offering" means Pono's initial public offering that was consummated
on February 14, 2023.

 "Pre-funded
Warrants" refers to warrants to purchase the Class A ordinary shares at an exercise price of $0.0001 per share.

 "Public
Warrants" refers to warrants to purchase the Class A ordinary shares at an exercise price of $11.50 per share.

 "SEC"
means the U.S. Securities and Exchange Commission.

 "Securities
Act" means the United States Securities Act of 1933, as amended.

 "SPAC
Continuance" refers to the domestication of Pono as a British Columbia company in connection with the Business Combination.

 "Sponsor"
means Mehana Capital LLC.

 "USD
$," "USD" or "U.S. Dollars" refers to the legal currency of the United States.

 "Warrant Agreement"
means the Warrant Agreement, dated February 9, 2023, by and between Pono and Continental Stock Transfer & Trust Company.

 "Warrants"
means any of the Public Warrants, General Warrants, Pre-funded Warrants, and the Placement Warrants.

 Item 1. Business.

 Overview

 We are an advanced aerospace
Original Equipment Manufacturer ("OEM") that is designing a next generation hybrid-electric Vertical Takeoff and Landing ("eVTOL")
aircraft for the Regional Air Mobility ("RAM") market. Our aircraft aims to offer a more efficient way to move people and
goods at a regional scale (i.e., from 50 to 500 miles), help to connect remote communities, and will advance our ability to deal with
an increasing number of climate-related natural disasters such as wildfires, floods, or droughts.

 The product we are designing
and delivering is a hybrid electric 7-seat aircraft, coined the Cavorite X7, that can take off and land vertically like a helicopter.
However, unlike a traditional helicopter, for the majority of its flight it will fly in a configuration much like a traditional aircraft.
This would allow the Cavorite X7 to fly faster, farther, and operate more efficiently than a traditional helicopter. Expected to travel
at speeds surpassing 250 miles per hour at a range over 500 miles, we believe this aircraft will be a disruptive force to RAM travel.

 The new and developing eVTOL
aircraft market has been made possible by a convergence of innovation across many different technologies. Batteries, immense strength
of light materials, computing power, simulation, and propulsion technology have all crossed a critical threshold to enable viable aircraft
designs such our Cavorite X7. This has resulted in the establishment and rapid growth of the Advanced Air Mobility ("AAM")
market. Morgan Stanley has projected that the eVTOL aircraft market could reach USD $1 trillion (in the base case) by 2040 and USD
$9 trillion by 2050.

 The Cavorite X7 architecture
is based on our patented fan-in-wing ("Horizon Omni-modal Vertical (HOVR) Wing" or "HOVR Wing") technology, which
has been developed and tested over the last several years. While most of our competitors in the AAM industry rely on open rotor designs,
our HOVR Wing uses a series of ducted electric fans located inside the wings to produce vertical lift. After vertical takeoff, the aircraft
accelerates forward. At a safe speed, the wings close to conceal the fans inside the wings and the aircraft returns to a highly efficient
configuration. The ability to take off and land like a helicopter and fly forward like an airplane is the key differentiator to its performance.

 A picture of Horizon's 50%-scale prototype that has successfully
completed flight testing

 The aircraft is powered
by a hybrid-electric main engine. For vertical flight, electrical power for the powerful ducted fans in the wings and canards comes
from two sources: an on-board generator driven by an internal combustion engine and an array of batteries. Augmenting the battery
power with generator power allows us to reduce battery size, recharge the aircraft after vertical takeoff or landing, and increase
safety. This aircraft is able to operate in austere locations without power, unlike other pure electric AAM aircraft designs that
will be forced to fly from charging station to charging station.

 We believe that the technology
and configuration advantages of our Cavorite X7 aircraft will represent a significant market advantage. It is anticipated that our aircraft
will be significantly less expensive to own and operate than legacy helicopters with similar payload characteristics and will travel almost
twice as fast. The specifications for the aircraft call for it to be able to carry seven people with a useful load of 1,500 lbs., almost
twice the carriage capacity of many of our AAM peers. We believe the combination of carrying more people or goods, traveling faster, and
operating more efficiently will provide a strong economic model for broad adoption.

 Our business operating model
is predicated on building and selling Cavorite X7 aircraft for both civilian and military use. We also believe that the extensive intellectual
property developed to enable the successful operation of our aircraft could be licensed to third parties to generate significant profit.

 We have designed, built, and
completed flight testing of a 50%-scale prototype of our Cavorite X7 aircraft. This sub-scale prototype has been through hover testing
and successfully transitioned to forward flight. We have also partnered with Cert Centre Canada (3C) for development of a certification
basis that will be used to form the foundation for Type Certification with TCCA. Receiving a Type Certificate in accordance with
stated regulatory standards will certify compliance to applicable airworthiness standards for the Cavorite X7, a prerequisite for using
the aircraft in commercial operations. We believe our aircraft will be one of the first eVTOL aircraft to be certified for flight into
known icing conditions ("FIKI"), dramatically increasing operational utility. We are targeting Type Certification prior to 2030.

 Patents and other Intellectual Property

 In order to protect the novel
technologies that underpin the Cavorite X7 design, we have accumulated 31 issued and allowed patents thus far, the earliest expiry of
which will be 2035. The most significant of these patents are US non-provisional utility patents that protect the core fan-in-wing invention
and various other novel details required to enable its practical use. Amongst these issued patents are several design patents that seek
to protect the shape of the Cavorite X7 with its distinct forward swept main wings, unique empennage, and forward canards. Other intellectual
property exists in the areas of hybrid-electric propulsion; ducted fan propulsion unit blade and stator design, cooling, and electrical
control; control systems including novel yaw control software and hardware; and digital twin simulation.

 The eVTOL Industry, Total Addressable Market
and its Drivers

 The eVTOL aircraft market
is a developing sector within the transportation industry. This market sector is dependent on the successful development and implementation
of eVTOL aircraft and networks, none of which are currently in commercial operation. Morgan Stanley have projected that the eVTOL market
for moving people and moving goods could be between USD $1 trillion by 2040 and USD $9 trillion by 2050, as set forth in the
"Morgan Stanley Research, eVTOL/Urban Air Mobility TAM Update" report released in May 2021 (the "Morgan Stanley
Report").

 Furthermore, in its 2021 Regional
Air Mobility report, NASA has highlighted that while the United States has over 5,000 airports, only 30 of them support 70% of all
travelers. 1 This report highlights that the average American lives within 16 minutes of an airport yet must travel hours
to larger hubs for even shorter regional travel. 73% of Americans prefer road travel over flying, even if that means spending hours
in gridlocked traffic. Accordingly, we believe there is a significant opportunity to improve regional travel through the use of intelligently
designed eVTOL aircraft.

 NASA, REGIONAL AIR MOBILITY (2021),

 Regional Air Mobility

 Regional Air Mobility ("RAM")
is a term that represents a faster, more efficient way of moving people and goods between 50 and 500 miles. With the development of more
economical, versatile, and safe aircraft like Horizon Aircraft's Cavorite X7 that can flexibly travel between regional locations,
it is little wonder that the market demand is high for these types of machines.

 NASA highlights that RAM has
the potential to fundamentally change how we travel and receive our goods by "bringing the convenience, speed, and safety of
air travel to all Americans, regardless of their proximity to a travel hub or urban center" and "through targeted investments,
RAM will increase the safety, accessibility, and affordability of regional travel while building on the extensive and underutilized federal,
state, and local investment in our nation's local airports."

 New types of aircraft capable
of operating with very limited ground infrastructure can deliver critical supplies to remote communities, transport critically injured
people to the hospital faster and more efficiently, help with disaster relief operations, and can help service people around the world
in special military missions.

 Another report from Morgan
Stanley projects that eVTOL technology is expected to revolutionize logistics due to advantages in speed, efficiency and accessibility
over current trucks, airplane and train freight transportation. In addition, the Morgan Stanley Report cites the potential for eVTOL technology
to provide a viable and affordable transportation solution in geographic locations without a current viable solution (such as rural or
island communities) and to expand the possibilities for 24-hour delivery or overnight parcel delivery in regions where existing transport
modes are slow.

 The large RAM market opportunity
is precipitated by a transportation system that is insufficient to handle increasing demand without time delays, high infrastructure and
maintenance costs and adverse environmental impact. Since 1990, global passenger flows have increased by more than 125% across all major
modes of travel while global trade volume has increased by approximately 200%. To counter the rapidly increasing demand for mobility and
logistics, governments worldwide are investing a total of approximately USD $1 trillion per annum into transport infrastructure,
which is three times more as compared to twenty years ago. Despite these investments, our regional transport systems have not fundamentally
improved.

 In response, governments are
increasing their support for the development of both urban and regional eVTOL networks, and sustainable aviation more generally, through
regulatory incentives and investment. For example, the Canadian government recently introduced the Initiative for Sustainable Aviation
Technology (INSAT) where $350M will be invested into innovative companies focused on sustainable aviation solutions. We believe that Horizon
Aircraft could be an ideal match for the recent government funding opportunities and has benefited from awards via government grants already
exceeding $CAD 2 million.

 The History of Horizon Aircraft

 Horizon was founded in 2013
to develop an innovative prototype amphibious aircraft. However, as we investigated the latest advancements in the areas of electric motor
and battery technologies, we realized that a new high-utility type of aircraft concept was feasible. The experienced aircraft development
team shifted to developing the unique Cavorite X-series concept, specifically a 7-person hybrid eVTOL aircraft. In June of 2021,
Horizon was acquired by Astro Aerospace Ltd. ("Astro"), an OTCQB-listed company, in an all-stock deal. In August of 2022,
Astro and Horizon agreed to unwind the deal and Horizon was sold back to its original shareholders.

 After re-privatizing from
Astro, Horizon successfully raised funding to support the continued development and testing of its sub-scale prototypes as well as to
continue progress on the detailed design of a full-scale technical demonstrator aircraft.

 Sub-Scale Prototypes

 We have built many sub-scale
prototype aircraft. Commencing with a smaller 1/7 th -scale aircraft, we have now completed flight testing on a half-scale prototype.
This large prototype has a 22-foot wingspan and weighs approximately 600 lbs. This aircraft has been through successful testing in hover,
wind tunnel, and forward transition flight. All testing yielded positive results, and the aircraft has performed significantly above initial
expectations in respect to both power and stability.

 Full-Scale Cavorite X7 Aircraft Concept

 Based on positive initial
testing results, the team has transitioned to building a full-scale technical demonstrator aircraft. This demonstrator aircraft will be
designed to hold seven (7) people: six (6) passengers and one (1) pilot. Updated performance estimates from early sub-scale
testing indicate that the full-scale hybrid-electric Cavorite X7 will be able to travel at speeds that may surpass 250 mph and carry 1,500
lbs. of useful load over 500 miles with the appropriate fuel reserves.

 Business Combination

 On February 14, 2023, Pono
consummated its Initial Public Offering. On January 12, 2024 (the "Closing Date"), we consummated the Business Combination
which resulted in the combination of Pono with Legacy Horizon, pursuant to the previously announced Business Combination Agreement, following
the approval at the extraordinary general meeting of the shareholders of Pono held on January 4, 2024. On January 10, 2024, pursuant to
the Business Combination Agreement, the Company initiated the SPAC Continuance when Pono was continued and de-registered from the Cayman
Islands when the Cayman Islands Registrar of Companies issued a Certificate of De-Registration. On January 11, 2024, the Company completed
the SPAC Continuance and re-domesticated as a British Columbia company and in connection therewith, effected the Articles, under the laws
of British Columbia. Pursuant to the Business Combination Agreement, on January 12, 2024, Merger Sub and Legacy Horizon were amalgamated
under the laws of British Columbia, and Pono changed its name to New Horizon Aircraft Ltd.

 Our Competitive Strengths

 We believe that our business
benefits from several competitive strengths, including the following:

 Proprietary Ducted Fan-in-Wing Technology — the
"HOVR Wing" System

 The majority of our competitors
use "open propeller" eVTOL vertical lift architectures. We employ our own proprietary HOVR Wing technology that provides a
number of important advantages:

 More Efficient: Ducted fans are significantly more efficient than open propellers of similar diameter, using much less power for the same levels of thrust. Our unique HOVR Wing system also generates significant induced lift over the wing, further reducing the amount of momentum lift required by the electric ducted fans and improving efficiency.

 Lower Noise: The presence of ducts around the fans stops the noise from radiating freely into the environment. Furthermore, we will employ acoustic liners within the fan duct that lower the noise further. We expect this to enable the Cavorite X7 aircraft to land at a large number of locations close to high population densities.

 Fly Enroute Like a Normal Aircraft: The HOVR Wing has the ability to return to a configuration similar to a traditional airplane for efficient enroute flight. This aerodynamically efficient enroute configuration is the key to its impressive performance metrics.

 CTOL, STOL, VTOL: The HOVR Wing concept also naturally supports Conventional Takeoff and Landing ("CTOL"), able to take off and land from a conventional runway like a traditional aircraft, should that be required. It can also conduct Short Takeoff and Landing ("STOL") operations, something that is anticipated to be very useful for regional flight operators. In CTOL and STOL operations the aircraft will also be able to carry more payload. Finally VTOL operations will open up remote landing opportunities, special missions, and dramatically expand its unique utility.

 Flight into Known Icing: We believe the Cavorite X7 will be one of the first VTOL aircraft that could be successfully certified for flight into known icing conditions. Being able to operate in poor weather should expand the operational capability of the aircraft and further reinforce strong commercial business cases.

 Agile Team with Significant Aerospace and
Operational Experience

 We were founded by a team
with deep experience in the aerospace industry. Our team boasts individuals who have led the design, construction and testing of new aircraft
types and have deep industry experience. The leadership team within Horizon also includes personnel with significant experience in
human resources and information technology which we believe will facilitate cohesion, effectiveness and security as the company continues
to grow.

 Operational Experience

 Many of our principal engineers
and technicians have significant operational experience. Many are active pilots. For example, our CEO was an active CF-18 fighter pilot
for nearly 20 years and holds a commercial Airline Transport Pilot's License. This experience allows the team to visualize
operating this innovative aircraft in the real world. Design considerations for easy field repair, safety, performance, and a focus on
lowering operational costs has been foundational to the Cavorite X7 design and development. We believe this deep operational experience
and design consideration has led to a machine concept that will support for-profit operators, thereby increasing demand for the aircraft.

 Our Strategy

 Build Aircraft for the Rapidly Growing Regional
Air Mobility Market

 We are focusing our initial
services on Regional Air Mobility. Beyond simple movement of cargo and people at the regional level — 50 to 500 miles — the
aircraft will be able to economically conduct a number of unique missions such as:

 Medical Evacuation: Able to travel almost twice the speed as a traditional helicopter and at significantly lower operating costs. Delivering people or other time sensitive materials to a hospital in half the time of current helicopters has the potential to save many lives.

 Remote Resupply: Many remote communities around the world suffer from anxiety about delivery of critical goods. Without the runway infrastructure to support traditional aircraft remote deliveries, the Cavorite X7 will be able to deliver critical medical supplies, food, and other important goods directly to these areas.

 Disaster Relief: As global climate conditions become more extreme, a hybrid electric eVTOL like the Cavorite X7 offers a unique way to save lives when a weather disaster strikes. Able to land almost anywhere and operate without power infrastructure due to its hybrid electric architecture, the Cavorite X7 could help people when climate disaster strikes.

 Military Missions: An aircraft capable of travelling at speeds almost twice that of a traditional helicopter offers unique military capability. Casualty evacuation, forward operating base resupply and other Special Operations will help Allied Servicepeople around the world.

 Develop Unique Technologies That Can be
Broadly Licensed to Generate Revenue

 We expect that the technology
we are developing for the Cavorite X7 aircraft may be broadly useful across the industry. For example, the unique HOVR Wing concept could
support other designs across the industry or within military applications. These technologies offer potential to significantly enhance
revenue.

 Our Cavorite X7 Hybrid eVTOL Aircraft Concept

 Our full-scale Cavorite X7
Hybrid eVTOL aircraft is currently being built. The combination of unique architecture, hybrid power, and proprietary ducted fan-in-wing
technology enables it to take off and land vertically while also flying at speeds much greater than a typical helicopter. We anticipate
that the final production aircraft will be able to carry six (6) passengers and one (1) pilot at ranges over 500 miles and at
speeds that may surpass 250 miles per hour.

 Ducted Fan-in-Wing "HOVR Wing"
Technology

 Our unique HOVR Wing technology
is described above and is protected by a US non-provisional utility patent. This technology allows the aircraft to return to an aerodynamically
efficient configuration enroute. The ability to fly as a traditional aircraft enroute has many operational advantages and may offer a
faster route to certification for commercial use.

 During a vertical takeoff,
an array of electrically powered ducted fans located in the wings and canards provide the required lift. For transition to forward flight,
the aircraft starts its rear pusher propeller and accelerates forward to a safe speed at which point the canards and wings close systematically
to conceal the fans within the wings. At this point, the aircraft is in a normal configuration much like a traditional aircraft. The balance
of the mission can then be conducted in a highly efficient manner. For landing, the reverse process occurs.

 This design is both efficient
and safe. During hover, multiple fans can fail with the aircraft maintaining hover. For example, during flight testing the 50%-scale prototype
aircraft hovered with 20% of its fans disabled. In addition, as outlined below, there are two sources of electricity for the fans: an
onboard generator and a battery array. Even at moderate forward speed the generator can support the full electrical power requirements
in the unlikely event of dramatic full battery array failure. For increased durability, each fan unit is electrically, mechanically, and
thermally isolated from the others, mitigating the chance of a cascading failure.

 This aircraft concept also
naturally allows for Conventional Takeoff and Landing (CTOL) as well as Short Takeoff and Landing (STOL). If one end of the mission calls
for loading of important cargo at an airport logistics hub or delivery to an airport, the Cavorite X7 can easily operate like a traditional
aircraft. Notably, in CTOL and STOL operational modes, the aircraft's payload would also increase.

 The Cavorite X7 hybrid eVTOL during transition
to forward flight

 Hybrid Electric Power System

 By their very nature, VTOL
aircraft will excel at delivering critical goods and services to remote locations. These remote locations may not have the charging infrastructure
to support purely electric VTOL aircraft. The Cavorite X7 will use a hybrid power system. This system will provide two sources of electrical
power during demanding vertical takeoff and landing operations and will allow the battery array to re-charge in flight and after a mission.
The batteries will be designed for high power draw, so they will naturally support quick charging.

 For remote operations, the
aircraft effectively becomes a power generation station. After landing the aircraft can recharge itself in minutes and will be able to
produce usable power should that be required, for example during a disaster relief mission where the power grid is offline. The Cavorite
X7 could land in a parking lot and provide charging or power for communications that has been disrupted.

 The hybrid power system will
emit less greenhouse gas emissions than a traditional turbine engine when compared to a traditional helicopter. The aircraft draws significant
electrical energy from the battery array during vertical takeoff and landing, reducing emissions during this phase. In addition, enroute
the aircraft is in an aerodynamically efficient configuration as compared to a helicopter, dramatically lowering the power required to
travel. The combination of these two factors is a compelling sustainability improvement over current VTOL aircraft.

 Safety by Design

 The safety, performance, and
reliability of our aircraft will be key factors in achieving customer acceptance of our aircraft for commercial use. First and foremost,
our aircraft design is focused on safety. There are several important considerations in the design concept that augment safety:

 The hybrid electric system will be designed to provide two sources of electrical power for the vertical lifting fans.

 The aircraft can hover with more than 20% of the fans disabled, returning the aircraft to safety in the case of fan failure.

 Each vertical lifting fan is mechanically contained, preventing catastrophic blade loss from damaging adjacent fan units.

 Each vertical lifting fan is both electrically and thermally isolated. This will help to avoid any cascading electrical problems or thermal runaways from reaching adjacent fan units.

 With only moderate forward speed, the generator can support all electrical demand for the vertical fan array. This provides additional safety in the event of a catastrophic battery failure.

 The aircraft is able to fly normally with all of the wings and canards in the open position, should any of them fail to move as commanded.

 In the event of a vertical lift system failure, the aircraft can land (or take off) conventionally. It can also operate in STOL mode, should that be required.

 With the wings closed during ground operations there will be no exposed fans, increasing passenger safety.

 An early focus in the design process on human factors will ensure that the aircraft is easy to fly, increasing safety in all flight operations.

 Performance

 The Cavorite X7 will also
benefit from significant performance. First, due to its aerodynamically efficient configuration enroute, it will be fast. We are anticipating
a maximum dash cruise speed of at least 250 knots, with a more efficient enroute speed likely just over 200 knots. Our initial estimates
also indicate that in VTOL mode it will have a 1,500 lb. useful load, which is the amount of combined fuel and payload it can carry. This
could increase to 1,800 lbs. when the aircraft operates in STOL or CTOL modes. Finally, our initial estimates indicate the aircraft will
be able to travel 500 miles with medium payloads with full operational fuel reserves. This is an aircraft design that was designed to
do work in the real world, and we believe our customers will recognize and appreciate this.

 Flight into Known Icing and Other Operational
Challenges

 We believe that the
Cavorite X7 design may be one of the only viable VTOL designs that could be certified for Flight into Known Icing. This is due to
its unique characteristic of flying like a traditional aircraft for enroute flight, without multiple open rotors that could
accumulate ice. Transition to and from vertical flight would occur in Visual Meteorological Conditions, essentially clear of any
clouds. As a result, enroute there would only be one propeller exposed to icing conditions should there be a requirement to fly
through clouds that could cause ice accumulation. This propeller can be electrically heated for anti-icing purposes, something that
is common in commercial regional turboprop operations. Furthermore, with a significant amount of on-board electrical power available
enroute, electrothermal coatings may be used to help prevent or remove ice on lift surfaces. Finally, with a turbine engine the
aircraft systems will have access to warm bleed air that could be circulated for anti-icing or de-icing.

 Bird strikes are also an area
of concern for commercial flight. Our aircraft concept has only one exposed propeller that is partially protected by the fuselage. Unlike
many compound open rotor designs where losing one blade may cause a cascading failure, our aircraft operates like any number of the thousands
of commercial regional aircraft already certified and operating profitably.

 Challenging weather is often
difficult for regional commercial flight operations. The Cavorite X7's hybrid power system and efficient enroute configuration will
likely make it more resilient in the face of bad weather. Increased speed and range over pure electric VTOL regional aircraft should allow
for increased versatility, able to divert to a backup airfield or vertiport, go around unexpected storms, or deal with unexpected winds
that could negatively impact slower designs. We feel that this, coupled with FIKI certification, could offer a significant operational
advantage over our competitors.

 Aviation Regulations

 In Canada and the U.S., civil
aviation is regulated by the TCCA and the Federal Aviation Administration (FAA) respectively. These two regulatory bodies control all
aspects of certifying a new aircraft for commercial flight (Type Certification), production of that aircraft (Production Certification)
and issuance of an Air Operations Certificate (AOC) to organizations who wish to use the aircraft in commercial operations.

 We intend to seek approval
for the design of the Cavorite X7 by obtaining a Type Certificate under TCCA using Canadian Air Regulations (CAR) §523 under Normal
Category, Level 2 — for aeroplanes with 2 to 6 passengers. Due to the innovative design of the Cavorite X7, it is expected
that TCCA will invoke certain regulations and standards from CAR §527, (helicopter certification requirements) and
additional Special Conditions. We have engaged Flight Test Centre of Excellence (3C) as partners who will perform the role of
Applicant's Representative for the certification effort. 3C has extensive expertise in developing and executing aircraft
certification programs and is helping to prepare our formal application to TCCA. We have also had initial discussions with the FAA
and plan to run a parallel program that would greatly expedite certification for use in the United States.

 While working towards a Type
Certificate for our aircraft that will enable sales for commercial use, we will also be pursuing a Production Certificate. Once obtained,
this will allow volume manufacturing to meet the demand that we anticipate. Companies using our aircraft for commercial operations will
require an AOC.

 As we will not be permitted
to deliver commercially produced aircraft to customers until we have obtained TCCA type certification, no material sales revenue from
aircraft deliveries is expected to be generated before TCCA certification issuance. The process of obtaining a valid type certificate,
production certificate and airworthiness certificate for the Cavorite X7 will take several years. Any delay in the certification
process could negatively impact us by requiring additional funds to be spent on the certification process and by delaying our ability
to sell aircraft.

 Marketing

 Our marketing strategy is
intended to build industry and consumer awareness of our technology. We are working with several external firms to develop and execute
a robust marketing plan. Marketing efforts will include comprehensive Communication, Investor Relations, and Public Relations plans to
ensure consumer understanding, investor confidence, and entering the public consciousness as developmental operations continue. Our overarching
value proposition will focus on the benefits of our Cavorite X7 platform and its wide array of superior operational capabilities, while
maintaining the highest safety standards. We also believe that the striking visual design of the aircraft coupled with market leading
utility will be an important point of differentiation from our competition.

 Competition

 The current eVTOL landscape
in North America and more broadly from a global perspective is competitive. Alternative technologies, either known or unknown, could bring
more attractive eVTOL designs to the marketplace. We believe that our primary competition for market share will come from similar minded
companies that come to realize that Regional Air Mobility may offer a more compelling initial business case as compared to early eVTOL
designs. These companies could employ similar design architectures alongside hybrid-electric power systems and challenge our Cavorite
X7. However, at present the vast majority of our eVTOL competition are pursuing purely electric flight, which currently leaves most lagging
behind from a speed, range and cargo-carrying capability.

 Human Resources

 As of August 21, 2025, we
had 28 employees in Canada and 2 employees outside of Canada. None of our employees are subject to a collective bargaining agreement
or represented by a trade or labor union. We consider our relationship with our employees to be suitable. We believe that our turnover
and productivity levels are at acceptable levels.

 Properties

 Horizon leases office space and an aircraft hangar in Lindsay, Ontario,
which serves as the corporate headquarters, and office space and light composite manufacturing space in Haliburton, Ontario. Horizon believes
that these properties are sufficient for its business and operations as currently conducted. The Company is currently exploring locations
for future scalable manufacturing operations.

