ホライゾン・エアクラフト（HOVR）2027年度第1四半期決算説明会：X7支出とテスト日程

要点

• Horizon Aircraftが実物大実証機「Cavorite X7」への支出を増やしたことにより、研究開発費は前年同期の270万カナダドルから740万カナダドルに増加しました。
• 同社は、7,000万カナダドルを超える現金残高をもって2027年会計年度第1四半期を終えました。営業活動に使用された純現金支出は、240万カナダドルから720万カナダドルに増加しました。
• 純損失は、前年同期の1,090万カナダドル（1株当たり0.29カナダドル）から410万カナダドル（1株当たり0.06カナダドル）に縮小しました。当四半期には、380万カナダドルの非現金ワラント負債評価益が含まれています。
• 経営陣は、2027年第1四半期末頃に実物大実証機を完成させ、その後に地上試験、滑走試験、飛行試験を実施することを目指しています。初の機体認証の取得目標は2030年初頭としていますが、経営陣は具体的な日付を約束することはできないと述べています。
• 顧客と署名済みの意向表明書（LOI）には、オプションを含めて最大200機のX7機体の潜在的購入が含まれており、見込まれる潜在的売上高は10億カナダドルを超えています。これには、V-Star PowerLift Aviationとの約6億カナダドル相当、最大100機に関する法的拘束力のないLOIが含まれます。
• 経営陣は、エンジニアリング、統合、試験が進展するにつれて開発支出が高水準にとどまると予想する一方で、管理費よりも研究開発に重きを置いた支出構造を維持する方針です。

主要財務データ

事業および業績の状況

Horizon Aircraftは、推進システム、飛行制御システム、電気系統、アビオニクス、着陸装置、構造システムを含む実物大実証機「Cavorite X7」の製作を進めています。従業員数は1年前の30名から65名以上に増加しており、外部請負業者を含めるとフルタイム相当（FTE）で85名を超えています。

同社は、BETA Technologiesの飛行制御コンピューターとカスタム仕様のフライ・バイ・ワイヤ・ソフトウェアを選定しました。経営陣によると、このプラットフォームは20万マイル以上の飛行実績を有しており、Horizonはすべてのコンポーネントを自社開発する代わりに確立されたシステムを活用できるようになります。また、Marshall Aerospaceの飛行力学および制御モデルもX7プログラムに適用されています。

計画されている一連の試験は、地上運転から始まり、徐々に速度を上げる滑走試験へと進みます。飛行試験は、垂直離着陸（VTOL）へ進む前に、まず通常離着陸（CTOL）から開始される見込みです。Horizonは当初、CTOL型とそれに続くVTOL型の2台の実物大プロトタイプを製作する計画です。

Horizonは計器飛行方式（IFR）および既知着氷状態飛行能力の取得も目指しています。1,040万カナダドル規模のINSATプロジェクトのもと、トロント大学の防氷技術を取り入れた小型サンプルの風洞試験が7月に開始されました。経営陣は、膨大な試験および規制対応作業が依然として残されていることを強調しました。

商用における関心は、地域輸送、緊急対応、貨物輸送、軍事ミッションに集まっています。同社によると、署名済みのLOIはオプションを含め最大200機のX7の潜在的購入に加え、別途5機の潜在的リースを表しています。Great Lakes Helicopterは、将来の保守・修理・点検（MRO）およびパイロット訓練支援を網羅するLOIに署名しており、追加の機体購入の可能性も含まれています。

経営陣の業績見通し（ガイダンス）

経営陣は、設計、エンジニアリングのマイルストーン、および試験が進展するにつれて、研究開発費が高水準にとどまると予想しています。今後の費用構成も同様で、X7の開発に大部分の支出が充てられ、一般管理費の構造は比較的小規模に維持される見込みです。

同社は2027年第1四半期末頃に実物大実証機を完成させ、その直後に試験を開始することを目指しています。経営陣の現在の目標は、2030年初頭にカナダ運輸省から初期認証を取得することですが、認証の時期は保証できないと強調しました。

Horizonは、これまで約50万カナダドルを受領しており、INSAT支援プロジェクトに基づく払い戻し対象費用が2027年会計年度中に100万カナダドルを超えると見込んでいます。経営陣は、カナダおよび米国における非希薄化型の資金調達の機会も追及しています。

