New Horizon Aircraft (HOVR) risk factors, FY2026 10-K

Risks Related to Our Business and Industry

1. 01We have incurred losses and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not achieve or maintain profitability
2. 02The 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
3. 03The 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 RAM services
4. 04We 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 2029, at the earliest, if at all
5. 05The RAM market for eVTOL passenger and goods transport services does not exist; whether and how it develops is based on assumptions, and the RAM market may not achieve the growth potential we expect or may grow more slowly than expected
6. 06We 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
7. 07We are a relatively small company in comparison to current industry leaders in the RAM market. We may experience difficulties in managing our growth
8. 08Any 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
9. 09Adverse 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
10. 10Our 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
11. 11If we are unable to successfully design and manufacture our aircraft, our business will be harmed
12. 12If the Cavorite X7 eVTOL aircraft we build fails to perform as expected our ability to develop, market, and sell our aircraft could be harmed
13. 13Our Cavorite X7 aircraft will make extensive use of lithium-based battery cells, which have been observed to catch fire or vent smoke and flame
14. 14If 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
15. 15We 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
16. 16Our 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
17. 17Our business may be adversely affected by labor and union activities in the future
18. 18Failure of information security and privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations
19. 19We 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
20. 20We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations

Risks Related to our Intellectual Property

1. 21We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position
2. 22Our 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
3. 23We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs
4. 24We 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

Risks Related to the Regulatory Environment in Which We Operate

1. 25We 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
2. 26We 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

Risks Related to Our Organization and Structure

1. 27British 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
2. 28These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management
3. 29Our management team may not successfully or efficiently operate as a public company
4. 30We 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
5. 31We 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
6. 32We will be an “emerging growth company,” and our reduced SEC reporting requirements may make our shares less attractive to investors

Risks Related to Taxes

1. 33Our 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
2. 34We are subject to Canadian and United States tax on our worldwide income
3. 35Dividends, if ever paid, on our Class A ordinary shares will be subject to Canadian or United States withholding tax
4. 36The transfer of our Class A ordinary shares may be subject to U.S. estate and generation-skipping transfer tax
5. 37Changes in tax laws may affect our shareholders and other investors

Risks Related to Ownership of Our Securities

1. 38An active market for our securities may not persist, which would adversely affect the liquidity and price of our securities
2. 39Our failure to meet Nasdaq’s continued listing requirements could result in a delisting of our securities66% rewritten
3. 40If 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
4. 41The price of our Class A ordinary shares may decline, and you could lose all or part of your investment as a result
5. 42Because 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
6. 43If our company were to dissolve or wind-up operations, holders of our Class A ordinary shares would not receive a liquidation preference
7. 44We may require substantial additional funding. Raising additional capital could cause dilution to our existing shareholders26% rewritten
8. 45Future 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
9. 46The exercise price for the Public Warrants is $USD 11.50 per Class A ordinary share. There is no guarantee that the Public Warrants will ever be in the money prior to their expiration, and as such, the Public Warrants may expire worthless
10. 47We may redeem the unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless