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Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft fiscal fourth quarter 2026 earnings conference call. All participants are present in a listen-only mode. Following management's prepared remarks, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded and will be available for replay on the company's website at www.horizonaircraft.com later today. I would now like to turn the call over to Matt Chesler,. Matt, please go ahead.

Thank you, operator. Good morning, everyone. Joining me on the call today are Horizon Aircraft's CEO, Brandon Robinson, and the company's CFO, Brian Merker. I'd like to remind you that we will be making forward-looking statements during today's call. All statements involve risks and uncertainties that may cause actual results to differ materially. For more information about these risks and uncertainties, please refer to the Risk Factors section of our annual report on Form 10-K for the fiscal year ended May 31st, 2026, and filed this morning with the Securities and Exchange Commission, and under the company's profile on SEDAR+ in Canada. Any forward-looking statements we make are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. Now, I'd like to turn the call over to our CEO, Brandon Robinson, for his prepared remarks. Brandon, please go ahead.

Thanks, Matt. Good morning, everyone. Thank you for joining us for Horizon's fourth quarter and fiscal 2026 year-end call. Fiscal 2026 was truly a transformational year. After completing a full-scale transition flight on our prototype last May, we spent this past year advancing the Cavorite X7 from technology validation to full-scale aircraft construction. We also expanded our engineering and leadership teams, assembled an outstanding group of aerospace development partners, and significantly strengthened our balance sheet that has now more than CAD 78 million in cash. For those that are newer to the company, the Cavorite X7 is our seven-person hybrid VTOL aircraft built around our patented fan and wing technology. Unlike other concepts in the advanced air mobility space, the X7 is expected to fly about 98% of its mission just like a normal aircraft on traditional wing-borne flight.

This unique concept elegantly combines the vertical flexibility of a helicopter with the speed, range, payload, safety and utility, and operating economics of a conventional aircraft. This past year's accomplishment have led New Horizon Aircraft to its strongest position in history from both an aircraft developmental perspective and a financial perspective. We have entered our next fiscal year with focus strictly on execution, assembling the aircraft, advancing certification activities, and preparing for flight testing of our full-scale aircraft demonstrator. Before I review our accomplishments during fiscal year 2026 in more detail and discuss our priorities for the year ahead, we would like to share a short and exciting video that should get you stoked about the progress we're making here at New Horizon Aircraft. Operator, please play the video. That was awesome. Anyway, let's continue.

Over the past year, we have made remarkable progress across nearly every aspect of the business. We strengthened our financial position, expanded our technical capabilities, and added world-class development partners, and continue to mature the X7 towards full-scale assembly. I'd now like to walk through the progress we made during the last year and why we believe Horizon is very well-positioned to achieve our important milestones ahead. A year ago, we completed the successful transition flight of our large-scale prototype. Today, the program is leveraging that achievement into the production of our full-scale X7 aircraft. Significant structural and component work, notably in respect of our aerostructure flight controls, flight dynamics, and test systems, has shifted into the hands of our specialized aerospace manufacturing partners and our team has grown. Our certification pathway has become more defined, and our balance sheet is substantially stronger.

The target performance of the X7 helps explain why we believe this effort is worth pursuing. The aircraft is designed for a maximum speed of approximately 250 miles per hour, a range of approximately 500 miles and a useful load of approximately 1,500 lbs. The aircraft will be capable of vertical flight, short takeoff and landing, and conventional takeoff and landings, as well as flight in all weather conditions, giving operators significant flexibility with which to match the aircraft to each mission. The X7's hybrid electric architecture is another defining advantage. Fuel carried on board has far greater energy density than today's all-electric aerospace architectures by a factor of almost 50.

By pairing a proven turbine engine with batteries and distributed electrical lift, the X7 is designed to recharge its battery system in flight after landing and does not require any ground charging infrastructure whatsoever, and could even be used as a remote power station in certain circumstances. Importantly, the aircraft also comes with compelling economics. An independent third-party analysis calculated the X7's operating cost at approximately CAD 0.97 per passenger seat mile. I'll say that again. CAD 0.97 per passenger seat mile based on a 500-hour flight envelope per year, or utilization per year, I should say. This is compared with operating costs of over CAD 4 for comparable helicopters with the same level of utilization.

Based on this analysis, our expectation is the X-7 could deliver operating costs of up to 75% lower per unit distance, as compared with a helicopter of a similar capacity, while also offering substantially greater speed, range, and safety. Importantly, our ambition is not to become an airline or operating an air taxi service. It's to become a leading manufacturer of a world-class aircraft. This allows us to continue to be extremely capital efficient and to maximize shareholder value, something we're laser focused on. The progress and sophistication of the full-scale X-7 prototype program is increasingly visible, and we have announced several significant engineering partnerships over the past year. These organizations bring expert experience to the development and certification process of specific components while we remain responsible for the overall aircraft architecture, system integration, and program execution.

For example, BETA Technologies' advanced flight control computers will be used on the X-7. This is really exciting. BETA's fly-by-wire platform was designed specifically for modern VTOL aircraft and incorporates safety-critical software, system redundancy, and flexible architecture intended to support reliable aircraft operations. I think they have over 100,000 miles on the ALIA aircraft right now already. In any case, flight controls sit at the heart of every aircraft handling stability, performance, and certification aspect. We believe BETA's leading VTOL-specific experience, engineering talent, and operational philosophy will fit with the long-term requirements of the X-7 program, and we couldn't be better aligned. RAMPF Composite Solutions on the fuselage construction perspective continues to advance manufacturing of the main fuselage and empennage, North Aircraft Industries, an expert in wing design and testing technologies, progresses with our patented wing architecture.

Marshall Aerospace has completed flight dynamics and control models for the X-7, allowing our team to predict and optimize how the X-7 should respond to the control inputs before even beginning flight testing. We are proud to partner with other industry leaders such as Pratt & Whitney Canada, MT-Propeller, and MHI Regional Jet. We remain committed to expanding our world-class partner ecosystem as we advance our aircraft program. As for certification, our team is focused strictly on creating a certified aircraft that places operational utility at the forefront. We're using elevated standards for design reviews, system requirements, safety assessments, and other certification considerations into the current prototype phase earlier than many programs do. This requires additional effort before the first flight, but it also produces a more robust aircraft and a far more efficient path through subsequent testing and certification.

Our objective has never been, and will not be, to target the shortest possible route to a flying prototype. Every engineering decision we make is aimed at delivering an aircraft that operators can fly safely, that regulators can certify, and that customers can rely on for decades. That philosophy influences how we selectively allocate capital, how we sequence development, and ultimately, how we measure success. It is also really exciting to see the broader advanced air mobility industry evolving. Regulators, operators, lessors, and even investors are placing greater emphasis on certification readiness, technical execution, capital discipline, and practical aircraft economics. We have built Horizon Aircraft around those priorities from the beginning, and we believe that positioning is becoming increasingly relevant as the industry matures. One of the clearest examples of this philosophy is how we approach all-weather capability.

The X-7 is designed for instrument flight rule operations, just like almost all normal commercial aircraft. We also intend to pursue certification for flight into known icing, something that is very unique and made possible as a result of its patented fan-in-wing architecture alongside its hybrid electric power core. This should enable the X-7 to operate in all weather conditions encountered by regional operators, as well as enabling emergency medical cargo delivery, and defense missions across the globe. All-weather capability is not a marketing feature. For an operator, an aircraft that can fly in almost any weather condition is critical to underpinning safe and profitable operations. Something that we're, again, laser-focused on. Our internal team has also grown alongside the technical team and now numbers over 55 people. We have added experienced engineering and program leaders, including most recently Richard Alexander as our Chief of Certified Programs.