リスクと注視点

認証の取得は、認証基準の完成、承認可能な適合証明方法の定義、および十分な飛行試験データの生成に依然として依存しています。全天候および着氷への対応能力については、さらなる技術的・規制上の作業が必要です。

現在、顧客の関心は拘束力のある注文ではなく、主にLOIという形で示されています。経営陣は、見込み顧客がより確定的なコミットメントを行う前に、一般的に機体の飛行や飛行試験プログラムの一部完了を確認したいと考えていることを示唆しました。

同社はまた、他のアドバンスト・エア・モビリティ（AAM）メーカーにおける試験上の問題が、セクター全体の受け止め方に影響を与える可能性も指摘しました。Horizonの規模拡大に伴い、安全とガバナンスにおける規律を維持することが引き続き重要な課題になると経営陣は述べています。

アナリスト質疑応答の要点

• LOIの契約移行：経営陣は、飛行試験の成功が、見込み顧客をより決定的なコミットメントへと導くための重要なカタリストになる可能性が高いと述べました。本格生産時の年間の生産能力は、1施設あたり約200〜300機と計画されています。
• 顧客への価値提案：経営陣は、速度、航続距離、全天候対応能力、地上充電の手間がない点を強調しました。X7のマイル当たり運航コストは、従来のヘリコプターと比較して60%から75%低くなる可能性があると試算しています。
• 米国市場における機会：Horizonは、物資輸送、負傷者後送、特殊作戦などの軍事用途に加え、地域輸送、緊急医療サービス、重要貨物輸送といった民生分野での応用の可能性を見出しています。
• 製造戦略：実証機のアセンブリと試験は自社内で行われています。経営陣は既存の航空機メーカーとのパートナーシップの可能性について協議していますが、プロトタイプのロールアウトがそのような合意に依存しているわけではないと述べました。
• 資本戦略：7,000万カナダドルを超える現金残高があるため、経営陣はATMプログラムを利用する緊急の必要性はないと述べています。2028年または2029年までの将来的な資金調達ニーズは、非希薄化型の資金調達、防衛関連または製造分野のパートナー、機体の前受金などの影響を受ける可能性があります。
• パイロット訓練と運航：初期のX7飛行試験はパイロット搭乗のもとフライ・バイ・ワイヤ・システムを使用して実施されます。経営陣は、最終的な規制枠組みに従い、将来の商用パイロットがX7の型式限定資格または証明を取得できると見込んでいます。

決算説明会全文文字起こし

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the New Horizon Aircraft Fiscal First Quarter 2027 Earnings Conference Call. [Operator Instructions] 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.

Matt Chesler

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.

I would 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 31, 2026, filed on July 16, 2026, with the Securities and Exchange Commission under the company's profile and on 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.

And now I'd like to turn the call over to our CEO, Brandon Robinson, for his prepared remarks. Brandon, please go ahead.

Eric Robinson

Thank you, Matt, and good morning, everyone, and thanks for joining us. We entered our fiscal 2027 with clear priorities to turn the X7's validated design into a full-scale aircraft, already to begin its formal test program by the spring of calendar 2027. Over the last several months, it has been really exciting. We have advanced the work on the structure, the flight controls and other systems that will define the X7 demonstrator.

The X7 is designed to combine the flexibility of vertical takeoff and landing with the speed, range and efficiency of conventional wing borne flight. It is a hybrid electric aircraft that does not require any ground charging infrastructure whatsoever. With a faster speed, a longer range, more energy reserves and an all-weather capability, it will excel in a number of missions such as regional transport, emergency response, cargo and of course, a number of interesting military operational missions.

At Horizon Aircraft, we are currently building our full-scale Cavorite X7 demonstrator aircraft. That means that we are indeed a design and production of all major systems, including forward and vertical propulsion, flight controls, high- and low-voltage electrical systems, avionics, landing gear and primary and secondary structures. As Brian will explain later, that work has translated into a significant increase in research and development spending this quarter, and we expect to maintain a continued focus on engineering and design activity moving forward.

Also exciting, our team has grown from 30 people a year ago to over 65 today and more than 85 FTEs, including external contractors. This growth continues to fuel very significant progress across all major activities. We continue to invest in systems and engineering resources needed for an aircraft design with certification in mind. The full-scale aircraft is intended to do more than simply achieve first flight. It is being designed and built with a level of sophistication that I'm very proud of and that is meant to facilitate certification.

