New Horizon Aircraft Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft Fiscal Second Quarter 2026 Earnings Conference Call. All participants are present in 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. If you would like to ask a question during this webcast, please click on the Ask Question box on the left side of your screen, type in your question, and hit Submit. 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 with Investor Relations. Matt, please go ahead.

Thank you, Operator, and good morning, everyone. Joining me on the call today are Horizon Aircraft's CEO, Brandon Robinson, and the company's CFO, Brian Merker. Before we get started, I would like to remind you that during today's call, we'll be making forward-looking statements. 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 New Horizons Aircraft's annual report on Form 10-K for the fiscal year ended May 31, 2025, and filed on August 22, 2025, as well as the Form 10-Q filed with the SEC today, all with the Securities and Exchange Commission, as well as other documents filed by New Horizons Aircraft with the SEC from time to time. Any forward-looking statements we make will be based on assumptions as of today. We undertake no obligation to update these statements as a result of new information or future events. And now, with all that, I would like to turn the call over to our CEO, Brandon Robinson, for his prepared remarks. Brandon, please go ahead.

Thanks, Matt, and good morning, everyone, and thank you for joining us today. This is truly a meaningful moment for Horizon Aircraft, as it is our first ever earnings call as a public company. I would like to start by welcoming our shareholders and potential investors and thanking our longstanding supporters for being with us at this exciting stage of our journey. As most of you know, we believe deeply in being transparent, direct, and realistic about both the opportunity in front of us and the work required to get there. Development of an advanced aircraft is complex, iterative, and progress is carefully earned milestone by milestone, as you've seen. Our goal in these calls is to clearly explain what we are building, why it matters, and how we intend to execute. So I'll start with the company overview and strategic positioning. So Ryzen Aircraft is developing the Cavarite X7, as many of you know. It's a unique eVTOL aircraft that we believe is fundamentally differentiated from the all-electric designs that dominate the current eVTOL landscape. First, our aircraft is hybrid electric-powered. Carrying a fuel source onboard the aircraft that is more than 40 times the energy density of the best aerospace batteries just made a lot of sense for our practical team. As such, the X-7 will be able to recharge itself airborne after landing, and of course, operate independent of any ground charging infrastructure. Second, by having a significant power generation element onboard alongside one of the world's most proven turbine engines, We aim to further the X-7's operational flexibility by seeking flight into known icing certification, very unique in this space. We are designing an aircraft for all weather IFR operations, just like the commercial aircraft that have become by far the safest means of travel for people traveling regional distances. Third, apart from its outstanding performance characteristics, the X-7 is being designed with a focus on safety, operational costs, and durability. These three pillars are essential for any viable air operation and means to deliver a product that will be widely adopted across the world in this rapidly expanding market. Finally, we are not planning to operate an air taxi business. We remain laser focused on being an OEM and building the very best modern VTOL aircraft that will provide operators and customers with a safe, economic, and enjoyable experience. So a bit on our technical progress and development roadmap. From a development standpoint, Horizon Aircraft continues to build momentum. Last May, as many of you know, we completed a successful full-wing transition flight of our large-scale prototype, a milestone achieved only by a small number of eVTOL developers globally. That achievement significantly de-risked our technical roadmap and provided valuable data that is now being applied directly to the full-scale Cabrite X7 program. Over the last two quarters, we have significantly expanded our technical and engineering team, added key personnel with deep experience in aerodynamics, aerostructures, propulsion, and system integration. The team expansion supports our transition from the demonstration aircraft to full prototype development, full-scale prototype development. And given our design development and engineering pathway ahead, we expect to continue adding key technical personnel so that we stay on track with our expected milestones. Our near-term goal is to complete the design and manufacture of the full-scale X-7 prototype by the end of 2026, with initial testing targeted for early 2027. It's a critical milestone and our top priority that underpins a future certification, customer engagement, and potential revenue opportunities. We have already made strong progress in recent months across a number of fronts on the progression of the X7 development program. Our collaboration with Pratt & Whitney, a global recognized leader in propulsion systems, represents an important validation of our technical approach and provides us with access to deep expertise as we advance DX7's propulsion architecture. This is a strategically significant step as we advance our full-scale prototype program. Last month, we partnered with Motion Applied, former high-performance technology arm of Formula One's McLaren Group. Pretty exciting. Now an independent Tier 1 technology provider, Motion Applied is strengthening our capabilities in power electronics, advanced systems integration, testing, and analysis. As aircraft development continues to accelerate, Having the right technical partners becomes increasingly important, and Motion Applied adds world-class depth to our engineering ecosystem. With an INSAT program, Initiative for Sustainable Aviation Technology, with our INSAT program grant awarded to Horizon Aircraft and our two collaborative partners for an estimated $10.5 million all-weather eVTOL project, we will directly advance our all-weather operational pathway. As previously highlighted, All weather capability is a key differentiator for our aircraft and a critical requirement for many commercial and military missions. The grant is particularly meaningful for Horizon Aircraft as it supports our development work without shareholder dilution, something we are especially mindful of going forward, and also a source of non-diluted funding we expect to continue pursuing in the years ahead. We'll go on to our financial position and capital runway now, and Brian will have more to say on this in a little bit. From a financial standpoint, though, we are well-funded with a cash balance of more than $24 million in the bank that provides us with our strongest liquidity position ever. We believe this is sufficient to fund the completion of our full-scale aircraft within the next 12 months and begin initial ground testing in early 2027, as I mentioned. Our strong balance sheet allows us the ability to continue executing our efficient development plan without feeling pressured into suboptimal financing decisions, while also giving us the flexibility as we evaluate strategic opportunities going forward. We continue to engage in ongoing discussions with several potential strategic partners, including aerospace and defense organizations regarding multiple paths forward. While we are encouraged by the level of interest, we remain disciplined in waiting for the right opportunity at the right time. and our strong cash position gives us the flexibility to prioritize long-term value creation over short-term announcements. On the industry perspective and differentiation, stepping back we believe the broader eVTOL industry is entering an interesting, much more sophisticated phase. As the excitement around early concepts matures, real-world considerations, speed, range, payload, required infrastructure, cost, operational robustness and flexibility These are all becoming increasingly important. We believe that this is where Horizon Aircraft stands apart. A hybrid electric gas eVTOL like the Calvary X7 will not be limited to being a quote-unquote taxi in the sky. It is designed to connect cities, move critical cargo, support medical evacuation, and serve defense and government missions. Markets that we believe will develop sooner and scale faster than many short-range infrastructure-dependent all-electric VTOL uses. With an expected cruising speed of almost 250 miles an hour, an estimated 500 mile range with fuel reserves and a 1500 pound useful load, the X-7 will have the potential to fly almost twice the speed of a comparable helicopter with significantly lower operating costs. We believe this positions Horizon Aircraft uniquely with the advanced air mobility ecosystem, a faster, safer, more cost-effective helicopter capability that has the potential to be extremely disruptive in this rapidly growing market. This is really an exciting time for the industry and for our company as it matures, and we are well-positioned to continue our rapid upward trajectory in 2026. So with that being said, I'd like to now pass it over to our CFO, Brian Merker, to discuss the financials in more detail. Brian, take it away.