His role is especially important as we strengthen the connection between the development activity, certification requirements, quality systems, and eventual production organization. This growth will only accelerate. We expect to continually aggressively hiring across our engineering, certification, quality, manufacturing, and program management platforms. Based on our current plan, we are anticipating staffing more than 100 employees by the end of next year and double that by the same time in 2028. As a part of our year-end planning process, we reevaluated the schedule for the full-scale demonstrator aircraft. We previously targeted completion by the end of calendar 2027. We're now expecting completion within approximately nine months, placing the milestone by the spring of 2027. This represents an approximately one-quarter shift from our prior expectations, which I'm sure the people online here can respect is a very minor slip.

As I mentioned earlier, we are not optimizing for the fastest prototype assembly. We're optimizing for the most certifiable aircraft. By increasing the sophistication of the platform during this phase, we are investing in a much more streamlined overall certification process. Following the completion of the demonstrator aircraft, we expect the 2027 test program to begin with initial ground testing, of course, followed by a traditional flight test program. At the same time, I should say, we will continue working with Transport Canada towards our type certification by 2030. We are encouraged not only by the engineering progress but also by growing commercial engagement. We are in discussions with several potential buyers and operators that have expressed interest being amongst the first to add the Cavorite X7 to their fleet.

Those conversations span regional transportation, emergency services, defense, logistics, and other special missions. We remain disciplined about how and when we formalize commercial commitments, and the level of interest reinforces our views that operators are looking for a vertical lift aircraft with superior range, safety, and economics, and we're very encouraged by that. Fiscal 2026 marked a major transition for the Horizon Aircraft team from validating the core concept to building a world-class organization, a supplier base, engineering capabilities, financial depth, and the certification discipline required to deliver a full-scale aircraft. There is substantial work ahead, but we enter Fiscal 2027 with the team, the plan, and the financial depth to execute. Now I'd like to pass the call over to our CFO, Brian Merker, to discuss the financial results, our capital position in more detail. Brian, take it away.

Thanks, Brandon, and good morning, everyone. Unless otherwise noted, financial figures are presented in Canadian dollars. As Brandon was alluding to, fiscal 2026 was a transformative year for Horizon, not only from an engineering standpoint but from a financial perspective as well. We did conclude the year with CAD 78.3 million of cash on the balance sheet as compared to CAD 7.5 million a year ago. This represents the strongest balance sheet in the company's history and provides us the financial resources that span beyond the completion of the full-scale demonstrator aircraft and well into certification and manufacturing efforts. This liquidity reflects disciplined access to capital throughout the year.

You may have seen we recently completed two registered direct offerings with the same two investors that collectively generated gross proceeds of USD 45 million, all on favorable terms, while our at the market program and non-dilutive funding through government grants provided additional capital. All told, financing activities generated more than CAD 88 million during the year at well over CAD 2 per share. We approach fundraising patiently and opportunistically. The objective is not simply to maximize cash at any particular time. It's to maintain sufficient liquidity, preserve strategic flexibility, and raise capital when market conditions are advantageous. That's exactly what we've done this year and are now well-positioned to execute on our aircraft development program. From an operating expense perspective, our spending increased as our aircraft development program transitioned from technology validation to the demonstrator aircraft assembly.

Research and development costs increased to CAD 13.2 million from CAD 3.7 million last year. This reflects investments in engineering talent, flight software, prototypes, equipment and materials, testing preparation, and data analysis. Meanwhile, G&A costs remained relatively stable at CAD 10.2 million, demonstrating the vast majority of our incremental investment continues to be directed towards advancing the aircraft development program. Cash used in operating activities totaled CAD 16 million during the year, or about CAD 4 million per quarter. This compares to CAD 9 million in the prior year or CAD 3 million per quarter. As we look ahead to fiscal year 2027, we expect another step up in investment as we receive major aircraft components, expand our engineering organization, continue systems integration, and prepare for ground and flight testing.

Notably, we believe our current cash position provides more than 24 months of liquidity while contemplating this increased investment in aircraft development. We also intend to passionately pursue non-dilutive sources of capital where appropriate, including government funding programs like INSAT, of which we've already received project approvals. They reimburse up to 40% of eligible project costs. Additionally, there's meaningful opportunities with the enhanced Canadian government defense spending obligations. Capital efficiency is built into our model.

As Brandon indicated, Horizon intends to be a pure play aircraft OEM, not an aircraft operator. We don't plan on funding large operating fleets, building a passenger network, or developing broad charging infrastructure. Focusing on building and selling our aircraft allows our capital and management attention to remain centered on designing, certifying, and manufacturing the aircraft. We believe Horizon enters fiscal 2027 with one of the strongest balance sheets in the sector, providing us with the flexibility to remain focused on disciplined execution. Brandon, back to you.

Okay, great. Thanks, Brian. The man, the myth, the legend. Love it. As fiscal year 2027 begins, New Horizon Aircraft is a much stronger and much more capable company than it was a year ago. We have a differentiated hybrid electric VTOL architecture, a validated technical foundation, a rapidly growing team, and a substantially stronger balance sheet, as well as a network of experienced aerospace partners supporting our aircraft development program. Our immediate priority is clear. Complete a full-scale Cavorite X7 demonstrator aircraft by spring of 2027 and begin ground and flight testing program. Every major work stream, structures, propulsion, flight controls, flight dynamics, instrumentation, systems integration, certification, and manufacturing readiness is being advanced with that singular objective in mind. The broader industry is moving in a direction that favors our practical and our unique approach.

Operators, regulators, governments, and strategic partners are increasingly focused on real-world utility, dispatch reliability, certification readiness, operating economics, and mission flexibility. Those are the foundational pillars, and have always been, on which the Cavorite X7 has been designed from the beginning. There is still significant work ahead, we don't underestimate the challenges of developing and certifying a new aircraft. Our focus isn't on reaching the next milestone the fastest. It's on responsibly reaching every milestone on our way to developing a truly revolutionary new aircraft. We look forward to updating you as the full-scale aircraft continues to come together and we achieve the next set of technical, commercial, and certification milestones. That concludes our prepared remarks, and we get into the fun stuff with Q&A soon. I'll now pass the call back to our operator to begin the Q&A session.

Thank you. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. The first question today is coming from Scott Buck from Titan Partners. Scott, your line is live.

Hi, good morning, guys. Thanks for taking my questions. I guess first on the BETA Technologies partnership announced last week, is this a straightforward supplier relationship, or does it include some sort of co-development or exclusivity or any other kind of equity/strategic component?

Great question, Scott Buck. On the BETA Technologies side, it's more than just a normal supplier relationship, okay? It does not involve any equity involvement or any investment so far from BETA Technologies' perspective. Our aircraft is unique, and that's going to require a lot of close technical development with BETA Technologies. We can't just purchase their off-the-shelf COTS flight control system and then plug it into our aircraft. It's much more of a close technical development relationship that goes back and forth that helps integrate that system into our aircraft successfully, if that makes any sense.

Yeah. No, that's very helpful. Brian Merker, I'm curious, can you help frame expected quarterly cash burn through fiscal 2027 and what the split looks like between prototype build versus headcount versus other certification spend. Just trying to understand what the components look like.

We do expect our cash usage to increase, as I mentioned. I would directionally suggest it's not going to be 2x what you've seen in our last 1 to 2 quarters, but somewhere in between where we're currently at and there. Part of that depends on the pace of bringing people in, and we're actively recruiting for a number of roles. We do expect, as I said, some increases to the cash spend. In terms of the split, we're seeing a combination of both additional resources, human resources come on board as well as significant scale in terms of spend on the demonstrator aircraft program. I would, again, directionally guide towards a 50/50 split people and components. Of course, that is dependent on a number of factors.