Plainly stated, by spending a little more attention upfront, we are investing in a much shorter and more efficient certification process later. A good example is BETA technologies collaboration. We selected BETA's flight control computers, and customized fly-by-wire software for the X7. Flight controls are critical for safety, handling and, of course, certification. BETA brings a platform built specifically for modern vital aircraft and one has flown in an aircraft for over 200,000 miles. This is a more efficient way to deploy capital, of course, than developing every major system ourselves.

We are also applying the flight dynamics and control model completed by Marshall Aerospace to the aircraft's development. That work helps us predict its response to pilot input, fine control strategies and prepare for a disciplined test campaign. All of our collaborations with Proven Aerospace Partners have distinct roles, but they will be collectively serve the credit -- a critical objective of producing a safe, capable and certifiable X7.

Our current target is to complete the around the end of the first calendar quarter of 2027 and begin testing shortly thereafter. That initial phase will include ground runs, taxi work and progressively higher speed taxi testing. The planned flight test sequence will begin with conventional takeoff and landing before we advance forward to vertical operations. Each step will be governed by test data and safety reviews, and we will continue to report progress against those specific milestones as the exciting progress continues.

We are also progressing all weather utility for the X7 in the sector. This is a very unique technological capability that will dramatically increase its operational utility and underlying economics. We intend to pursue IFR capabilities, so the ability to fly in cloud, something nearly all helicopters strictly avoid and a capability that will challenge modern eVTOL aircraft. We also intend to pursue a certification for flight into known icing conditions, a capability that only a handful of even helicopter types in the world actually possess.

For operators, that need to serve communities, respond to emergencies and battery cold weather or maintain dependable schedule all-weather capability is critical for profitable operations. In July, wind tunnel testing began on small samples, incorporating ice protection technologies developed by the University of Toronto as a part of our $10.4 million INSAT project. This is an important initial step and considerable testing and regulatory work remain.

Our certification work with Transport Canada continues alongside the engineering program. We expect to advance to the next steps in that process over the winter with a focus on completing our certification basis and means of compliance.

Moving away from our technical progress and road map in July, we announced a nonbinding letter of intent with V-Star PowerLift Aviation, an Australian operator with emergency experience in emergency services, covering up to 100 aircraft to the potential value of approximately $600 million. The intended application for the X7 at V-Star is quite appealing to us. As operators focused on medical response and regional missions and seize value in an aircraft that tended to travel further and faster than conventional helicopters, while also retaining the ability to serve locations without runway or any sort of charging infrastructure. In a country as vast as Australia with large reasons of uninhabited area, the technical attributes and advantages of the X7 are quite potent to say the least.

To date, our signed LOIs across all customers account for potential purchases of up to 200 X7s, including options with more than $1 billion in indicated potential sales value. Additionally, we have an LOI for the potential lease of 5 additional X7 aircraft, that's only the beginning.

We also recently signed an LOI with an Ontario-based Great Lakes Helicopter to support future X7 operations through maintenance, repair and overhaul services as well as pilot training. This LOI also contemplates potential additional aircraft purchases by Great Lakes Helicopter. We continue to speak with prospective operators and potential industry and manufacturing partners across a range of missions. Our near-term focus is on earning those relationships through technical progress. A full-scale demonstrator aircraft and flight test data should give potential customers and manufacturing partners a much more tangible and defined basis for discussing potential orders.

From a more generic point of view, the broader EV industry is becoming more tangible and realistic with each passing week and month. The FAA's eVTOL Integrated Pilot Program, so EIPP is putting new aircraft and mission concepts into real-world demonstrations to gather information to inform future rules and governments.

While that alone does not confer type certification on the X7 or guarantee its commercial authorization for Horizon, it does show that regulators and public partners are engaging the industry with practical questions about how advanced arability will operate.

We also see an exciting and growing focus on regional connectivity, emergency response and runway independent capabilities in public and defense discussions. The X7s combination of conventional and vertical operations, targeted range and onboard power is relevant to those needs. Defense applications for eVTOL aircraft are becoming more topical. And while we are not announcing any defense procurement program today, we are, of course, building aircraft as a utility, we believe can address both civil and government military missions.