Perfect. Thanks, Brandon. And good morning, everyone. When we designed this X-7 aircraft, we consciously decided to be a pure play OEM and focus on manufacturing a superior machine that would outperform its competition in all significant operating metrics. This model is not only efficient and cost-effective, but it allows us to focus on building this aircraft and avoiding distractions associated with operating aircrafts and building out the related infrastructure. Simply put, we're going to provide existing aircraft operators with an advanced machine for servicing their customers. With our team delivering the significant advancements that Brandon noted, our core focus from a financial perspective is ensuring we're operating from a position of strength in connection with that objective. We have significantly improved our liquidity position over the last quarter. We did close the quarter with more than $24 million in cash, by far our healthiest balance sheet ever. We always strive to be patient and careful with our fundraising activity, and we currently use a combination of the at-the-market program, non-dilutive funding, and warrant exercises. During the quarter, we raised more than $11 million at an average price of $281 per share. We often hear from government, commercial, and other potential strategic partners that liquidity is an important consideration. They understand the capital-intensive nature of our industry and want to work with partners who will be around for decades to come. We believe that's us, and as Brandon indicated, we'll be evaluating potential strategic partners in 2026 from both an investment and manufacturing perspective. Ideal partners for us would be globally recognized organizations in the manufacturing and or defense sectors. Our Q2 financial results reflect our continued investment in aircraft design, build, and certification. More specifically, total operating expenses were $5.1 million for the quarter, up from $3.3 million in the same period in the prior year. Most notably, our administrative costs were slightly reduced on a year-over-year basis with our spend on aircraft development or R&D costs up from $0.4 million a year ago to $2.6 million in the current period. Similarly, on a year-to-date basis, we almost doubled our operating costs from $6 to $11 million, again with admin costs relatively flat while our development costs increased from $0.7 million to $5.3 million. These aircraft development costs are directly related to people, components, and tooling connected to building out our full-scale aircraft that we expect to complete in the next 12 months. As it relates to cash, cash used in operations totaled $5 million for the six-month period ending November 30. This was slightly higher as compared to the same period in the prior year. With the increase in operating costs, we are carefully managing our working capital And in addition, there were a number of non-cash costs recognized in the period that are often influenced by the appreciation of the stock price that we've observed. Now, as we look ahead, our focus remains on disciplined execution, advancing our full-scale aircraft flight program, furthering certification efforts, and preparing our customers for commercial flight operations prior to 2030. With our improved liquidity position, proven technology and outstanding talent, I'm confident we can deliver that long-term value to shareholders. And with that, I conclude my prepared remarks and I'll turn the call back to Brandon.