Great. That's helpful. Last one for me, guys. I'm curious, the partners you have on the prototype, do they have the capacity to scale with you into low rate production, or will production tooling require a different supplier base?

No, we've paid a lot of attention to this particular piece. My father was in advanced pharmaceutical manufacturing for decades. The entire aircraft has been built to be built, if that makes sense. We've had production in mind from the very beginning, all the way from why doesn't our wings have taper to them? Because that's aerodynamically slightly more efficient. Well, it's because every single rib is the same size, right? It's easier to manufacture. All the partners that we choose, Pratt & Whitney Canada is a great one, right? The PT6, one of the most robust and bulletproof engines that exists on the face of the planet, has been in manufacturing for decades. We're taking that approach. We're building an aircraft to be built.

RAMPF Composite Solutions, for example, building the fuselage, they can ramp up to producing a number of different fuselages and support us through low volume and medium volume production. Same with North Aircraft. Yeah, the answer is yes. We're thinking about that, and many of the decisions that we're making are aligned specifically with that. Again, not producing a one-off prototype that can fly, but producing a machine that can be certified, that can be produced in the volumes that make sense economically.

Perfect. Well, that's all I have, guys. I appreciate the added color. Thanks for the time.

Great question, Scott. Thank you.

Thank you. The next question will be from Josh Sullivan from JonesTrading. Josh, your line is live.

Hey, good morning. Just following up on the collaboration with Beta. How are you guys thinking of your make versus buy thoughts generally across the aircraft, and what other areas are maybe potential for additional collaborations at this point?

I'll let Brian finish this one off. Because we've gone with a hybrid electric architecture, for those online, again, it is a really well-understood, really robust, unique power core for the airplane. Unlike most of the folks that are in this industry who have all electric architectures, ours is hybrid electric. That allows us to not be so critical on many of the main systems. We have leading-edge vertical propulsion units, leading-edge batteries, and battery management systems. We don't have to take everything in-house and design it to the 99.9th percentile, razor-edge, aerospace-grade type of innovative system because we can choose more robust architectures and things that are commercially available for our system because we're not so pushed to the edge of the engineering envelope in order to make the aircraft work.

A great example is on the battery side, we have high power demands. Instead of requiring 400 watt hour per kilogram batteries, we can reduce the energy density and prefer much more robust or select much more robust, high power dense batteries that are just a lot more safe and a lot more robust, I would say, for operational use.

An example of the Beta partnership would be, again, taking a bit of a difficult thing, which is a flight control system, starting in a really, really good space. Beta, again, has more than 100,000 hours flying ALIA on their flight control system. It is designed to the highest DAL standards, and we're starting in a really, really good space already, so kind of getting a jumpstart there. Eventually, we'll bring a few more things in-house, but for now, again, we're not pushed to the edge on that stuff, so we have a little more flexibility is all I'll say. Great question, Josh.

Got it. Just with these collaborations, how do you think about the aftermarket question or the long tail here on supporting the aircraft and with these various collaborations? How do we think about how that's going to all work together?

Well, I think it's a really positive story. You see, again, I'll use Beta as an example. We're doing the same. We're developing technologies in-house that are going to be broadly useful across a number of different ecosystems. I can't say much more than that. 2026 is an exciting space for technological innovation, especially in the aerospace community in terms of strengths of materials and electrical systems, propulsion units. These technologies, when they're fully validated, are going to be broadly applicable across a number of different industries, especially within the aerospace industry. We're excited to continually innovate, identify valuable products, and collaborate with companies who would like some of this technology that we've, and companies like Beta, have developed. I think we're seeing that borne out now.

Got it. We have Farnborough coming up next week. Just curious, on customer engagement, what areas of the market and applications are maybe approaching you guys, any preview into what we might see from you guys at Farnborough? I'll jump off after that. Thank you for the time.

No, thanks, Josh. Yep. We're really excited about Farnborough. Okay. For everyone that's not tracking Hall 4 by the Canadian Pavilion booth 4625, we'll have a small model there for everyone to take a look at. More importantly, you can just come and see and talk to the team. It's going to be an exciting time. Hopefully, the air conditioning holds up in Farnborough, which I'm told it's going to. Farnborough's going to be exciting. We are meeting with a number of different suppliers and folks that are interested across the commercial and the defense sector.

A lot of defense interest in what we're doing, of course. I can't get into too much more detail about that. Needless to say, our docket is completely overbooked at this point. Yeah. Every day I look at it's getting more and more complicated in terms of where I got to be. Please come by. For anyone that's interested, like I said, swing by Hall 4, just next to the Canadian Pavilion, 4625.

Thank you. As a reminder, it will be star one on your phone at any time if you wish to ask a question from the phone lines. The next question is coming from Rick Ryan from Oak Ridge Financial. Rick, your line is live.

Great. Thank you. Say, Brandon, you've got pretty aggressive plans to expand your employee count. You've done it so far, and you've talked about doubling it again over a period of time, and mentioned engineering and certification. Where does that talent pool exist? I mean, is the reach beyond Canada? How do you compete with the others in the air mobility space to go after this talent pool?

Rick, great question. For those that don't know, Canada has a very robust aerospace ecosystem, right? We have Bombardier Defense, CAE, MHI RJ, MHICA. We're one of the few countries that has the ability to design, build, produce, certify clean sheet aircraft designs. There is a lot of aerospace talent compressed into a few locations. Right now we're just north of Toronto as our primary location. We have another location in Ottawa. To your point, we're looking to expand. Just to be frank, we're in the short strokes of looking at various locations to expand into. It'd be silly if we weren't looking into the Kitchener-Waterloo area, into the Montreal-Quebec area, where there's these loci of aerospace engineering talent. It has been a challenge to attract world-class talent to the Greater Toronto Area. We've done so successfully.

You can see, we've over tripled the team in the last year or so. To continue that rate of expansion, we're of course looking into other locations. We're going to stay north of the border for now. Yeah, the future's pretty exciting. We have a track record of success with expanding the team and attracting, again, some of the best folks on the planet. We're very, very picky with whom we work, that's a bit of a challenge. That's allowed us to punch way above our weight in terms of our team size. We're going to continue to expand. We're looking actively at a number of different locations, and it's an exciting place where we're currently located. It's very exciting to look into some of these other places, again, that have a lot of aerospace talent in a small geographical region.

Okay.

Great question.

Thank you. Eventually, do you need to move manufacturing into the U.S. to access the U.S. initiatives in this space, or won't that be a requirement?

We don't. I mean, unlike some of the other companies in this space, we're not saying we're going to build thousands of these aircraft per year requiring multi-billion dollar installations. We're building 200 to 300 of these aircraft at peak rate at very profitable margins. We can do that within southern Ontario and/or Quebec as well. We'll probably travel south of the border for flight testing. That just makes sense. Of course, we're talking to a bunch of different communities. State of Ohio is amazing, and further south, from a production capacity perspective once we eventually expand. Of course, we're talking to people globally as well that would really like to either build this aircraft or set up MRO, maintenance, repair, and overhaul type of activities for us to support the global fleet.

Okay, great. Brian, one for you. Pre-commercialization, I think there's an opportunity or potential opportunity for licensing revenues or some other sorts of monetization efforts before actual building of the aircraft. Can you talk about how that might look and the kind of timing of such opportunities, if they exist?