Over the coming quarters, we expect to share meaningful engineering progress, additional supplier relationships as they are formalized and certification-related developments. The central measure of execution remains at the aircraft itself, completing the full-scale demonstrator aircraft and progressing through ground and flight testing in a responsible sequence.

Now I would like to pass the call over to our CFO, Brian Merker, to discuss the financial results and our capital position in more detail. Brian, take it away.

Brian Merker

Thank you, Brandon, and good morning, everyone. All financial figures are presented in Canadian dollars unless noted otherwise. Our results this morning for the first quarter represents an obvious expansion and effort toward the aircraft development work that Brandon just described.

Research and development expenses were $7.4 million, up from $2.7 million a year ago. The increase was concentrated in engineering and development work on the full-scale aircraft including prototype manufacturing, flight software and analysis. Engineering cost within R&D rose to approximately $5.3 million, up from $0.3 million in the comparable quarter a year ago. This spending relates to building a full-scale aircraft, fuselage, wings, flight controls. We do expect development spending to remain elevated at these levels as design activity, engineering milestones and testing activities continue to progress.

General and administrative expenses moved in the other direction, declined to $1.7 million from $3.2 million a year ago, primarily because stock-based compensation costs were lower. We anticipate a similar mix of R&D versus G&A expenses on a prospective basis as well as we commit ourselves to being efficient with our needs for administrative requirements, and this mix is important. A larger share of our spending is dedicated to advancing the X7, and this compares quite favorably to many of our peers that -- a significant administrative burdens.

In respect of liquidity, during the quarter, net cash used in operations was $7.2 million compared with $2.4 million in the same period last year. We used another $0.7 million for investing activities, which principally related to equipment and tooling, while financing activities were limited in the quarter with there are $0.6 million coming in via the ATM program. This represents an average rate of $2.81 or USD 2.04.

We finished the quarter with more than $70 million in cash. This remains a very strong liquidity position for the company at this stage of development and reflects an industry-leading ratio of liquidity to operating cash usage. As many of our peers are fundraising as needs arise, we continue to be patient and efficient with our spending, leveraging non-dilutive sources and bringing in capital when market conditions are favorable.

For the period, we reported a net loss of $4.1 million or $0.06 per share compared with a net loss of $10.9 million or 29% share -- per share in the prior period. The decrease in net loss does include a $3.8 million noncash gain from the change in fair value of our warrant liabilities, and this compares with a $5.1 million noncash expense in the prior period. As we plan the next phase of development, we're managing expenditures against engineering milestones and the resources needed for integration and testing. We also continue to see significant non-dilutive sources.

Under our INSAT supportive project, we've already received close to $0.5 million of reimbursed project costs and those reimbursable project costs are anticipated to reach more than $1 million throughout the fiscal year. The Shed program here in Canada is expected to yield similar results. There are many other developing non-dilutive operate is the sphere of defense and R&D that we're pursuing as well, recognizing the significant increase in federal government defense spending requirements beginning this year.

To summarize, as it is today, we have a healthy balance sheet, a disciplined development and certification strategy and a team focused on putting resources into the work that moves the X7 forward. Brandon, back to you.

Eric Robinson

Thank you, Brian. This quarter brought progress where it matters most. The full-scale aircraft, the flight control architecture, the engineering work to needed to test it and significant demand tied to a clear operating use case. We also began evaluating ice protection technology for all-weather capability that will unlock operational capability across a broad spectrum of civil and military missions.

We appreciate your interest in Horizon Aircraft and look forward to updating you as we reach the next milestones. So that concludes our prepared remarks. Operator, please open the call for questions.

Operator

[Operator Instructions] And your first question this morning is coming from Josh Sullivan from Jones Trading.

質疑応答

Joshua Sullivan

Just as we look at the -- Great Lakes relationship, can we just touch on pilot training and the MRO ecosystem. I guess with pilot training, can you just outline some of the thoughts on requirements and pool that you're kind of thinking about.