Thanks very much, Brian. Really exciting stuff. In closing, Horizon Aircraft enters the second half of fiscal 2026 with a differentiated aircraft and business model, a clear technical roadmap, strong tech research partners, and growing industry validation, a very solid financial foundation, and meaningful strategic discussions underway with more to come that could lead to significant value-creating opportunities for the company. There remains important work ahead. We're confident in our team, our strategy, our financial position, and our ability to execute. So that concludes our prepared remarks. I'd like to pass the call over to the operator to begin the exciting Q&A session.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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. Your first question for today is from Jason Colbert with D Barrel Capital. Your line is live.

Hi, guys. Congratulations on all the progress. Can you do me a favor and just break down how you see 2026 unfolding in terms of the technical hurdles to get to certification? That would be helpful. Thank you.

All right. Excellent question, Jason. Essentially, we are building the full-scale aircraft right now. So we'll have some announcements very shortly, but we are in active discussions with aerostructures folks, and we could have a fuselage and wings and empennage and tail all coming in, you know, kind of in the summer, going into the fall, and putting the full-scale aircraft together, which is a very significant technical milestone. En route to that and in parallel, we're going to be testing all the major subsystems. So vertical propulsion is already being tested. I've said that publicly. We have our PT6 that is going to be spinning up pretty soon. So the heartbeat of the aircraft, the turbine engine, work on that is going to begin very shortly. We have a lot of different aerostructures pieces and systems coming together. Of course, flight controls would be a natural thing to be putting a lot of effort into right now as it is going to be a fly-by-wire aircraft. So in short, a lot of subsystems and systems testing, aerostructures coming together. And again, we're aiming to have a full-scale aircraft together to begin ground testing in the beginning of 2027. Jason, great question. I hope that answers it.

It does. Thank you. And that's very exciting. But also, you know, congratulations on raising the capital. And I assume that a significant amount of that capital is going to get used towards the certification this year.

Yeah, we are starting certification work as we speak. So working through that you have to be technical to understand it, aircraft functional hazard analysis, writing a certification basis, speaking with Transport Canada. All of these activities are ongoing, of course. And as everyone knows, I'll remind them, we have a great partnership with Certification Centre Canada, the founders on our board of directors, Dr. John Marris. So if any crew understands what's ahead of us, we're well positioned to have visibility into all of that.

Terrific. Congratulations.

Thank you.

Your next question for today is from Dick Ryan with Oak Ridge Financial.

Thank you. Say, Brandon, focusing a little bit on the inset funding, I mean, being able to fly in all weather seems to be a pretty significant differentiator if and when that's achieved. Has that changed the cadence of your conversation with potential partners or, uh, operators out there of that capability that might set you apart from just the eVTOL sector?