 Corporate Information

 On January 11, 2024, we continued and de-registered from the Cayman
Islands and redomiciled under the laws of the Province of British Columbia, Canada. Our principal executive offices are located at 3187
Highway 35, Lindsay, Ontario, K9V 4R1, and our telephone number is (613) 866-1935. Our website is
Our website and the related information that can be accessed through such website does not form part of this report.

 Legal Proceedings

 As of August 21, 2025, we
were not a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary
course of our business. Regardless of the outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion
of management resources, negative publicity and reputational harm and other factors.

 Item 1A. Risk Factors.

 The following risk factors
apply to the business and operations of Horizon and its consolidated subsidiaries. The occurrence of one or more of the events or circumstances
described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to realize
the anticipated benefits of the Company and may have an adverse effect on the business, cash flows, financial condition and results of
operations of Horizon. We may face additional risks and uncertainties that are not presently known to us or that we currently deem immaterial,
which may also impair our business, cash flows, financial condition and results of operations.

 All figures noted are in thousands of Canadian dollars
unless noted otherwise.

 Risks Related to Our Business and Industry

 We have incurred losses and expect to incur
significant expenses and continuing losses for the foreseeable future, and we may not achieve or maintain profitability.

 We expect to incur significant
operating losses. We have not yet started commercial operations, making it difficult for us to predict our future operating results, and
we believe that we will continue to incur operating losses until at least the time we begin commercial operations with aircraft deliveries
or licensing revenues. As a result, our losses may be larger than anticipated, and we may not achieve profitability when expected, or
at all, and even if we do, we may not be able to maintain or increase profitability.

 We expect our operating expenses
to significantly increase over the next several years as we complete our aircraft design, build, testing, and manufacturing. We expect
the rate at which we incur losses will be significantly higher in fiscal 2026 and beyond as we engage in the following activities:

 continuing to design and build our Cavorite X7 hybrid eVTOL aircraft with the goal of having such aircraft certified and ultimately produced;

 engaging suppliers in the development of aircraft components and committing capital to serial production of those components;

 building our production capabilities to assemble and test the major components of our aircraft: propulsion systems, energy system assembly and aircraft integration, as well as incurring costs associated with outsourcing production of subsystems and other key components;

 hiring additional employees across design, production, marketing, administration and commercialization of our business;

 engaging with third party providers for design, testing, certification and commercialization of our products;

 building up inventories of parts and components for our aircraft;

 further enhancing our research and development capacities to continue the work on our aircraft's technology, components, hardware and software performance;

 testing and certifying the performance and operation of our aircraft;

 working with third-party providers to train our pilots, mechanics and technicians in our proprietary aircraft operation and maintenance;

 developing and launching our digital platform and customer user interface;

 developing our sales and marketing activities and developing our vertiport infrastructure; and

 increasing our general and administrative functions to support our growing operations and our responsibilities as a public company.

 Because we will incur the
costs and expenses from these efforts before we receive any associated revenue, our losses in future periods will be significant. In addition,
we may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in the revenue we
anticipate, which would further increase our losses. Furthermore, if our future growth and operating performance fails to meet investor
or analyst expectations, or if we have future negative cash flow or losses resulting from our investment in acquiring customers or expanding
our operations, this could have a material adverse effect on our business, financial condition and results of operations.

 The eVTOL market may not continue to develop,
eVTOL aircraft may not be adopted by the transportation market, eVTOL aircraft may not be certified by transportation and aviation authorities
or eVTOL aircraft may not deliver the expected reduction in operating costs or time savings.

 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, EASA 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
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 Mobility services.

 We expect that the success of selling our aircraft will be highly dependent
on our target customers' embrace of Regional Air Mobility and eVTOL vehicles, which we believe will be influenced by the public's
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 Mobility 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 Mobility 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, at the earliest, if at all.

 We were incorporated in 2013,
and we are developing an aircraft for the emerging Regional Air Mobility 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 design 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.

 You should consider our business
and prospects in light of the risks and significant challenges we face as a new entrant into a new industry, including, among other things,
with respect to our ability to:

 design, build, test and produce safe, reliable and high-quality Cavorite X7 aircraft and scale that production in a cost- effective manner;

 obtain the necessary certification and regulatory approvals in a timely manner;

 build a well-recognized and respected brand;

 establish and expand our customer base;

 properly price our aircraft, and successfully anticipate the demand by our target customers;

 improve and maintain our manufacturing efficiency;

 maintain a reliable, secure, high-performance and scalable technology infrastructure;

 predict our future revenues and appropriately budget for our expenses;

 anticipate trends that may emerge and affect our business;

 anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape;

 secure, protect and defend our intellectual property; and

 navigate an evolving and complex regulatory environment.

 If we fail to adequately address
any or all of these risks and challenges, our business may be materially and adversely affected.

 The Regional Air Mobility market for eVTOL
passenger and goods transport services does not exist; whether and how it develops is based on assumptions, and the Regional 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, 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 may be unable to adequately control the
costs associated with our pre-launch operations, and our costs will continue to be significant after we commence operations.

 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 and $880 in 2025 and
2024, 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 Mobility market. We may experience difficulties in managing our growth.

 We expect to experience significant
growth in team size as we experience an increase in the scope and nature of our research and development, manufacturing, testing, and
certification of our aircraft. Our ability to manage our future growth will require us to continue to improve our operational, financial
and management controls, compliance programs and reporting systems. We are currently in the process of strengthening our compliance programs,
including our compliance programs related to internal controls, intellectual property management, privacy and cybersecurity. We may not
be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems
and procedures, which could have an adverse effect on our business, reputation and financial results. We also may not be able to grow
the team in a timely manner or hire the expertise required in order to successfully continue our aircraft development.

 Our forward-looking operating information
and business plan forecast relies in large part upon assumptions and analyses that we have developed or obtained from respected third
parties. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted
results.

 Our management has prepared
our projected financial performance, operating information and business plan, which reflect our current estimates of future performance.
Whether our actual financial results and business develops in a way that is consistent with our expectations and assumptions as reflected
in our forecasts depends on a number of factors, many of which are outside our control. Our estimates and assumptions may prove inaccurate,
causing the actual amount to differ from our estimates. These factors include, but are not limited to, the risk factors described herein
and the following factors:

 our ability to obtain sufficient capital to sustain and grow our business;

 our effectiveness in managing our costs and our growth;

 our ability to meet the performance and cost targets of manufacturing our aircraft;

 our ability to effectively develop our fan-in-wing eVTOL technology that underpins our Cavorite X7 aircraft design and operation;

 establishing and maintaining relationships with key providers and suppliers;

 the timing, cost and ability to obtain the necessary certifications and regulatory approvals;

 the development of the Regional Air Mobility market and customer demand for our aircraft;

 the costs and effectiveness of our marketing and promotional efforts;

 competition from other companies with compelling aircraft that may emerge to compete directly or indirectly with our Cavorite X7 aircraft;

 our ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel;

 the overall strength and stability of domestic and international economies;

 regulatory, legislative and political changes; and

 consumer spending habits.

 Unfavorable changes in any
of these or other factors, most of which are beyond our control, could materially and adversely affect our business, results of operations
and financial results. It is difficult to predict future revenues and appropriately budget for our expenses, and we have limited insight
into trends that may emerge and affect our business. If actual results differ from our estimates or we adjust our estimates in future
periods, our operating results and financial position could be materially affected.

 We do not anticipate delivering our first
Cavorite X7 eVTOL aircraft to customers until sometime prior to 2030 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 condition.

 While we currently have an
experienced aircraft prototyping team, there are many important milestones to achieve prior to being able to deliver our first commercial
aircraft, including completing the detailed design, sub-system assembly, airframe manufacturing, systems integration, testing, design
refinement, type certification of the aircraft, and production certification of our manufacturing facility. Our inability to properly
plan, execute our operations, and analyze and contain the risk associated with each step could negatively impact our ability to successfully
operate our business.

 Any delays in the development, certification,
manufacture and commercialization of our Cavorite X7 aircraft and related technology, such as battery technology or electric motors, may
adversely impact our business, financial condition and results of operations.

 We may experience future delays
or other complications in the design, certification, manufacture, and production of our aircraft and related technology. These delays
could negatively impact our progress towards commercialization or result in delays in increasing production capacity. If we encounter
difficulties in scaling our production, if we fail to procure the key enabling technologies from our suppliers (e.g., batteries, power
electronics, electric motors, etc.) which meet the required performance parameters, if our aircraft technologies and components do not
meet our expectations, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived
as less safe than those of our competitors, we may not be able to achieve our performance targets in aircraft range, speed, payload and
noise or launch products on our anticipated timelines, and our business, financial condition and results of operations could be materially
and adversely impacted.

 Adverse publicity stemming from any incident
involving us or our competitors, or an incident involving any air travel service or unmanned flight based on eVTOL technologies, could
have a material adverse effect on our business, financial condition and results of operations.

 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 Mobility 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 Mobility 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 plans require a significant
amount of capital. In addition, our future capital needs may require us to sell additional equity or debt securities that may adversely
affect the market price of our shares and dilute our shareholders or introduce covenants that may restrict its operations.

 We expect our expenditures
to continue to be significant in the foreseeable future as we expand our development, certification, production and commercial launch,
and that our level of capital expenditures will be significantly affected by customer demand for our services. The fact that we have a
limited operating history and are entering a new industry means we have no historical data on the demand for its aircraft. As a result,
our future capital requirements will be uncertain and actual capital requirements may be different from those we currently anticipate.
We may seek equity or debt financing to finance a portion of its capital expenditures. Such financing might not be available to us in
a timely manner or on terms that are acceptable, or at all.

 Our ability to obtain the
necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor
acceptance of our industry and business model. These factors may make the timing, amount, terms and conditions of such financing unattractive
or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our
planned activities or substantially change our corporate structure. We might not be able to obtain any funding, and we might not have
sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue
our operations. We may seek to raise such capital through the issuance of additional shares or debt securities with conversion rights
(such as convertible bonds and option rights). An issuance of additional shares or debt securities with conversion rights could potentially
reduce the market price of our shares, and we currently cannot predict the amounts and terms of such future offerings.

 In addition, our future capital
needs and other business reasons could require us to sell additional equity or debt securities or obtain a credit facility. The sale of
additional equity or equity-linked securities could dilute our shareholders. In addition, such dilution may arise from the acquisition
or investments in companies in exchange, fully or in part, for newly issued shares, options granted to our business partners or from the
exercise of stock options by our employees in the context of existing or future share option programs or the issuance of shares to employees
in the context of existing or future employee participation programs. The incurrence of indebtedness would result in increased debt service
obligations and could result in operating and financing covenants that would restrict our operations.

 If we cannot raise additional
funds when we need or want them, our operations and prospects could be negatively affected.

 If we are unable to successfully design
and manufacture our aircraft, our business will be harmed.

 We are currently developing
plans to expand our primary manufacturing infrastructure near Toronto, Ontario, and we plan to begin production of our certified aircraft
in 2028 at the earliest. We may not be able to successfully develop and certify a full-scale aircraft. We may also not be able to successfully
develop commercial-scale manufacturing capabilities internally or supply chain relationships with our intended Tier 1 suppliers. Our production
facilities and the production facilities of our outsourcing parties and suppliers may be harmed or rendered inoperable by natural or man-made
disasters, including earthquakes, flooding, fire and power outages, or by health epidemics, which may render it difficult or impossible
for us to manufacture our aircraft for some period of time.

 If the Cavorite X7 eVTOL aircraft we build
fails to perform as expected our ability to develop, market, and sell our aircraft could be harmed.

 We have not yet produced a
full-scale Cavorite X7 aircraft. Although we are satisfied with the flight testing of our 50%-scale prototype, there is no guarantee that
the full-scale aircraft will perform as we anticipate. Our aircraft may contain defects in design and manufacture that may cause them
not to perform as expected or that may require design changes and/or repairs. Our Cavorite X7 aircraft may be impacted by various performance
factors that could impair customer satisfaction, such as excessive noise, turbulent air during flight, foreign object damage, fan stall
or wing flutter, overloading, hail and bird strike, or adverse icing accumulation. If our Cavorite X7 aircraft fails to perform as expected,
we may need to delay delivery of initial aircraft, which could adversely affect our brand in our target markets and could adversely affect
our business, prospects, and results of operations.

 Our Cavorite X7 aircraft require complex
software, hybrid electric power systems, battery technology and other technology systems that remain in development and need to be commercialized
in coordination with our vendors and suppliers to complete serial production. The failure of advances in technology and of manufacturing
at the rates we project may impact our ability to increase the volume of our production or drive down end user pricing.

 Our Cavorite X7 will use a
substantial amount of third-party and in-house software codes and complex hardware to operate. Our software and hardware may contain errors,
bugs or vulnerabilities, and our systems are subject to certain technical limitations that may compromise our ability to meet our objectives.
Some errors, bugs or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been implemented.
We have a limited frame of reference by which to evaluate the long-term performance of our software and hardware systems and our aircraft,
and we may be unable to detect and fix any defects in the aircraft prior to commencing commercial operations. The development and on-going
monitoring of such advanced technologies is inherently complex, and we will need to coordinate with our vendors and suppliers in order
to complete full-scale production. Our potential inability to develop the necessary software and technology systems may harm our competitive
position or delay the certification or manufacture of our aircraft.

 We are relying on third-party
suppliers to develop a number of emerging technologies for use in our products, including lithium-based battery technology. Many of these
technologies are already commercially viable, and our survey of commercially available products has already yielded promising results.
However, the final cell design of our potential suppliers may not be able to meet the safety, technological, economical or operational
requirements to support the regulatory requirements and performance assumed in our business plan.

 We are also relying on third-party
suppliers to commercialize these technologies (such as battery cell technology) at the volume and costs they require to launch and ramp-up
our production. Our suppliers may not be able to meet the production timing, volume requirements or cost requirements we have assumed
in our business plan. Our third-party suppliers could face other challenges, such as the lack of raw materials or machinery, the breakdown
of tools in production or the malfunctioning of technology as they ramp up production. As a result, our business plan could be significantly
impacted, and we may incur significant delays in production and full commercialization, which could adversely affect our business, prospects,
and results of operations.

 Our Cavorite X7 aircraft will make extensive
use of lithium-based battery cells, which have been observed to catch fire or vent smoke and flame.

 The battery packs within our
Cavorite X7 aircraft will use lithium-based cells. On rare occasions, lithium-based cells can rapidly release the energy they contain
by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-based cells. While the battery pack
is designed to contain any single cell's release of energy without spreading to neighboring cells, a failure of battery packs in
our aircraft could occur or batteries could catch fire during production or testing, which could result in bodily injury or death and
could subject us to lawsuits, regulatory challenges or redesign efforts, all of which would be time consuming and expensive and could
harm our brand image. Also, negative public perceptions regarding the suitability of lithium-based cells for automotive applications,
the social and environmental impacts of cobalt mining, or any future incident involving lithium-based cells, such as a vehicle or other
fire, could seriously harm our business and reputation.

 We will rely on third-party suppliers and
strategic parties for the provision and development of key emerging technologies, components and materials used in our Cavorite X7 aircraft,
such as the lithium-based batteries that will help to power the aircraft, a significant number of which may be single or limited source
suppliers. If any of these prospective suppliers or strategic parties choose to not do business with us at all, or insist on terms that
are commercially disadvantageous, we may have significant difficulty in procuring and producing our aircraft, and our business prospects
would be harmed.

 Third-party suppliers and
strategic parties will provide key components and technology to the Cavorite X7 aircraft. Collaborations with strategic parties are necessary
to successfully commercialize our existing and future products. If we are unable to identify or enter into agreements with strategic parties
for the development of key technology or if such strategic parties insist on terms that are commercially disadvantageous, including for
example the ability to freely commercialize jointly owned intellectual property, we may have significant difficulty in procuring and producing
our aircraft or technologies, components or materials used in our aircraft.

 In addition to our collaborations,
we will be substantially reliant on our relationships with our suppliers for the parts and components in our aircraft. If any of these
prospective suppliers choose to not do business with us at all, or insist on terms that are commercially disadvantageous, we may have
significant difficulty in procuring and producing our aircraft, and our business prospects would be harmed. If our suppliers experience
any delays in providing us with or developing necessary components, or if our suppliers are unable to deliver necessary components in
a timely manner and at prices and volumes acceptable to us, we could experience delays in manufacturing our aircraft and delivering on
our timelines, which could have a material adverse effect on our business, prospects and operating results.

 While we plan to obtain components
from multiple sources whenever possible, we may purchase many of the components used in our Cavorite X7 aircraft from a single source.
While we believe that we may be able to establish alternate supply relationships and can obtain replacement components for our single
source components, we may be unable to do so in the short term, or at all, at prices or quality levels that are acceptable to us. In addition,
we could experience delays if our suppliers do not meet agreed upon timelines or experience capacity constraints. Any disruption in the
supply of components, whether or not from a single source supplier, could temporarily disrupt production of our aircraft until an alternative
supplier is able to supply the required material. Changes in business conditions, unforeseen circumstances, governmental changes, and
other factors beyond our control or which we do not presently anticipate, could also affect our suppliers' ability to deliver components
to us on a timely basis. Any of the foregoing could materially and adversely affect our results of operations, financial condition and
prospects.

 If any of our suppliers become economically
distressed or go bankrupt, we may be required to provide substantial financial support or take other measures to ensure supplies of components
or materials, which could increase our costs, affect our liquidity or cause production disruptions.

 We expect to purchase various
types of equipment, raw materials and manufactured component parts from our suppliers. If these suppliers experience substantial financial
difficulties, cease operations, or otherwise face business disruptions, we may be required to provide substantial financial support to
ensure supply continuity or may have to take other measures to ensure components and materials remain available. Any disruption could
affect our ability to deliver aircraft and could increase our costs and negatively affect our liquidity and financial performance.

 We may not succeed in establishing, maintaining
and strengthening our brand, which would materially and adversely affect customer acceptance of our services, reducing our anticipated
sales, revenue and forecasts.

 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 Mobility 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 Mobility 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.

 Our business depends substantially on the
continuing efforts of our key employees and qualified personnel; our operations may be severely disrupted if we lose their services.

 Our success depends substantially
on the continued efforts of our key employees and qualified personnel, and our operations may be severely disrupted if we lose their services.
As we build our brand and become more well known, the risk that competitors or other companies may poach our key talented personnel increases.
The failure to attract, integrate, train, motivate and retain these personnel could seriously harm our business and prospects. The design,
assembly, testing, production and certification of our aircraft requires highly skilled personnel for which there is currently a shortage
in the aerospace workforce in North America. We intend to work with third parties to attract talented workers; however, if we are unable
to hire, train, and retain qualified personnel, our business could be harmed, and we may be unable to implement our growth plans.

 Our business may be adversely affected by labor and union activities
in the future.

 Although none of our employees
are currently represented by a labor union, it is not uncommon throughout the aircraft industry generally for many employees at aircraft
companies to belong to a union, which can result in higher employee costs and increased risk of work stoppages. We may also directly and
indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work
stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results.

 Failure of information security and privacy
concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.

 We expect to face significant
challenges with respect to information security and privacy, including the storage, transmission and sharing of confidential information.
We will transmit and store confidential and private information of our customers, such as personal information, including names, accounts,
user IDs and passwords, and payment or transaction related information.

 We intend to adopt strict
information security policies and deploy advanced measures to implement the policies, including, among others, advanced encryption technologies.
However, advances in technology, an increased level of sophistication of our services, an increased level of expertise of hackers, new
discoveries in the field of cryptography or others can still result in a compromise or breach of the measures that we use. If we are unable
to protect our systems, and hence the information stored in our systems, from unauthorized access, use, disclosure, disruption, modification
or destruction, such problems or security breaches could cause a loss, give rise to our liabilities to the owners of confidential information
or even subject us to fines and penalties. In addition, complying with various laws and regulations could cause us to incur substantial
costs or require that we change our business practices, including our data practices, in a manner adverse to our business.

 Compliance with required information
security laws and regulations could be expensive and may place restrictions on the conduct of our business and the manner in which we
interact with our customers. Any failure to comply with applicable regulations could also result in regulatory enforcement actions against
us, and misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings
against us by governmental entities or others, and damage to our reputation and credibility, and could have a negative impact on revenues
and profits.

 Significant capital and other
resources may be required to protect against information security breaches or to alleviate problems caused by such breaches or to comply
with our privacy policies or privacy-related legal obligations. The resources required may increase over time as the methods used by hackers
and others engaged in online criminal activities are increasingly sophisticated and constantly evolving. Any failure or perceived failure
by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise
of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could
cause our customers to lose trust in us and could expose us to legal claims. Any perception by the public that online transactions or
the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of online retail and
other online services generally, which may reduce the number of orders we receive.

 We are subject to cybersecurity risks to
our operational systems, security systems, infrastructure, integrated software in our aircraft and customer data processed by us or third-party
vendors.

 We are at risk for interruptions,
outages and breaches of the following systems, which are either owned by us or operated by our third-party vendors or suppliers:

 operational systems, including business, financial, accounting, product development, data processing or production processes;

 facility security systems;

 aircraft technology including powertrain, avionics and flight control software;

 the integrated software in our aircraft; or

 customer data.

 The occurrence of any such
incident could disrupt our operational systems, result in loss of intellectual property, trade secrets or other proprietary or competitively
sensitive information, compromise personal information of customers, employees, suppliers, or others, jeopardize the security of our facilities
or affect the performance of in-product technology and the integrated software in our aircraft.

 Moreover, there are inherent
risks associated with developing, improving, expanding and updating the current systems, such as the disruption of our data management,
procurement, production execution, finance, supply chain and sales and service processes. These risks may affect our ability to manage
our data and inventory, procure parts or supplies or manufacture, deploy, and deliver our aircraft, adequately protect our intellectual
property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. We
cannot be sure that these systems upon which we rely, including those of our third-party vendors or suppliers, will be effectively implemented,
maintained or expanded as planned. If these systems do not operate as we expect them to, we may be required to expend significant resources
to make corrections or find alternative sources for performing these functions.

 Any unauthorized access to
or control of our aircraft or our systems or any loss of data could result in legal claims or proceedings. In addition, regardless of
their veracity, reports of unauthorized access to our aircraft, their systems or data, as well as other factors that may result in the
perception that our aircraft, their systems or data are capable of being "hacked," could negatively affect our brand and harm
our business, prospects, financial condition and operating results.

 Although we plan to have a
formal cybersecurity committee organized by the Board, as well as third party security specialists on contract, there is no guarantee
that this additional layer of corporate governance will be sufficient to mitigate the posed by motivated cybersecurity criminals.

 We face risks related to natural disasters, health epidemics
and other outbreaks, which could significantly disrupt our operations.

 Our manufacturing or customer
service facilities or operations could be adversely affected by events outside of our control, such as natural disasters, wars, health
epidemics, and other calamities. Although we have servers that are hosted in an offsite location, our backup system does not capture data
on a real-time basis, and we may be unable to recover certain data in the event of a server failure. We cannot necessarily ensure that
any backup systems will be adequate to protect us from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications
failures, break-ins, war, riots, terrorist attacks or similar events. Any of the foregoing events may give rise to interruptions, breakdowns,
system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of
software or hardware as well as adversely affect our ability to provide services.

 Risks Related to our Intellectual Property

 We may not be able to prevent others from
unauthorized use of our intellectual property, which could harm our business and competitive position.

 We may not be able to prevent
others from unauthorized use of our intellectual property, which could harm our business and competitive position. We rely on a combination
of patents, trade secrets, employee and third-party nondisclosure agreements, copyrights, trademarks, intellectual property licenses,
and other contractual rights to establish and protect our rights in our technology. Despite our efforts to protect our proprietary rights,
third parties may attempt to copy or otherwise obtain and use our intellectual property or seek court declarations that they do not infringe
upon our intellectual property rights or those rights are not enforceable. Monitoring unauthorized use of our intellectual property is
difficult and costly, and the steps we have taken or will take are aimed to prevent misappropriation. From time to time, we may have to
resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources,
including significant amounts of time from our key executives and management, and may not have the desired outcome.

 Patent, trademark, and trade-secret
laws vary significantly throughout the world. Some countries do not protect intellectual property rights to the same extent as do the
laws of the United States, Canada, and European Union. Therefore, we may not be able to secure certain intellectual property rights
in some jurisdictions, and our intellectual property rights may not be as strong or as easily enforced outside of North America and the
European Union. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products,
potentially resulting in the loss of some of our competitive advantage and a decrease in our revenue which could adversely affect our
business, prospects, financial condition and operating results.

 Our patent applications may not issue as
patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

 We cannot be certain that
we are the first inventor of the subject matter to which we have filed or plan to file a particular patent application, or if we are the
first party to file such a patent application. If another party has filed a patent application for the same subject matter as we have,
or similar subject matter is otherwise publicly disclosed, we may not be entitled to the protection sought by the patent application.

 Further, the scope of protection
of issued patent claims is often difficult to determine. As a result, we cannot be certain that the patent applications that we file will
issue, or that our issued patents will afford protection against competitors with similar technology or will cover certain aspects of
our products. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial
condition or operating results.

 As our patents may expire and may not be
extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope,
our patent rights may not protect us effectively. In particular, we may not be able to prevent others from developing or exploiting competing
technologies.

 We cannot assure you
that we will be granted patents pursuant to our pending applications or those we plan to file in the future. Even if our patent
applications succeed and we are issued patents in accordance with them, these patents could be contested, circumvented or
invalidated in the future. In addition, the rights granted under any issued patents may not provide meaningful protection or
competitive advantages. The claims under any patents that issue from our patent applications may not be broad enough to prevent
others from developing technologies that are similar or that achieve results similar to us. The intellectual property rights of
others could also bar us from licensing and exploiting any patents that are issued from our pending applications. Numerous patents
and pending patent applications owned by others exist in the fields in which we have developed and are developing our technology.
These patents and patent applications might have priority over our patent applications and could result in refusal of or
invalidation of our patent applications. Finally, in addition to those who may claim priority, any of our existing or pending
patents may also be challenged by others on the basis that they are otherwise invalid or unenforceable.

