New Horizon Aircraft Ltd. (HOVRW) Q3 2026 Earnings Call Transcript

Okay, so forget the whole flying taxi hype where companies are just setting billions on fire. Horizon Aircraft just dropped audited data proving their hybrid vertical takeoff plane costs under a buck a mile to run.

Right, 97 cents a seat mile to be exact. It is almost absurdly cheap compared to the pure electric guys.

It really is. Welcome to Earnings Unscripted, by the way. Today is April 14, 2026, and we are looking at Q3 results for Horizon Aircraft, ticker HOVR. And just to satisfy the lawyers, this is strictly not financial advice, just two friends analyzing the markets before we need more coffee.

I definitely already need more coffee. But look, this quarter is your classic pre-revenue aerospace story. Zero actual revenue to report. total operating expenses, sorry, total OPEX jumped 48% quarter over quarter to $7.59 million.

Because they are physically building the thing now, right?

Exactly. Research and development alone surged 64% to $4.28 million. That is all prototype manufacturing costs. And the stock reaction was incredibly messy today. We saw a pre-market surge to $1.67, lots of chop during the day, and then it basically just drifted lower in extended hours to close down about 3% at 1.51.

But wait, if R&D spending is up that much, how did their net loss actually shrink? I think reported EPS went from negative 21 cents to negative 16 cents.

Paper math. It is entirely paper math. They booked a $1 million non-cash gain on warrant liabilities this quarter. Last quarter, that same line item was a massive $4 million loss. So the improvement is an accounting illusion, not operational efficiency.

Ah, the magic of non-cache adjustments. But okay, what they are actually building with that cache is genuinely interesting. During testing, they realized their wing prototype was essentially over-engineered. They just straight up dropped a fan from each side.

Right, dropping redundant weight. In aerospace, that is a massive win. You remove the fan, reduce the drag, and the plane goes faster without compromising hover safety.

It fits their whole identity, too. They are flat out refusing to build an air taxi network. No passenger apps, no funding, expensive vertiports. They just want to be an OEM and sell hardware to businesses.

It is the only sensible way to play it. Trying to run an airline and invent a new aircraft at the same time is just capital suicide. Selling direct to medical evac or, you know, remote mining companies is infinitely more grounded.

Yeah, the CEO was talking about a heavy mining operation in Canada. They currently use fleets of helicopters out in the middle of nowhere. And he brought up his background as an Air Force fighter pilot, too. He said standard helicopters are just, quote, beating the air to death at low speeds.

That is a highly accurate description of a helicopter.

Right? He said he would have killed for this aircraft in the military. It flies stealthy twice as fast as a chopper, but still lands without a runway. It makes a ton of sense.

The narrative is great, I agree. But reality always comes back to the balance sheet. They're sitting on $19.67 million in cash right now, which is down 19% from last quarter. The CFO even warned burn rate will modestly increase. That cash pile is not infinite.

Okay, yes, that is exactly what we need to unpack. Let's get into the details on that cash runway and the crazy market cap target they just tied their bonuses to.

The math on that cash runway is exactly where the narrative gets a bit uncomfortable. You look at the raw balance sheet, they are sitting on $19.67 million, but total operating expenses just hit almost $7.6 million this quarter alone.

Right, and they are moving into the actual physical assembly of the plane, which is not getting cheaper.

Exactly. I mean, R&D is already up 64%. And Brian Merker, the CFO, explicitly said cash from operations will, quote, remain consistent or modestly increase as compared to current run rates. Modestly increase from roughly $8 million a quarter. You just do the division there, that $19 million realistically lasts maybe three quarters. It is certainly not the one to two years management keeps hinting at.

Um, which actually explains why the SEC filings still have that warning in them, the going concern label.

Yes, it is completely unerased in the Q310Q. It flat out says there's substantial doubt around the company's ability to operate beyond 12 months. They also still flag an unremediated material weakness over internal controls, basically inadequate separation of financial duties.

