TORONTO - New Horizon Aircraft Ltd. (NASDAQ: HOVR), a developer of hybrid electric Vertical TakeOff and Landing (eVTOL) aircraft, has announced the termination of its forward purchase agreement (FPA) with Meteora Capital Partners (WA:CPAP), LP. This termination is expected to result in a gain of approximately $20-25 million for the company's second quarter ending November 30, 2024.
The original FPA, established in August 2023 prior to the completion of a SPAC merger, has been mutually dissolved. As per the termination agreement, Horizon Aircraft will pay Meteora a $200,000 termination fee and has agreed to issue 200,000 shares of common stock contingent on the filing of a resale registration statement within the next 24 months.
Horizon Aircraft is an aerospace engineering firm focusing on the development of the Cavorite X7, one of the world's first hybrid eVTOL aircraft. The company prioritizes safety, performance, and utility in its designs, aiming to address a broad spectrum of early use cases upon successful testing and certification.
The termination of the FPA removes a financing structure that was previously in place, which the company suggests may reduce the overhang often associated with special purpose acquisition companies (SPACs).
The information disclosed is based on a press release statement and contains forward-looking statements regarding the company's future plans and expected performance. These statements are subject to risks and uncertainties, and actual results may differ materially. Horizon Aircraft has not provided any assurance that it will meet the expectations outlined in its forward-looking statements.
Investors and the public are advised that the company's future operations, including the development and potential market entry of the Cavorite X7 eVTOL, are subject to various factors, including market competition, technology evolution, regulatory changes, and the need for additional capital.
In other recent news, New Horizon Aircraft faces potential delisting from the Nasdaq due to failure to meet the net income standard, market value of listed securities, and stockholders' equity. The company has requested a hearing with the Nasdaq Hearings Panel to appeal this decision. Meanwhile, EF Hutton initiated coverage on New Horizon Aircraft with a Buy rating, emphasizing the company's potential for revenue generation and its current financial position.
The company has also amended its warrant terms and appointed Tom Brassington, a veteran from eVTOL developer Lilium, as its new Chief Technology Officer. In a bid to raise capital, New Horizon Aircraft has set the terms for a public offering expected to yield approximately $2.9 million.
In the realm of product development, the company has reported substantial progress in its eVTOL prototype testing. The Cavorite X7 eVTOL design is on track for completion and testing by 2026. These are the recent developments with New Horizon Aircraft.
InvestingPro Insights
Recent data from InvestingPro sheds light on New Horizon Aircraft Ltd.'s (NASDAQ: HOVR) financial position and market performance, providing context to the company's recent termination of its forward purchase agreement.
According to InvestingPro, HOVR's market capitalization stands at a modest $6.68 million, reflecting the company's early-stage status in the competitive eVTOL market. The company's financial health appears precarious, with InvestingPro data showing an adjusted operating income of -$5.16 million for the last twelve months as of Q1 2025. This aligns with an InvestingPro Tip indicating that HOVR is "quickly burning through cash," which could explain the company's decision to terminate the FPA and potentially seek alternative financing options.
The stock's performance has been notably weak, with InvestingPro reporting a one-year price total return of -97.44% as of the latest data. This significant decline is consistent with another InvestingPro Tip stating that the "price has fallen significantly over the last year." The recent termination of the FPA and the expected gain of $20-25 million may provide some financial relief, but it's clear that HOVR faces substantial challenges in its pursuit of bringing the Cavorite X7 to market.
Investors considering HOVR should note that InvestingPro offers 14 additional tips for this stock, providing a more comprehensive analysis of the company's prospects and risks. These insights could be particularly valuable given the volatile nature of the eVTOL sector and HOVR's current financial position.
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