Eric Robinson

Yes. Okay. So great question. I think it's easy to get focused just on producing the machine. We're really focused on building out an entire ecosystem. So that includes maintenance, repair and overhaul, so supporting the fleet that eventually is growing across the world. Figuring out how to train pilots efficiently and effectively and partnering with folks that have expertise in both of those areas. So -- and that's Great lakes Helicopter. I mean they train pilots. They have a lot of maintenance parent overall activities. As it relates to the pilot training specifically, the X7 is going to be a fly-by-wire aircraft. We'll get into that a little bit later. It is one of the -- going to be one of the easiest airplanes possibly defined in vertical mode, mean we have kids come in and they're able to -- 10-year-old is able to land it on an aircraft carrier, first try. And that's with all the dynamics that we believe are going to comprise the full-scale aircraft.

So that being said, we'll take commercial. The idea is most likely we'll take a commercial fixed-wing sort of pilot. We'll bring them in. We'll get them type rated on the X7. They'll get an endorsement, is a possible way that could work forward. And again, working with partners to come up with that construct. Once they're type -- once they're rated on type, then they'll be able to go and do commercial operations. So -- pretty exciting times. Like I said, with an airplane that's going to be this easy to fly, unlike a traditional helicopter, which they're pretty squarely. You take your hands off the flight controls and this thing will sit rock steady, which is pretty cool. So a lot of advantages for pilot training with the way we've set the are interest and our partners, yes.

Joshua Sullivan

Got it. Sorry. And then maybe if you look at your order interest, be it -- Great Lakes or the Australian partner, what are the defining characteristics of the early interest from customers at this point? And I guess, how do you expect that to evolve as you get further along in development and brand out there?

Eric Robinson

Yes. So we're pretty proud of the way we started it, and people have heard me say this before, but we distilled specifications from -- a deep understanding of operators. So the first thing that the operators like are the specifications. So the speed, the range and specifically the all-weather capability when we make that happen, that is going to be huge. A lot of helicopter operators -- and most of the modern electric vital companies will struggle and do struggle to operate in any sort of cloud conditions, which confines their operations to good weather only. Being able to fly in clouds and in clouds with potential icing is going to be absolutely huge for the X7. So the speed, the range, the operational utility, the bad weather operations and, of course, we don't need any charging infrastructure whatsoever. So operators are not going to be limited from going to vertical with these high-voltage charging stations that are required. The X7 can literally land anywhere that there's fuel and it can recharge itself, right, which is pretty fantastic.

So all of that combined with an underpinning economic piece. So between 60% and 75% cheaper to operate per unit mile than a traditional very expensive helicopter is once you have the specifications for an operational utility perspective and then you underpin it with some serious economic advantages. That is a real winning combination for a lot of the operators out there and lessors.

Operator

Your next question is from Sam Duval from Oak Ridge Financial.

Unknown Analyst

Congrats on the quarter and for the progress towards the full-scale development. My question also goes off the Great Lakes relationship. I mean, now you guys have LOIs from India, Chile, Australia and Canada. Are you guys going to see similar requirements for MROs and light programs in these international countries as well?

Eric Robinson

Yes. We're selective with whom we partner. There's been lots of opportunities and continue to be a lot of opportunities globally. Like I said earlier, it's definitely something we have to think about, and we have been approached by quite a few different organizations. The key there is picking the geographies that we want to branch out into, understanding them in very much detail. So we're not service level folks, and of course, partnering with very high-quality companies. So that -- those discussions are ongoing. And like I said, we're going to really focus on building out that ecosystem to support the fleet across the globe, and that does mean MRO and training and some production in different places, too.

Unknown Analyst

No, that makes sense. And kind of on that same LOI front, what's kind of the feeling you're getting from the United States market? And what's kind of the preliminary, I mean, want or need? Is it more on the civilian side or the government the sand side?

Eric Robinson

Yes. The demand signals from the U.S. are huge, right? There is really nothing in the category of our range and speed in this space. So on the civil side, I mean, NASA has a good study out there, there's 5,000 underutilized regional airports. Now if -- the reason they're underutilized, they have two short of runways, most of the time for the bigger -- progressively bigger and bigger aircraft to get in and out of. Something like this on the civilian side, the X7 will be able to land pretty much anywhere that there's a chunk of payment that's 40x40. So all of these regional airports now become nodes for a pretty exciting sort of world school transportation network in a much better experience for a lot of travelers. So that's on the civilian side.