Yeah, this is an excellent question. Nothing has changed for us. We have planned this from the very beginning. This is one of the things that we identified very early on in developing the concept for the X7. I come from an operational fighter pilot background. I flew jets in the Air Force for the better part of two decades. I have been in bad weather situations that were unpredicted. and bad weather, snowy weather, inadvertent icing, unexpected winds, head winds, etc., etc. Having the flexibility to have an aircraft that can fly in clouds under IFR certified routes just like the normal commercial aircraft was critically important for us to design right from the beginning. So essentially a tougher, more operationally flexible version of a VTOL that again operates independent of any sort of charging infrastructure whatsoever. So bad weather, cold weather, further distances, faster, more operational reserve energy and fuel, all of those resonate incredibly well with their operators. So when I go and talk to people that actually fly these helicopters and are looking at VTOL operations in the future, they breathe kind of a sigh of relief. It's not a fair weather machine that can only fly in sunny skies in Southern California. This is a beast of an aircraft that is going to be tough you know, built for the real world, as we say. So from the beginning, that was the plan, and that is coming together really well. As you know, we have a climatic wind tunnel that's pretty close to us. So when the time is right, we can build a wing section and take it to the climatic wind tunnel, turn it down to minus 40 degrees Fahrenheit, and throw all sorts of snow and freezing precipitation at it. So we're really well set up to make sure that this, you know, that aspiration turns into reality.

Okay, great to hear. On the competition side, you see the EV tall guys now talking about bringing hybrid airframes to market potentially. What's your 30,000-foot view of that effort?

Yeah, I mean, in many ways, a hybrid makes a lot of sense for these vehicles. I think You know, when they get into testing, they may or may not discover that, you know, it's difficult to get all of the flight testing in they need with an all-electric architecture. They're probably looking at the same things we looked at. They need to heat the cabin. They need extra fuel reserves at their destination in case something happens. And that all sort of chips away at a pure electric architecture. Now, the difficult thing for those folks is, in many ways, their VTOL aircraft are built around an all-electric architecture. These open rotor systems, high drag on route flights. So it won't be as big of a challenge for them to throw a hybrid system in there, but the overall architecture of their aircraft is really still designed for all electric operation. So we wish them the best. I think it's a really smart move for a lot of them to go hybrid. But, again, they'll be limited in upper end speed and range based on their ability to hybridize it correctly, if that makes any sense.

Sure, sure. Hey, Brian, one for you. OPEX, you talked about the increase, you know, so far year to date. Well, how should we be, you know, putting OPEX in a range as we go through the rest of 26 and into 27?

Thanks, Dick. So, yeah, that's... What I would expect, you know, is that the cost will gradually scale up as we add more people, as we add more tooling components to build out the full-scale aircraft and the certification program. We're going to see an increase in operating costs. Over the next couple of quarters, you'll see that gradually scale. And, you know, if we think about this time next year, we're probably looking at in the range of 2x in terms of total operating costs.

Okay. Great. And thanks for holding the first conference call. It's good to have the transparency as we move through the story. Thanks, guys.

I really appreciate the question. Thanks very much.

As a reminder, if you would like to ask a question, please press star 1.

I would now like to turn the call over to Matt Chesler from Investor Relations to moderate questions from the company shareholders that were submitted in advance or via the chat.

Thank you, operator. The first question or set of questions comes from Josh Sullivan at Jones Trading. Josh is asking, how might New Horizons benefit in terms of development timeline for the Cabaret X7 given the experience of other eVTOL competitors in the market's experience. He's asking if there's any major lessons learned or risks avoided that might speed the X7 to market relative to the experience of peers.

Yeah, great question from Josh. Essentially, the advanced air mobility market and eVTOL sort of group in general is a lot more sophisticated than it was sort of five years ago. People are testing real aircraft and working towards certification. It's going to be very exciting. The S-4 is going to be certified pretty soon from Joby. Archer will follow thereafter. Vertical is making some great progress as well. And I like 2025. It's a much more honest place where I get a lot more sophisticated questions back up five years, and it was a lot of fancy renderings. So the exciting thing is this is happening, which is fantastic. And there have been a lot of lessons learned along the way. There have been lessons learned on the aerostructure side. There have been lessons learned on the power electronic side. There have been lessons learned on the limitations of an all-electric architecture in terms of how batteries really operate and how much battery power you need on board to make a real operational machine work. And it's thousands of pounds for the pure electric folks. And so I think some of the lessons learned along the way have been a focus on the end user, on the operator, and building a machine that is laser focused on delivering superior performance across the board. So safer, faster, tougher machine that can operate in clouds, in cold weather, in bad weather. That laser focus on the end user has been a very significant lesson learned. If you build it, they will come approach. You build a machine because you can, and then you try to find a use for it. that's less successful than a company like our approach. And there's a few other ones out there that have listened to the operators, that viscerally understand what they need, and are building a machine that is going to be extremely useful for those folks, cost-effective and safe. And then its adoption will lead to, of course, a safer, more sustainable sort of future for all of us. So that's been the major lesson learned for us alongside a myriad of technical lessons that the whole group has learned. We could go through some of those, but again, they're highly technical, specific to aerostructures and electric motors and power electronics. But it's a cool place. There's some great tech, and it keeps getting better in 2025. Again, we like the focus on the end user as a significant lesson that has turned out well for us. Great question.

