S-1: New Horizon Aircraft Eyes Public Markets with $155 Million Share and Warrant Offering

New Horizon Aircraft Ltd. seeks to raise up to $155 million through a primary and secondary offering of Class A ordinary shares and warrants, aiming to fund its eVTOL aircraft development and provide liquidity for existing securityholders.

Summary

• New Horizon Aircraft Ltd. is registering for the primary issuance of up to 12,065,375 Class A ordinary shares upon warrant exercises and a secondary offering of up to 9,950,444 Class A ordinary shares and 565,375 placement warrants by selling securityholders.
• The company will receive proceeds only from the exercise of warrants, potentially up to $138.8 million, which will be used for general corporate purposes.
• Selling securityholders, including the Sponsor, PIPE investors, and EF Hutton LLC, may offer and sell their shares and warrants from time to time.
• The registration aims to satisfy certain registration rights granted by the company.
• New Horizon Aircraft Ltd. completed a business combination with Pono Capital Three, Inc. on January 12, 2024, and its securities are listed on the Nasdaq Capital Market under the symbols HOVR and HOVRW.
• The company is an emerging growth company and highlights the speculative nature and high risks associated with investing in its securities.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While it highlights the potential of the eVTOL market and the company's technology, it also emphasizes the significant risks, ongoing losses, and the need for further capital. The overall tone is cautiously optimistic but heavily caveated.

Positives

• The company will receive proceeds from warrant exercises, providing capital for operations.
• Listing on the Nasdaq Capital Market provides increased visibility.
• The company has a dual use business model with both civilian and military applications.

Negatives

• The company will not receive any proceeds from the sale of Common Shares or Warrants by the Selling Securityholders.
• The company is an emerging growth company, which may make its shares less attractive to some investors.
• The company highlights the speculative nature and high risks associated with investing in its securities.

Risks

• The company has incurred losses and expects to incur significant expenses and continuing losses for the foreseeable future, and it may not achieve or maintain profitability.
• 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.
• The success of the company's business depends on the safety and positive perception of its aircraft, the establishment of strategic relationships, and of its ability to effectively market and sell aircraft that will be used in Regional Air Mobility services.
• 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.
• The company may be unable to adequately control the costs associated with its pre-launch operations, and its costs will continue to be significant after it commences operations.
• The company is a relatively small company in comparison to current industry leaders in the Regional Air Mobility market. The company may experience difficulties in managing its growth.
• 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 of the Cavorite X7 aircraft, would adversely impact the company's business plan and strategic growth plan and its financial condition.
• The company's business depends substantially on the continuing efforts of its key employees and qualified personnel; its operations may be severely disrupted if it loses their services.
• The company is subject to substantial regulation and unfavorable changes to, or its failure to comply with, these regulations could substantially harm its business and operating results.
• The company will need to improve its operational and financial systems to support its expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect its billing and reporting.
• The need to raise additional capital.
• The company will rely on third-party suppliers and strategic parties for the provision and development of key emerging technologies, components and materials used in its Cavorite X7 aircraft, such as the lithium-ion batteries that will help to power the aircraft, a significant number of which may be single or limited source suppliers.
• The company may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position.
• The company may need to defend itself against intellectual property infringement claims.
• 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 the company's business and operating results.
• The company may be subject to governmental export and import control laws and regulations as it expands its suppliers and commercial operations outside Canada, the U.S. and Europe.
• British Columbia law and the company's Articles will 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.
• The company's management team may not successfully or efficiently manage its transition to being a public company.
• An active market for the company's securities may not develop, which would adversely affect the liquidity and price of the company's securities.
• Failure to meet Nasdaqs continued listing requirements could result in a delisting of the company's Common Shares and Public Warrants.
• The market price for the company's Common Shares may decline following the Business Combination.
• The Common Share price may fluctuate and you could lose all or part of your investment as a result.
• The company's shareholders may experience dilution in the future.
• There is no guarantee that the Warrants will ever be in the money; they may expire worthless or the terms of Warrants may be amended; and
• The future exercise of registration rights may adversely affect the market price of the Common Shares.

Future Outlook

The company anticipates delivering its first Cavorite X7 eVTOL aircraft to customers in 2027, pending receipt of regulatory approval and certification.

Industry Context

The document references Morgan Stanley projections that the eVTOL aircraft market could reach $1 trillion by 2040 and $9 trillion by 2050, indicating significant potential growth in the Advanced Air Mobility (AAM) market.

Comparison to Industry Standards

• The document mentions that the Cavorite X7 is expected to travel at speeds up to 250 miles per hour at a range over 500 miles, which the company believes will be a disruptive force to RAM travel.
• The document states that the Cavorite X7 will be cheaper to own and operate than helicopters with similar payload characteristics and will travel almost twice as fast.
• The document states that 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 its competitors.

Stakeholder Impact

• Shareholders may experience dilution in the future.
• The market price of the company's Common Shares may decline following the Business Combination.
• The Common Share price may fluctuate and you could lose all or part of your investment as a result.

Next Steps

• Complete detailed design of the full-scale Cavorite X7 aircraft.
• Continue rigorous testing of the 50%-scale prototype.
• Obtain necessary certification and regulatory approvals.
• Establish and expand customer base.
• Improve and maintain manufacturing efficiency.
• Secure, protect and defend intellectual property.

Key Dates

Keywords

eVTOL, aircraft, shares, warrants, offering, New Horizon Aircraft, Regional Air Mobility, HOVR, Business Combination, Pono