 We may need to defend ourselves against
patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

 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 vehicles 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:

 cease manufacturing our aircraft, or discontinue use of certain components in our aircraft, or offering services that incorporate or use the challenged intellectual property;

 pay substantial damages;

 seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, or at all;

 redesign our aircraft; or

 establish and maintain alternative branding for our aircraft or services.

 In the event of a successful
claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property
right, our business, prospects, operating results and financial condition could be materially and adversely affected. In addition, any
litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management
attention.

 We may be subject to damages resulting from
claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees' former employers.

 Many of our employees were
previously employed by other aeronautics, aircraft or transportation companies or by suppliers to these companies. We may be subject to
claims that us or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of
former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying
monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key personnel or our work-product could hamper
or prevent our ability to commercialize our products, which could severely harm our business. Even if we are successful in defending against
these claims, litigation could result in substantial costs and demand on management resources.

 Risks Related to the Regulatory Environment in Which We Operate

 We are subject to substantial regulation
and unfavorable changes to, or our failure to comply with, these regulations could substantially harm our business and operating results.

 Our eVTOL aircraft, our planned
operation of Regional Air Mobility 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 related to the eVTOL industry, including aircraft certification, production certification, passenger operation, flight operation,
airspace operation, security regulation and vertiport regulation are currently evolving, and we face risks associated with the development
and evolution of these regulations.

 Our aircraft must be initially
certified by the Transport Canada Civil Aviation organization in order to be used for commercial purposes in Canada. Furthermore, we must
also seek type certification under the Federal Aviation Administration 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 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 services could materially and adversely
affect our results of operations, financial condition, and prospects.

 To the extent the laws change,
our aircraft may not comply with applicable American, European, international, federal, provincial, state or local laws, which would have
an adverse effect on our business. Compliance with changing regulations could be burdensome, time-consuming, and expensive. To the extent
compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results would be adversely
affected.

 It is intended for third-party air carriers
to operate the Cavorite X7 aircraft in Canada, the U.S. and Europe. These third-party air carriers are subject to substantial regulation
and laws, and unfavorable changes to, or the third-party air carriers' failure to comply with, these regulations and/or laws could
substantially harm our business and operating results.

 Third-party air carriers are
subject to substantial regulation and laws, and unfavorable changes to, or the third-party air carriers' failure to comply with,
these regulations or laws could substantially harm our business and operating results. Further, although third-party air carriers may
have experience in providing air transportation services, they will initially have limited experience in operating our unique Cavorite
X7 hybrid eVTOL aircraft. Although we will screen potential air operators who wish to purchase and use our aircraft, our arrangements
with third-party air carriers may not adequately address the operating requirements of our customers to their satisfaction. Given that
our business and our brand will be affiliated with these third-party air carriers, we may experience harm to our reputation if these third-party
air carriers provide customers with poor service, receive negative publicity, or experience accidents or safety incidents.

 We are or will be subject to anti-corruption,
anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject
us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which
could adversely affect our business, results of operations, financial condition and reputation.

 We are or will be subject
to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations in various
jurisdictions in which we conduct or in the future may conduct activities, including Canada's Proceeds of Crime (Money Laundering)
and Terrorist Financing Act (PCMLTA), U.S. Foreign Corrupt Practices Act (FCPA), European anti-bribery and corruption laws, and
other anti-corruption laws and regulations. The PCMLTA, FCPA and European anti-bribery and corruption laws prohibit us and our officers,
directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or
providing anything of value to a "foreign official" for the purposes of influencing official decisions or obtaining or retaining
business or otherwise obtaining favorable treatment. The PCMLTA also requires companies to make and keep books, records and accounts that
accurately reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. A violation
of these laws or regulations could adversely affect our business, results of operations, financial condition and reputation. Our policies
and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives,
consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.

 Non-compliance with anti-corruption,
anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media
coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal
expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation.
In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in our shares.

 We may be subject to governmental export
and import control laws and regulations as we expand our suppliers and commercial operations outside Canada, the U.S. and Europe.

 Our Cavorite X7 aircraft may
be subject to export control and import laws and regulations, which must be made in compliance with these laws and regulations. For example,
we may require licenses to import or export our aircraft, components or technologies to our production facilities and may experience delays
in obtaining the requisite licenses to do so. Audits in connection with the application for licenses may increase areas of noncompliance
that could result in delays or additional costs. If we fail to comply with these laws and regulations, we and certain of our employees
could be subject to additional audits, substantial civil or criminal penalties, including the possible loss of export or import privileges,
fines, which may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees
or managers.

 Risks Related to Our Organization and Structure

 British Columbia law and our Articles contain
certain provisions, including anti-takeover provisions, that limit the ability of shareholders to take certain actions and could delay
or discourage takeover attempts that shareholders may consider favorable.

 Our Articles and the BCBCA
contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by
our Board and therefore depress the trading price of our Class A ordinary shares. These provisions could also make it difficult for shareholders
to take certain actions, including electing directors who are not nominated by the current members of the Board or taking other corporate
actions, including effecting changes in our management. Among other things, our Articles include provisions regarding:

 the limitation of the liability of, and the indemnification of, our directors and officers;

 the exclusive right of our Board to expand the Board by appointing
one or more directors to the Board by up to 1/3 of the number of current directors or to fill casual vacancies created upon the resignation,
death, or removal of a director up to the number of directors who were elected or appointed as directors at the last shareholder meeting,
which prevents shareholders from being able to fill vacancies on our Board;

 the procedures for the conduct and scheduling of Board and shareholder meetings; and

 advance notice procedures with which shareholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a shareholders' meeting, which could preclude shareholders from bringing matters before annual or special meetings of shareholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.

 These provisions, alone or
together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management.

 Any provision of our Articles
or British Columbia law that has the effect of delaying or preventing a change in control could limit the opportunity for shareholders
to receive a premium for their Class A ordinary Shares and could also affect the price that some investors are willing to pay for Class
A ordinary Shares.

 Our management team may not successfully or efficiently manage
its transition to being a public company.

 As a public company, we have
incurred increased obligations relating to our reporting, procedures, and internal controls. These obligations and attendant scrutiny
require investments of significant time and energy from our executives and could divert their attention away from the day-to-day
management of our business, which in turn could adversely affect our financial condition or operating results.

 The members of our management
team have extensive experience leading complex organizations. However, they have limited experience managing a publicly traded company,
interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that specifically govern
public companies.

 We will incur significant expenses and administrative
burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations.

 As a public company we face
increased legal, accounting, administrative and other costs and expenses. The Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley
Act"), including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated
thereunder, Public Company Accounting Oversight Board (the "PCAOB") and the securities exchanges, impose additional reporting
and other obligations on public companies. Compliance with public company requirements increases costs and makes certain activities more
time-consuming. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons
to serve on the Board or as executive officers. The additional reporting and other obligations imposed by these rules and regulations
increases legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased
costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic
objectives. Advocacy efforts by shareholders and third parties may also prompt additional changes in governance and reporting requirements,
which could further increase costs.

 We will need to improve our operational
and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense
recognition and any inability to do so will adversely affect our billing and reporting.

 To manage the expected growth
of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures, and controls and
continue to increase systems automation to reduce reliance on manual operations. Any inability to do so will affect our manufacturing
operations, customer billing and reporting. Our current and planned systems, procedures and controls may not be adequate to support our
complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or
problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our
relationships with our customers, cause harm to our reputation and brand and could also result in errors in our financial reporting, as
well as other reporting obligations. We expect that complying with these rules and regulations may substantially increase our legal and
financial compliance costs and will make some activities more time-consuming and costly.

 We will be an "emerging growth company,"
and our reduced SEC reporting requirements may make our shares less attractive to investors.

 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 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 $700 million as of the last business day of our prior second fiscal quarter,
and (ii) the date on which we issued more than USD $1.0 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.

 Risks Related to Taxes

 Our ability to utilize our net operating
loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations, including losses as a result
of the Business Combination.

 We have incurred, and we are
likely to continue incurring significant tax losses, which may be limited in our usability under Canadian and other tax laws, in particular
following the Amalgamation and other significant shareholder changes. Although we neither expect the Business Combination nor any of the
ownership changes in the course of past financing rounds to result in a forfeiture of our Canadian tax loss attributes, the realization
of future tax savings from such tax loss attributes will be limited under the Tax Act following the Amalgamation and will depend on the
tax authorities' acceptance of their continued availability and our ability to generate future taxable income in Canada against
which such losses can be offset.

 We are subject to Canadian and United States
tax on our worldwide income.

 We are deemed to be a resident
of Canada for Canadian federal income tax purposes by virtue of existing under the BCBCA, subject to the application of an applicable
tax treaty or convention. Accordingly, subject to an applicable tax treaty or convention, we will be subject to Canadian taxation
on our worldwide income, in accordance with the rules set forth in the Income Tax Act (Canada) (the "Tax Act") generally applicable
to corporations residing in Canada.

 Notwithstanding that we will
be deemed to be a resident of Canada for Canadian federal income tax purposes, we will also be treated as a U.S. corporation for
U.S. federal income tax purposes, pursuant to Section 7874(b) of the Code, and will be subject to U.S. federal income
tax on our worldwide income under applicable U.S. inversion rules. As a result, subject to an applicable tax treaty or convention, we
will be subject to taxation both in Canada and the U.S., which could have a material adverse effect on our business, financial condition
and results of operations. Accordingly, all prospective shareholders and investors should consult with their own tax advisors in this
regard.

 Dividends, if ever paid, on our Class A ordinary shares will
be subject to Canadian or United States withholding tax.

 It is currently anticipated
that we will not pay any dividends on the Class A ordinary shares in the foreseeable future. To the extent dividends are paid, dividends
received by holders of our Class A ordinary shares who are not residents of the U.S. and who are residents of Canada for purposes
of the Tax Act will be subject to U.S. withholding tax. Any dividends may not qualify for a reduced rate of withholding tax under
the U.S.-Canada income tax treaty ("Canada-U.S. Tax Convention"). In addition, a Canadian foreign tax credit or a deduction
in respect of such U.S. withholding taxes paid may not be available.

 Dividends received by shareholders
who are residents of the U.S. will not be subject to U.S. withholding tax but will be subject to Canadian withholding tax. Any
dividends may not qualify for a reduced rate of withholding tax under the Canada-U.S. Tax Convention. For U.S. federal income tax
purposes, a U.S. holder may elect for any taxable year to receive either a credit or a deduction for all foreign income taxes paid
by the holder during the year. Dividends paid by us will be characterized as U.S. source income for purposes of the foreign tax credit
rules under the Code. Accordingly, U.S. holders generally will not be able to claim a credit for any Canadian tax withheld unless,
depending on the circumstances, they have an excess foreign tax credit limitation due to other foreign source income that is subject to
a low or zero rate of foreign tax. Subject to certain limitations, a U.S. holder should be able to take a deduction for the U.S. holder's
Canadian tax paid, provided that the U.S. holder has not elected to credit other foreign taxes during the same taxable year.

 Dividends received by non-U.S. holders
who are not residents of Canada for purposes of the Tax Act will be subject to U.S. withholding tax and will also be subject to Canadian
withholding tax. These dividends may not qualify for a reduced rate of U.S. withholding tax under any income tax treaty otherwise
applicable to our shareholders, subject to examination of the relevant treaty. These dividends may, however, qualify for a reduced rate
of Canadian withholding tax under any income tax treaty otherwise applicable to our shareholders, subject to examination of the relevant
treaty.

 Each holder of our Class A
ordinary Shares should seek tax advice, based on such shareholder's particular facts and circumstances, from an independent tax
advisor.

 The transfer of our Class A ordinary shares
may be subject to U.S. estate and generation-skipping transfer tax.

 Because our Class A ordinary
shares will be treated as shares of a U.S. domestic corporation for U.S. federal income tax purposes, the U.S. estate and
generation-skipping transfer tax rules generally may apply to a non-U.S. holder's ownership and transfer of our Class A ordinary
shares.

 Changes in tax laws may affect our shareholders and other investors.

 There can be no assurance
that our Canadian and U.S. federal income tax treatment or an investment in us will not be modified, prospectively or retroactively,
by legislative, judicial or administrative action, in a manner adverse to us or our shareholders or other investors.

 Risks Related to Ownership of Our Securities

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

 The price of our securities
may vary significantly due to factors specific to us as well as to general market or economic conditions. Our Class A ordinary shares
may be thinly traded; therefore, our share price may fluctuate more than the stock market as a whole. Without a larger public float, our
Class A ordinary shares will be less liquid than the shares of companies with broader public ownership. Trading of a relatively small
volume of our Class A ordinary shares may have a greater effect on the trading price than would be the case if our public float were larger.
Accordingly, an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable
to sell your securities unless a market can be established and sustained.

 Our failure to meet Nasdaq's continued listing requirements
could result in a delisting of our securities.

 If we fail to satisfy Nasdaq's
continued listing requirements, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may
take steps to delist our securities. Such a delisting would likely have a negative effect on the price of our shares and would impair
your ability to sell or purchase our shares when you wish to do so.

 On July 19, 2024, Nasdaq
notified us that for at least the last 30 consecutive business days, the bid price for the Company's Class A ordinary shares had
closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing
Rule 5550(a)(2) (the "Bid Price Rule").

 In accordance with Nasdaq
Listing Rule 5810(c)(3)(A), we had a compliance period of 180 calendar days, or until January 15, 2025, to regain compliance with the
Bid Price Rule. If at any time before January 15, 2025, the bid price of our Class A ordinary shares closed at $1.00 per share or more
for a minimum of ten consecutive business days, Nasdaq could have provided us with a written confirmation of compliance with the Bid Price
Rule and the matter deemed closed.

 On January 22, 2025, we received
a written notification from Nasdaq indicating that the Staff determined that we had received an additional 180 calendar days, or until
July 14, 2025, to regain compliance with the Bid Price Rule. On June 26, 2025, we received notice from Nasdaq informing us that we had
regained compliance with the Bid Price Rule and that the matter is now closed.

 On August 28, 2024, we were
notified by Nasdaq that we had failed to maintain a net income from continuing operations of USD $500,000 in our most recently completed
fiscal year or in two of the last three of our most recently completed fiscal years required for continued listing under Nasdaq Listing
Rule 5550(b)(3) (the "Net Income Standard"). The Nasdaq Qualifications Listing Staff (the "Staff") notified us
that we also did not meet the alternative continued listing standards under Nasdaq Listing Rule 5550(b)(2) (the "Market Value of
Listed Securities Standard," which requires the market value of our listed securities be at least $35 million) or Nasdaq Listing
Rule 5550(b)(1) (the "Equity Standard," which requires us to maintain stockholders' equity of at least $2.5 million)
(the Net Income Standard, the Market Value of Listed Securities Standard, and the Equity Standard, collectively the "Continued Listing
Standards"). We requested a hearing before the Nasdaq Hearings Panel (the "Panel") to appeal the Nasdaq Qualifications
Listing Staff's (the "Staff") determination, which took place on December 12, 2024.

 On January 24, 2025, we received
a letter from the Nasdaq Office of General Counsel confirming the decision of the Panel that the Company had regained compliance with
the Continued Listing Standards by demonstrating compliance with the Equity Standard and that the matter was closed. Pursuant to Nasdaq
Listing Rule 5815(d)(4)(B), we will be subject to a panel monitor for a period of one year from the date of the letter.

 There can be no assurance
that we will be able to maintain compliance with Nasdaq's continued listing standards. In the event that we are unable to sustain
compliance with all applicable requirements for continued listing on Nasdaq, our Class A ordinary shares may be delisted from Nasdaq.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:

 a limited availability
 of market quotations for our securities;

 reduced liquidity for our
 securities;

 a determination that our Class A ordinary shares are "penny stock" which will require brokers trading in the Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;

 a limited amount of news
 and analyst coverage; and

 a decreased ability to
 issue additional securities or obtain additional financing in the future.

 We reached a determination to restate certain
of our previously issued audited financial statements, which resulted in unanticipated costs and may affect investor confidence and raise
reputational issues.

 In connection with the preparation
of our unaudited condensed interim consolidated financial statements for the period ended February 29, 2024, we determined that based
on the application of U.S. generally accepted accounting principles ("GAAP"), the deferred development costs recorded by Robinson
Aircraft Ltd. in the fiscal year ended May 31, 2023 and prior are more appropriately classified as research and development costs. On
April 19, 2024, the Audit Committee of the Board of Directors of the Company, concluded that the Company's previously issued audited
financial statements for the year ended May 31, 2023, and unaudited condensed consolidated interim financial statements for the period
ended August 31, 2023 (collectively, the "Non-Reliance Periods"), should no longer be relied upon. The audited financial statements
for the year ended May 31, 2023, were restated to reflect a reclassification of previously capitalized deferred development costs to Research
and Development costs in the statements of operations (the "Restated Financial Statements"). We filed the Restated Financial
Statements in a Current Report on Form 8-K with the SEC on April 22, 2024. Any previously furnished or filed reports, related earnings
releases, investor presentations that reference deferred development costs or research and development expenses, or similar communications
describing our financial results for the Non-Reliance Periods should no longer be relied upon.

 As a result, we incurred unanticipated
costs for accounting and legal fees in connection with or related to the restatement and have become subject to a number of additional
risks and uncertainties, which may affect investor confidence in the accuracy of our financial disclosures and may raise reputational
issues for our business.

 If securities or certain industry analysts
do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume
could decline.

 The trading market for our
shares will depend on the research and reports that securities or industry analysts publish about us or our business. We will not have
any control over such analysts. If one or more of the analysts who cover us downgrade our shares or change their opinion of our shares,
the share price would likely decline. If one or more of these analysts cease coverage of us or we or fail to regularly publish reports
on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

 The price of our Class A ordinary shares may decline, and you
could lose all or part of your investment as a result.

 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 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:

 results of operations that vary from the expectations of securities analysts and investors;

 results of operations that vary from our competitors;

 changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

 declines in the market prices of stocks generally;

 strategic actions by us or our competitors;

 announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments;

 announcements of estimates by third parties of actual or anticipated changes in the size of our customer base or the level of customer engagement;

 any significant change in our management;

 changes in general economic or market conditions or trends in our industry or markets;

 changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

 additional securities being sold or issued into the market by us or any of the existing shareholders or the anticipation of such sales, including if we issue shares to satisfy restricted stock unit related tax obligations or if existing shareholders sell shares into the market when applicable "lock-up" periods end;

 investor perceptions of the investment opportunity associated with our Class A ordinary shares relative to other investment alternatives;

 the public's response to press releases or other public announcements by us or third parties, including our filings with the SEC;

 litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors;

 guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

 the development and sustainability of an active trading market for our Class A ordinary shares;

 actions by institutional or activist shareholders;

 developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies;

 changes in accounting standards, policies, guidelines, interpretations or principles; and

 other events or factors, including those resulting from pandemics, natural disasters, war, acts of terrorism or responses to these events.

 These broad market and industry
fluctuations may adversely affect the market price of our Class A ordinary shares, regardless of our actual operating performance. In
addition, price volatility may be greater if the public float and trading volume of our Class A ordinary shares is low. In the past, following
periods of market volatility, shareholders have instituted securities class action litigation. If we are involved in securities litigation,
it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome
of such litigation.

 Because there are no current plans to pay
cash dividends on our Class A ordinary shares for the foreseeable future, you may not receive any return on investment unless you sell
your Class A ordinary shares at a price greater than what you paid for it.

 We intend to retain future
earnings, if any, for future operations, expansion and debt repayment, and there are no current plans to pay any cash dividends for the
foreseeable future. The declaration, amount and payment of any future dividends on our Class A ordinary shares will be at the sole discretion
of our Board. Our Board may take into account general and economic conditions, our financial condition and results of operations, our
available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, implications
of the payment of dividends by us to our shareholders or by our subsidiaries to us and such other factors as our Board may deem relevant.
As a result, you may not receive any return on an investment in our Class A ordinary shares unless you sell your Class A ordinary shares
for a price greater than that which you paid for it.

 If our company were to dissolve or wind-up operations, holders
of our Class A ordinary shares would not receive a liquidation preference.

 If we were to wind up or dissolve
and liquidate and distribute our assets, our Class A ordinary shares would share in our assets only after we satisfy any amounts we owe
to our creditors and preferred equity holders, including the holders of our Series A Preferred Shares (described below). If our liquidation
or dissolution were attributable to our inability to profitably operate our business, then it is likely that we would have material liabilities
at the time of liquidation or dissolution. Accordingly, it is unlikely that sufficient assets would remain available after the payment
of our creditors and preferred equity holders to enable holders of Class A ordinary shares to receive any liquidation distribution with
respect to any Class A ordinary shares.

 We may require substantial additional funding.
Raising additional capital could cause dilution to our existing shareholders.

 The percentage of our Class
A ordinary shares owned by current shareholders may be diluted in the future because of equity issuances for acquisitions, capital market
transactions or otherwise, including, without limitation, equity awards that we may grant to our directors, officers and employees, and
exercise of our Warrants.

 To the extent that we raise
additional capital through the sale of equity or convertible debt, the ownership interests of our shareholders will be diluted. In addition,
the terms of any equity or convertible debt we agree to issue may include liquidation or other preferences that adversely affect the rights
of our shareholders. Convertible debt financing, if available, may involve agreements that include covenants limiting or restricting our
ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring dividends, and may impose
limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely
impact our ability to conduct our business.

 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
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
into the Sales Agreement, we filed a prospectus supplement, dated March 25, 2025 (the "Original Prospectus Supplement") 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 $6.25 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 $16.5 million of
Class A ordinary shares, which did not include any prior sales made pursuant to the Sales Agreement.

 Furthermore, based on the
aggregate market value of our Class A ordinary shares held by non-affiliates ("public float") as of the date of the filing
of this Annual Report, and for so long as our public float is less than USD $75 million, the amount we can raise through primary public
offerings of securities, including sales under the Sales Agreement, in any twelve-month period using shelf registration statements is
limited to an aggregate of one-third of our public float. If our public float meets or exceeds $75 million at any time, we will no longer
be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3. Unless and until our public float meets or exceeds
USD $75 million, our ability to raise capital using the Shelf Registration Statement will be constrained by General Instruction I.B.6
of Form S-3, which may affect the timing of and amounts we can raise; however, we will still maintain the ability to raise funds through
other means, such as through the filing of a registration statement on Form S-1 or via private placements.

 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.

 Pursuant to our Articles,
we are also authorized to issue an unlimited number of preferred shares, of which 4,500 preferred shares have been designated as our Series
A Preferred Shares, which are convertible into Class A ordinary shares. Such Series A Preferred Shares are senior to our Class A ordinary
shares in terms of dividend priority and liquidation preference. Any preferred shares that we issue in the future may rank ahead of our
Class A ordinary shares in terms of dividend priority or liquidation preference and may have greater voting rights than our Class A ordinary
shares. In addition, such preferred shares may contain provisions allowing those shares to be converted into Class A ordinary shares,
which could dilute the value of our Class A ordinary shares to current shareholders and could adversely affect the market price, if any,
of our Class A ordinary shares. In addition, the preferred shares could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company.

 Future sales, or the perception of future sales, by us or our
shareholders in the public market could cause the market price for our Class A ordinary shares to decline.

 The sale of our Class A ordinary
shares in the public market, including Class A ordinary shares issued upon the exercise of Warrants, or the perception that such sales
could occur, could harm the prevailing market price of our Class A ordinary shares and make it difficult for us to raise funds through
securities offerings in the future. These sales, or the possibility that these sales may occur, also might make it more difficult for
us to sell equity securities in the future at a time and at a price that it deems appropriate.

 In the future, we may also
issue its 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.

 On April 4, 2025, a registration
statement on Form S-3 was declared effective by the SEC, registering certain Class A ordinary shares for resale (the "Resale Registration
Statement"). Certain securityholders may sell large amounts of our Class A ordinary shares in the open market or in privately negotiated
transactions pursuant to the Resale Registration Statement, which could have the effect of increasing the volatility in our Class A ordinary
share price or putting significant downward pressure on the price of our Class A ordinary shares.

 There is no guarantee
that the Public Warrants will ever be in the money; they may expire worthless or the terms of warrants may be amended.

 The
exercise price for the Public Warrants is USD $11.50 per 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 ordinary shares purchasable upon exercise of a
Public Warrant.

 Our Warrant Agreement
designates the courts of the State of New York or the United States District Court for the Southern District of New York
as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our Public Warrants,
which could limit the ability of Public Warrant holders to obtain a favorable judicial forum for disputes with us.

 Our
Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against the Company arising out of
or relating in any way to the Warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the
State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably
submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.

 Notwithstanding
the foregoing, these provisions of the Warrant Agreement will not apply to suits brought to enforce any liability or duty created by the
Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in the Warrant Agreement. If any action, the subject matter of which is within the scope the
forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the United States
District Court for the Southern District of New York (a "foreign action") in the name of any holder of our Public Warrants,
such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State
of New York in connection with any action brought in any such court to enforce the forum provisions (an "enforcement action"),
and (y) having service of process made upon such Public Warrant holder in any such enforcement action by service upon such Public
Warrant holder's counsel in the foreign action as agent for such Public Warrant holder.

 This
choice-of-forum provision may limit a Public Warrant holder's ability to bring a claim in a judicial forum that we find favorable
for disputes with the Company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Warrant
Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial
condition and results of operations and result in a diversion of the time and resources of our management and Board.

 We may redeem the
unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless.