Well, Brandon, Josh has a follow-up question. He's asking, as we move forward and as you evaluate potential partnerships, what are you going to be prioritizing?

So, and again, we have nothing to announce right now, but I mean, the Canadian ecosystem in aerospace is excellent. You have Bombardier, Bombardier Defense, you have Mitsubishi Heavy Industries Regional Jet, so Bombardier is building the Global 8000 series now, MHIRJ and MHICA, so Mitsubishi has been doing a lot of excellent things in the aerospace world. It is a thriving ecosystem for aerospace up here, which is fantastic, and it would be CLE, if we weren't talking to all of those folks on the defense and commercial side, that would bring bench strength to manufacturing and production and certification of the aircraft. So looking forward in 2026, we're going to be pushing forward on those strategic discussions. And again, I can't announce anything now, but it would be great to have an announcement in 2026 of a major strategic partner to further de-risk the development going forward.

Okay, thank you. Let's move on to the next submitted question. Can you speak to both your airframe and battery packs? Are you going to design and build them internally or develop both via a partnership?

Yeah, so I mean, the great thing is, again, yeah, so great question. On the airframe side, of course, we have all of the technical skills to do it in-house. So we're designing the aerostructure, the outer mode line, iterating that, making sure we have a stable aircraft and the aerostructure can support all of the loads it needs to support. We have that ability in-house. Of course, it makes sense to get a second set of eyes on it. So again, there's a lot of really talented folks in the Canadian aerospace ecosystem that we can, once we're done, we can hand it off for a second set of eyes and an additional analysis, which is great. And again, on the airframe side, we're going to be hit and go on the build pretty soon, which is fantastic. So that would speak to the level of sophistication we already are at with the airframe. On the battery pack side, we're going to be looking to procure the cells. But we have a really cool opportunity and an exceptional design already, I think, for a unique battery pack that's simple, that's safe. And again, we don't need 2,000 pounds of batteries on board like all electric folks. We have a hybrid engine that is producing a lot of electricity. And just the way the aircraft hovers It does not burn as much energy as you might think in hover. And so those two unique aspects combine to give us a unique situation where it can be a little more flexible with our battery packs, choose chemistries that are a little stronger, that aren't as delicate, if that makes any sense, that are much more robust and not as prone to thermal events, really robust chemistries for high power drop and recharging rapidly. We will design our own battery packs at the cell level. We'll procure those from a world-class battery cell manufacturer. And of course, testing, testing, and more testing when it comes to all that stuff. Uniquely, our batteries are located away from the cockpit, so there's no giant lithium reservoir sitting underneath the passengers, which is nice. They're all out in the wings, as I mentioned before. Yeah, so that's an exciting one. So that covers the airframe. That covers the battery packs. Hopefully I got both of those pillars with that answer.

Brandon, there was another questioner that jumped into the queue for the telephone line. So I'm going to turn the call back briefly to the operator for that question, and then we'll pick up the submitted questions right after. Operator? Okay, sounds great.

Thank you. Your question is coming from Brian Lentier with Vax Small Cap Research.

Good morning, gentlemen. Really impressive update. I'm really happy to hear the progress on the financing side. A lot of the things I wanted to ask have already been covered, but if you could touch on some of the challenges and maybe the opportunities that you're seeing when it comes to recruiting right now and identifying the key technical talent. Does your location being headquartered in Canada provide any unique advantages when it comes to finding people to add to your technical team?