Thanks, Rick. I think this licensing revenue opportunity is certainly the highest probability short to medium term path to revenue-generating activities. One of the big questions for us is the if question, do we want to go down this path? If so, where might we do it, and who might we do it with? We know it might be a challenge for us to produce and sell aircraft in every region of the world, and every type of aircraft using this technology that we have. There very well may be a strong opportunity for us to partner. It could be on the military side, it could be on the commercial side of people who have a different concept in mind using the same technology. I do believe that's a strong opportunity for us. If I think ahead to 2027, 2028, that's where I think those conversations will be had.

Okay, great. Thank you, and congratulations on continuing to hit your milestones, guys.

Thanks, Rick.

Thank you. The next question.

Thank you.

The next question will be from Brian Lantier from Zacks Small-Cap Research. Brian, your line is live.

Great. Good morning, guys. Great job, a lot of my questions have already been answered, but I just wanted to take a moment and step back and say, 15 months ago, you were standing in a field working with your half-scale demonstrator, going through your first transition flight. To be here, I think it's important for everyone to really take a moment and say, you guys really accomplished a lot in a short period of time. The questions from all your investors speaks to how well you guys communicated with the market. Great job on all that. I don't have a lot left to ask other than we've talked a lot about flight controls in the past as being a major obstacle. I know everything is sort of working in sync and you're advancing everything together, is there one maybe systems integration? Is there one major thing that's at the top of your whiteboard right now, Brandon?

Yeah. You kind of nailed it with systems integration. You can develop each one of the federated systems together. An airplane is really about how all those systems talk to each other, and how they work. They each have to work in isolation, that's fine, but they all have to work together. One of the things we're doing right now is building what's called an iron bird. For those who don't know, it's all the systems wired together, all the control systems, the flight control computers, everything wired together, and we understand and we stress test it and deconflict how it talks to each other, how all these systems talk to each other, how they work together, and how that federated systems comes together as more than the sum of its parts, if that makes sense. There are some cornerstones to that.

Flight control systems is a major one, and I flew the F-18 for the better part of 20 years in the Air Force, the Canadian Air Force, and it was a fly-by-wire computer airplane, right? If I put the stick to the left, the computer says, "Pilot wants to go to the left," the computer figures out exactly how to do that. If I leave the stick alone in the middle, the computer says, "Pilot does not want to go left or right. It wants to stay very stable," or he wants to stay, or she wants to stay very stable, and it moves all the flight controls in order to make it the most stable aircraft.

600 miles an hour at 250 feet off the ground, with all sorts of turbulence and rolling through valleys and stuff, that aircraft is the most stable and safe aircraft. The flight control system, again, at the core of every commercial aircraft, is a very well-known thing on how to build. That'll be the cornerstone of the systems that come together. Of course, we're thinking of everything, right? We have instrumentation, flight instrumentation, structures, yeah, main propulsion, vertical propulsion. Like I said, they're all coming together really well to be tested very shortly in our iron bird and then transported into the main aircraft, which I'll remind everyone, the structure is coming together. In the next several months, we'll be receiving parts and we'll be putting together the full-scale aircraft, which is incredibly exciting. Long answer for a short question, which I tend to do quite often. Anyway, thanks, Brian. Really appreciate the question.

That's great. I guess, is there one particular thing that when you're talking to investors you feel like maybe they're missing in the story? Do you feel like it's your operating costs and the advantage that you have in the market, or is there something else that sort of jumps out at like, "I feel like I tell this story all the time, and then people still aren't grasping that concept?

Yeah. This is a fantastic question, and thank you for that. There is one thing that drives me absolutely crazy about this space. It's the operational utility of the aircraft, so being able to fly in all weather and bad weather operations. I have buddies, ex-Air Force buddies, that are flying commercial operations for helicopter operators, and they cannot fly in bad weather. They just can't. Most helicopters avoid clouds like the plague. They can't fly in bad weather. They can't fly in cold weather, or at least it's challenging, and especially not in instrument flight rules conditions where there could be icing in clouds.

The ability to fly this airplane all year round in all sorts of bad weather conditions, just like every other commercial aircraft on the planet, is I think very underappreciated by a lot of the retail investors and a lot of the institutional investors. That's going to make a very significant difference. I think the second one is the focus on economics and safety. This airplane flies 98% of the time just like a normal commercial aircraft, but compared to a conventional helicopter, we're up to 75% cheaper per unit mile. Half the helicopter fleet on the planet simply goes from one place to another. For those folks that operate those helicopters, this aircraft is literally going to save you 50%-75% of the cost per unit mile. Like I said, just under CAD 1 per passenger seat mile versus CAD 4+ for a typical helicopter.

I think that is very significant. Having a safer, faster, better, and more economical machine is just inventing a better mousetrap to do a huge amount of work globally. I think that's appreciated by some folks, but that's really going to sink in over the next 12 months when people start realizing, again, how much good work we can do globally and, again, the economics, the safety, and the operational utility combined into a pretty special airplane.

That's great. Thanks. That's all for me.

Thank you. We would now like to turn the call over to Matt Chessler from investor relations to answer questions from investors that were submitted in advance or via the webcast chat feature.

Thank you, operator. Brandon, we're going to start out with a number of questions that are tied to timing. If you could just answer the questions around what's the timing for certification, finding a production partner, and potential customers? That is from Jen Falkofske. Thank you.

Okay, Jen, great question. We're still targeting certification prior to 2030, right? We're partnered with Cert Center Canada, which is a leading certification agency here. We have the advantage of certifying north of the border, which again, we're kind of a big fish in a much smaller pond up here. We've had several meetings with Transport Canada. Of course, we've brought on experts, Richard Alexander, Kevin Bruce, Head of Airworthiness, who've done this before. We've been there. We have folks that have done that previously, and we're partnered with some of the best folks on the planet to come up with and execute the plan for certification. On the certification side, we're still on track. We want to get a certified aircraft off the line by 2030.

It's an awesome question. The next several months, this is nerdy engineering stuff by the way, will be through PDR season, which is a fancy term for all of the subsystems that require a lot of engineering thought have been through their paces, right? Picture an engineer in front of the entire company pitching their system, and it's 150 PowerPoint slides down to where each electron goes to the next point in space and time. That allows us to get essentially into manufacturing and then building out the systems for iron bird testing. PDR leads into CDR quickly thereafter. I think in the next three to six months, it's going to be pretty exciting to see full-scale structural parts arriving, right?

Here's a question that came in through Reddit, which is really more about near-term milestones. You've indicated where you want to be in six to nine months. Even shorter term from that, what are you thinking about? What are you expecting over the next three months from a build perspective?

We'll have the fuselage, parts of the wing, parts of the empennage, which is the back part, the canards arriving, and it'll start actually being assembled and look like a normal aircraft over the next, like I said, three to six months, which will be really, really cool. I mentioned the iron bird stuff. Again, we can get nerdy on that, too. That's going to be very exciting seeing everything wired together, the flight control computers start talking to each other, the multiple propulsion units and the brains that talk to them, so the electronic control units working all together in a sort of a master construct will be incredibly exciting. We have the space set aside. We have a lot of material rolling into the main hangar right now. That's going to be really exciting over the next three to six months.

Jack, the engineer, is asking about differences between the full-scale aircraft that you're building right now and the large-scale prototype. Have you discovered anything during production that wasn't apparent on the large-scale model, such as build optimization, time saved to build, or some component fit challenges?

Yeah, really smart question from Jack. The answer is not yet meaningfully. Everything that we've sort of anticipated is rolling forward kind of normally. Like I said, my father was in advanced pharmaceutical manufacturing. It gave him a mind, not only from a pilot's perspective, again, he's been flying and building airplanes since he was 14 years old, but also from a manufacturing perspective, to be able to anticipate certain changes. I think we made a lot of smart choices early on that gave us some flexibility to take some more practical approaches to manufacturing. There's nothing that we've discovered so far that is going to radically redesign the aircraft. Well, in our half-scale prototype, you saw as far as the renderings went, and then to what we produced, they look the same.