 We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of the Class A ordinary shares equals or exceeds $18.00 per share for any
20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of redemption
to the warrant holders. If and when the warrants become redeemable by us, we may exercise its redemption right even if we are unable to
register or qualify the underlying securities for sale under all applicable state securities laws. Additionally, ninety (90) days
after the warrants become exercisable, we may redeem all (but not less than all) of the outstanding warrants at $0.01 per warrant upon
a minimum of 30 days' prior written notice of redemption (during which time the holders may exercise their warrants prior to
redemption for the number of shares set forth in the table under the section captioned " Description of Securities — Warrants — Redemption
of Warrants — Redemption of Warrants for Class A Ordinary Shares ") if the following conditions are satisfied:
(i) the last reported sale prices of the Class A ordinary shares equals or exceeds $18.00 per share (as may be adjusted for stock
splits, stock dividends, reorganizations, recapitalizations or the like) on the trading day prior to the date of the notice; (ii) the
private placement warrants are also concurrently exchanged at the same price as the outstanding Public Warrants; and (iii) there
is an effective registration statement covering the issuance of Class A ordinary shares issuable upon exercise of the warrants and a current
prospectus relating thereto available throughout the 30-day period after written notice of redemption is given. In either case, redemption
of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may
be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to
hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption,
is likely to be substantially less than the market value of your warrants.

 Item 1B. Unresolved Staff Comments.

 None.

 Item 1C. Cybersecurity.

 Risk Management and
Strategy

 Horizon recognizes the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our
information systems and protect the confidentiality, integrity, and availability of our data.

 Managing Material
Risks & Integrated Overall Risk Management

 We
have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture
of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our decision-making
processes at every level. Our management team works closely with our IT department to continuously evaluate and address cybersecurity
risks in alignment with our business objectives and operational needs.

 Engage Third Parties
on Risk Management

 Recognizing
the complexity and evolving nature of cybersecurity threats, we engage with a range of external experts, including cybersecurity assessors,
consultants, and auditors in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized
knowledge and insights, ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration
with these third-parties includes regular audits, threat assessments, and consultation on security enhancements.

 Oversee Third-party
Risk

 Because
we are aware of the risks associated with third-party service providers, we implement stringent processes to oversee and manage these
risks. We conduct thorough security assessments of all third-party providers before engagement and maintain ongoing monitoring to ensure
compliance with our cybersecurity standards. At a minimum the monitoring includes annual assessments by our Chief Information Security
Officer ("CISO"). This approach is designed to mitigate risks related to data breaches or other security incidents originating
from third-parties.

 Risks from Cybersecurity
Threats

 We
have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

 Governance

 The
Board is acutely aware of the critical nature of managing risks associated with cybersecurity threats. The Board has established robust
oversight mechanisms to ensure effective governance in managing risks associated with cybersecurity threats because we recognize the significance
of these threats to our operational integrity and stakeholder confidence,

 Board of Directors
Oversight

 The
 Audit Committee is central to the Board's oversight of cybersecurity risks and bears the primary responsibility for this domain.
The Audit Committee is composed of independent board members with diverse expertise including risk management, technology, and finance,
equipping them to oversee cybersecurity risks effectively.

 Management's
Role Managing Risk

 The
CISO and our Chief Executive Officer play a pivotal role in informing the Audit Committee on cybersecurity risks. They provide comprehensive
briefings to the Audit Committee on a regular basis, with a minimum frequency of once per year. These briefings encompass a broad range
of topics, including:

 Current cybersecurity landscape and emerging threats;

 Status of ongoing cybersecurity initiatives and strategies;

 Incident reports and learnings from any cybersecurity events; and

 Compliance with regulatory requirements and industry standards.

 In
addition to our scheduled meetings, the Audit Committee, CISO and Chief Executive Officer maintain an ongoing dialogue regarding emerging
or potential cybersecurity risks. Together, they receive updates on any significant developments in the cybersecurity domain, ensuring
the Board's oversight is proactive and responsive. The Audit Committee actively participates in strategic decisions related to cybersecurity,
offering guidance and approval for major initiatives. This involvement ensures that cybersecurity considerations are integrated into our
broader strategic objectives. The Audit Committee conducts an annual review of the Company's cybersecurity posture and the effectiveness
of its risk management strategies. This review helps in identifying areas for improvement and ensuring the alignment of cybersecurity
efforts with the overall risk management framework.

 Risk Management
Personnel

 Primary
responsibility for assessing, monitoring, and managing our cybersecurity risks rests with the CISO, Jason O'Neill. With over 25
years of experience in the field of IT Technology and enterprise security, Mr. O'Neill brings a wealth of expertise to his role.
His background includes extensive experience achieving bank and government-level compliant security practices in high-performance technology
companies. His in-depth knowledge and experience are instrumental in developing and executing our cybersecurity strategies. Our CISO oversees
our governance programs, communicates cyber security threats, remediates known risks, and oversees our employee training program.

 Monitor Cybersecurity
Incidents

 The
CISO is continually informed about the latest developments in cybersecurity, including potential threats and innovative risk management
techniques. This ongoing knowledge acquisition is crucial for effective prevention, detection, mitigation, and remediation of cybersecurity
incidents. The CISO implements and oversees processes for the regular monitoring of our information systems. This includes the deployment
of advanced security measures and regular system audits to identify potential vulnerabilities. In the event of a cybersecurity incident,
the CISO is equipped with a well-defined incident response plan. This plan includes immediate actions to mitigate the impact and long-term
strategies for remediation and prevention of future incidents.

 Business Continuity
Plan

 Access
to company files and data is critical to our effective operation and financial performance. The Company is aware that cybersecurity treats
including ransomware must be identified and mitigated with minimal impact to corporate objectives. We employ a secure data governance
policy that includes off-site, secure, multi-cloud data storage to ensure that risks to critical business operations are mitigated in
the rare case of an incident.

 Reporting to Board
of Directors

 The
CISO, in his capacity, regularly informs the Chief Financial Officer and Chief Executive Officer of all aspects related to cybersecurity
risks and incidents. This ensures that the senior management team is kept abreast of the cybersecurity posture and potential risks facing
Horizon. Furthermore, significant cybersecurity matters, and strategic risk management decisions are escalated to the Board, ensuring
that they have comprehensive oversight and can provide guidance on critical cybersecurity issues.

 Item 2. Properties.

 Horizon's
principal executive offices are located at 3187 Highway 35, Lindsay, Ontario, K9V 4R1. Horizon leases office space and an aircraft hangar
in Lindsay Ontario, which serves as the corporate headquarters, and office space and light composite manufacturing space in Haliburton
Ontario. Horizon believes that these properties are sufficient for its business and operations as currently conducted. Horizon is currently
exploring locations for future scalable manufacturing operations.

 Item 3. Legal Proceedings.

 From
time to time, we may become involved in legal proceedings relating to claims arising from the ordinary course of business. Our management
believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse
effect on our results of operations, financial condition or cash flows.

 Item 4. Mine Safety Disclosures.

 Not
applicable.

 Item 5. Market For Registrant's Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

 Market Information

 Our
Class A ordinary shares and Public Warrants are each traded on the Nasdaq Capital Market under the symbols "HOVR," and "HOVRW,"
respectively.

 As
of August 21, 2025, there were 52 holders of record of our Class A ordinary shares and nil holders of record of our Public Warrants.

 Dividends

 We
have not paid any cash dividends on our Class A ordinary shares to date. The payment of cash dividends by us in the future will be dependent
upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within
the discretion of our Board.

 Securities Authorized
for Issuance Under Equity Compensation Plans

 The
information contained Part III, Item 12. " Securities Authorized for Issuance Under Equity Compensation Plans " is incorporated
by reference herein.

 Recent Sales of Unregistered Securities

 None.

 Purchases of Equity Securities by the
Issuer and Affiliated Purchasers

 None.

 Item 6. Reserved.

 Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

 References in this report
(the "Annual 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 consolidated
financial statements and the notes thereto contained elsewhere in this Annual Report. Certain information contained in the discussion
and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

 All figures noted are in
thousands of Canadian dollars unless noted otherwise.

 Special Note Regarding Forward-Looking Statements

 This Annual Report includes
"forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange 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.

 Overview

 New Horizon Aircraft Ltd.
(the "Company", "Horizon", "we," "us" or "our"), a British Columbia corporation,
with our 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"), as a Delaware corporation, subsequently redomiciled in the
Cayman Islands on October 14, 2022, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization, or similar business combination.

 Business Combination

 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 Merger and other transactions
contemplated thereby (collectively, the "Business Combination") closed on January 12, 2024, when, pursuant to the Business
Combination Agreement, Merger Sub merged with and into Robinson, surviving the Merger as a wholly owned subsidiary of Pono. Pono changed
its name to "New Horizon Aircraft Ltd." and the business of Robinson became the business of New Horizon Aircraft Ltd.

 The financial information
included in this report reflect (i) the historical operating results of Robinson prior to the Business Combination ("Legacy Horizon");
(ii) the combined results of Pono and Legacy Horizon following the closing of the Business Combination; (iii) the assets and liabilities
of Legacy Horizon at their historical cost; and (iv) the Company's equity structure for all periods presented.

 Organization and Nature of Business

 The Company's objective
is to significantly advance the benefits of sustainable air mobility. In connection with this objective, we have designed and developed
a cost effective and energy efficient hybrid-electric vertical takeoff and landing ("eVTOL") prototype aircraft for use in
future regional air mobility ("RAM") networks.

 Robinson was incorporated
in 2013. Initially, the company was focused on development of a hybrid-electric amphibious aircraft, and in 2018 the Company pivoted to
developing an innovative eVTOL concept that is identified as the Cavorite X7. The Company has built several small-scale prototypes including
a 50%-scale aircraft that has completed flight testing. We are now building a full-scale demonstrator aircraft that is expected to commence
flight testing in 2026 or 2027.

 Horizon intends to sell these
Cavorite X7 aircraft to third parties, air operators, lessors, individual consumers, and NATO military customers. The Company plans to
manufacture its aircraft and license its patented fan-in-wing technology and other core innovations to other Original Equipment Manufacturers
("OEM's"). Manufacturing will be accomplished with a heavy reliance on experienced aircraft manufacturing partners and
supply chain vendors. Horizon believes this highly focused business model will provide the most efficient use of capital to produce an
aircraft that has a variety of applications.

 Key Factors Affecting Operating Results

 See the section entitled " Risk
Factors " for a further discussion of these considerations.

 Development of the Regional Air Mobility
Market

 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.

 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 air cargo, business travel and air-taxi services. If the market for RAM
does not develop as expected, this would significantly impact the Company's ability to generate revenue or grow its business.

 Competition

 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.

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

 Government Certification

 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. Horizon expects the FAA to participate during this process
which will likely reduce the traditional amount of time required to achieve FAA certification.

 The Company 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 develop a certification
basis for the certification of Horizon's eVTOL aircraft.

 Typically, the certification
of a new aircraft design by TCCA or the FAA is a long and complex process, often spanning more than five years and costing hundreds of
millions of dollars. The Company has never undergone such a process, and there is no guarantee that its Cavorite X7 design will eventually
achieve certification. The Company will need to obtain authorization and certifications related to the production of its aircraft. While
it anticipates being able to meet the requirements of such authorization and certifications, the Company may be unable to obtain such
authorization and certifications, or to do so on the timeline it projects. Should the Company fail to obtain any of the required authorization
or certifications, or do so in a timely manner, or any of these authorization or certifications are modified, suspended or revoked after
it obtains them, the Company may be unable to fulfill sales of its commercial aircraft or do so on the timelines it projects, which would
have adverse effects on its business, prospects, financial condition, and results of operations.

 Dual Use Business Model

 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 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 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.

 Going Concern and Liquidity

 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.

 Horizon is a pre-revenue organization
in a research and development and flight-testing phase of operations. With more than $15 million of cash on-hand as of the date of filing,
management expects that the proceeds from recent sales of securities will be sufficient to fund our current operating plan for at least
the next 12 months from the date the consolidated financial statements were available to be issued, however there remains 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 would have a material adverse effect
on our financial position, results of operations, cash flows, and ability to achieve our intended business plans.

 Components of Results of Operations

 Revenue

 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, development, and certify our eVTOL aircraft.

 Operating Expenses

 Research and Development Expenses

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

 We expect our research and
development expenses to increase as we increase staffing to support aircraft engineering and software development, build aircraft, and
continue to explore and develop our eVTOL aircraft and technologies.

 Selling, General and Administrative Expenses

 Selling, general and administrative
expenses primarily consist of personnel expenses, including salaries, benefits, and stock-based compensation, related to executive management,
finance, legal, and human resource functions. Other costs include business development, investor relations, contractor and professional
services fees, audit and compliance expenses, insurance costs and general corporate expenses, including depreciation, rent, information
technology costs and utilities.

 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.

 Other Income

 Other income consists of grants
and subsidies received for developmental work and foreign exchange gains and losses.

 Interest Expense, net

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

 Change in fair value of Forward Purchase Agreement

 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, the Company recorded a $21,400 gain.

 Change in fair value of Warrants

 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.

 Results of Operations

 We believe the following information
includes all adjustments necessary to state fairly the results of operations for all periods presented. This data should be read in conjunction
with Horizon's consolidated financial statements and notes thereto. These results of operations are not necessarily indicative
of the future results of operations that may be expected for any future period.

 Comparison of the Year Ended May 31, 2025
to the Year Ended May 31, 2024

 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, and May 31, 2024 (000's CAD).

 Operating expenses

 2025

 2024

 Variance ($)

 Research and development

 $
 3,660

 $

 $
 (2,780
)

 General and administrative

 9,925

 3,744

 (6,181
)

 Total operating expenses

 13,585

 4,624

 (8,961
)

 Loss from operations

 (13,585
)

 (4,624
)

 8,961

 Other expenses (income)

 (575
)

 (585
)

 Interest expense (income), net

 (123
)

 Change in fair value of Warrants

 1,988

 (394
)

 (2,382
)

 Change in fair value and Termination of Forward Purchase Agreement

 (20,660
)

 4,342

 25,002

 Net Income (Loss)

 $
 5,200

 $
 (8,160
)

 $
 (13,360
)

 Operating Expenses

 Operating expenses increased by $8,961, from $4,624 for the year-ended
May 31, 2024, to $13,585 for the year-ended May 31, 2025. The increase was primarily driven by professional fees, additional staff hired
to support research and development activities, and other administrative costs connected with the Company's growth activities.

 Research and Development Expenses

 Research and development expenses
increased by $2,780, from $880 during the year-ended May 31, 2024, to $3,660 during the year-ended May 31, 2025. The increase was primarily
attributable to additional labour 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:

 2025

 2024

 Compensation Costs

 $
 2,305

 $

 Engineering costs

 1,285

 Depreciation

 -

 Total Research and Development costs

 $
 3,660

 $

 General and Administrative

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

 Other expenses (income)

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

 Cash Flows

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

 Net cash provided by (used in)

2025

2024

 Variance ($)

 Operating activities

 $
 (9,312
)

 $
 (3,308
)

 $
 (6,004
)

 Investing activities

 (142
)

 (209
)

 Financing activities

 15,185

 5,105

 10,080

 Net increase in cash

 $
 5,731

 $
 1,588

 $
 4,143

 Net Cash used in Operating Activities

 The Company's cash flows
used in operating activities have been primarily comprised of compensation costs, software expenses, technology costs, professional services
related to research and development and general and administrative activities, insurance, and direct research and development costs for
aircraft design, simulation, and aircraft manufacturing, partially offset by periodic grants received from various government agencies
and interest earned on cash. The Company expects to increase hiring to accelerate its engineering and certification efforts in the coming
years.

 For the year-ended May 31,
2025, the $6,004 increase in cash used from operations as compared to the year-ended May 31, 2024, was primarily attributed to increased
operating costs in connection to the Company's growth efforts and changes in working capital.

 Net Cash used in Investing Activities

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

 For the year-ended May 31,
2025, the $67 decrease in cash used by investing activities as compared to the year-ended May 31, 2024, was primarily attributed to website
development costs incurred in the prior year.

 Net Cash provided by Financing Activities

 The Company's cash flows
provided by financing activities to date have primarily been composed of funding raised with convertible instruments and registered securities
offerings.

 For the year-ended May 31,
2025, the $10,080 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, 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. Proceeds received by the Company are summarized below:

 Gross Proceeds - Class A Shares

 $
 1,906

 Gross Proceeds - PFW's

 $
 2,041

 Gross Proceeds - Warrant Exercises

 $
 2,787

 Direct costs

 $
 (510
)

 Net Proceeds

 $
 6,224

 PFW's may be exercised
by warrant holders at any time at a nominal exercise price as they were funded in connection with the RSO. Upon exercise, each PFW may
be exchanged for one Class A ordinary share. All 3 million PFW's were exercised during the year-ending May 31, 2025.

 Warrant holders exercised
2,590,000 warrants in exchange for 2,590,000 Class A ordinary shares for proceeds of $2,787 in the year-ended May 31, 2025.

 As of May 31, 2025, there
were 12,065,375 warrants outstanding at an exercise price of $11.50 USD and 3,210,000 General Warrants outstanding at an exercise price
of $0.75 USD 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 $0.36 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.

 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. The proceeds received by the
Company are summarized below:

 Gross Proceeds - Class A Shares

 $
 2,100

 Gross Proceeds - Preferred Shares

 6,300

 Direct costs

 (41
)

 Net Proceeds

 $
 8,359

 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 $6.25 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, 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 USD $16.5 million of Class A ordinary shares.

 Sources of Liquidity

 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, the Company's principal
source of liquidity is expected to be cash and cash equivalents of more than $15,000 on-hand as of the date of this filing, future government
grants and subsidies, and future sales of securities.

 To date, the Company has funded
its operations primarily with the issuances of Class A ordinary shares, Series A Preferred Shares, and issuances of convertible debt instruments.
Additional funding has been provided through government-backed grants.

 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 will be required and efforts to raise such working capital will be ongoing through at least the next several years.

 Off-Balance Sheet Arrangements

 We did not have any off-balance
sheet arrangements as of May 31, 2025, and May 31, 2024.

 Significant Accounting Judgements, Estimates,
and Assumptions

 The preparation of consolidated
financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial
statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have
identified the following critical accounting policies:

 Derivative Financial Instruments

 The Company evaluates its
financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance
with ASC Topic 815, Derivatives and Hedging ("ASC 815"). For derivative financial instruments that are accounted for
as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting
date, with changes in the fair value reported in the consolidated statements of operations. For derivative instruments that are classified
as equity, the derivative instruments are initially measured at fair value (or allocated value), and subsequent changes in fair value
are not recognized so long as the contracts continue to be classified in equity.

 The Company's Forward Purchase Agreement and Warrants outstanding
are recognized as a derivative liability in accordance with ASC 815. Accordingly, the Company recognizes the instrument 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 is measured at fair value using a simulation model. At the settlement date, the Forward Purchase
Agreement will be 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.

 Research and Development Costs

 The research and development
costs are accounted for in accordance with ASC 730, Research and Development, which requires all research and development costs
to be expensed as incurred.

 Recent Accounting Standards

 Recently Adopted Accounting
Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")
2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements
through enhanced disclosures about significant segment expenses, interim segment profit or loss and assets, and how the CODM uses reported
segment profit or loss information in assessing segment performance and allocating resources. The Company adopted ASU 2023-07 effective
June 1, 2024.

 Recently Issued Accounting Pronouncements Not
Yet Adopted

 In December 2023, the FASB
issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of incremental income
tax information related to the income tax rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.
The update is effective for annual periods beginning after December 15, 2024 on a prospective basis, and retrospective application is
permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures within its consolidated financial statements.

 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 of 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.

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

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

 Not required for smaller reporting
companies.

 Item 8. Financial Statements and Supplementary Data.

 The
consolidated financial statements and related consolidated financial statement schedules required to be filed are indexed on page F-1
and are incorporated herein.

 Item 9. Changes in and Disagreements
With Accountants on Accounting and Financial Disclosure.

 None.

 Item 9A. Controls and Procedures.

 Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure
that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control
objectives.

 Evaluation of Disclosure
Controls and Procedures

 As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2025. Based upon their evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2025, our disclosure controls and procedures (as
defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective.

 Management's
Annual Report on Internal Controls Over Financial Reporting

 Management
is responsible for establishing and maintaining adequate internal control over financial reporting, and for performing an assessment of
the effectiveness of internal control over financial reporting as of May 31, 2025. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. GAAP. Our system of internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with U.S. GAAP, and that receipts and expenditures of our company are being made only in accordance
with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 Management
performed an assessment of the effectiveness of our internal control over financial reporting as of May 31, 2025, based upon criteria
in Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based upon this evaluation, our principal executive officer and principal financial officer concluded that, as of the
end of the period covered by this Annual Report, the design and operation of our disclosure controls and procedures were not effective.

 Notwithstanding the identified
material weakness, management, including our principal executive officer and principal financial and accounting officer, believe that
the consolidated financial statements contained in this Annual Report fairly present, in all material respects, our financial condition,
results of operations and cash flows for the fiscal periods presented in conformity with GAAP.

 Remediation of Material Weakness

 While significant progress
has been made to improve our internal control over financial reporting, not all aspects of our internal controls have been sufficiently
remediated. The material weakness, as of May 31, 2025, relates to the inadequate separation of financial responsibilities. Our management,
with the oversight of the Audit Committee of our Board of Directors, continues to design and implement measures to remediate the material
weakness. Remediation of the material weakness will require further validation and testing of the operating effectiveness of the applicable
remedial controls over a sustained period of financial reporting cycles. With additional personnel anticipated to be hired in fiscal year
2026, the Company expects to make significant advances towards remediating the identified material weakness.

 Changes in Internal
Control Over Financial Reporting

 No recent changes in our internal control over financial reporting
had or are expected to have a material impact on the Company's internal controls.

 Item 9B. Other Information.

 (a)

 None.

 (b)
 During the quarter ended May 31, 2025, none of our directors or officers adopted or terminated a "Rule 10b5-1 trading agreement" or a "non-Rule 10b5-1 trading agreement" (in each case defined in Item 408 of Regulation S-K).

 Item 9C. Disclosure Regarding
Foreign Jurisdictions that Prevent Inspections.

 Not
applicable.

 Item 10. Directors, Executive Officers and Corporate Governance.

 Directors and Executive Officers

 The
following table sets forth, as of August 21, 2025, the name, age and position of each of our executive officers and directors.

 Name

 Age

 Position

 Executive Officers

 Brandon Robinson (3)

 Chief Executive Officer, Director

 Jason O'Neill (2)

 Chief Operating Officer, Director

 Brian Merker

 Chief Financial Officer

 Stewart Lee

 Head of People & Strategy

 Non-Employee Directors

 Trisha Nomura (1)

 John Maris (2)

 John Pinsent (1)

 (1)

 Class I Director

 (2)

 Class II Director

 (3)

 Class III Director

 Background of Directors
and Executive Officers

 Executive Officers

 Brandon Robinson. Brandon
Robinson has served as the Chief Executive Officer and as a member of the Board of Horizon since the Business Combination, and previously
served as the founder and Chief Executive Officer of Horizon and led the Horizon team since its inception in 2013. He has dedicated his
life to aviation, initially as a CF-18 pilot in the Canadian Armed Forces (CAF) before moving into large scale military capital projects.
Upon leaving the CAF, Mr. Robinson discovered his passion for the Advanced Air Mobility movement. Mr. Robinson serves on the Board
of Directors of the Ontario Aerospace Council. Mr. Robinson has a Bachelor of Mechanical Engineering from Royal Military College,
an MBA from Royal Roads University, has co-authored several successful aerospace patents, and holds an Airline Transport Pilots License.
His deep operational experience alongside a passion for technical innovation has propelled Horizon to the forefront of the Advanced Air
Mobility movement.

 We believe that Mr. Robinson,
given his extensive experience as a front-line fighter pilot, mechanical engineering knowledge and adept managing acumen, is qualified
to serve as a member of our Board due to his unique combination of skills he brings as our co-founder and Chief Executive Officer.

 Jason
O'Neill. Jason O'Neill has served as Chief Operating Officer and as a member of the Board of Horizon since
the Business Combination. Mr. O'Neill previously served as Horizon's Chief Operating Officer since
January 2019. Mr. O'Neill has more than 20 years of experience in senior roles scaling tech-based start-ups.
Prior to joining Horizon, Mr. O'Neill worked at Centtric as the Director of Product and Strategy for 13 years. Most
recently he served as the Director of Product and Data for Thoughtwire for nearly 10 years. Mr. O'Neill's
previous organizations were focused on problem solution, leveraging leading edge computer-based technologies. Mr. O'Neill
attended both the University of Toronto and the University of Waterloo.

 Mr. O'Neill is qualified
to serve on our board based on his operational experience scaling businesses, as well as his historical experience as Chief Operating
Officer of Horizon.

 Brian Merker. Brian
Merker has served as Chief Financial Officer of Horizon since the Business Combination. Mr. Merker has more than 20 years of senior
financial management experience including more than 10 years serving in the Aviation sector, most recently as Chief Financial Officer
of Skyservice Business Aviation ("Skyservice") from 2018 to 2022, supporting growth efforts in aircraft management, maintenance,
fixed-based operations, charter, and brokerage. Prior to Skyservice, Mr. Merker served as Chief Financial Officer of Great Slave Helicopters
as well as Vice President of Finance of its parent Company, Discovery Air, a publicly traded organization from 2013 to 2018. Discovery
Air includes a diverse range of aviation related services including fighter jet pilot training, rotary-wing services, a commercial fixed-wing
airline, fire suppression support, as well as aircraft engineering and maintenance. Prior to his time at Discovery Air, Mr. Merker served
as Vice President of Finance from 2007 to 2012 at Score Media, a publicly traded company focused on sports broadcast and technology innovation.
Mr. Merker began his career in the KPMG audit practice, where he served from 2003 to 2006. During this time, he gained significant exposure
to SEC registrants at the commencement of the Sarbanes-Oxley legislation. Mr. Merker obtained his Honours Commerce degree in Economics
from Guelph University before attending Queen's University to complete his Chartered Professional Accounting academia requirements.