Yeah, so it is an exciting time in 2025. And again, Canada is unique insofar as that we have a thriving aerospace ecosystem up here and a lot of talent coming out of the technical colleges. So there's a lot of highly talented, highly skilled younger folks. We've just been through a bunch of co-ops And one of our co-ops is actually coming back for full-time work. I must say the skill coming out of some of these technical schools right now is impressive. I don't know whether it's YouTube and they can just learn on their own, whereas I had to go to some stuffy sort of library and just pick up one of the books with the most words in it, where now you can kind of get tutorials on everything. But they come as junior engineers with exceptional abilities, with an exceptional ability to learn. So that's been really exciting for us. So picking up the younger talent is great. And in the ecosystem right now, seems to be a bit of turnover at some of the larger companies. And so we do have access to some very significant senior level talent, which is fantastic. These folks are in high demand, but I think it's the uniqueness of our product, the focus of the team on just building an awesome prototype. And we're not the flashiest company from an IRPR perspective. We build stuff, and I think that is pretty exciting for a lot of the senior folks. And when they interview with us, they see a team that has some deep bench strength, that knows what they're doing, that has been there and done that, that has designed and built and flown clean sheet aircraft designs. And it's just a really cool project for them to work on in a very practical way. We're not trying to shoehorn tech in that doesn't make any sense. There's tons of room for innovation, and we move quickly. And that's been resonating with a lot of folks. Now, on the challenges side, Of course, again, these senior, most talented folks are in high demand as well. So we tend to compensate really well. And right now, Canada seems to be a nice place for a lot of folks to want to move to, given a lot of the geopolitical turmoil globally. So we've hired a lot of international folks. We've hired some folks from the U.S. And right now, it seems to be a pretty positive story for us. We're always going to struggle to build a team as fast as we want. But it's been, that's been a bright spot so far.

And I guess maybe along those lines, there's talk scuttled about in the industry that the confusion at the FAA right now is possibly going to push out some of the certification timelines for Jovian Archer, maybe out another six months. Could you talk about the fact that maybe your focus on working with Transport Canada is a potential advantage relative to companies focused squarely on working with the FAA?

Yeah, great question. I would say two things. One, that's the advantage of being kind of an eVTOL 2.0 company, right? We're not all carrying Nokia flip phones around, but a lot of folks have iPhones as Apple was kind of second mover in this space. Same with us. We're able to... avoid building this massive company when the regulatory framework for certification wasn't even in place. The cool thing now about designing one of these aircraft is that we have visibility through EASIS SC VTOL or the FAA 2117 BRAVO framework. We know exactly what we're designing to, which makes a ton of sense. Now, to speak specifically to the Canadian Transport Canada Civil Aviation Opportunity, TCCA is simply – a much smaller organization than the FAA, but it is not inundated with 600 companies coming at them with all these bizarre designs. And so it's a much quieter place. Essentially, we're a much bigger fish in a much smaller pond with a very agile Transport Canada Civil Aviation that now has visibility on a couple of different frameworks that have helped over the years kind of coalesce a structure for them to certify here in Canada. It is an opportunity for us. We're thankful for it, and we hope that that leads to a bit more of an efficient certification process. Again, partnered with Certification Center Canada, world experts in certifying aircraft.

Great. Thank you. And I'll echo the other comments. Really appreciate you guys having a call. It's great to have this back-and-forth conversation on the company at this stage.

Yeah, I really appreciate it.

Great questions, Brian. Thank you.

I would now like to hand the floor back to Matt to continue the questions.

Thank you, operator. Let's pick it up where we left off. Brian, here's a question for you from Gideon Ewers from Rotor Hub International. Gideon asks, says that you talked about building an aircraft that is faster with better range and speed and safety. How about seat per mile costs compared with existing platforms?

Okay, yeah, this is – perhaps this is the most important question as we think of – at least as I look ahead three or four years from now and try to separate some of the winners from the losers in this space. Cost per seat mile is one of those metrics that's commonly referenced in the industry. We looked at this in a fair amount of detail. We actually brought in a third party to look at this as well. Most of our peer group speak about $3 to $5 per seat mile. I believe they'll get there one day, although it's going to take some work, but they will probably get there. In our case, we are projecting a cost per seat mile around a buck. It sounds too good to be true, but it's largely a function of two things. One is the performance of the machine, and as we've alluded to earlier, our operating performance is significantly better than our peer group, and we're going twice as fast, for example. It's also a function of operating costs, and as a result of reduced maintenance, you know, fuel costs, all of the costs that lead into the operating cost of the aircraft, we are projecting a cost per seat mile, as I said, around a buck. And if you start looking at what that means for a trip, whether that's, you know, New York to Boston or, you know, that regional range, that 100 to 500-mile range, The impact to operators for a machine like this compared to whether it's advanced air mobility machines or legacy helicopters is significantly improved economics for the operators. So that's why I believe if we look out three to four years, this is the kind of machine that's going to be on the winning side.