The aircraft on our website right now is the OML that's being produced. That's the outer mold line that the aircraft will look like that. We're pretty proud of it. It's not going to be radically changed. Will there be optimization to be done? Absolutely. Of course, we'll tweak the flight control systems. From a production perspective, yeah, there's nothing that we've come across so far that has led us to radically redesign anything so far. Great question. Hopefully, that clarifies.

The next question is from Niffer. Thinking about testing, is weather going to be a consideration that you take into effect you begin in early 2027

Sorry, the question is weather going to be a consideration?

Yeah. Are there any challenges related to weather that you're going to take into consideration when you begin testing the aircraft?

Well, that's going to be a two-fold answer. The first answer is in terms of location and where we go. I'm lucky to have done some tests in the Air Force, and I have a couple of buddies who are elite test pilots. One of them just flew Virgin Galactic to space, right? He's the Unity. He's on our board of directors. Dr. John Maris is also an elite test pilot in North America. As far as test programs are concerned, we understand the limitations of cold weather testing in Canada. We will beat this airplane up, don't get me wrong, and we'll make sure that it's certified for cold weather ops, all-weather ops, or at least that's what the current plan is.

To get enough test data initially early on in the program, it makes sense, I'm not committing to any individual location, but it makes sense to look south of the border, to where the weather is a little nicer year-round. I did a lot of flying in El Centro, California, where there's 355 days of clear blue sky weather down there. Ohio has the National Advanced Air Mobility Center of Excellence, NAAMCE, in Springfield, Ohio, that's set up for test flying. In Montreal, Quebec. In Canada, there's another center of excellence in Canada for advanced air mobility test. From a location perspective, we take a very practical approach, like we do with everything across the company. We know what's ahead of us, and we're planning in advance.

Now, from a specific, like how to beat this airplane up and to know that it's going to work in icing and hopefully flight into known icing and in clouds, we have a complete plan for that as well. I don't want an airplane that is usable only in sunny weather days and clear of clouds. We want a commercially viable aircraft that is tough as nails and has all the safety components that you expect out of a normal commercial aircraft. I think operators and customers will appreciate that.

Brandon, we're coming up close to the 9:30 timeline, but I do want to jam in some more questions.

Yep, sure. I'll try to be more brief. Sorry, Matt.

Okay. Kurt is asking whether you anticipate any specific regulatory headwinds.

Well, if any CEO said no, they'd be lying, right? This is a new aircraft category. We're specifically under a bit of an advantage here in Canada, like I said, with a very flexible Transport Canada Civil Aviation, big fish, small pond, flexible regulatory group that is really smart. We have the advantage of being like a VTOL 2.0 company. We're certifying now, and we've designed the aircraft, again, a little bit later than some of the initial entrants, where we knew the rules to which we were certifying for. 21.17 Bravo in the U.S. has been laid out. SC VTOL lays out the regulatory framework to a very high standard as well. We knew what we were designing to. The devil's in the details. We have to prove it. That is not without some risk.

We know what those are, we've designed the aircraft to those regulations. We're off to a really, really good start. We're operating under a known regulatory framework or multiple frameworks. Like I said, if any CEO said there was no regulatory certification risk, they would be lying. We have a lot of work ahead of us. We think we have great visibility on where we're going. Yeah. Folks can watch and see how we do.

Okay, great. Shangas wants to know what you're bringing to Farnborough, to the Farnborough Airshow next week. He's looking forward to seeing us there.

Nice. Hall 4, 4625, right next to the Canadian Pavilion. We'll have a nice little setup with a small demonstrator aircraft there, like you said, 10-foot wingspan or so. More importantly, we'll be bringing, I think, seven people over from the team. Please come talk to us. We'd love to show you around the place. We'll have some technology that you can interact with to kind of really get a good feel for where we're at. It's going to be an exciting time in Farnborough. Please come by.

Brandon, why don't we call it a wrap with 9:30 approaching? I'd like to turn it back to you for some concluding remarks.

Okay. Yeah. Well, thanks, Matt. Really appreciate it. Some great questions from a number of interested folks. Please keep watching our YouTube channel, follow me on LinkedIn. You will find us a pretty transparent group, we try to really clearly communicate exactly where we are at. I think Horizon Aircraft has never been in a better position, right? We have the capital, the engineering talent, the industry partnerships, and the technical foundation to really execute the next phase of the Cavorite X7 program. While significant work remains ahead, of course, the opportunity to redefine regional flight has never been clear, and we look forward to updating shareholders in the quarters ahead as we continue turning this vision into a certifiable aircraft. As always, really, really appreciate your interest and support. Thank you all. Have a great day.

Thank you. This does conclude today's conference. You may disconnect at this time. Thank you for your participation.

Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft Fiscal Third Quarter 2022 Earnings Conference Call. All participants are present in a listen-only mode. Following management's prepared remarks, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded and will be available for replay on the company's website at www.horizonaircraft.com later today. I would now like to turn the call over to Matt Chesler. Matt, please go ahead.

Thank you operator. Good morning everyone. Joining me today on the call are Horizon Aircraft's CEO, Brandon Robinson, and the company's CFO, Brian Merker. Before we get started, I'd like to remind you that we will be making forward-looking statements during today's call. These statements involve risks and uncertainties that may cause actual results to differ materially. For more information about these risks and uncertainties, please refer to the Risk Factors section of our annual report on Form 10-K for the fiscal year ended May 31st, 2025, and filed on August 22nd, 2025, as well as the Form 10-Q filed with the SEC today, all with the Securities and Exchange Commission, and under the company's profile on SEDAR+ in Canada, as well as other documents filed by New Horizon Aircraft and the SEC under the company's profile on SEDAR+ in Canada from time to time.

Any forward-looking statements we make are based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. Now, I would like to turn over the call to our CEO, Brandon Robinson, for his prepared remarks. Brandon, please go ahead.

Thanks, Matt. Good morning, everyone, and thank you for joining us today. I'll start off by saying that we believe the advanced air mobility sector continues to grow in a very constructive way. What began as a concept-driven phase just a few short years ago for many companies is now shifting towards practical execution, where real-world performance, certification pathways, and economic viability are becoming the defining factors for long-term success. At Horizon Aircraft, we've always taken a pragmatic approach to this market. Our focus remains on building an aircraft that solves real operational challenges. We are building an aircraft for operators that will offer meaningful improvements in cost, performance, reliability, and safety across a number of missions. That laser focus on developing an operational tough, high-performance aircraft continues to guide our progress on the Cavorite X7. A little bit about technical progress and developmental roadmap.

From a developmental standpoint, our primary focus is now on the continued design and production of our full-scale aircraft prototype. Very exciting. Our intentions remain to complete the full-scale aircraft by the end of the year, which is the single most important engineering milestone for the company over the next nine months. This will position us to begin ground testing and ultimately flight testing in early 2027. Our hybrid-electric architecture that we incorporated into our aircraft from the very beginning continues to be a key differentiator. By combining a turbine-based power system with electric propulsion, we have the best of both worlds. We're able to deliver a level of performance, safety, and operational flexibility that we believe is not achievable at regional distances over 100 miles with pure electric aircraft in this space.

The hybrid-electric core power system, the X7, will have the ability to operate independently of any ground charging infrastructure. No need for any lagging vertiport construction to hold back initial operations. While airborne and after landing, the aircraft will be able to recharge itself, adding to safety. We also plan on pursuing full IFR capabilities, so flight into clouds, and also flight into known icing certification, capabilities that are essential for many commercial and defense applications and unlikely for almost any of the other eVTOL concepts. In addition, a leading independent audit firm has also verified that the Cavorite X7 is expected to deliver up to 75% lower operating costs, measured on a per mile basis versus both conventional helicopters and some advanced air mobility aircraft being produced by our peers, all while offering superior speed, range, safety, and payload capacity. On to partnerships.