And of course, a number of different missions, emergency medical services -- currently getting something to the hospital and half the time, whether it's an injured person or it's an organ or radioactive cancer isotope for research. So on the EMS side, it's huge. Any sort of critical cargo you need to get somewhere -- that's huge across the entire United States. The Southern U.S. gets hit by hurricanes all the time and power grids go out, being able to deploy an X7 to the middle of somewhere that has no power whatsoever and start saving lives right away. Maybe it's plugging in a mobile medical station into the aircraft itself because it can generate so much power. We're really excited about some of those missions as well. If you move over to the military side, of course, I mean, we essentially built a helicopter capability that's twice as fast almost and at comparable economics and it's going to be much more robust in terms of its operational cadence. So on the military side, of course, the major defense primes and US DOW quite interested in the machine once it gets out there and gets flying, and we get some test data from it. A lot of people watching us right now. So a great question. Thanks, Sam.

Operator

Your next question is coming from Brian Lantier from Zacks Small-Cap.

Brian Lantier

Great. I was wondering if you could talk a little bit about as you're ramping up in engineering, how is the integration of all of your suppliers progressing? And anything that's positively surprised you or been a bit of a hiccup so far?

Eric Robinson

Well, from the -- so it's going really well. On the positive side, I mean, I'll bring beta up again, so has built an amazing tech company. Their flight control system, it takes what would have been a very difficult in-house sort of development progress or finding something and trying to work with one of the big OEMs like Honeywell or someone that try to spend a lot of money and try to change their system into something that will work for us. The BETA system is perfect. And it's -- like you said, it's out there, it's being tested. So from that perspective, when we've been looking at different suppliers, we've been pleasantly surprised that companies like BETA and the company they're using for their actuation system as well. So that's been really good.

And having a little bit later start in this game, if that makes sense, a Vital 2.0 company, we've been able to take advantage of some of the tech that quite frankly, some of the larger companies have developed, as well as some of the progress recently in battery technology as well, alongside electric motor technology. So everything keeps progressing nicely. Having started a little bit later, gives us some advantages from a supply chain perspective, specifically even designing a hybrid electric

Brian Lantier

That makes sense. Given the progress you've made in the last 15 months or so, what was the feedback like Farnborough?

Eric Robinson

The feedback was great. I think we caught some folks by surprise in terms of us saying we're going to do something and then sticking for the most part, to that time line. And I think people were surprised to see the progress on the full-scale X7. In-house testing of the vertical propulsion systems. We have the main propulsion system in-house as well. The iron birds coming together really well. The main structure is, like I said, being put together right now. And so we'll have an aircraft, it looks like an aircraft fairly shortly. And I think, again, there's been a lot of promises in the sector and a company that can deliver on what it says it's going to do is -- that was pretty exciting to see the response.

Operator

Your next question is coming from Scott Buck from Titan Partners.

Scott Buck

So I have a question on LOI conversion. What has to happen for some of these LOIs to become binding orders? Is first flight a trigger? Or maybe just what is a reasonable expectation in terms of time line during the process to see some of these converted to real purchasers?

Eric Robinson

Yes. I think I can speak generally. I can't speak to the terms and conditions of each one for obvious reasons. But generally speaking, it makes sense that these companies want to see that aircraft fly, right? So it's going to be really exciting when we roll the testing begin flight testing.

When this aircraft flies and flies well and gets a certain portion through some of the flight testing, then things get a lot more serious for a lot of those folks that are quite interested in getting in at the beginning of our production, right? We're a little bit different from some of the other major OEMs in this space. Insofar as we're not claiming we're going to build 10,000 per year sort of thing, right? We're going to build in a very normal in 200 to 300 a year at full rates from one of our facilities. And that's still very profitable, but that's not a lot of airplanes initially, right? So people want to get in early. And that's driven a bit more, I would say, serious demand, if that makes any sense.

Scott Buck

Yes. That's very helpful. And my second question, just given the military and emergency services and government pipeline, are there grants or defense development contracts that could potentially offset burn before certification in Canada or other allies?

Eric Robinson

Yes, absolutely. So on the military and civilian side, so in Canada, we have to spend on defense, right? So there are a number of different really exciting constructs that are being put together to get access for companies like us in the aerospace and defense sector for access to non-dilutive financing. Brian can fill any gaps here in the -- if I missed something. But a good example is initiative for sustainable aviation technology. That's a $350 million bucket for sustainable aviation companies and innovative aerospace companies like ours. We've already been successful with one, and we can apply multiple times for different programs, which we plan on doing. No promises it will win anymore, but it looks pretty good for us.