 Stewart Lee. Stewart
Lee has served as the Head of People and Strategy at Horizon since the Business Combination and previously served as Horizon's
Head of People and Strategy since 2013. Prior to joining Horizon, Mr. Lee formed his own company, providing human resources consulting
services to a wide array of clients. Previously, Mr. Lee was the Director of Human Resources for Steel-Craft Door Products, a large
Canadian national manufacturing company, for 11 years. Mr. Lee also served in the Canadian Armed Forces as a Logistics Officer
for 6 years. Mr. Lee holds a Bachelor of Commerce degree from Royal Roads University. He also holds an MBA in management from
Royal Roads University and has been a Chartered Professional in Human Resources since 2009.

 Non-Employee Directors

 Trisha Nomura. Trisha
Nomura has served as independent director and chairperson of the Audit Committee of Horizon since the Business Combination. Ms. Nomura
served as an independent director of Pono and was the chairperson of Pono's Audit Committee prior to the Business Combination. She
also served as an independent director of Pono Capital Two, Inc. (Nasdaq: PTWO) and as the Chief Financial Officer of Pono Capital
Corp (Nasdaq: PONO). Since July 2018, Ms. Nomura has owned a consulting firm, Ascend Consulting, LLC. Prior to opening her own
firm, Ms. Nomura worked in both public accounting and private industry. Ms. Nomura was the Chief Operating Officer of HiHR from July 2015
to December 2016, and the Vice President of Strategic Services from May 2014 to July 2015. Ms. Nomura also served as the
Chief People Officer of ProService Hawaii from January 2017 to June 2018. Ms. Nomura began volunteering with the HSCPA since
2010 through the YCPA Squad, has been the Treasurer of Kaneohe Little League since 2013, and is a member of the AICPA, where she was selected
to attend the Leadership Academy, has served on the Association Board of Directors, and is currently serving as an at-large Council member.
Ms. Nomura is a CPA, not in public practice, and a CGMA. She is a graduate of Creighton University, where she obtained her Bachelor
of Science in Business Administration in accounting, and of the University of Hawaii at Manoa, where she earned her Master of Accountancy
degree.

 Ms. Nomura's consulting,
accounting and management skills and knowledge make her an important addition to our Board.

 John Maris. John
Maris has served as an independent director of Horizon since the Business Combination. Dr. Maris has served as the Chief Executive Officer
of Cert Centre Canada ("3C"), a privately held business that provides consulting services in the aerospace industry, since
2008. At 3C, Dr. Maris has overseen flight testing, research and development, and certification services provided to aerospace organizations
across the world. Since 1995, Dr. Maris has also served as President and Chief Executive Officer of Marinvent Corporation, a company established
to develop procedures and technologies to increase the efficiency and reduce the risk of aeronautical programs, including the Electronic
Flight Bag (EFB) technology. Dr. Maris also founded Maris Worden Aerospace in 1986. From 1993 to 1995, Dr. Maris served as the Mobile
Servicing System Control Equipment Manager for the International Space Station for the Canadian Space Agency. From 1983 to 1993, Mr. Maris
was a project officer and experimental test pilot for the Canadian Department of National Defense. In 1983, Dr. Maris enlisted in the
Royal Canadian Air Force and graduated from the United States Air Force Test Pilot Course at Edwards Air Force Base in California in 1989.
Dr. Maris subsequently served four years as Project Officer and Experimental Test Pilot at the Aerospace Engineering Test Establishment
at Cold Lake, Alberta. In 1995, holding the rank of Major, Dr. Maris retired from the Canadian Forces to devote full-time to Marinvent
Corporation. Dr. Maris earned a B.Sc. in Aeronautical Engineering at the Imperial College of Science and Technology at London University
in 1979, and subsequently earned a Master of Aeronautical Science degree in 1982 and a Master of Aviation Management degree in 1983, both
with Distinction from Embry-Riddle Aeronautical University (ERAU) at Daytona Beach, Florida. In 2017, Dr. Maris received his Ph. D. from
ERAU, earning his doctorate in Aviation Safety and Human Factors. In 2018 he was granted Affiliate Professor status at Concordia University
in Montr al. Dr. Maris sits on a number of the Concordia University's boards and is also on the Centre technologique
en a rospatiale board.

 Dr. Maris' vast
experience in the aerospace industry, both as a pilot and entrepreneur, makes him an important addition to our Board.

 John Pinsent. John
Pinsent has served as an independent director of Horizon since the Business Combination. In 2004. Mr. Pinsent founded St. Arnaud Pinsent
Steman Chartered Professional Accountants ("SPS"), a chartered professional accounting firm based out of Edmonton, Alberta,
Canada. Before founding SPS, Mr. Pinsent worked for ten years at Ernst & Young LLP, earning his Chartered Accountants designation
in 1996. From 1986 to 1994, Mr. Pinsent served as the Controller and Vice President Finance of an Alberta based international retail organization.
Mr. Pinsent earned his Bachelor of Education and Bachelor of Commerce (AD) degrees at the University of Alberta, has an ICD.D designation
from the Institute of Corporate Directors and became an FCPA in 2013. Mr. Pinsent serves as a board member of Enterprise Group, Inc.,
a Toronto Stock Exchange listed company that provides specialized equipment and services in the build out of infrastructure for energy,
pipeline, and construction industries. He also sits on the board of directors of several private companies and supports numerous non-profit
and philanthropic initiatives. He has experience serving as board and audit committee chairs and has extensive experience in compliance
and corporate governance in the public markets.

 Mr. Pinsent's experience
providing accounting, audit, tax and business advisory services, along with his public company and board experience, make him an important
addition to our Board.

 Family Relationships

 Brian Robinson, our Chief
Engineer, is the father of Brandon Robinson. Jason O'Neill is the brother-in-law of Brandon Robinson. There are no other family
relationships among any of our directors or executive officers.

 Board Composition

 Our business and affairs are
organized under the direction of our Board. The Board consists of five members. The primary responsibilities of the Board are to provide
oversight, strategic guidance, counseling, and direction to our management. The Board will meet on a regular basis and additionally as
required.

 In accordance with our Articles,
our Board is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered
three-year terms. The directors are assigned to the following classes:

 Class I consists of Ms. Nomura and Mr. Pinsent, whose
terms will expire at our 2027 annual meeting of shareholders;

 Class II consists
of Mr. O'Neill and Mr. Maris, whose terms will expire at our 2025 annual meeting of shareholders; and

 Class III consists of Mr. Brandon Robinson, whose term will
expire at our 2026 annual meeting of shareholders.

 At each annual meeting of
shareholders to be held after the initial classification, the successors to directors whose terms then expire will be elected to serve
from the time of election and qualification until the third annual meeting following their election and until their successors are duly
elected and qualified. This classification of our Board may have the effect of delaying or preventing changes in our control or management.

 Director Independence

 As a result of our Class A
ordinary shares being listed on the Nasdaq Capital Market, we adhere to the listing rules of Nasdaq in affirmatively determining
whether a director is independent. Our Board has consulted, and will consult, with its counsel to ensure that the board's determinations
are consistent with those rules and all relevant securities and other laws and regulations regarding the independence of directors.
The Nasdaq listing standards generally define an "independent director" as a person, other than an executive officer of a
company or any other individual having a relationship which, in the opinion of the issuer's board of directors, would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director.

 Each of the directors other
than Mr. Brandon Robinson and Mr. O'Neill qualify as independent directors as defined under the listing rules of
Nasdaq, and our board consists of a majority of independent directors, as defined under the rules of the SEC and Nasdaq Listing Rules relating
to director independence requirements. In addition, we are subject to the rules of the SEC and Nasdaq relating to the membership,
qualifications, and operations of the audit committee, the compensation committee, and the nominating and corporate governance committee,
as discussed below.

 Board Oversight of Risk

 One of the key functions of our Board will be informed oversight of
its risk management process. The Board does not currently anticipate having a standing risk management committee, but rather provides
oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks
inherent in their respective areas of oversight. In particular, our Board will be responsible for monitoring and assessing strategic risk
exposure and our audit committee will have the responsibility to consider and discuss the combined company's major financial risk
exposures and the steps its management will take to monitor and control such exposures, including guidelines and policies to govern the
process by which risk assessment and management is undertaken. The audit committee will also monitor compliance with legal and regulatory
requirements. Our compensation committee will also assess and monitor whether our compensation plans, policies and programs comply with
applicable legal and regulatory requirements.

 Board Committees

 Our Board has established
an audit committee, a compensation committee and a nominating and corporate governance committee. Our Board adopted a written charter
for each of these committees, which complies with the applicable requirements of current Nasdaq Listing Rules. Copies of the charters
for each committee are available on the investor relations portion of Horizon's website. The composition and function of each
committee will comply with all applicable requirements of the Sarbanes-Oxley Act and all applicable SEC rules and regulations.

 Audit Committee

 The members of the audit committee
are Ms. Nomura (Chair), Mr. Maris, and Mr. Pinsent. Our Board has determined that each of the members of the audit committee
will be an "independent director" as defined by, and meet the other requirements of the Nasdaq Listing Rules applicable
to members of an audit committee and Rule 10A-3(b)(i) under the Exchange Act, including that each member of the audit committee
can read and understand fundamental financial statements in accordance with Nasdaq audit committee requirements. In arriving at this determination,
the Board examined each audit committee member's scope of experience and the nature of their prior and current employment. The audit
committee will meet on at least a quarterly basis. Both the combined company's independent registered public accounting firm and
management intend to periodically meet privately with our audit committee.

 The primary purpose of the
audit committee is to discharge the responsibilities of the Board with respect to our accounting, financial, and other reporting and internal
control practices and to oversee our independent registered accounting firm. Specific responsibilities of our audit committee include:

 selecting a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;

 helping to ensure the independence and performance of the independent registered public accounting firm;

 discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and the independent accountants, our interim and year-end operating results;

 developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

 reviewing policies on risk assessment and risk management;

 reviewing related party transactions;

 obtaining and reviewing a report by the independent registered public accounting firm at least annually, that describes our internal quality-control procedures, any material issues with such procedures, and any steps taken to deal with such issues when required by applicable law; and

 approving (or, as permitted, pre-approving) all audit and all permissible non-audit service to be performed by the independent registered public accounting firm.

 Audit Committee Financial Expert

 Our Board has determined that
Ms. Nomura qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication
requirements of the Nasdaq Listing Rules. In making this determination, our Board considered Ms. Nomura's formal education,
training, and previous experience in financial roles.

 Compensation Committee

 The members of the compensation
committee are Mr. Pinsent (Chair), Ms. Nomura, and Mr. Maris. Our Board has determined that each of the members will be
an "independent director" as defined by the Nasdaq Listing Rules applicable to members of a compensation committee. The
Board has determined that each of the members of the compensation committee is a non-employee director, as defined in Rule 16b-3
promulgated under the Exchange Act and satisfy the independence requirements of Nasdaq. The compensation committee will meet from time
to time to consider matters for which approval by the committee is desirable or is required by law.

 Specific responsibilities
of our compensation committee include:

 reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer's compensation, evaluating our Chief Executive Officer's performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;

 reviewing and approving the compensation of our other executive officers;

 reviewing and recommending our Board the compensation of our directors;

 reviewing our executive compensation policies and plans;

 reviewing and approving, or recommending that our Board approve, incentive compensation and equity plans, severance agreements, change-of-control protections and any other compensatory arrangements for our executive officers and other senior management, as appropriate;

 administering our incentive compensation equity-based incentive plans;

 selecting independent compensation consultants and assessing whether there are any conflicts of interest with any of the committee's compensation advisors;

 assisting management in complying with our proxy statement and annual report disclosure requirements;

 if required, producing a report on executive compensation to be included in our annual proxy statement;

 reviewing and establishing general policies relating to compensation and benefits of our employees; and

 reviewing our overall compensation philosophy.

 Nominating and Corporate Governance Committee

 The members of the nominating
and corporate governance committee are Mr. Maris (Chair), Ms. Nomura and Mr. Pinsent. The Board determined that each of
the members will be an "independent director" as defined by the Nasdaq Listing Rules applicable to members of a nominating
committee. The nominating and corporate governance committee will meet from time to time to consider matters for which approval by the
committee is desirable or is required by law.

 Specific responsibilities of our nominating and
corporate governance committee include:

 identifying, evaluating and selecting, or recommending that our Board approve, nominees for election to our Board;

 evaluating the performance of our Board and of individual directors;

 reviewing developments in corporate governance practices;

 evaluating the adequacy of our corporate governance practices and reporting;

 reviewing management succession plans; and

 developing and making recommendations to our Board regarding corporate governance guidelines and matters.

 Code of Ethics

 We have adopted a code of ethics that applies to all of our directors,
officers and employees. A copy of our code of ethics posted on the "Governance —Documents" portion under the "Investors"
tab of our website at  Information contained on or accessible through our website is not a part
of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only. We also intend
to disclose future amendments to, or waivers of, its code of ethics, as and to the extent required by SEC regulations, on our website.

 Insider Trading Policy

 Our Board has adopted an insider
trading policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who are aware of material
nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material nonpublic information
to other persons who may trade on the basis of that information.

 Our insider trading policy
prohibits our Board members, officers, employees and consultants from engaging in transactions involving options on our securities, such
as puts, calls and other derivative securities, whether on an exchange or in any other markets. Our insider trading policy also prohibits
our Board members, officers, employees and consultants from purchasing Company securities on margin, borrowing against Company securities
held in a margin account, or pledging Company securities as collateral for a loan.

 Our insider trading policy
permits our executive officers and directors to enter into trading plans established according to Section 10b5-1 of the Exchange Act.
These plans may include specific instructions for a broker to exercise vested options and sell our common stock on behalf of the executive
officer or director at certain dates if our stock price is above a specified level or both. Under these plans, the executive officer or
director no longer has control over the decision to exercise and sell the securities in the plan, unless he or she amends or terminates
the trading plan during a trading window. The purpose of these plans is to enable executive officers and directors to recognize the value
of their compensation and diversify their holdings of our stock during periods in which the executive officer or director would be unable
to sell our common stock because material information about us had not been publicly released.

 Compensation Committee Interlocks and Insider Participation

 None of the members of the compensation committee was at any time one
of Horizon's officers or employees. None of Horizon's executive officers currently serves, or has served during the last completed
fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers that will
serve as a member of our Board or compensation committee.

 Shareholder and Interested Party Communications

 Stockholders and interested parties may communicate with our Board,
any committee chairperson or the non-management directors as a group by writing to the board or committee chairperson in care of Horizon
Aircraft Ltd., 3187 Highway 35, Lindsay, Ontario K9V 4R1 Canada. Each communication will be forwarded, depending on the subject matter,
to the Board, the appropriate committee chairperson or all non-management directors.

 Limitations of Liability and Indemnification of Directors and
Officers

 Under the BCBCA, a director
of a company is jointly and severally liable to restore to the company any amount paid or distributed as a result of paying dividends,
commissions and compensation, among other things, contrary to the BCBCA. A director of a company will not be found liable under the BCBCA
if the director relied, in good faith, on (i) financial statements of the company represented to the director by an officer of the company
or in a written report of the auditor of the company, (ii) a written report of a lawyer, accountant, engineer, appraiser or other person
whose profession lends credibility to a statement made by that person, (iii) a statement of fact represented to the director by an officer
of the company to be correct, or (iv) any record, information or representation that the court considers provides reasonable grounds for
the actions of the director, whether or not the record was forged, fraudulently made or inaccurate, or the information or representation
was fraudulently made or inaccurate. Further, a director of a company is not liable under the BCBCA if the director did not know and could
not reasonably have known that the act done by the director or authorized by resolution voted for or consented to by the director was
contrary to the BCBCA.

 We have purchased and intend
to maintain director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their
services to the combined company, including matters arising under the Securities Act.

 Our Articles provide that
we must indemnify all eligible parties (which includes our current, former or alternate directors and officers), and such person's
heirs and legal personal representatives, as set out in the BCBCA, against all eligible penalties to which such person is or may be liable,
and we must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in
respect of that proceeding. Each director is deemed to have contracted with us on the terms of indemnity contained in our Articles. In
addition, we may indemnify any other person in accordance with the BCBCA.

 There is no pending litigation
or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We
are not aware of any threatened litigation or proceedings that may result in a claim for such indemnification.

 Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling the combined
company, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.

 Delinquent Section
16(a) Reports

 Section 16(a) of the Securities Exchange Act of 1934 requires our directors,
certain officers and any beneficial owners of more than 10% of our common stock to file reports relating to their ownership and changes
in ownership of our Class A ordinary shares with the SEC by certain deadlines and furnish copies of such reports to us.

 Based
solely upon a review of those reports and written representations provided to us by all of our directors and executive officers, we believe
that during the year ended May 31, 2025, our directors, executive officers and greater than 10% stockholders timely filed all reports
they were required to file under Section 16(a), except that one Form 4 relating to two transactions was filed late by Ms. Nomura; one
Form 4 relating to one transaction was filed late by each of Mr. Maris and Mr. Pinsent; one Form 3 and two Form 4s covering an aggregate
of 17 transactions were filed late by Mr. O'Neill; one Form 4 covering 13 transactions was filed late by Mr. Robinson; one Form
4 covering 13 transactions was filed late by Mr. Merker; one Form 4 covering 13 transactions was filed late by Mr. Lee; one Form 4 relating
to four transactions was filed late by Mehana Capital LLC, a 10% shareholder; and two Form 4s covering an aggregate of 20 transactions
were filed late by Dustin Shindo.

 Item 11. Executive Compensation.

 Executive Compensation

 We are currently considered
an "emerging growth Company" within the meaning of the Securities Act for purposes of the SEC's executive compensation
disclosure rules. Accordingly, we are required to provide a Summary Compensation Table, as well as limited narrative disclosures regarding
executive compensation for our last two completed fiscal years and an Outstanding Equity Awards at Fiscal Year End Table for our last
completed fiscal year. These reporting obligations extend only to the following "named executive officers," who are the individuals
who served as our principal executive officer and the next two most highly compensated executive officers at the end of the fiscal year
2025.

 This section discusses material
components of the executive compensation programs for Horizon's executive officers who area named in the "Summary Compensation
Table" below. In fiscal year 2025, Horizon's "named executive officers" and their positions were as follows:

 Brandon Robinson, Chief Executive Officer;

 Jason O'Neill, Chief Operating Officer;

 Brian Merker, Chief Financial Officer;

 This discussion may contain
forward-looking statements that are based on Horizon's current plans, considerations, expectations, and determinations regarding
future compensation programs.

 Summary Compensation Table

 The following table contains
information pertaining to the compensation of Horizon's named executives for the years-ending May 31, 2025, and May 31, 2024.

 Name
 and Position

 Year

 Salary

 Bonus

 ($) (1)

 Stock

 Awards
 ($) (2)

 Option

 Awards
 ($CAD) (3)

 Non-Equity

 Incentive
 Plan

 Non-qualified

 Deferred
 Earnings

 All

 Other

 Total

 Brandon

 2025

 369,036

 52,785

 102,199

 212,000

 —

 —

 —

 736,020

 Robinson, Chief Executive Officer

 2024

 270,985

 —

 —

 —

 —

 —

 —

 270,985

 Jason

 2025

 254,125

 38,250

 74,273

 156,880

 —

 —

 —

 523,528

 O'Neill, Chief Operating Officer

 2024

 212,029

 —

 —

 —

 —

 —

 —

 212,029

 Brian
Merker,

 2025

 269,583

 38,250

 84,763

 183,320

 —

 —

 —

 574,916

 Chief Financial Officer

 2024

 129,108

 59,127

 188,235

 (1)

 Amounts reflect awards under the Company's short-term incentive plan to be satisfied in the form of Class A ordinary shares.

 (2)

 Amounts reflect the granting
of Performance Share Units and the Company's contribution to each individual under the ESPP (defined below).

 (3)

 Options vest and become exercisable in three equal installments over a 3-year period. Options granted in the year-ended May 31, 2025, were issued with a strike price equal to $USD0.61. Options granted in the year-ended May 31, 2024, were issued with a strike price equal to $USD0.85.

 Narrative to the Summary Compensation Table

 Annual Base Salary

 We pay our named executive
officers a base salary to compensate them for services rendered to our company. The base salary payable to our named executive officers
is intended to provide a fixed component of compensation reflecting the executive's skill set, experience, role and responsibilities.

 Equity Compensation

 We have granted stock options
to our employees, including our named executive officers, in order to attract and retain them, as well as to align their interests with
the interests of our shareholders. In order to provide a long-term incentive, these stock options vest over three years subject to
continued service.

 In connection with the Business Combination we adopted the 2023 Equity
Incentive Plan, effective January 12, 2024. This plan was amended by the shareholders on December 17, 2024. For additional information
about the 2023 Equity Incentive Plan, see the section titled "— Summary of the 2023 Equity Incentive Plan " section
of this report.

 Other Elements of Compensation

 Retirement Savings and Health Spending Account and Group Benefits

 All of our full-time employees,
including our named executive officers, are eligible to participate in our pension and health plans. The health spending account program
will reimburse costs that include medical, dental and vision benefits; a group benefits plan to provide for short-term and long-term disability
insurance; life and AD&D insurance will be offered to all full-time employees. In May 2024, the Company established an employee share
purchase plan ("ESPP") whereby employees can elect to allocate between 3-5% of earnings to the purchase of Company stock in
the open market, matched equally by Horizon. The first share purchases in connection with this ESPP commenced in June 2024.

 Perquisites and Other Personal Benefits

 We determine perquisites on
a case-by-case basis and will provide a perquisite to a named executive officer when we believe it is necessary to attract or
retain the named executive officer. We did not provide any perquisites or personal benefits to our named executive officers not otherwise
made available to our other employees in fiscal year 2024.

 Executive Compensation Arrangements

 Employment Agreements

 As a result of the Business
Combination, Horizon entered into employment agreements with the Horizon's executive officers: Brandon Robinson (Chief Executive
Officer), Jason O'Neill (Chief Operating Officer), and Brian Merker (Chief Financial Officer) (each an "Employment Agreement,
and collectively, the "Employment Agreements").

 The Employment Agreements all provide for at-will employment that may
be terminated by the employee with thirty days' notice to Horizon of resignation from employment; by Horizon without notice, payment
in lieu of notice, benefit continuation (if applicable) or compensation of any kind, where permitted by the Ontario Employment Standards
Act, 2000, as amended from time to time (the "ESA"), which includes willful misconduct, disobedience or willful neglect of
duty that is not trivial and has not been condoned by Horizon; or by Horizon with notice or pay in lieu of notice by providing the employee
(i) the minimum amount of notice, pay in lieu of notice (or a combination of both), severance pay, vacation pay and benefit continuation
(if applicable) and any other entitlements strictly required by the ESA, calculated from the date of the employee's original employment
with Horizon; plus (ii) such additional amount of payment of Base Salary (as defined below) in lieu of notice ("Additional Pay in
Lieu of Notice"), as is necessary to ensure that the aggregate of the statutory notice, pay in lieu of notice and severance pay
entitlements under (a) above and the Additional Pay in Lieu of Notice under sub-section (ii), (b), at a minimum equals twelve (12) months,
and such aggregate shall increase by additional one (1) month payment of the employee's Base Salary in lieu of notice for each completed
year of service from the Effective Date to an overall cumulative maximum of 24 months of Base Salary; plus, (iii) payment of a prorated
portion of any bonuses that the employee is eligible to receive as of the date of termination, calculated to the end of the Severance
Period based upon the average incentive compensation paid to the employee in the two years prior to the year in which notice of termination
is communicated. For the purposes of the Employment Agreements, the period for which an employee receives notice and/or payment, calculated
from the date the employee is advised of the termination of his employment, is the "Severance Period."

 If following a Change of Control (as defined in the Employment Agreements),
Horizon gives the employee Good Reason to terminate his employment and the related Employment Agreement, and provided the employee exercises
that right within two years from the date of the Change of Control, the employee shall be entitled to receive the benefits set forth above,
as if the employee's employment had been terminated on a without cause basis. "Good Reason" means the occurrence of
(i) a constructive termination of employment and of the Employment Agreement; (ii) any material and unilateral change in employee's
title, responsibilities, or authority in place at the time of the Change of Control; (iii) any material reduction in the Base Salary paid
to employee at the time of the Change of Control; (iv) any termination or material reduction in the aggregate value of the employee benefit
programs, including, but not limited to, pension, life, disability, health, medical or dental insurance, in which the employee participated
or under which the employee was covered at the time of Change of Control; or (v) the employee's assignment to any significant, ongoing
duties inconsistent with his skills, position (including status, offices, titles and reporting requirements), authority, duties or responsibilities,
or any other action by Horizon, which results in material diminution of such position.

 The Employment Agreements provide for a base salary of USD$300,000
for E. Brandon Robinson; $CAD275,000 for Brian Merker, and $CAD240,000 for Jason O'Neill (each a "Base Salary"). Possible
annual performance bonuses and equity grants under the 2023 Equity Incentive Plan, as amended, are to be determined by Horizon's
compensation committee.

 Contractor Agreement

 In connection with the Closing of the Business Combination, Horizon
entered into a Contractor Agreement (the "Contractor Agreement"), dated January 12, 2024 (the "Effective Date"),
by and among Horizon, 2195790 Alberta Inc. (the "Contractor") and Stewart Lee (the "Keyman"). Pursuant to the
Contractor Agreement, the Contractor will be providing certain services (the "Services") as the Head of People & Strategy
through the Keyman. The term of the Contractor Agreement began on the Effective Date and unless earlier terminated, will automatically
expire on December 31, 2025 (the "Expiry Date") and may be extended by mutual agreement in writing. Horizon will pay the Contractor
for the performance of the Services fees in the amount of $CAD120.00 per hour (the "Fees").

 The Contractor Agreement may be terminated by mutual agreement; for
convenience by either party upon the delivery of, (i) if by the Contractor, 90 calendar days' prior written notice to Horizon, and
if by Horizon, 60 calendar days' prior written notice to the Contractor; or by Horizon for material breach. Upon the expiration
or earlier termination of the Contractor Agreement for any reason, Horizon will provide the Contractor with only the Fees accrued and
owing to the Contractor up to and including the Expiry Date or earlier termination date.