In recent months, we've made some really meaningful progress in furthering key strategic partnerships. We contracted the production of our fuselage structure to RAMPF Group, an international manufacturing company with over 900 employees that specializes in advanced composites. This marks a very significant shift into the production of our full-scale aircraft, something extremely exciting to report. In parallel, we have contracted production of our wings to North Aircraft Industries. Their world-class expertise in precision aerostructures and complex wing structures in particular support both performance optimization and production readiness as we move closer to full-scale assembly later this year. We also recently announced a key collaboration with Mitsubishi Heavy Industries RJ Aviation Group, MHIRJ for short, a company that brings decades of experience in aircraft development, certification, and support stemming from its history with the CRJ Regional Jet program.

This collaboration brings highly specialized engineering support to the Cavorite X7 program, particularly in the area of flight test instrumentation, which will be critical as we move towards our flight test program in early 2027. These strategic collaborations significantly strengthen our technical roadmap and is a very meaningful step forward in developmental capability, technical progress, and sophistication of our program. Of course, as we continue to be actively engaged in discussions with several additional potential strategic partners to join Horizon Aircraft's mission and vision, we are encouraged by a significant level of interest with a range of companies that include the best across aerospace and defense and manufacturing sectors. These discussions are ongoing, and we remain disciplined in pursuing opportunities that align with long-term shareholder value. As for our financial position and capital runway, Brian will shortly explain this in more detail.

Our financial performance demonstrates that we remain disciplined and focused on capital efficiency. We entered the third quarter with approximately $20 million in cash, providing us with working capital runway in excess of 12 months, based on our current operating plan. Importantly, our development strategy is intentionally structured to be significantly more capital efficient than many of our peers. By focusing on a hybrid architecture, leveraging strategic partnerships, and by not implementing an air taxi service strategy, so being an OEM versus an operator, we are able to advance the program without a level of capital intensity typically associated with the all-electric eVTOL development in this space.

In addition, with the requirements of the Canadian federal government to increase its spending to defense of up to 5% of GDP, or an increase of approximately CAD 15 billion-CAD 20 billion each year, we continue to pursue non-dilutive sources of funding, similar to the $10.4 million INSAT grants we previously announced. We expect those types of opportunities to remain an important part of our broader funding strategy going forward. We also have very significant government tailwinds that are building. If we take a step back from our near-term objective of building the Cavorite X7 prototype, we are seeing increasingly supportive regulatory and policy developments for the advanced air mobility sector. In Canada, as I just alluded to, the recently announced Defense Industrial Strategy outlines a substantial increase in long-term defense spending, with a clear focus on innovation and next-generation technologies just like ours.

We believe this creates a multi-year tailwind for companies like Horizon Aircraft, particularly given the dual-use nature of our platform across both commercial and defense applications. In the United States, recent developments from the Department of Transportation and the FAA around the advancement of eVTOL integration pilot program represent another important step forward. Government support at this level helps accelerate the path forward towards integration of eVTOL aircraft into national airspace systems and ultimately supports broader adoption across the industry. Taken together, these developments reinforce our view that the regulatory environment is moving in the right direction and that our timing is perfect, very well-aligned with the broader industry tailwinds. With that said, I'd like to now pass it over to our CFO, Brian Merker, to discuss the financials in more detail. Brian, over to you.

Great. Thanks, Brandon, and good morning, everyone. On the financial side, we closed the quarter with $20 million in cash, continuing with our healthy liquidity and longer-term working capital availability. We always strive to be patient and careful with our fundraising activity. Using a combination of our at-the-market program, non-dilutive grants, and warrant exercises, we have raised $25 million at an average price of $2.03 per share thus far into the year. This has put us in a position to focus on our engineering progress and the development of important partnerships as we plan for the manufacturing phase of our business. These Q3 financial results reflect our continued investment in aircraft design, build, and plan certification. More specifically, total operating expenditures were $7.6 million for the quarter, up from $3.6 million in the same period last year.

Notably, Admin costs were largely flat, with our spend on Aircraft Development costs up from $0.4 million a year ago to $4.3 million in the current period. Similarly, on a year-to-date basis, operating costs nearly doubled to $19 million from $10 million this time last year. Again, with Admin costs relatively flat, while our Aircraft Development costs increased from $1.2 million to $9.6 million. These Aircraft Development costs are directly related to people, components, and tooling connected to building our full-scale aircraft that we expect to complete by the end of 2026. On the liquidity side, cash used in operations totaled $12 million for the nine-month period ending February 28. This was higher as compared to the same period the prior year, driven by our amplified investment in building our full-scale aircraft.

Looking ahead, we're anticipating our cash from operations to remain consistent or modestly increase as compared to the current Fiscal 2026 quarterly run rates through to the completion of our full-scale demonstrator aircraft. As Brandon noted, during the quarter, we engaged a well-recognized independent audit firm to conduct a comprehensive Cavorite X7 operating cost evaluation. This analysis focused on taking our aircraft performance, notably speed, range, and payload, and apply the cost to operate the machine to arrive at a reliable economic model for future customers. We believe as we begin to target aircraft buyers over the next year, that this evaluation will provide the substantive corroboration customers need to commit to the Cavorite X7.

In particular, the $0.97 cost per available seat mile is materially favorable as compared to our peers in the AAM space, who are publicizing a $3-$5 operating cost per seat mile range, as well as comparable legacy helicopters that have costs in the $4-$7 per seat mile range. As a result, our aircraft is expected to deliver up to 75% lower operating costs versus other all-electric advanced air mobility aircraft being produced by our peers and versus conventional helicopters, all while offering the superior speed, range, and payload capacity that we've been talking about. We do expect these significant operating cost efficiencies will resonate with aircraft operators. These are not incremental improvements. They are meaningful product differentiators that we believe will be critical as the industry moves towards commercialization.

Finally, as we look ahead, our focus remains on disciplined execution, advancing our full-scale aircraft flight program, furthering our certification efforts, and preparing our customers for commercial flight ops prior to 2030. With our strong liquidity, proven technology, and outstanding talent, I'm eagerly anticipating these developments over the next several quarters. That concludes my prepared remarks, and now I'll pass the call back to Brandon.

Thanks very much, Brian. In closing, we are very encouraged by the progress that we are making. We are advancing towards a clearly defined and highly meaningful milestone, the completion of our full-scale prototype by the end of the year. At the same time, we are expanding our team, deepening our partner ecosystem, and continuing to engage with potential strategic partners that could further accelerate our path forward. More broadly, we believe that the industry is beginning to converge around the realities of what it takes to build a commercially viable aircraft. With safety being one of our top priorities alongside performance, economics, and operational flexibility, we believe our hybrid-electric and fan-in-wing architecture positions us very well on all three fronts. This is truly an exciting time for Horizon Aircraft.

Our team is growing, our momentum is building, and we truly believe that we are focused on executing against the milestones that we believe will create long-term value for our shareholders. That concludes our prepared remarks, and I'd like now to pass the call back to the operator to begin the Q&A session.

Thank you very much, Brandon. We are now opening the floor for questions. If you would like to ask a question, you can press star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For any participants using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions. Thank you. Our first question is coming from Dick Ryan of Oak Ridge Financial. Dick, your line is live.