Okay, great.

The next question, there's a follow-up question from Gideon, and I'm just going to read it directly. Has your rivals pivot one by one from battery to hybrid power since you went with that option from the start? Are you now experiencing a sense of, told you so? He may or may not want to answer that.

No, what I will say is we do wish them the best of luck. We see very much the X7 as a complementary service, right? And I've seen the business models, Joby and Archer, they're planning on flying 2,500 hours per year. That's five times what a typical helicopter operation would do. And so their business model is really calibrated for the shorter range, lower margin, high frequency routes in good weather. And then we can be very much a complimentary sort of service. So take our aircraft and reach out and go 500 miles at 250 miles an hour. Go between cities, not just within them. and do some of those lower-hanging fruits, easier missions to begin with, the critical, you know, emergency medical support, transporting organs, transporting radioactive isotopes, transporting people to the hospitals, critical cargo anywhere. Again, so we, you know, we try not to... We try to be very realistic, and again, those folks will find, you know, use cases for their machines in the short to medium term. And we're just, you know, but we are happy that we... you know that we can focus on the end-user and built a product to specifications that make a lot of sense again twice as fast as a helicopter much much cheaper to own and operate and as it would have it very competitive even amongst the all electric VTOL companies that now are seeing the expense of their you know two thousand plus pounds of batteries on board and some of the limitations therein so again we're excited they're going to be certified they will start to be used very very shortly and we can enjoy the success rate alongside them.

There's an additional question for either Brandon or O'Brien. You say that your ideal investment or manufacturing partner looks like a globally recognized brand. Is that ideal partner from within or without the aerospace industry?

Yeah, that'll be from within the aerospace industry. We're going to have a lot of different partners, to be quite frank. And again, we're not looking for press releases. We're looking for solid partnerships that can help move us forward on a technical basis. And so you'll see us have realistic partnerships that drive things forward and build an ecosystem that is going to lead to our success. So hopefully that answered that question.

Yes. Here's a follow-up question from Josh Sullivan at Jones Trading. He's saying, if we pull back to 30,000 feet, And there are different eVTOL offerings coming to market over the next couple of years, all with various strengths and weaknesses. In your view, what applications or customers do you see where the Cabaret X7 is the standout capability in that market?

Well, I mean, so the global helicopter fleet is, what, 70,000 airframe strong? Half of those aircraft just go from one place to another. And the typical range is much more than 50 miles that some of the all-electric folks are going to be limited to. So anything that requires vertical takeoff and landing, and again, that's over half of the global helicopter fleet total, where you're going more than 50 miles, you're going to want our machine. It's faster, safer, more economic to fly than helicopter and some of the even longer range all-electric VTOL companies as well. So it's going to be a very compelling offering from a 30,000-foot range It would mean the machine that I would want to fly as the next military guy if I needed vertical takeoff and landing and really needed to go anywhere for all of those different reasons. So, yeah, but that's me. Of course, different folks have different views. Again, we see ourselves very complementary, but there's a huge mission set on the civilian and military side that this aircraft will be able to do almost immediately, and we're pretty proud of that.

I'd like to now ask a question from Dominic Perry from Flight Global. It's actually a two-parter. He asks, what are the particular pinch points or challenges you expect this year as you build out the prototype? Was there a second follow-up? You said this is a two-parter? Yeah, the second part is, last year you announced a partnership with ZeroAvia to investigate hydrogen power. What's the progress on that project making?