Ooh, ouch. Okay. Inadequate separation of duties in a startup is fairly common. But having that substantial doubt label hanging over your head while you are trying to convince, you know, heavy mining companies or military buyers that you are a long-term partner, that is tough.

It is a massive friction point. But honestly, it just reinforces why their entire business model is an exercise in survival. Brandon Robinson emphasized on the call that by not running an air taxi service, they avoid the extreme capital intensity of the all-electric guys. If Horizon was trying to build vertiports right now like their rivals, they would already be bankrupt.

So their absolute refusal to be an airline is literally the only thing keeping the lights on. Pretty much.

But this is where those new PSUs become the real tell. The performance share units. Right. The February 10th issue. They handed out over 1.6 million new performance units to management, but they only vest if Horizon hits a $250 million market cap and outperforms the Russell microcap index.

That is wildly aggressive. I mean, they are nowhere near a quarter of a billion dollars today.

Not even in the same zip code, but it maps out their entire psychological playbook. Look, if you have maybe nine months of real cash runway and your massive bonus depends on creating a quarter billion dollar valuation, you need a colossal catalyst. You need something tangible, right?

You need a physical airplane.

You have to wheel something out of the hangar and prove it works precisely, which is why the CEO called finishing the full scale Cavrite X7 by the end of 2026 the quote single most important engineering milestone for the company over the next nine months. They have to finish the physical build to juice the stock price, and they need that higher valuation so they can execute an equity raise without diluting the stock to zero.

Basically threading a needle while falling out of the sky. I guess they do have that INSAT grant from the Canadian government, though, the Initiative for Sustainable Aviation. That is up to $10.4 million to reimburse their R&D.

$10.4 million Canadian, yes. It reimburses 40% of eligible project costs. But the operative word there is reimburse. You still have to spend the cash up front to claim the rebate later. So it helps, absolutely, but it does not solve the immediate cash flow problem.

Okay, so they have KPMG validating their sub-dollar operating costs, brilliant hybrid technology, and essentially a ticking time bomb on the balance sheet. So stepping back, how does this tension play out heading into next quarter?

It becomes a race of sheer execution. The guidance from management is basically just blinders on until December. They are putting everything into finishing that physical demonstrator by the end of 2026.

Because early 2027 is when the actual progressive testing starts. The ground taxiing and those bunny hops they talked about.

Yeah, and it is not just getting it off the ground. They are doing extreme weather validation right now. They're putting prototype parts into the ACE climatic wind tunnel next door and literally blasting them with minus 40 degree precipitation.

Okay, minus 40 sounds completely miserable. But I guess if you want to sell aircraft to a remote mining site, you have to prove you can survive a Canadian winter, right?

They have to prove the ice phobic coatings and that hot engine bleed air actually work. But beyond the engineering, the biggest wild card to watch next quarter is definitely the government side.

Because of the military applications. Brandon did say they were engaging with some, quote, very interesting folks on the defense side.

Yes, especially with Canada supposedly bumping up their defense spending. But look, zero formal procurement deals were actually disclosed this quarter. There are no signed MOUs.

Oh, so it is really just handshakes for now.

Just handshakes. If they can convert one of those conversations into actual non-dilutive funding before the cash pile vanishes, the entire narrative shifts. But if they stumble on that assembly timeline, the math gets very grim.

Well, it feels like they are betting the entire company on the execution of these next few quarters. We are essentially just watching to see if they can finish a functional aircraft faster than they can burn through $20 million.

That is the aerospace startup equation in a nutshell.

Right. Definitely high stakes, but a really fascinating story to follow. For Miro and myself, thanks for tuning in to Earnings Unscripted today. Stick around for a quick note on how this episode was made. If you want these drops to just organically show up for you, following the show is probably the easiest way to do that. And just as a quick aside, Earnings Unscripted is actually an AI-assisted project, taking raw financial filings and turning them into the conversation you just We would really love to know what you think or what tickers you want us to unpack next. So feel free to email us at earningsunscripted at datamadness.ca or just catch the X link in the show notes. Talk soon.

See you next time.