 Outstanding Equity Awards as of May 31, 2025

 The following table sets forth
information regarding outstanding option awards held by the named executive officers as of May 31, 2025. The applicable vesting provisions
are described in the footnote following the table.

 Option Awards

 Stock Awards

 Name (a)

 securities
 underlying
 unexercised
 options
 (#)
 exercisable
 (b)

 securities
 underlying
 unexercised
 options
 (#)
 unexercisable
 (c)

 incentive plan
 awards:
 securities
 underlying
 unexercised
 unearned
 options
 (#)
 (d)

 Option
 exercise
 price
 (USD$)
 (e)

 Option
 expiration
 date
 (f)

 shares or
 units of
 stock that
 have not
 vested
 (#)
 (g)

 Market
 value of
 shares
 or units
 of stock
 that
 have not
 vested
 ($)
 (h)

 incentive
 plan awards:
 unearned
 shares,
 units or
 other rights
 that have
 not vested
 (#)
 (i)

 incentive
 plan
 awards:
 Market
 or payout
 value of
 unearned
 shares,
 units or
 other rights
 that have
 not vested
 ($)
 (j)

 Brandon Robinson (1)

 95,476

 47,737

 —

 $
 0.55

 August 2, 2030

 $
 145,835

 —

 —

 —

 400,000

 —

 $
 0.61

 February 2, 2035

 100,000

 Jason O'Neill (1)

 97,502

 48,750

 —

 $
 0.55

 August 2, 2030

 74,000

 107,918

 —

 —

 —

 296,000

 —

 $
 0.61

 February 2, 2035

 Brian Merker

 33,333

 66,667

 —

 $
 0.85

 May 30, 2034

 86,000

 125,420

 —

 —

 —

 344,000

 —

 $
 0.61

 February 2, 2035

 (1)

 Stock options that expire
in 2032 were granted at $CAD0.76 per share and converted for purposes of this table at a foreign exchange rate of USD $1.00 to CAD $1.36.

 Director Compensation

 Non-employee directors are
compensated with a combination of cash and stock. Additionally, we provide reimbursement to our non-employee directors for their
reasonable expenses incurred in attending meetings of our Board and its committees.

 The following table sets forth
information regarding compensation earned during the fiscal year ended May 31, 2025, by each of our non-employee directors who
served as a director of the Company during that time, which consists of cash retainers and stock awards:

 Name

 Fees
 Earned or
 Paid in Cash
 ($)

 Stock
 Awards
 ($)

 All Other
 ($)

 Total
 ($)

 Trisha Nomura

 50,000
 (1)

 50,000
 (1)

 —

 100,000
 (1)

 John Maris

 40,000
 (2)

 40,000
 (2)

 —

 80,000
 (2)

 Joh Pinsent

 40,000
 (2)

 40,000
 (2)

 —

 80,000
 (2)

 (1)

 Expressed in USD $.

 (2)

 Expressed in CAD $.

 Summary of the 2023 Equity Incentive Plan

 General.

 The purpose of the 2023 Equity Incentive Plan is to secure for Horizon
and its shareholders the benefits inherent in share ownership by the employees and directors of Horizon and its affiliates who, in the
judgment of the Board, will be largely responsible for its future growth and success, to provide incentives to the interests of employees,
officers and directors that align their interests to the interests of the shareholders. These incentives are provided through the grant
of stock options, deferred share units, restricted share units (time based or in the form of performance share units) and share awards
(collectively, the "Awards"). Capitalized terms used in this section but not defined, shall have the meanings ascribed to
them in the 2023 Equity Incentive Plan.

 Share Issuance Limits

 The aggregate number of ordinary
shares that may be subject to issuance under the 2023 Equity Incentive Plan is 5,277,452.

 Stock Options

 Option Grants

 The 2023 Equity Incentive Plan authorizes the board of Horizon to grant
options. The number of ordinary shares, the exercise price per ordinary share, the vesting period and any other terms and conditions of
options granted pursuant to the 2023 Equity Incentive Plan, from time to time are determined by the board at the time of the grant, subject
to the defined parameters of the 2023 Equity Incentive Plan. The date of grant for the Options shall be the date such grant was approved
by the Board.

 Exercise Price

 The exercise price of any
Option cannot be less than the closing price on the Nasdaq Capital Market immediately preceding the date of grant (the "Fair Market
Value").

 Exercise Period, Blackout Periods and Vesting

 Options are exercisable for
a period of ten years from the date the option is granted, or such greater or lesser period as determined by the Board. Options may
be earlier terminated in the event of death or termination of employment or appointment. Vesting of Options is determined by the Board.

 The right to exercise an option
may be accelerated in the event a takeover bid in respect of the ordinary shares is made or other change of control transaction.

 Pursuant to the 2023 Equity Incentive Plan, with respect to options
held by participants who are not U.S. taxpayers, when the expiry date of an Option occurs during, or within nine (9) business days
following, a "blackout period", the expiry date of such option is deemed to be the date that is ten (10) business days
following the expiry of such blackout period. Blackout periods are imposed by Horizon to restrict trading of Horizon's securities
by directors, officers, employees and certain others who hold options to purchase ordinary shares, in accordance with Horizon's
insider trading policy and similar policies in effect from time to time, in circumstances where material non-public information exists,
including where financial statements are being prepared but results have not yet been publicly disclosed.

 Cashless Exercise Rights

 Cashless exercise rights may also be granted under the 2023 Equity
Incentive Plan, at the discretion of the Board, to an optionee in conjunction with, or at any time following the grant of, an Option.
Cashless exercise rights under the 2023 Equity Incentive Plan effectively allow an optionee to exercise an Option on a "cashless"
basis by electing to relinquish, in whole or in part, the right to exercise such Option and receive, in lieu thereof, a number of fully
paid Class A ordinary shares. The number of Class A ordinary shares issuable on the cashless exercise right is equal to the quotient obtained
by dividing the difference between the aggregate Fair Market Value and the aggregate option price of all ordinary shares subject to such
option by the Fair Market Value of one (1) Class A ordinary share.

 Termination or Death

 If an optionee dies while
employed by Horizon, any Option held by him or her will be exercisable for a period of 6 months or prior to the expiration of the
Options (whichever is sooner) by the person to whom the rights of the optionee shall pass by will or applicable laws of descent and distribution.
If an optionee is terminated for cause, no Option will be exercisable unless the Board determines otherwise. If an optionee ceases to
be employed or engaged by Horizon for any reason other than cause or death, then the options will be exercisable for a period of 90 days
or prior to the expiration of the Options (whichever is sooner).

 Restricted Share Units ("RSU")

 RSU Grant

 The 2023 Equity Incentive
Plan authorizes the Board to grant RSUs, in its sole and absolute discretion, to any eligible employee or director. Each RSU provides
the recipient with the right to receive a cash payment equal to the market value of a Share (or, at the sole discretion of the Board,
a Share) as a discretionary payment in consideration of past services or as an incentive for future services, subject to the 2023 Equity
Incentive Plan and with such additional provisions and restrictions as the Board may determine. Each RSU grant shall be evidenced by a
restricted share unit grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan and any other terms and conditions
which the Board deem appropriate.

 Vesting of RSUs

 Concurrent with the granting
of the RSU, the Board shall determine the period of time during which the RSU is not vested and the holder of such RSU remains ineligible
to receive ordinary shares. Such period of time may be reduced or eliminated from time to time for any reason as determined by the Board.
Once the RSU vests, the RSU is automatically settled through a cash payment equal to the market value of a Share (or, at the sole discretion
of the Board, a Share).

 Retirement or Termination

 In the event the participant
retires, dies or is terminated during the vesting period, any unvested RSU held by the participant shall be terminated immediately provided
however that the Board shall have the absolute discretion to accelerate the vesting date.

 Deferred Share Units ("DSU")

 DSU Grant

 The 2023 Equity Incentive
Plan authorizes the Board to grant DSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible
directors. Each DSU grant shall be evidenced by a DSU grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan
and any other terms and conditions which the Board deems appropriate. A DSU entitles the recipient to receive, for each DSU redeemed,
a cash payment equal to the market value of a share; alternatively, the Company may, at its sole discretion, elect to settle all or any
portion of the cash payment obligation by the issuance of Shares from treasury.

 Vesting of DSUs

 A Participant is only entitled
to redemption of a DSU when the eligible director ceases to be a director of the Combined Entity for any reason, including termination,
retirement or death. DSUs of an eligible director who is a U.S. Taxpayer shall be redeemed and settled by the Company as soon as
reasonably practicable following the separation from service.

 Performance Share Units ("PSU")

 PSU Grant

 The 2023 Equity Incentive
Plan authorizes the Board to grant PSUs, in its sole and absolute discretion in a lump sum amount or on regular intervals to eligible
directors. Each PSU grant shall be evidenced by a PSU grant letter which shall be subject to the terms of the 2023 Equity Incentive Plan
and any other terms and conditions which the Board deems appropriate. A PSU entitles the recipient to receive, for each PSU redeemed,
one Class A ordinary Share.

 Vesting of PSUs

 A Participant is only entitled
to redemption of a PSU when the related PSU vesting conditions have been met, which are defined in the Board's sole discretion at
the time of issuance.

 Retirement or Termination

 In the event the participant
retires, dies or is terminated during the vesting period, any unvested PSU held by the participant shall be terminated immediately, provided,
however, that the Board shall have the absolute discretion to accelerate the vesting date.

 Share Awards

 The Board, on the recommendation
of the compensation committee, shall have the right, subject to the limitations set forth in the 2023 Equity Incentive Plan, to issue
or reserve for issuance, for no cash consideration, to any eligible person, any number of Shares as a discretionary bonus of Shares subject
to such provisos and restrictions as the Board may determine. The aggregate number of Shares that may be issued as Share Awards is 1,000,000.

 Provisions Applicable to all Grant of Awards

 Participation Limits

 The aggregate number of ordinary
shares that may be issued and issuable under the 2023 Equity Incentive Plan together with any other securities-based compensation arrangements
of Horizon, as applicable:

 (a)

 to insiders shall not exceed 10% of Horizon's outstanding issue from time to time;

 (b)

 to insiders within any one-year period shall not exceed 10% of the Horizon's outstanding issue from time to time; and

 (c)

 to insiders within any one-year period, shares issuable under Awards under this 2023 Equity Incentive Plan shall not exceed 5% of Horizon outstanding issue from time to time.

 Any Award granted pursuant
to the 2023 Equity Incentive Plan, prior to a participant becoming an insider, shall be excluded from the purposes of the limits set out
in (a) and (b) above. The aggregate number of Options that may be granted under the 2023 Equity Incentive Plan to any one non-employee
director of the Combined Entity within any one-year period shall not exceed a maximum value of $CAD150,000 worth of securities, and together
with any Restricted Share Rights and Deferred Share Units granted under the 2023 Equity Incentive Plan and any securities granted
under all other securities-based compensation arrangements, such aggregate value shall not exceed $CAD200,000 in any one-year period.

 Transferability

 Pursuant to the 2023 Equity
Incentive Plan, any Awards granted to a participant shall not be transferable except by will or by the laws of descent and distribution.
During the lifetime of a participant, Awards may only be exercised by the Participant.

 Amendments to the 2023 Equity Incentive Plan

 The Board may amend, suspend
or terminate the 2023 Equity Incentive Plan or any Award granted under the 2023 Equity Incentive Plan without shareholder approval, including,
without limiting the generality of the foregoing: (i) changes of a clerical or grammatical nature; (ii) changes regarding the
persons eligible to participate in the 2023 Equity Incentive Plan; (iii) changes to the exercise price; (iv) vesting, term and
termination provisions of Awards; (v) changes to the cashless exercise right provisions; (vi) changes to the authority and role
of the Board under the 2023 Equity Incentive Plan; and (vii) any other matter relating to the 2023 Equity Incentive Plan and the
Awards granted thereunder, provided however that:

 (a)

 such amendment, suspension or termination is in accordance with applicable laws and the rules of any stock exchange on which the Combined Entity's shares are listed;

 (b)

 no amendment to the 2023 Equity Incentive Plan or to an Award granted thereunder will have the effect of impairing, derogating from or otherwise adversely affecting the terms of an Award which is outstanding at the time of such amendment without the written consent of the holder of such Award;

 (c)

 the expiry date of an Option shall not be more than ten (10) years from the date of grant of such Option, provided, however, that at any time the expiry date should be determined to occur either during a blackout period or within ten business days following the expiry of a blackout period, the expiry date of such Option shall be deemed to be the date that is the tenth business day following the expiry of the blackout period;

 (d)

 the Board shall obtain shareholder approval of:

 (i)

 any amendment to the aggregate number of shares issuable under the 2023 Equity Incentive Plan;

 (ii)

 any amendment to the limitations on shares that may be reserved for issuance, or issued, to insiders;

 (iii)

 any amendment that would reduce the exercise price of an outstanding Option other than pursuant to a declaration of stock dividends of shares or consolidations, subdivisions or reclassification of shares, or otherwise, the number of Shares available under the 2023 Equity Incentive Plan; and

 (iv)

 any amendment that would extend the expiry date of any Option granted under the 2023 Equity Incentive Plan except in the event that such option expires during or within ten (10) business days following the expiry of a blackout period.

 If the 2023 Equity Incentive
Plan is terminated, the provisions of the 2023 Equity Incentive Plan and any administrative guidelines and other rules and regulations
adopted by the Board and in force on the date of termination will continue in effect as long as any Award pursuant thereto remain outstanding.

 Administration

 The 2023 Equity Incentive
Plan is administered by the Board, which may delegate its authority to a committee or plan administrator. Subject to the terms of the
2023 Equity Incentive Plan, applicable law and the rules of Nasdaq, the Board (or its delegate) will have the power and authority to:
(i) designate the eligible participants who will receive Awards, (ii) designate the types and amount of Award to be granted
to each participant, (iii) determine the terms and conditions of any Award, including any vesting conditions or conditions based
on performance of the Corporation or of an individual ("Performance Criteria"); (iv) interpret and administer the 2023
Equity Incentive Plan and any instrument or agreement relating to it, or any Award made under it; and (v) make such amendments to
the 2023 Equity Incentive Plan and Awards as are permitted by the 2023 Equity Incentive Plan and the rules of the SEC and Nasdaq.

 Summary of U.S. Federal Income Tax Consequences

 The following summary is intended
only as a general guide to the material U.S. federal income tax consequences of participation in the 2023 Equity Incentive Plan.
The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not
change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant's
death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As
a result, tax consequences for any particular participant may vary based on individual circumstances. The summary assumes that awards
granted under the 2023 Equity Incentive Plan to U.S. taxpayers will be exempt from, or will comply with, Section 409A of the
Code. If an award is not either exempt from, or in compliance with Section 409A, less favorable tax consequences may apply.

 Nonstatutory Stock Options.

 Options granted under the
2023 Equity Incentive Plan will be nonstatutory stock options having no special U.S. tax status. An optionee generally recognizes
no taxable income as the result of the grant of such an option. Upon exercise of a nonstatutory stock option, the optionee normally recognizes
ordinary income equal to the amount that the fair market value of the shares on such date exceeds the exercise price and Horizon generally
will be allowed a compensation expense deduction for the amount that the optionee recognizes as ordinary income. If the optionee is an
employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by
the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value
on the exercise date, will be taxed as capital gain or loss. No tax deduction is available to Horizon with respect to the grant of a nonstatutory
stock option or the sale of the stock acquired pursuant to such grant.

 Restricted Share Rights, Performance Awards
and Dividend Equivalents.

 Recipients of grants of restricted
stock units, performance awards or dividend equivalents (collectively, "deferred awards") will not incur any federal income
tax liability at the time the awards are granted. Award holders will recognize ordinary income equal to (a) the amount of cash received
under the terms of the award or, as applicable, (b) the fair market value of the shares received (determined as of the date of receipt)
under the terms of the award. Dividend equivalents received with respect to any deferred award will also be taxed as ordinary income.
Shares to be received pursuant to a deferred award generally become payable on the date or payment event, as specified in the applicable
award agreement. For awards that are payable in shares, a participant's tax basis is equal to the fair market value of the shares
at the time the shares become payable. Upon the sale of the shares, appreciation (or depreciation) after the shares are paid is treated
as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.

 Share Awards

 If a Share Award is payable
in Shares that is subject to a substantial risk of forfeiture, unless a special election is made by the holder of the award under the
Code, the holder must recognize ordinary income equal to the fair market value of the Shares received (determined as of the first time
the Shares become transferable or not subject to substantial risk of forfeiture, whichever occurs earlier). The holder's basis for
the determination of gain or loss upon the subsequent disposition of Shares acquired pursuant to a Share Award will be the amount ordinary
income recognized either when the Shares are received or when the Shares are vested.

 Section 409A.

 Section 409A of the Code
provides certain requirements for non-qualified deferred compensation arrangements with respect to an individual's deferral and
distribution elections and permissible distribution events. Except for DSUs, Awards granted under the 2023 Equity Incentive Plan do not
have any deferral feature that is subject to the requirements of Section 409A of the Code. If an award is subject to and fails to
satisfy the requirements of Section 409A of the Code, the recipient of that award may recognize ordinary income on the amounts deferred
under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an
award that is subject to Section 409A fails to comply with Section 409A's provisions, Section 409A imposes an additional
20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. Certain states
have enacted laws similar to Section 409A which impose additional taxes, interest and penalties on non-qualified deferred compensation
arrangements. The Combined Entity will also have withholding and reporting requirements with respect to such amounts.

 Tax Effect for the Combined Entity.

 Horizon generally will be
entitled to a tax deduction in connection with an award under the 2023 Equity Incentive Plan in an amount equal to the ordinary income
realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option).
Special rules could limit the deductibility of compensation paid to the Combined Entity's chief executive officer and other "covered
employees" as determined under Section 162(m) and applicable guidance.

 THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT
OF THE U.S. FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMBINED COMPANY UNDER THE 2023 EQUITY INCENTIVE PLAN. IT DOES
NOT PURPORT TO BE COMPLETE AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX
LAWS OF ANY MUNICIPALITY, STATE, OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

 2023 Equity Incentive Plan Benefits

 Because awards under the 2023
Equity Incentive Plan are discretionary, the benefits or amounts to be received by or allocated to participants and the number of shares
to be granted under the 2023 Equity Incentive Plan cannot be determined at this time except as set forth below.

 Upon the completion of the
Business Combination, the 2023 Equity Incentive Plan replaced the Prior Plan. We agreed to exchange outstanding awards under the Prior
Plan for Horizon Options that will be governed by the 2023 Equity Incentive Plan.

 Compensation Committee
Interlocks and Insider Participation

 None
of the members of the compensation committee was at any time one of Horizon's officers or employees. None of Horizon's executive
officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of
any other entity that has one or more executive officers that will serve as a member of our Board or compensation committee.

 Item 12. Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters.

 The following table sets forth
information regarding the beneficial ownership of our shares of common stock as of August 21, 2025, based on information obtained from
the persons named below, with respect to the beneficial ownership of shares of our Class A ordinary shares by:

 each person known by us to be the beneficial owner of more than 5% of Horizon's Class A ordinary shares;

 each of our named executive officers and directors; and

 each of our officers and directors as a group.

 Beneficial ownership is determined
according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it
possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable
or exercisable within 60 days.

 In the table below, percentage
ownership is based on 39,210,651 Class A ordinary shares outstanding as of August 21, 2025. This table assumes that there are no
additional issuances of equity securities, including equity awards that may be issued under the 2023 Equity Incentive Plan.

 Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all Class A ordinary shares beneficially
owned by them. Unless otherwise noted, the business address of each of the following entities or individuals is 3187 Highway 35, Lindsay
A6 K9V 4R1, Ontario Canada.

 Name and Address of Beneficial Owner

 Beneficially
 Owned

 % of
 Class

 Directors and Named Executive Officers

 Brandon Robinson (1)(2)

 2,545,201

 6.5
 %

 Jason O'Neill (3)

 765,567

 2.0
 %

 Brian Merker (7)

 607,294

 1.5
 %

 Trisha Nomura

 147,565

 *

 John Maris

 56,654

 *

 John Pinsent

 56,654

 *

 All executive officers and directors as a group (7 individuals)

 4,602,832

 11.7
 %

 Greater than Five Percent Holders:

 Canso Investment Counsel Ltd. (6)

 13,308,428

 33.9
 %

 Dustin Shindo (8)

 3,116,293

 7.9
 %

 William George Brumder II (5)

 2,750,000

 7.0
 %

 Brian Robinson (1)(4)

 2,064,925

 5.3
 %

 *

 Less than 1%.

 (1)

 Brandon Robinson and Brian Robinson are the directors of Robinson Family Ventures Inc. Brandon Robinson and Brian Robinson may each be deemed to share beneficial ownership of the securities held of record by Robinson Family Ventures Inc. Each of Brandon Robinson and Brian Robinson disclaims any such beneficial ownership except to the extent of his pecuniary interest.

 (2)

 Includes options to purchase 143,213 shares at a price of $CAD0.76 per share and options to purchase 400,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

 (3)

 Includes options to purchase 146,252 shares at a price of $CAD0.76 per share and options to purchase 296,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

 (4)

 Includes options to purchase 117,001 shares at a price of $CAD0.76 per share and options to purchase 80,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

 (5)

 Based on a Schedule 13G filed July 2, 2025, William George Brumder II is the record holder of the securities reported herein. Includes warrants to purchase 461,788 shares at USD$11.50. The address of William George Brumder II is N. Broadway Avenue, Ste.200, Oklahoma City, OK, 73103.

 (6)

 Based on a Schedule 13G/A filed on March 6, 2025, by Canso Investment Counsel Ltd. ("Canso"). The shares reported as beneficially owned include (i) 4,819,539 Class A ordinary shares held by Canso and (ii) 8,488,889 Class A ordinary shares issuable to Canso upon the conversion of the Series A Preferred Shares held by Canso. The securities reported to be beneficially owned by Canso are owned of record by certain managed accounts of Canso. These managed accounts have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, such securities. The business address of Canso is 100 York Blvd., Suite 550, Richmond Hill, On, L4B 1J8.

 (7)

 Includes options to purchase 100,000 shares at a price of $USD0.85 per share and options to purchase 344,000 shares at $USD0.61 per share. The table reflects the options on a fully vested basis.

 (8)
 Based on a Schedule 13D filed on February 26, 2025, by Dustin Shindo.
Includes Placement Warrants to purchase 565,375 shares at USD$11.50. The address of Dustin Shindo is 4348 Waialae Ave., #632, Honolulu,
HI, 96816

 Securities Authorized
for Issuance Under Equity Compensation Plans

 The
following table provides information, as of August 21, 2025, with respect to our Class A ordinary shares that may be issued, subject to
certain vesting requirements, under existing and future awards under the 2023 Equity Incentive Plan.

 A

 B

 C

Securities

to be Issued

Upon

Exercise of

Outstanding

Options,

Warrants,

and Rights

 Weighted-Average

Exercise Price

of Outstanding

Options,

Warrants and

Rights

(USD)

Securities

Remaining

Available for

Future

Issuance

Under Equity

Plans (Excluding

Securities

Reflected in

Column

(A))

 Plan Category

 Equity compensation plans approved by security holders

 2,483,227

 $

 0.74

 2,023,977

 Equity compensation plans not approved by security holders

 -

 -

 -

 Total

 2,483,227

 2,023,977

 Item 13. Certain Relationships and Related Transactions, and Director
Independence.

 The
following is a description of certain transactions (including a series of transactions) occurring during the preceding two fiscal years
in which the amount involved exceeded the lesser of USD $120 or 1% of the average of our total assets for our two prior fiscal year ends
in which any directors, director nominees, executive officers, greater than 5% beneficial owners and their respective immediate family
members (each, a "Related Person") had or will have a direct or indirect material interest, other than the compensation arrangements
(including with respect to equity compensation) described in the sections entitled "Executive Compensation" and "Director
Compensation".

 We
intend to ensure that in accordance with the audit committee charter, that the audit committee shall conduct reasonable prior review and
oversight of all related party transactions for potential conflicts of interest, except for transactions involving the compensation of
executive officers or directors, which shall be overseen by the compensation committee.

 Transactions Related
to the Business Combination

 Voting Agreement

 Simultaneously
with the execution of the Business Combination Agreement, the majority shareholder of Horizon entered into a voting agreement with Pono
and Legacy Horizon.

 Lock-Up Agreements

 Certain
significant shareholders of Legacy Horizon entered into lock-up agreements (the "Lock-up Agreements") providing
for a lock-up period commencing at the Closing of the Business Combination and ending on the earlier of (x) six months
from the Closing, (y) the date Pono consummates a liquidation, merger, share exchange or other similar transaction with an unaffiliated
third party that results in all of Pono's shareholders having the right to exchange their Pono ordinary shares for cash, securities
or other property and (z) the date on which the closing sale price of Pono ordinary shares equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations and recapitalizations and the like) for any twenty (20) trading days
within any thirty (30) trading day period commencing at least one hundred and fifty (150) days after the Closing. In connection
with the Closing, Pono, Legacy Horizon, and the Sponsor waived lockup restrictions on approximately 1.69 million shares held by a non-affiliate
Horizon shareholder. The six-month anniversary of the Closing elapsed on July 12, 2024, and the associated restrictions were removed.

 Director Indemnity
Agreements

 In
connection with the Closing, each of the members of the Board entered into an Indemnity Agreement with Horizon (collectively, the "Director
Indemnity Agreements," and each, a "Director Indemnity Agreement").

 Pursuant
to Horizon's Articles, subject to the BCBCA, Horizon must indemnify a director, former director or alternate director of Horizon
and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and Horizon
must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect
of that proceeding.