Great. Thank you. Congratulations, guys, on the continued progress you're making. Hey, Brandon, just a question. I mean, you've ticked off a couple key collaborations, partnerships. I'm wondering if you could give us just a high-level of what should we be expecting next. I mean, what are key collaborations that you need to check off over the next six months-nine months as you get ready for early 2027? I mean, are we talking electronics, more in manufacturing, power distribution? Can you give us maybe just a rough roadmap of what we should be expecting?

Well, I'll say for those who don't know, the Canadian advanced aerospace ecosystem is pretty substantial. One of the few countries in the world that has full design, production, certification capability. Companies like Bombardier and Bombardier Defense, Mitsubishi Heavy Industries, like we talked about, CAE. There are a lot of really vibrant and significant capabilities up here in Canada. That trickles down into supply chain realities as well. You're talking a lot about power electronics, et cetera. Those are a lot of supply chain questions. The great thing about 2026 is, through the excellent work of a lot of the other companies, a lot of these technologies are advancing quite well. We get to use some of these advanced technologies and the partnerships that offer these advanced technologies.

We can't announce anything, of course, but it would be silly if we weren't talking to the Bombardiers and the Bombardier Defenses, and other Mitsubishi parts of their company, it's a very large company, to build out capacity for engineering and production, primarily. We have a lot of extremely rich talent inside the company. Like I said, we're surrounded by an awesome ecosystem that can support all aspects of development, engineering, production, certification.

Great. Thank you for that. You mentioned down the road, one of the key differentiators would be the ability to fly into known icing conditions. When would that testing kind of kick in? What's the timing of that?

This bears emphasis, right? There are only a handful of helicopters, and there won't be any VTOLs, I don't think, that will be able to be certified for flight into clouds, let alone flight into known icing. Any sort of open rotor technology is extremely difficult to get certification where ice can build up on the main rotor system and then shed into the other blades. There's only, like I said, a handful of helicopters in the world that can do this. This makes us very unique. If people can take a look at one of our latest press releases, the INSAT grant for up to $10.4 million takes a look at anti-icing technologies. We had planned from the beginning to incorporate anti-icing and de-icing technologies across the aircraft, the main propeller, the aircraft intake, all of the main wings, and the canards.

From the very beginning, this aircraft is designed really, really tough to be able to fly in IFR conditions, in clouds, and in icing. Now, to test it, we happen to have the ACE Climatic Wind Tunnel next door to us. Think a wind tunnel where you can drop the temperatures down to -40 degrees, add precipitation, see how it sticks to the aircraft. Through our grant, we're testing all sorts of icephobic coatings, electrothermal coatings on the wings. Of course, with the turbine engine on board, we have bleed air, warm bleed air, to use conventional de-icing that just typical commercial aircraft use now. A lot of different layers, a lot of possibilities, and a great place to test to make this machine really tough.

Great. Good to hear. Thank you.

Yep. Thanks, Dick.

Thank you very much. Our next question is coming from Josh Sullivan of JonesTrading. Josh, your line is live.

Hey, good morning.

Hi, Josh.

On flight testing in 2027, can you just walk us through roughly on the schedule, ground testing to flight? When might you start adding additional aircraft, or how long are you looking to test the first aircraft to kind of inform the design improvements on any subsequent aircraft for certification?

Yeah. I've talked about this before. Okay, the ground testing is the first thing you do. You get the aircraft assembled, you start doing the basic ground testing, and then it'll turn into high-speed taxi testing, bunny hops down the runway. It would make sense for us to have two aircraft. Again, I've spoken about this before. We haven't made any official announcements. Maybe one is a conventional aircraft without all the hardware in the wings, but properly mass-balanced, where we could test it in a very conventional way, while we concurrently test like a VTOL version of the aircraft and doing hover testing and then slowly move towards transition.

You approach the transition phase from both ends of the spectrum, the high-speed spectrum and the low-speed spectrum, and that really doubles up the efficiency of any flight test program. As for the milestones, we haven't announced exactly what the flight test milestones are, but we have announced that we want to be through flight testing and certification and have aircraft rollout prior to 2030 or in and around 2030. That can allow people to kind of construct a timeline of flight testing in their minds, if that makes any sense.

Sure. Just one on the X7's projected operating study cost that you guys did. The assumptions on passenger load, range, maintenance, where do you feel you're most differentiated? Again, the overall cost is fantastic, but on the individual metrics versus other AAM, just where would you highlight?

Well, essentially, to summarize it comes down to the fact that, okay, against helicopters, we'll take those first. We're about 20%-30% cheaper to operate per hour, but in that hour, we go about 1.8-2 times further with our speed as a helicopter in a much more efficient fashion. Those two things multiply together to create a situation where on a per mile basis, so if you're just moving critical goods and people around the planet, which about half the helicopter fleet does in the world, then that's very compelling. Like I said, it's been audited by KPMG. Versus helicopters, it's pretty simple. The aircraft is much more slick en route, it's faster, and it has lower operating costs per unit hour. Helicopters are expensive to maintain. Their per hour maintenance costs are pretty significant.

A lot of single-point-of-failure type of stuff, the main rotor system, if anything goes wrong, and it's going to be the same for eVTOL. I think there's a lot of optimism with the all-electric folks in terms of their maintenance costs with the complex rotating mechanisms and the concordant maintenance on the rotor systems and the battery costs. Essentially, versus our peers, we simply travel much further in a much more efficient way. The fuel source that we have on board is 40 times more energy-dense, and that translates directly into economics. You add on our efficiency en route and essentially our very low-drag configuration, where we're just flying like a normal aircraft using normal commercial routes in the sky. That's kind of our secret sauce right there.

Insurance companies love the fact that we fly around 98% of the time, just like a normal aircraft that they know how to insure. They see the VTOL portion of the aircraft as just another additional layer of safety over and above what a traditional commercial aircraft might have. On the insurance side, that helps. Again, on the speed and the maintenance side, that really helps. We don't need any infrastructure, so we can land anywhere. We don't need to pay these hefty fees at a vertiport when we land to take advantage of their high-power charging infrastructure. Again, our aircraft being hybrid-electric, it can recharge itself. Finally, we have significantly less batteries on board. Now, regardless of what the other companies tell you, these batteries are very expensive in some of their machines. I can't get into the details.

I know a little bit too much as an ex-military guy with competitive intelligence sort of baked into me. These are very expensive battery packs. They're going to be changed out more often than people think, and we have significantly less batteries on board. That combined with the simplified structure compared to the rest of the folks and lower maintenance costs overall, it all kind of stacks up together to produce kind of a very compelling cost comparison. That's where all the numbers kind of come from on a high level. We can take you through under NDA, of course, the detailed KPMG audited reports.

Perfect. Thank you for all the details. Have a good one.

Okay. Thanks, Josh.

Thank you very much. Just a reminder, if there will be any more questions, you can still join the queue by pressing star one on your phone keypad now. Our next question is coming from Brian Lantier of Zacks Small-Cap Research. Brian, your line is live.

Great. Thanks. Brandon, I was wondering, you've been really active on the conference circuit. I was wondering if you've received any particular feedback from industries or operators that has helped shape the redesign that you announced about a month ago.

Yeah. What we have received from feedback, it's a great question, Brian, thank you, is that they appreciate our approach. When we talk to operators, even the initially skeptical ones that have fleets of helicopters that are operating, the more they talk to us, the more their heads start to nod and go, "Wow, you guys have really thought this through." My father has been building airplanes since he was 14 years old. I've been flying them since I was three years old. We live the operational realities of fixing these aircraft in remote locations, keeping the maintenance, repair, and overhaul costs low, keeping things simple as possible, really designing an airplane that is laser-focused on the operators. The feedback is almost universally positive when they see how it operates and the potential economic advantages.