Okay, so pinch points going forward. Like I said, we're a very open and transparent company. If I told you everything was going to be smooth sailing and there are no challenges ahead, I would be lying. And any other eVTOL CEO that tells you it's smooth sailing doesn't know what they're talking about. There's always challenges. Okay, we'll start with some of the core tech. We have some great progress on the vertical propulsion system that we'll be able to announce by a technical update soon. But of course, batteries and power electronics are always going to be a challenge. We always want more power density in our electric motors. We always want more energy density and power density from the battery cells. And they are only moving at 3% to 5% per year. Now thankfully, we don't need crazy high-tech batteries given our hybrid solution. But getting those power electronics, getting those battery cells in, testing them, completely and getting enough data is always going to be a challenge, and it's a challenge for any of the other manufacturers. Another challenge that people probably don't realize unless they are in the business is again, flight controls. This is a fly-by-wire machine. There's a lot of moving parts, in many ways less so than some of the tilt rotor and tilt wing mechanisms that are out there. So in many ways simplified, but still a complicated problem to solve on the flight control side. Thankfully, we have some great partnerships building on that front too. Again, we'll be able to announce some things hopefully fairly soon. But those are some technical pinch points. We talked about our ability to hire as fast as we want. That's always going to be a challenge to build a company in a quality way, especially as well-funded as we are now. And so on the HR side, that's going to be a challenge as well. On the ZeroAvia front, We're working slowly with those folks. Again, they're the world leaders in hybridization, period, dot. It happens to be hydrogen hybridization, so we've taken a look at a fitment for our aircraft with hydrogen. There's a lot more questions around the delivery network associated with hydrogen, fill stations, the availability at different locations, that sort of thing. But they have a lot of really good answers. Primarily, we partnered with them to learn as much as we could from one of the leading hybridization companies in aerospace. And they are world class. They really are. So they've done a lot of great work on the engineering side. We've learned a lot. And will we go hybrid hydrogen tomorrow? Absolutely not. But it's great to partner with these folks and to learn as much as we can. We take a humble approach to all these partnerships. And we try to Admit when we don't know something and learn as much as we can from the world experts. And that was our plan with Xeravia, and it's worked out really well.

Great. There are a couple more questions, Brandon. One of them is from Todd Coase. The other is from Mo Man. And they both ask about our sort of platform intentions. So let me just try to combine them into a single question. We're being asked, will you be building platforms Do you have any plans to build aircraft besides the X-7 Cabaret model? Do you have any plans to build multiple prototypes this year, perhaps one for Medivac, one for defense, or one for other purposes? How are you thinking about that development timeline and progress?

So the first thing I have to do is just build and test the prototype aircraft. I'll answer the second part first. Mission-specific aircraft are interesting because we've designed this from the beginning. So we've made modifications to the interior volume and the door sizing such that, of course, you can get an injured person on a gurney in and out of the aircraft from Medevac, which makes a lot of sense. That's going to be a great mission for this aircraft, especially in the short to medium term. And so for the different mission sets, you know, the floor, for example, is stressed for loading of various equipment. across a cargo sort of fitment as well. And so it's not a matter of completely tailoring the entire aircraft to a certain mission. We've created kind of a Swiss Army knife, for lack of a better word, in the interior cabin volume so that we can quickly switch it from cargo, maybe it runs cargo missions at night, and then you can flip it into a business travel. You can snap in some seats and business travel during the day. There will be, again, an easy refurb for medevac with all the necessary life-saving equipment on the inside and oxygen and all that sort of good stuff. But we're going to start, again, just to be laser-focused here, we're going to start on just completing our full-scale prototype aircraft. And, again, that will have the requisite sort of fitments and sizing for multi-emission sort of capability once they start rolling off the low-rate initial production line. Now, are we building other sort of variants? It would be silly for us not to look into larger aircraft, maybe some smaller aircraft. There's been interest, and I've said this publicly before, in our drone, our X-5, 22-foot wingspan aircraft that had already been through transition flight. Of course, if you're a Special Forces guy and you had this aircraft that you could fold the wings forward, put it in the back of the trailer, and tow it behind an F-250 truck to anywhere you wanted, and not have complicated launch and recovery machinery and an aircraft that fast that can get stuff to places, forward operating base, et cetera, of course you'd be very interested in it. So there's interest in everything from the smallest version all the way, of course, and it would be silly for us not to look into a much larger version as well. We are focused on building and testing the X-7 demonstrator first, and so we're 100% focused on that right now. with some optionality going forward in the future for other sizes. It's a great technology platform.

So that's all I can say there. Great. We're going to conclude the question and answer segment at this time. I would say we do greatly appreciate the participation of all of our investors in our earnings call. Brandon, I'd like to turn the call back over to you.

Yeah, so thanks, everybody. Some great questions. Thanks for joining the first ever earnings call for Horizon Aircraft. We really sincerely appreciate your interest and your support going forward. We really look forward to updating you on our progress in the upcoming quarters ahead. Exciting times, folks. Thank you all.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.