 Non-Competition
Agreements

 On
January 12, 2024, Horizon, Legacy Horizon, and each of E. Brandon Robinson, Jason O'Neill, Brian Merker, and Stewart Lee entered
into non-competition and non-solicitation agreements (the "Non-Competition and Non-Solicitation Agreements"), pursuant to
which such persons and their affiliates agreed not to compete with Horizon during the two-year period following the Closing and, during
such two-year restricted period, not to solicit employees or customers or clients of such entities. The Non-Competition and Non-Solicitation
Agreements also contain customary non-disparagement and confidentiality provisions.

 Registration Rights
Agreement

 In
connection with the Business Combination, on January 12, 2024, Pono, Legacy Horizon, the Sponsor, the executive officers and directors
of Pono immediately prior to the consummation of the Business Combination (with such executive officers and directors, together with the
Sponsor, the "Sponsor Parties"), and an existing shareholder of Horizon (such party, together with the Sponsor Parties, the
"Investors") entered into a registration rights agreement (the "Registration Rights Agreement") to provide for
the registration of Class A ordinary shares issued to them in connection with the Business Combination. We filed a registration statement
on Form S-1 to register the shares covered by the Registration Rights Agreement, and on April 4, 2025, a registration statement on Form
S-3 was declared effective by the SEC, registering such shares for resale (the "Resale Registration Statement"). Horizon bore
the expenses incurred in connection with the filing of the registration statements.

 Employment Agreements
and Other Transactions with Executive Officers

 Horizon
has entered into employment agreements and contractor agreements with certain of its executive officers and reimburses affiliates for
reasonable travel-related expenses incurred while conducting business on behalf of Horizon. See the section entitled "Executive
Compensation — Executive Compensation Arrangements — Employment Agreements " and — " Contractor
Agreement."

 Related Party Transactions
Policy Following the Business Combination

 Upon
consummation of the Business Combination, our Board adopted a written Related Party Transactions Policy that sets forth our policies and
procedures regarding the identification, review, consideration and oversight of "related party transactions." For purposes
of the policy only, a "related party transaction" is a transaction, arrangement or relationship (or any series of similar
transactions, arrangements or relationships) in which we or any of our subsidiaries are participants involving an amount that exceeds
$120,000, in which any "related party" has a material interest.

 Transactions
involving compensation for services provided to us as an employee, consultant or director will not be considered related party transactions
under this policy. A "related party" is any executive officer, director, nominee to become a director or a holder of more
than 5% of any class of our voting securities, including any of their immediate family members and affiliates, including entities owned
or controlled by such persons.

 Under
the policy, the related party in question or, in the case of transactions with a holder of more than 5% of any class of our voting securities,
an officer with knowledge of a proposed transaction, must present information regarding the proposed related party transaction to our
audit committee (or, where review by our audit committee would be inappropriate, to another independent body of our Board) for review.

 Our
audit committee will approve only those transactions that it determines are fair to us and in our best interests. All of the transactions
described above were entered into prior to the adoption of such policy.

 Services Proposal
with 3C

 On
April 4, 2025, 3C delivered a services proposal to Horizon in support of the Company's Cavorite X7 certification program (the "Proposal").
The Proposal outlines pricing for a range of services including certification planning, technical documentation, and regulatory engagement.
Horizon is not obligated to engage 3C for any of the services listed in the Proposal and retains full discretion to select specific services
or phase their delivery. To date, Horizon has engaged 3C to perform services at a cost of $60. John Maris, one of Horizon's directors
is the Chief Executive Officer of 3C.

 Related Party Policy

 Our code of ethics requires
us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except
under guidelines approved by the Board (or the audit committee). Related-party transactions are defined as transactions in which (1) the
aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a
participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial
owner of Class A ordinary shares, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or
will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner
of another entity). A conflict of interest can arise when a person takes actions or has interests that may make it difficult to perform
his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives
improper personal benefits as a result of his or her position.

 Our audit committee, pursuant
to its written charter, is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions.
All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed
by us to be no less favorable to us than are available from unaffiliated third parties. Such transactions will require prior approval
by our audit committee and a majority of our uninterested "independent" directors, or the members of the board who do not
have an interest in the transaction, in either case who have access, at our expense, to its attorneys or independent legal counsel. We
will not enter into any such transaction unless our audit committee and a majority of our disinterested "independent" directors
determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such
a transaction from unaffiliated third parties. Additionally, we will require each of our directors and executive officers to complete
a directors' and officers' questionnaire that elicits information about related party transactions.

 These procedures are intended
to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the
part of a director, employee or officer.

 Director Independence

 The
information contained under the heading "Director Independence" in Part III, Item 10. " Directors, Executive Officers
and Corporate Governance " is incorporated by reference herein.

 Item 14. Principal Accountant Fees and Services.

 On
May 20, 2025, Horizon's audit committee approved the continued engagement of MNP LLP ("MNP") as the Company's
independent registered public accounting firm for the Company's fiscal year-ended May 31, 2025. As previously disclosed, on April
2, 2024, the Company dismissed Marcum LLP ("Marcum") as the Company's independent registered public accounting firm.

 Fees Paid to Independent Registered Public
Accounting Firm

 The
following table provides information regarding the fees billed by MNP for the fiscal years ended May 31, 2025 and 2024 (000's
CAD).

 2025

 2024

 Audit Fees (1)

 Audit-Related Fees (2)

 -

 Tax Fees (3)

 All Other Fees (4)

 -

 -

 Fees Paid to Prior
Independent Registered Public Accounting Firm

 The
following table provides information regarding the fees billed by the Company's previous independent registered public accounting
firm, Marcum, for the fiscal year ended May 31, 2024 (000's CAD).

 2024

 Audit Fees (1)

 $

 Audit-Related Fees (2)

 $

 Tax Fees (3)

 $
 nil

 All Other Fees (4)

 $
 nil

 (1)

 Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings.

 (2)

 Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our year-end financial statements and are not reported under "Audit Fees." These services include attest services that are not required by statute or regulation and consultation concerning financial accounting and reporting standards.

 (3)

 Tax Fees. Tax fees consist of fees billed for professional services relating to tax compliance, tax planning and tax advice.

 (4)

 All Other Fees. All other fees consist of fees billed for all other services.

 Audit Committee Pre-Approval
Policy and Procedures

 The
audit committee has pre-approved all auditing services and permitted non-audit services to be performed for us by our auditors, including
the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved
by the audit committee prior to the completion of the audit).

 Horizon's audit committee's policy is to pre-approve all audit and permissible non-audit services provided by our independent
registered public accounting firm, the scope of services provided by our independent registered public accounting firm and the fees for
the services to be performed. These services may include audit services, audit-related services, tax services and other services. Pre-approval
is detailed as to the particular service or category of services and is generally subject to a specific budget. Our independent registered
public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided
by our independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to
date.

 Our
audit committee adopted its committee charter (the "Audit Committee Charter") that sets forth the authority and procedures
pursuant to which the audit committee shall pre-approve (or, where permitted under SEC rules to subsequently approve) audit and non-audit
services proposed to be performed by the independent auditor.

 Item 15. Exhibits and Financial Statement Schedules.

 (a)

 The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

 1.

 Financial Statements. See Index to Financial Statements under Item 8 of this Annual Report on Form 10-K.

 2.

 Financial Statement Schedules. All schedules have been omitted because the information required to be presented in them is not applicable or is shown in the financial statements or related notes.

 3.

 Exhibits. We have filed, or incorporated into this Annual Report on Form 10-K by reference, the exhibits listed on the accompanying Exhibit Index immediately following the financial statements contained in this Annual Report on Form 10-K.

 (b)

 Exhibits. See Item 15(a)(3) above.

 (c)

 Financial Statement Schedules. See Item 15(a)(2) above.

 Item 16. Form 10-K Summary.

 None.

 INDEX TO FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID: 1930)

 Consolidated Balance Sheets as at May 31, 2025 and May 31, 2024

 Consolidated Statements of Operations for the years ended May 31, 2025 and May 31, 2024

 Consolidated Statements of Stockholder's Equity for the years ended May 31, 2025 and May 31, 2024

 Consolidated Statements of Cash Flows for the years ended May 31, 2025 and May 31, 2024

 Notes to Consolidated Financial Statements

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Board of Directors and Shareholders of New
Horizon Aircraft Ltd.

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated
balance sheets of New Horizon Aircraft Ltd. (the "Company") as at May 31, 2025 and 2024, and the related consolidated statements
of operations, changes in shareholders' equity (deficit), and cash flows for each of the years in the two-year period ended May
31, 2025, and the related notes (collectively referred to as the "consolidated financial statements").

 In our opinion, the consolidated financial statements
present fairly, in all material respects, the consolidated financial position of the Company as at May 31, 2025 and 2024, and the results
of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended May 31, 2025, in conformity
with accounting principles generally accepted in the United States of America.

 Material Uncertainty Related to Going Concern

 The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements,
the Company has incurred cumulative losses from operations, negative cash flows from operating activities, and has an accumulated deficit
that raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also
described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.

 /s/ MNP LLP

 Chartered Professional Accountants

 Licensed Public Accountants

 We have served as the Company's auditor since 2024.

 Mississauga, Canada

 August 21, 2025

 F- 2

 CONSOLIDATED BALANCE SHEETS

 AS AT MAY 31, 2025 AND MAY 31, 2024

 EXPRESSED IN CANADIAN DOLLAR 000'S, EXCEPT SHARE AMOUNTS

 2025

 2024

 Assets:

 Current assets:

 Cash and cash equivalents

 $
 7,547

 $
 1,816

 Prepaid expenses

 2,431

 Accounts receivable

 Total current assets

 8,173

 4,664

 Operating lease assets

 Property and equipment, net

 Total Assets

 $
 8,412

 $
 4,944

 Liabilities and Shareholders' Equity:

 Current liabilities:

 Accounts payable

 $

 $

 Accrued liabilities

 Operating lease liabilities

 Total current liabilities

 1,326

 1,333

 Forward Purchase Agreement

 —

 20,938

 Warrant liabilities

 4,488

 Operating lease liabilities

 Total Liabilities

 5,822

 22,877

 Shareholders' Equity (Deficit):

 Class A ordinary shares, no par value; 100,000,000 shares authorized; 32,325,709 issued and outstanding ( 18,607,931 as of May 31, 2024)

 84,562

 74,406

 Preferred shares, no par value; unlimited authorized; 4,500 issued and outstanding ( nil as of May 31, 2024)

 6,277

 —

 Additional paid-in capital

 ( 78,766
)

 ( 77,656
)

 Accumulated deficit

 ( 9,483
)

 ( 14,683
)

 Total Shareholders' Equity (Deficit)

 2,590

 ( 17,933
)

 Total Liabilities and Shareholders' Equity (Deficit)

 $
 8,412

 $
 4,944

 The accompanying notes are an integral part of these consolidated
financial statements.

 F- 3

 CONSOLIDATED STATEMENTS OF OPERATIONS

 EXPRESSED IN CANADIAN DOLLAR 000'S,
EXCEPT PER SHARE AMOUNTS

 For the year-ended

 2025

 2024

 Operating expenses

 Research and development

 $
 3,660

 $

 General and administrative

 9,925

 3,744

 Total operating expenses

 13,585

 4,624

 Loss from operations

 ( 13,585
)

 ( 4,624
)

 Other expenses (income)

 ( 575
)

 Interest (income) expense, net

 ( 123
)

 Change in fair value of Warrants

 1,988

 ( 394
)

 Change in fair value of Forward Purchase Agreement

 4,342

 Termination of Forward Purchase Agreement

 ( 21,400
)

 -

 Total other (income) expenses

 ( 18,785
)

 3,536

 Income (Loss) before income taxes

 5,200

)

 Income tax expense

 -

 -

 Net Income (Loss)

 $
 5,200

 $
)

 Income (loss) per share:

 Basic:

 $
 0.20

 $
 ( 0.76
)

 Diluted:

 $
 0.17

 $
 ( 0.76
)

 Shares used in computing Income (loss) per share:

 Basic:

 25,844,200

 10,717,378

 Diluted:

 30,760,145

 10,717,378

 The accompanying notes are an integral part of these consolidated
financial statements.

 F- 4

 CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY (DEFICIT)

 EXPRESSED IN CANADIAN DOLLAR 000'S,
EXCEPT SHARE AMOUNTS

 Class A
 Ordinary Shares

 Class B
 Ordinary Shares

 Preferred Shares

 Additional
 Paid-in

 Total
 Shareholders'

 Capital

 Deficit

 (Deficit)

 Balance at May 31, 2024

 18,607,931

 $
 74,406

 —

 $
 —

 —

 $
 —

 $
 ( 77,656
)

 $
 ( 14,683
)

 $
 ( 17,933
)

 Stock-based Compensation

 —

 —

 —

 —

 —

 —

 —

 Net Income

 —

 —

 —

 —

 —

 —

 —

 5,200

 5,200

 Incentive Shares Issued

 220,549

 —

 —

 —

 —

 —

 —

 General Warrant Issuance

 —

 —

 —

 —

 —

 —

 ( 5,157
)

 —

 ( 5,157
)

 Pre-Funded Warrants Exercised

 3,000,000

 1,925

 —

 —

 —

 —

 —

 —

 1,925

 General Warrant Exercise

 2,590,000

 2,787

 —

 —

 —

 —

 3,232

 —

 6,019

 Class A Shares ordinary Issued under Sales Agreement

 940,562

 —

 —

 —

 —

 —

 —

 Other Class A ordinary Shares Issued

 6,966,667

 3,887

 —

 —

 —

 —

 —

 —

 3,887

 Preferred Shares Issued

 —

 —

 —

 —

 4,500

 6,277

 —

 —

 6,277

 Balance at May 31, 2025

 32,325,709

 $
 84,562

 —

 $
 —

 4,500

 $
 6,277

 $
 ( 78,766
)

 $
 ( 9,483
)

 $
 2,590

 Class A

Ordinary Shares

 Class B

 Ordinary Shares

 Non-Voting Common Shares

 Additional

 Paid-in

 Total

Shareholders'

 Capital

 Deficit

 (Deficit)

 Balance at May 31, 2023

 5,075,420

 $
 5,083

 1,062,244

 $
 —

 168,832

 $
 —

 $

 $
 ( 6,523
)

 $
 ( 1,385
)

 Stock-based Compensation

 —

 —

 —

 —

 —

 —

 —

 Net Loss

 —

 —

 —

 —

 —

 —

 —

)

)

 Placement Warrant Issuance

 —

 —

 —

 —

 —

 —

 ( 970
)

 —

 ( 970
)

 Conversion of Convertible Debentures

 —

 —

 517,352

 1,496

 —

 —

 —

 —

 1,496

 Conversion of Convertible Notes Payable

 —

 —

 1,253,770

 6,843

 —

 —

 —

 —

 6,843

 Issuance of Service Shares

 —

 —

 385,297

 1,558

 —

 —

 —

 —

 1,558

 Legacy Horizon Share Exchange

 3,588,869

 9,897

 ( 3,218,663
)

 ( 9,897
)

 ( 168,832
)

 —

 —

 —

 —

 New Horizon Shares on Effective Date

 7,639,434

 56,720

 —

 —

 —

 —

 ( 76,807
)

 —

 ( 20,087
)

 Incentive Shares

 954,013

 —

 —

 —

 —

 —

 —

 —

 —

 Capital Markets Advisory Shares

 965,179

 2,706

 —

 —

 —

 —

 —

 —

 2,706

 Underwriter Shares Issued

 385,016

 —

 —

 —

 —

 —

 —

 —

 —

 Balance at May 31, 2024

 18,607,931

 $
 74,406

 —

 $
 —

 —

 $
 —

 $
 ( 77,656
)

 $
 ( 14,683
)

 $
 ( 17,933
)

 The accompanying notes are an integral part
of these consolidated financial statements.

 F- 5

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 EXPRESSED IN CANADIAN DOLLAR 000'S

 Year-ended

 2025

 2024

 Cash Flows from Operating Activities:

 Net Income (loss)

 $
 5,200

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 Stock-based compensation

 1,492

 Non-cash interest

 —

 Registered Share Offering Costs

 —

 Change in fair value of Forward Purchase Agreement

 4,342

 Gain on Termination of Forward Purchase Agreement

 ( 21,400
)

 —

 Change in Warrant liability

 1,988

 ( 394
)

 Changes in operating assets and liabilities:

 Prepaid expenses

 1,901

 Accounts receivable

 ( 402
)

 Accounts payable

 ( 36
)

 Accrued liabilities

 Operating leases

 —

 Net cash used in operating activities

 ( 9,312
)

 ( 3,308
)

 Cash Flows used in Investing Activities:

 Purchase of property and equipment

 ( 142
)

 ( 209
)

 Net cash used in investing activities

 ( 142
)

 ( 209
)

 Cash Flows from Financing Activities:

 Finance lease payments

 —

 Proceeds from issuance of Convertible debentures

 —

 6,700

 Outflow from Business Combination

 —

 ( 1,573
)

 Repayment of Term loan

 —

 ( 40
)

 Net Proceeds from Sales Agreement

 —

 Proceeds from Registered Securities Offering

 3,947

 —

 Registered Share Offering Costs

 ( 510
)

 —

 Net Proceeds from Issuance of Class A Ordinary Shares

 2,082

 —

 Net Proceeds from Issuance of Preferred Shares

 6,277

 —

 Forward Purchase Agreement termination

 ( 278
)

 —

 Proceeds from warrants exercised

 2,787

 —

 Net cash provided by financing activities

 15,185

 5,105

 Net Change in Cash and Cash Equivalents

 5,731

 1,588

 Cash and Cash Equivalents - Beginning of year

 1,816

 Cash and Cash Equivalents - End of year

 $
 7,547

 $
 1,816

 Taxes paid

 $
 —

 $
 —

 Conversion of Convertible debentures

 $
 —

 $
 1,496

 Interest paid

 $

 $

 The accompanying notes are an integral part
of these consolidated financial statements.

 F- 6

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 EXPRESSED IN CANADIAN DOLLAR 000'S, EXCEPT
PER SHARE AMOUNTS

 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"), as a Delaware corporation, subsequently redomiciled in the Cayman Islands on October
14, 2022, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization,
or similar business combination.

 The Company has designed and developed a hybrid-electric
vertical takeoff and landing ("eVTOL") prototype aircraft for use in future regional air mobility ("RAM") networks.

 Business Combination

 On February 14, 2023, the Company consummated
an initial public offering ("IPO"). On January 12, 2024 (the "Closing date"), the Company 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 Merger and other transactions contemplated
thereby (collectively, the "Business Combination") closed on January 12, 2024, when, pursuant to the Business Combination
Agreement, Merger Sub merged with and into Robinson, surviving the Merger as a wholly owned subsidiary of Pono. Pono changed its name
to "New Horizon Aircraft Ltd." and the business of Robinson became the business of New Horizon Aircraft Ltd.

 The consolidated financial statements included
in this report reflect (i) the historical operating results of Robinson prior to the Business Combination ("Legacy Horizon");
(ii) the combined results of Pono and Legacy Horizon following the closing of the Business Combination; (iii) the assets and liabilities
of Legacy Horizon at their historical cost; and (iv) the Company's equity structure for all periods presented.

 NOTE 2. Going Concern and Liquidity

 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 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.

 F- 7

 Horizon is a pre-revenue organization in a research
and development and flight-testing phase of operations. While management estimates that the net cash proceeds from fiscal 2025 sales of
securities will be sufficient to fund our current operating plan for at least the next 12 months from the date these 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 would 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 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 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 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. All figures
are in thousands of Canadian dollars unless noted otherwise.

 Emerging Growth Company

 The Company is an "emerging growth company,"
as defined in Section 2 (a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its 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.

 Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (specifically,
those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under
the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging
growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company's consolidated financial statements with another public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.

 F- 8

 Reverse Recapitalization

 Pursuant to Accounting Standards Codification
("ASC") 805, for financial accounting and reporting purposes, Robinson was deemed the accounting acquirer with Pono being
treated as the accounting acquiree, and the Merger was accounted for as a reverse recapitalization (the "Reverse Recapitalization").
Accordingly, the consolidated financial statements of the Company represent a continuation of the financial statements of Robinson, with
the Merger being treated as the equivalent of Robinson issuing stock for the net assets of Pono, accompanied by a recapitalization. The
net assets of Pono were stated at historical costs, with no goodwill or other intangible assets recorded, and were consolidated with Robinson
financial statements on the Closing Date. Operations prior to the Closing Date are presented solely as those of Legacy Horizon. The number
of Legacy Horizon common shares for all periods prior to the Closing Date have been retrospectively decreased using an exchange ratio
that was established in accordance with the Merger Agreement (the "Exchange Ratio").

 Upon the consummation of the Merger, the Company
gave effect to the issuance of 7,251,939 shares of Common Stock for the previously issued Pono common stock and Private Investment in
Public Equity ("PIPE") Shares that were outstanding at the Closing Date. The Company raised $ 4 in proceeds, net of redemptions
of Pono public stockholders of $ 140.0 million and reimbursements for Pono's expenses of $ 4.5 million, and $ 2.7 million of cash in
connection with the PIPE Financing.

 Robinson incurred $ 3.1 million in transaction
costs, satisfied by a combination of cash and common stock, consisting of banking, legal, and other professional fees, and assumed a $ 16.6
million derivative liability related to a Forward Purchase Agreement, $ 1.0 million warrant liability, and $ 0.4 million of accounts payable
from Pono.

 January 12,
 2024

 Forward Purchase Agreement

 $
 16,596

 Warrant Liability

 Accounts Payable

 Net Liabilities Assumed

 $
 17,926

 Use of Estimates

 The preparation of the consolidated financial
statements in conformity with GAAP requires the Company's management to make judgements, estimates, and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of expenses during the reporting period.

 Making judgements, estimates, and assumptions
requires management to exercise significant approximations. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating
an estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ from
those estimates.

 Management believes the most significant judgements,
estimates, and assumptions for the period include those in connection with Financial Instruments, Business Combinations, Going Concern,
and stock-based compensation.

 Cash and Cash Equivalents

 The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents
as of May 31, 2025, and May 31, 2024.

 F- 9

 Income Taxes

 Income taxes are provided in accordance with ASC
Topic 740, Income Taxes ("ASC 740"). A deferred tax asset or liability is recorded for all temporary differences
between income for financial statement purposes and income for tax purposes as well as operating loss carry forwards. Deferred tax expenses
or recovery result from the net change during the year of deferred tax assets and liabilities. Any interest and penalties are recorded
as part of income tax expense.

 Deferred tax assets are reduced by a valuation
allowance, when, in the opinion of management, it is likely that some portion of the deferred tax asset will not be realized. Deferred
taxes are adjusted for the effects of changes in tax laws and rates. Interest and penalties, if applicable, are recorded in the Company's
statement of operations.

 Net Income (loss) Per Share

 Basic net loss per share is calculated by dividing
net loss attributable to common stockholders by the weighted-average number of common shares outstanding. Stock options, Convertible debentures,
and Convertible promissory notes were excluded from the computation of diluted net income (loss) per share for the year-ending May 31,
2024, as including them would have been anti-dilutive.

 Fair Value of Financial Instruments

 The Company applies ASC Topic 820, Fair Value
Measurement ("ASC 820"), which establishes a framework for measuring fair value and clarifies the definition of fair value
within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to
transfer a liability in the Company's principal or most advantageous market in an orderly transaction between market participants
on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants
would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting
entity. Unobservable inputs reflect the entity's own assumptions based on market data and the entity's judgments about the
assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information
available in the circumstances.

 The carrying amounts reflected in the balance
sheet for current assets and current liabilities approximate fair value due to their short-term nature.

 Level 1 — Assets and liabilities with unadjusted,
quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in
active markets for identical assets or liabilities.

 Level 2 — Inputs to the fair value measurement
are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable
inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

 Level 3 — Inputs to the fair value measurement
are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets
or liabilities.

 Research and Development Costs

 The research and development costs are accounted
for in accordance with ASC 730, Research and Development, which requires all research and development costs be expensed as incurred.

 F- 10

 Stock-based Compensation

 Our stock-based compensation awards consist of
stock options and performance share units ("PSU's") granted to employees and non-employees. We recognize stock-based
compensation expense in accordance with the provisions of ASC 718, Compensation - Stock Compensation ("ASC 718"). ASC
718 requires the measurement and recognition of compensation expense for all stock-based compensation awards to be based on the grant
date fair values of the awards. We estimate the fair value of share options using the Black-Scholes option-pricing model. The value of
the award is recognized as expense over the requisite service period on a straight-line basis. Determining the grant date fair value of
the awards using the Black-Scholes option-pricing model requires management to make assumptions and judgments, including but not limited
to the following:

 Expected term — The
estimate of the expected term of employee awards is determined in accordance with the simplified method, which estimates the term based
on an averaging of the vesting period and contractual term of the option grant.

 Expected volatility — Expected
volatility used is based on the volatility of similar entities (referred to as "guideline companies") for a period consistent
with the expected term of the award.

 Risk-free interest rate — The
risk-free interest rate used to value awards is based on the Treasury yields in effect at the time of grant for a period consistent with
the expected term of the award.

 Dividend yield — We
have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future.

 Forfeiture rate — We have elected
to account for forfeitures as they occur and will record stock-based compensation expense assuming all option holders will complete the
requisite service period. If an employee forfeits an award because they fail to complete the requisite service period, we will reverse
stock-based compensation expense previously recognized in the period the award is forfeited.

 Vesting conditions — We have evaluated
the likelihood of vesting in recognition of stock-based compensation awards.

 Property and Equipment, Net

 Property and equipment is stated at historical
cost less accumulated depreciation. Expenditures for major renewals and betterments are capitalized, while minor replacements, maintenance,
and repairs, which do not extend the asset lives, are charged to operations as incurred. Upon sale or disposition, the cost and related
accumulated depreciation is removed from the accounts, and any difference between the selling price and net carrying amount is recorded
as a gain or loss in the statements of operations and comprehensive loss. Depreciation on property and equipment is calculated using the
straight-line method over the estimated useful lives of the assets.