Again, a mining company I was talking to, they had a fleet of 15 helicopters just moving stuff around the North without infrastructure to land. That's a very expensive thing to do. Our aircraft could immediately drop their costs very very significantly. Oh, by the way, get a mine set up and much quicker because it's moving around a lot faster than typical helicopters, yeah, in a much more serviceable way. It's quite compelling when you talk to these operators. Like I said, even the initially skeptical ones, where by the end, the feedback is almost universally positive. Now, pertaining to the OML changes, that is just us making the airplane better. We saw an opportunity through testing on the canards. For example, we are able to lose an entire canard side.

We didn't need the dual redundancy of having two fans per canard, so we could go down to one and make the aircraft faster, slicker, and more stable. I remind everyone that each one of those fan units has two electric motors in it for redundancy. Should the worst happen and an entire canard fail, it is still able to hover just fine. Its robustness was a little higher than we realized during our flight testing of the large-scale prototype, and so we were able to make the design just a little more efficient. Drop one fan from each wing to make five fans in each wing and make the canard a little more efficient as well. It's slicker, faster, and just as safe as before.

Okay, great. I know this is a really recent bit of news, but in light of the Prime Minister's remarks the other day that the days of $0.70 of every dollar of military spending in Canada coming to the U.S. are over, has that caused any internal conversations at New Horizon about what ways that you could capitalize on that in the future?

Oh, it's such a great scenario for us. Again, I say that fully realizing it's a very complicated world, and I feel bad for the folks that are caught in the mess. We've realized in Canada, of course, that we have to focus on our own sovereign defense, and their spending up to 5% means a very significant opportunity. Actually, I flew as a fighter pilot with the Secretary of State right now, who's trying to figure out how to buy Canadian, procure indigenous capabilities that we're producing up here. We're also talking to a lot of very interesting folks on the defense side in the U.S. as well. A lot of tailwinds like we alluded to, and yes, the short answer is yes. This is a fantastic time to be exactly where we are right now.

Yeah. Okay, great. One quick question for Brian. Were there any one-time expenses in the operating costs, the R&D side, related to some of the startups with either RAMPF or North Aircraft?

Yeah, I don't know if I would define them as one-time costs. I think you're going to see those types of costs, and they certainly grew in the quarter as you've seen, or you will see if you haven't read the Q yet, but those will be ongoing as we look to complete the full-scale aircraft. They're supporting us, as Brandon was talking about, on the main structure and the wings, flight controls, and that will continue to be the case until the aircraft's completed.

Okay. All right, great. Thanks.

Thank you very much. Well, we have reached the end of our phone line questions. We would now like to turn the call over to Matt Chesler from Investor Relations to answer questions from the investors that were submitted in advance or via the webcast chat feature.

Thank you very much. Let's start with a first question around the potential military design for the X7, following on Brian's most recent question. Is the full-scale prototype being designed with any defense-specific requirements in mind?

The answer is absolutely. Matt, sorry, go ahead.

No, go ahead, Brandon.

Yeah. The answer is absolutely. We have a number of advantages for military use. Specifically, I would've loved to have this capability in the Air Force when I was flying jets. Often we have missions where we have to get in and out of a place without any sort of runway infrastructure. Think dropping off Special Forces troops or removing a casualty or an injured person or a pilot from beyond enemy lines that has ejected. That just happened, right? Helicopters, relatively speaking to jets that I flew, are very slow, 120, 140 knots max. Having a capability to land vertically but fly much faster and in a much stealthier way than a helicopter beating the air to death as it travels behind enemy lines, it is immediately an aircraft that could be used across a number of missions in the military.

Another advantage is a hybrid-electric aircraft has a certain amount of power generation on board that allows very significant sensor payloads to be powered. We're talking to a number of different defense prime contractors, and of course, the services themselves, about different surveillance options, different payloads that it could support. Yeah. Essentially a helicopter capability that's twice as fast, that has sensor payload support built in, and it's baked into our DNA. Like I said, I would've loved to have this capability. We're preparing the aircraft for dual use.

Next, a question for Brian on capital and cash runway. Nadia first is asking if you could provide some clarity on the current cash runway and whether additional capital will be required before initiating full-scale flight testing in early 2027. Just a question around how we're approaching future funding while managing potential shareholder dilution.

Got it. Okay. Thanks, Nadia, for that question. It's an important one. I would say with $20 million of cash that we have currently, and I look at the cash we've used in operations on a TTM basis, which is about $14 million, we believe we have another one to two years of liquidity on the balance sheet today. We expect as we complete the full-scale aircraft for the next several quarters, much like the few advanced air mobility peers that have achieved that milestone, there's going to be significantly increased interest from the investment community, as well as manufacturing partners and government bodies. I wouldn't say we're in any hurry to raise funds right now. Rather, we can be patient.

We'll certainly continue to bring in non-dilutive funding from our friends in the different government bodies, continue to build rapport with potential partners that may wish to deploy capital to Horizon, and certainly, focus on executing our technical milestones. That's not to say that we won't have to eventually raise money, but we have been, and we will continue to be careful about the timing and the terms so as to respect our existing shareholder group. We expect we can get to the next major milestone, which as Brandon has been speaking about, completing that full-scale aircraft, and without urgent fundraising efforts.

Thank you. If we could double-click on the milestones, there's a follow-up question around execution milestones, prior to the achievement of the ability to engage in full-scale flight testing. What does that potentially look like over the balance of the year?

The first thing is locking down all the suppliers. We have the majority of that sorted out, which is great. It's building up test rigs. We've already tested a significant amount of the core technology. Full-scale fan units are producing requisite thrust, staying cool, building out wire harnesses, checking the main structures, building out the main structures as we're doing right now. Yeah, preparing to assemble the aircraft. Building out test rigs, getting the subsystems completed for integration alongside when the fuselage and the wings arrive, then we have something to put in them that has been fully tested and is ready to go to be put in the aircraft and tested in situ in the aircraft.

We're concurrently working one of the most challenging things for any advanced air mobility company. Building one of these machines is flight controls. We are looking to partner with a very significant group for flight control development, so more to follow on that. Yeah. It all comes together to be able to be assembled and rolled out of the hangar, like you said, in the next nine months or so. Pretty exciting times. Hopefully, that answered the question.

Hope so too. We have a question from Maxim Riley, who is asking if we could quantify the scope of our partnership with MHIRJ. Is this a limited engineering engagement or part of a longer-term certification and flight testing strategy?

Well, I have to be careful what I say here. I would encourage everyone to take a look at the Mitsubishi Corporation writ large. It is a multinational company with very significant capabilities across a number of commercial and defense applications. In Canada, MHIRJ, again, has full clean-sheet design, production, certification, engineering capability. That's just alone, that one small piece of Mitsubishi is quite exciting. MHICA is another very interesting part of the company that has production capability, has facilities that are attractive as well in the Greater Toronto Area. Writ large, Mitsubishi has capital arms. They're interested in investment across a number of different technologies, and they have the pockets to be able to do so. Right now it is essentially an engineering and expertise partnership. Of course, there's potential there for a lot more.

Okay. That's great. With that, Brandon, I think I'm going to turn the call back over to you right now for some concluding remarks. I did want to say to all of our shareholders, thank you very much for submitting in your questions. If we didn't get to them on today's call, let's follow up offline. Thank you.

Okay. Yeah. Thanks, Matt. We really appreciate everyone, so thanks for attending. As always, we appreciate your interest and support, and we really do look forward to updating you on our progress in the exciting quarters ahead of us. Thanks, all.

Thank you very much. This does conclude today's conference, and you may disconnect your lines at this time. Thank you for your participation.