 Impairment of Long-Lived Assets

 We review our long-lived assets, consisting primarily
of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets
may not be recoverable. Such triggering events or changes in circumstances may include: a significant decrease in the market price of
a long-lived asset, a significant adverse change in the extent or manner in which a long-lived asset is being or intended to be used,
a significant adverse change in legal factors or in the business climate, the impact of competition or other factors that could affect
the value of a long-lived asset, a significant adverse deterioration in the amount of revenue or cash flows expected to be generated from
an asset group, an accumulation of costs significantly in excess of the amount originally expected for the acquisition or development
of a long-lived asset, current or future operating or cash flow losses that demonstrate continuing losses associated with the use of a
long-lived asset, or a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of significantly
before the end of its previously estimated useful life. We perform impairment testing at the asset group level that represents the lowest
level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these
assets is determined by comparing the forecasted undiscounted cash flows attributable to such assets including any cash flows upon their
eventual disposition to their carrying value. If the carrying value of the assets exceeds the forecasted undiscounted cash flows, then
the assets are written down to their fair value. We determined there was no impairment of long-lived assets during all periods presented.

 Derivative Financial Instruments

 The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, Derivatives and Hedging ("ASC 815"). For derivative financial instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with
changes in the fair value reported in the consolidated statements of operations. For derivative instruments that are classified as equity,
the derivative instruments are initially measured at fair value (or allocated value), and subsequent changes in fair value are not recognized
so long as the contracts continue to be classified in equity.

 F- 11

 The Company's Forward Purchase Agreement
was recognized as a derivative liability in accordance with ASC 815. Accordingly, the Company recognized the instrument 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 was measured at fair value using a simulation model. The Forward Purchase Agreement was terminated
on November 1, 2024.

 Warrants

 The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance
in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the warrants meet all the requirements for equity classification under
ASC 815, including whether the warrants are indexed to the Company's own ordinary shares, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent
quarterly period end date while the warrants are outstanding.

 For issued or modified warrants that meet all
the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time
of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to
be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the
estimated fair value of the warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.

 The warrants were determined to be recorded as
liabilities.

 Public Warrants

 The measurement of the Public Warrants as of May
31, 2025, 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 $ 0.08 per warrant as of May 31, 2025.

 Government Grants

 The Company receives payments from government
entities primarily for research and development deliverables as part of ongoing development of the Company's technology and future
services offering. Under the Company's accounting policy for government grants received as a payment for research and development
services, grants are recognized on a systematic basis over the periods in which these services are provided and are presented as other
income in the statement of operations. Effective June 1, 2021, the Company adopted ASU 832, Government Assistance.

 Recent Accounting Standards

 Recently Adopted Accounting Pronouncements

 In November 2023, the Financial
Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements through enhanced disclosures
about significant segment expenses, interim segment profit or loss and assets, and how the CODM uses reported segment profit or loss information
in assessing segment performance and allocating resources. The Company adopted ASU 2023-07 effective June 1, 2024.

 F- 12

 Recently Issued Accounting Pronouncements Not
Yet Adopted

 In December 2023, the FASB
issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of incremental income
tax information related to the income tax rate reconciliation and expanded disclosures of income taxes paid, among other disclosure requirements.
The update is effective for annual periods beginning after December 15, 2024, on a prospective basis, and retrospective application is
permitted. The Company is currently evaluating the impact of ASU 2023-09 on its disclosures within its consolidated financial statements.

 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 of 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.

 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
(in 000's CAD):

 Year-Ended

 2025

 2024

 Computer Equipment

 $

 $

 Leasehold Improvements

 Tools and Equipment

 —

 Website Development

 Vehicles

 Accumulated Depreciation

 ( 185
)

 ( 94
)

 Total Property and Equipment, net

 $

 $

 Depreciation expenses of $ 138 for the year ended May 31, 2025 (May
31, 2024 - $ 56), has been recorded in the consolidated statements of operations, of which $ 70 (May 31, 2024 - $ 29) was recorded in Research
and Development expenses with the remainder in General and Administrative expenses.

 Prepaid Expenses

 Prepaid Expenses consisted of the following (in
000's CAD):

 2025

 2024

 Prepaid insurance

 $

 $

 Prepaid rent

 Prepaid software

 Prepaid capital market services

 1,938

 Total Prepaid expenses

 $

 $
 2,431

 F- 13

 Accrued Expenses

 Accrued Expenses consisted of the following (in
000's CAD):

 2025

 2024

 Accrued professional fees

 $

 $

 Accrued employee costs

 Other accrued expenses

 Total Accrued expenses

 $

 $

 NOTE 5. Leases

 The Company has previously entered into multiple
lease agreements for the use of certain property and equipment under operating and finance leases. Property leases include hangars, storage,
offices, and other space.

 The Company records the initial right-to-use asset
and lease liability at the present value of lease payments scheduled during the lease term. Unless the rate implicit in the lease is readily
determinable, the Company discounts the lease payments using an estimated incremental borrowing rate at the time of lease commencement.
The Company estimates the incremental borrowing rate based on the information available at the lease commencement date, including the
rate the Company could borrow for a similar amount, over a similar lease term with similar collateral. The Company's weighted-average
discount rate for operating and finance leases during all periods presented was 10 %.

 Operating lease expense is recognized on a straight-line
basis over the lease term. The weighted-average remaining lease term is 1 year as of May 31, 2025. There were no new leases entered into
during the year-ended May 31, 2025.

 The Company's lease costs were as follows
(in 000's CAD):

 2025

 2024

 Operating lease cost

 $

 $

 Short-term lease cost

 Total Lease cost

 $

 $

 The Company's weighted-average remaining
lease term and discount rate as of May 31, 2025, and May 31, 2024, was as follows:

 2025

 2024

 Weighted-average remaining lease term (years)

 Weighted-average discount rate

 %

 %

 F- 14

 The minimum aggregate future obligations under
the Company's non-cancellable operating leases as of May 31, 2025, were as follows (in 000's CAD):

 2024

 fiscal 2026

 fiscal 2027

 fiscal 2028 and thereafter

 -

 Total future lease payments

 Less: imputed interest

 ( 2
)

 Present value of future lease payments

 $

 NOTE 6. Promissory Note

 On October 19, 2022, the Company issued a Promissory
Note in the principal amount of $ 300. The Promissory Note was to mature on October 18, 2027, and bore interest at a rate of 9.7 % per annum.
The Promissory was securitized by certain patents of the Company. The Promissory Note was being repaid on a monthly basis, with interest
only payments until October 15, 2023, and blended payments of $ 8 thereafter.

 During the year ended May 31, 2025, the Company
recorded and paid interest expenses of $ nil (May 31, 2024 - $ 15). The Company repaid the loan in its entirety including all accrued interest
on November 9, 2023.

 NOTE 7. Convertible Promissory Notes

 In May 2022, the Company approved the issuance
of a series of Convertible Promissory Notes (collectively, the "Notes") carrying a one-year term with interest on the outstanding
principal amount from the date of issuance accrued at the rate of 10 % per annum.

 The following table presents the principal amounts
and accrued interest of the Convertible Promissory Notes as of May 31, 2024:

 Convertible Promissory Notes May 31, 2022

 $

 Issuance of additional Convertible Promissory Notes

 1,035

 Accrued interest

 Convertible Promissory Notes May 31, 2023

 $
 1,142

 Issuance of additional Convertible Promissory Notes

 Accrued interest

 Conversion of Promissory Notes

 ( 1,496
)

 Convertible Promissory Notes May 31, 2024

 $
 -

 In October 2023, the Company completed a Qualified
Financing and based on the terms of the Notes all Convertible Promissory Notes were converted into 517,532 common shares at of the Company.

 F- 15

 NOTE 8. Convertible Notes Payable

 In October 2023, the Company received $ 6,700 in
exchange for Convertible Notes payable bearing interest at 10 % per annum. These convertible notes converted into common shares in the
event the Company raised more than US $ 5,000 or successfully listed its securities on a public stock exchange. The Convertible Notes payable
converted into common stock of the Company on January 12, 2024.

 The Company recorded $ nil of interest expenses
related to these Convertible Notes payable during the year ended May 31, 2025 (May 31, 2024 – $ 143).

 NOTE 9. 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 a single operating segment and one 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. Given the Company's 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 10. Term Loan

 In May 2020, the Company received a $ 40 line of
credit ("CEBA LOC") under the Canada Emergency Business Account program funded by the Government of Canada. The CEBA LOC was
non-interest bearing and could be repaid at any time prior to January 18, 2024, without interest or penalty. The Company repaid this loan
in December 2023.

 NOTE 11. Fair Value Measurements

 The following tables present information about
the Company's financial assets and liabilities that are measured at fair value on a recurring basis as of May 31, 2025, and May
31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

 Description

 Amount at
 Fair Value

 Level 1

 Level 2

 Level 3

 May 31, 2025

 Liabilities

 Derivative Liability - Warrants

 $
 4,488

 $
 1,264

 $
 —

 $
 3,224

 Total

 $
 4,488

 $
 1,264

 $
 —

 $
 3,224

 Description

 Amount at
 Fair Value

 Level 1

 Level 2

 Level 3

 May 31, 2024

 Liabilities

 Derivative Liability - Forward Purchase Agreement

 $
 20,938

 $
 —

 $
 —

 $
 20,938

 Derivative Liability - Warrants

 $

 $

 $
 —

 $

 Total

 $
 21,514

 $

 $
 —

 $
 20,965

 F- 16

 The following table provides quantitative information
regarding Level 3 fair value measurements inputs related to the Forward Purchase Agreement at their measurement dates:

 November 1,
 2024

 2024

 Redemption Price (USD)

 $
 10.61

 $
 10.61

 Stock Price (USD)

 $
 0.28

 $
 0.80

 Volatility

 %

 %

 Term (years)

 1.76

 2.18

 Risk-free rate

 4.40
 %

 4.51
 %

 The estimated fair value of the Forward Purchase
Agreement was measured at fair value using a simulation model, which was determined using Level 3 inputs. Inherent in a simulation are
assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates
the volatility of its Class A ordinary shares based on implied volatility from the Company's traded Class A ordinary shares and
from historical volatility of select peer company's shares that matches the expected remaining life of the Forward Purchase Agreement.
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected
remaining life of the Class A ordinary shares. The expected life of the warrants is assumed to be equivalent to their remaining contractual
term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero. Any changes in these assumptions
could change the valuation significantly.

 The Company mutually agreed to terminate the Forward
Purchase Agreement with its counterparty on November 1, 2024, for a cost of $ 278. In connection with this termination, the Company recorded
a $ 21,400 gain.

 As outlined in note 12, 5,800,000 warrants were
issued on August 21, 2024, of which 3,210,000 remain outstanding as of May 31, 2025. The following table provides quantitative information
regarding Level 3 fair value measurements inputs related to these Warrant liabilities at their measurement dates:

 2025

 August 21,
 2024

 Redemption Price (USD)

 $
 0.75

 $
 0.75

 Stock Price (USD)

 $
 1.06

 $
 0.96

 Volatility

 %

 %

 Term (years)

 4.2

 5.0

 Risk-free rate

 4.42
 %

 3.61
 %

 The change in the fair value of the assets and
liabilities, measured with Level 3 inputs, for the year ended May 31, 2025, and May 31, 2024, are summarized as follows:

 2025

 2024

 Fair value Derivative Liability - Opening

 $
 20,965

 $
 16,641

 Change in fair value of Forward Purchase Agreement

 4,342

 Termination of Forward Purchase Agreement

 ( 21,678
)

 -

 Additional Warrant Liabilities incurred

 5,157

 -

 Warrant Exercises

 ( 3,223
)

 -

 Change in fair value of Warrant Liabilities

 1,263

 ( 18
)

 Fair value Derivative Liability - Closing

 $
 3,224

 $
 20,965

 F- 17

 NOTE 12. Common Stock

 The Company's common stock 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; and (ii) an unlimited number of Class B ordinary shares. The
holder of each ordinary share is entitled to one vote.

 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. The proceeds received by the Company are summarized below:

 Gross Proceeds - Class A Shares

 $
 1,906

 Gross Proceeds - PFW's

 2,041

 Gross Proceeds - Warrant Exercises

 2,787

 Direct costs

 ( 510
)

 Net Proceeds

 $
 6,224

 PFW's may be exercised by warrant holders
at any time at a nominal exercise price as they were funded in connection with the RSO. Upon exercise, each PFW may be exchanged for one
Class A ordinary share. All 3 million PFW's were exercised during the year-ended May 31, 2025.

 Warrant holders exercised 2,590,000 warrants in
exchange for 2,590,000 Class A ordinary shares for proceeds of $ 2,787 during the year-ended May 31, 2025.

 As of May 31, 2025, there were warrants outstanding
of 12,065,375 at an exercise price of $ 11.50 USD and 3,210,000 at an exercise price of $ 0.75 USD to purchase an equivalent number of Class
A ordinary shares.

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

 Warrants

 Weighted
 Average
 Exercise
 Price
 (USD)

 Weighted
 Average
 Remaining
 Contractual Life
 (years)

 Aggregate
 Intrinsic
 Value
 (USD)

 Outstanding warrants May 31, 2024

 12,065,375

 $
 11.50

 4.0

 $
 -

 Issued August 21, 2024

 8,800,000

 $
 0.49

 4.3

 -

 Exercised

 ( 5,590,000
)

 $
 0.35

 4.7

 -

 Outstanding warrants May 31, 2025

 15,275,375

 $
 9.24

 3.7

 $

 Company has retroactively adjusted the number
of shares issued and outstanding prior to January 12, 2024, to give effect to the Exchange Ratio.

 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 $ 0.36 per share, and an aggregate of 4,500 Series A preferred shares of the Company at a price of USD
$ 1,000 per share. The financing closed on December 19, 2024.

 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. The proceeds
received by the Company are summarized below:

 Gross Proceeds - Class A Shares

 $
 2,100

 Gross Proceeds - Preferred Shares

 6,300

 Direct costs

 ( 41
)

 Net Proceeds

 $
 8,359

 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.
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, we 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 year-ended May 31,
2025, the Company incurred $ 528 in general and administrative costs relating to 689,371 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.

 F- 18

 NOTE 13. Stock-based Compensation

 In August 2022, the Company established a Stock
Option Plan, superseded by the 2023 Equity Incentive Plan (the "Option 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 year-ended May 31, 2025, the Company granted 1,520,000 stock options (May 31, 2024 – 100,000).
 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:

2025

 2024

 Stock price

 USD$
 0.27 - 0.61

 USD$
 0.85

 Risk-free interest rate

 3.8 % - 4.5
 %

 4.5
 %

 Term (years)

 Volatility

 %

 %

 Forfeiture rate

 %

 %

 Dividend yield

 %

 %

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

 Number of Shares

 Weighted Average
 Exercise Price (USD)

 Weighted Average
 Remaining
 Contractual Life
 (years)

 Aggregate Intrinsic
 Value

 Outstanding stock options May 31, 2024

 685,230

 $
 0.60

 6.5

 $

 Issued October 4, 2024

 180,000

 $
 0.27

 9.6

 $

 Issued February 3, 2025

 1,340,000

 $
 0.61

 9.9

 $

 Outstanding stock options May 31, 2025

 2,205,230

 $
 0.58

 8.4

 $
 1,340

 Exercisable as of May 31, 2025

 425,820

 $
 0.57

 5.5

 $

 During the year-ended May 31, 2025, the Company
recorded stock-based compensation expenses of $ 253 (May 31, 2024 - $ 66) relating to stock options and $ 677 relating to shares issued for
services (May 31, 2024 – nil). The weighted average grant date fair value of the stock options issued was $ 0.61 USD (May 31, 2024
- $ 0.59 USD).

 On February 3, 2025, the Company issued 335,000 Performance Share Units
("PSU's") that vest upon achievement of 100 % Total Shareholder Return. The Company has determined that this vesting
condition is highly probable and accordingly has recognized the entirety of the associated $ 562 in compensation costs related to these
PSU's during the year-ended May 31, 2025.

 NOTE 14. Net Income (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, Convertible debentures, PSU's,
and Warrants. Certain Stock options, Convertible debentures, PSU's, and Warrants were excluded from the computation of diluted net
income (loss) per share as including them would have been anti-dilutive.

 F- 19

 The following outlines the Company's basic
and diluted loss per share for the year-ended May 31, 2025, and May 31, 2024 (000's CAD, except share amounts):

 2025

 2024

 Income (loss) per share:

 Basic:

 $
 0.20

 $
 ( 0.76
)

 Diluted:

 $
 0.17

 $
 ( 0.76
)

 Shares used in computing Income (loss) per share:

 Basic:

 25,844,200

 10,717,378

 Diluted:

 30,760,145

 10,717,378

 NOTE 15. Grants and Subsidies

 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 invoiced and recorded as a reduction in
Research and Development costs in the consolidated financial statements for the year-ended May 31, 2025. As of May 31, 2025, $ 25 of this
grant has been received.

 Innovation Grant

 In January 2022, the Company entered into a Market
Research Investment Agreement (the "Agreement") with Collaboration. Ai, a company engaged with the United States Operations
Command and the U.S. Air Force to administer selection and awards for the AFWERX Challenge program to foster innovation within the services.
In connection with the Agreement, the Company will provide research, development, design, manufacturing, services, support, testing, integration,
and equipment in aid of delivery of market research in accordance with one or more statements of work or market research plans. A fixed
fee fund of $ 366 was approved. As of May 31, 2025, the Company had received $ 235 of this amount.

 Scientific Research and Experimental Development

 In connection with the year-ended May 31, 2024,
the Company filed an application for Scientific Research and Experimental Development ("SRED") credits with the Canadian
federal government in the amount of $ 307. This amount was received in August 2024.

 NOTE 16. INCOME TAXES

 The Company accounts for income taxes according
to the provisions of ASC 740, which prescribes an asset and liability approach for computing deferred income taxes. Reconciliations of
incomes taxes computed at the statutory combined Canadian federal and provincial statutory income tax rate of 26.5 % to the effective tax
rate for the years ended May 31, 2025, and 2024, are as follows:

 2025

 2024

 Income (Loss) before income taxes

 $
 5,200

 $
)

 Expected income tax (recovery) expense

 1,377

 ( 2,203
)

 Change in fair value of Financial Instruments and other non-deductible expenses

 ( 4,660
)

 1,094

 Change in valuation allowance

 3,223

 1,109

 Income tax (recovery)

 $
 -

 $
 -

 F- 20

 The Company intends to be treated as a United
States corporation for United States federal income tax purposes under section 7874 of the U.S. Tax Code and is expected to be subject
to United States federal income tax. However, for Canadian tax purposes, the Company is expected, regardless of any application of section
7874 of the U.S. Tax Code, to be treated as a Canadian resident company (as defined in the Canadian Income Tax Act for Canadian income
tax purposes). Accordingly, Horizon will be subject to taxation in both Canada and the United States.

 The following table summarized the components
of deferred tax:

 2025

 2024

 Deferred Tax Assets

 Finance Lease Liabilities

 $

 $

 Operating tax losses carried forward

 4,885

 1,742

 Property and equipment

 Other tax pools

 Valuation allowance

 ( 5,140
)

 ( 1,857
)

 Net Deferred Tax Assets

 Deferred Tax Liabilities

 Right of Use assets

 ( 8
)

 ( 20
)

 Total Deferred Tax Liabilities

 ( 8
)

 ( 20
)

 Net Deferred Tax Asset (Liability)

 $
 -

 $
 -

 A valuation allowance has been recognized to offset the entire effect
of the Company's net deferred tax asset as the realization of this deferred tax benefit is uncertain. The valuation allowance increased
by $ 3,223 for the year-ended May 31, 2025 (May 31, 2024 - $ 1,109). This is primarily due to the increase of federal, provincial, and state
net operating losses.

 The Company has analyzed filing positions in all
of the federal, provincial, and state jurisdictions where it is required to file income tax returns. The Company believes that its income
tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material
adverse effect on the Company's financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain
income tax positions have been recorded.

 NOTE 17. RELATED PARTY TRANSACTIONS

 During the year-ended May 31, 2025, the Company
paid $ 8 for facility design services to the spouse of an executive officer. Also during the year-ended May 31, 2025, the Company paid
$ 60 for aircraft certification services provided by an organization that a Director is the CEO and shareholder.

 NOTE 18. SUBSEQUENT EVENTS

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

 F- 21

 EXHIBIT INDEX

 Exhibit No.

 Description

 2.1

 Business Combination Agreement, dated August 15, 2023, by and among Pono Capital Three, Inc., Pono Three Merger Acquisitions Corp., and Robinson Aircraft, Ltd. d/b/a Horizon Aircraft (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on August 15, 2023)

 3.1

 New Horizon Articles (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024)

 3.2

 Notice of Articles (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024)

 4.1

 Warrant Agreement, dated February 9, 2023, by and between Pono Capital Three, Inc. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023)

 4.2

 Form of Warrant (incorporated by reference to Exhibit 4.5 to the Registration Statement on Form S-1/A, filed by New Horizon Aircraft Ltd. on August 15, 2024)

 4.3*

 Description of Securities

 10.1

 Form of Subscription Agreement for the PIPE investment (incorporated by reference to Exhibit 10.1 of Form 8-K filed by Pono Capital Three, Inc. on January 3, 2024)

 10.2+

 New Horizon Aircraft Ltd. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.3+*

 First Amendment to the New Horizon Aircraft Ltd. 2023 Equity Incentive Plan

 10.4

 Registration Rights Agreement, dated January 12, 2024, by and between Pono Capital Three, Inc. and parties thereto (incorporated by reference to Exhibit 10.3 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.5

 Registration Rights Agreement, dated February 9, 2023, by and among Pono Capital Three, Inc. and certain security holders. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023)

 10.6

 Form of Lockup Agreement (incorporated by reference to Exhibit 10.5 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.7

 Placement Unit Purchase Agreement, dated February 9, 2023, between Pono Capital Three, Inc. and Mehana Capital LLC (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K, filed by Pono Capital Three, Inc. on February 15, 2023)

 10.8

 Form of Non-Competition and Non-Solicitation Agreement (incorporated by reference to Exhibit 10.10 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.9

 Form of Indemnity Agreement (incorporated by reference to Exhibit 10.11 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.10+

 Employment Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd. and E. Brandon Robinson (incorporated by reference to Exhibit 10.12 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.11+

 Employment Agreement, dated January 11, 2024, by and between New Horizon Aircraft Ltd. and Jason O'Neill (incorporated by reference to Exhibit 10.13 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.12+

 Employment Agreement, dated January 12, 2024, by and between New Horizon Aircraft Ltd. and Brian Merker (incorporated by reference to Exhibit 10.14 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.13+

 Contractor Agreement, dated January 19, 2024, by and between New Horizon Aircraft Ltd., 2195790 Alberta Inc., and Stewart Lee (incorporated by reference to Exhibit 10.16 of Form 8-K filed by Pono Capital Three, Inc. on January 19, 2024)

 10.14

 Forward Purchase Agreement Confirmation Amendment, dated February 14, 2024, by and between the Company and Meteora (incorporated by reference to Exhibit 10.1 of Form 8-K filed by New Horizon Aircraft Ltd. on February 21, 2024)

 10.15

 Form of Underwriting Agreement (incorporated by reference to Exhibit 1.1 to Amendment No. 1 to the Registration Statement on Form S-1, filed by New Horizon Aircraft Ltd. on June 24, 2024)

 Exhibit No.

 Description

 10.16

 Form of Warrant Amendment (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on September 5, 2024)

 10.17

 Mutual Termination Agreement, dated November 1, 2024, by and between the Company and Seller (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on November 7, 2024)

 10.18

 Form of Subscription Agreement, dated December 18, 2024 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on December 20, 2024)

 10.19

 Amendment to Subscription Agreement, dated January 10, 2025, by and between the Company and the Purchasers (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, filed by New Horizon Aircraft Ltd. on January 13, 2025)

 10.20

 Sales Agreement, by and between the Company and JonesTrading Institutional Services LLC. (incorporated by reference to Exhibit 1.2 to the Registration Statement on Form S-3, filed by New Horizon Aircraft Ltd. on February 14, 2025)

 New Horizon Aircraft Ltd. Insider Trading Policy (incorporated by reference to Exhibit 19 to the Annual Report on Form 10-K filed by New Horizon Aircraft Ltd. on August 15, 2024)

 Subsidiaries of New Horizon Aircraft Ltd. (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)

 23.1*

 Consent of MNP LLP, independent registered public accounting firm

 31.1*

 Rule 13a-14(a) Certification by Principal Executive Officer

 31.2*

 Rule 13a-14(a) Certification by Principal Financial and Accounting Officer

 32.1**

 Section 1350 Certification of Principal Executive Officer and Principal Financial and Accounting Officer

 32.2**

 Section 1350 Certification of Principal Financial and Accounting Officer

 Clawback Policy (incorporated by reference to Exhibit 97 to the Annual Report on Form 10-K, filed by New Horizon Aircraft Ltd. on March 28, 2024)

 101.INS*

 101.SCH*

 101.CAL*

 101.DEF*

 101.LAB*

 101.PRE*

 104*

 *

 Filed with this Report.

 **

 Furnished with this Report.

 +

 Indicates a management or compensatory plan.

 Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the SEC upon request.

 SIGNATURES

 Pursuant to the requirements of Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 New Horizon Aircraft Ltd.

 Date: August 22, 2025

 /s/ Brandon Robinson

 Name:

 Brandon Robinson

 Title:

 Chief Executive Officer

 Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

 Name

 Position

 Date

 /s/ E. Brandon Robinson

 Chief Executive Officer and Director

 E. Brandon Robinson

 (Principal Executive Officer)

 /s/ Brian Merker

 Chief Financial Officer

 Brian Merker

 ( Principal Financial Officer and Accounting Officer)

 /s/ Jason O'Neill

 Chief Operating Officer and Director

 Jason O'Neill

 /s/ Trisha Nomura

 Trisha Nomura

 /s/ John Maris

 John Maris

 /s/ John Pinsent

 John Pinsent

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