And on the defense side, again, a lot of non-dilutive financing is being put together for aerospace and defense companies in Canada. In the U.S., obviously, they're very competitive, and we're excited. We've already won the U.S. grants a couple of years ago for development of our smaller scale X5. So there's precedent for us winning even south of the border as well. It is really exciting. A lot of yes, a lot of opportunities these days is what I'll say.

Operator

We would now like to turn the call over to Matt Chesler from Investor Relations to answer questions from investors that were submitted in advance or via the webcast chat future.

Matt Chesler

Firstly, we'd like to thank all of our shareholders for taking the time and showing the interest in submitting questions to us in advance and today, and we'll do our best to answer as many of them as possible during today's program. And if not, we'll follow up with you after the earnings call.

The first call is from Sergio Hiper and he's asking, "Are you in active discussions with a potential production or manufacturing partner today? And is a decision tied to the prototype rollout independent of it."

Eric Robinson

Yes. So the prototype rollout is independent of any discussions. Of course, folks are interested in partnering with us to be able to produce the aircraft. Again, as a more traditional aerospace company, we don't need some high-volume, 10,000 units, 100,000 units per year automotive manufacturing expertise. And quite frankly, the certified production standards for aircraft at that scale don't exist yet anyway. So we're taking a more traditional approach and talking to some more traditional aircraft manufacturing folks. But for the prototypes, we build them in-house. So we have assemblies come in. We have wings come in. We test put everything together, test it ourselves. And so we're not tied to any major announcements. This -- the full-scale prototypes, we'll start rolling out of the hanger fairly shortly and don't require any sort of production support.

Matt Chesler

Does have a follow-up question. Good. And it's -- are you in active discussions with specific defense agencies or military branches? And what's the earliest realistically for military contract?

Eric Robinson

So on the military side, it's really exciting. So just to remind folks, certification on the civilian side takes a while. That's fine, very high standards for caring civilians around.

On the military side, they have a different risk tolerance for machines and extreme capabilities like the one we're about to deliver with the X7. They have a separate certification framework on the military side. It's often quicker. And again, accepts a little more risk to get that capability saving troops, lives and accomplishing missions around the world. So that is really exciting. Of course, if you build a helicopter capability that's twice as fast, a lot quieter, a lot more reliable than a typical helicopter. You imagine getting personnel from beyond any lines back over to good guide land and a lot more efficient fashion, maybe is to rescue casualties or resupply forward operating base, maybe special forces, infiltration, exfiltration type of missions. Any -- logistics on the marine side and on the Navy side, there is an incredible amount of emissions that this capability would be good at. And of course, I can't speak to anything that we haven't announced yet. But if you're a major defense prime contractor in the U.S., you'd be quite interested in keeping an eye on whether this thing will actually work the way it's supposed to or not. I've been on record saying this before, one of them said, "Listen, we designed the same capability and the same sort of concept, you just beat us to the patents all the testing, et cetera." So -- yes, of course, we're talking to a bunch of folks around the world actually, and it's an exciting time for us right now.

Matt Chesler

With that -- there's an additional question around manufacturing design that unmined from one of our investors on the Reddit channel. And it says, "Will you be building one or two full-scale prototypes for testing?"

Eric Robinson

So two initially, and of course, if you look at any of the major OEMs, they even have more than two aircraft to get through a flight test program, which is pretty cool. So we'll start with two initially. I've been on record and we'll do a CTOL variant first, follow-up with a VTOL variant shortly thereafter for the VTOL testing. It's pretty cool because you can test the CTOL also the conventional take-on landing version. So down the runway, rotate, fly it at higher, higher speeds and build out the envelope from a high-speed perspective while you're simultaneously flying the VTOL variant getting through the hover testing and then accelerating towards transition from the lower-speed region. So a pretty efficient way to test, and that's what we're going to do. Great question.

Matt Chesler

Shifting gears. There's a question from for around -- I think, Brian, I'd like for you to answer if you would mind if it is, what's your current financing strategy for the next few years?

Brian Merker

Okay. Guys are going easy on me this morning. I'd probably answer that with a couple of points. The first thing I'd say is that we're committed to being capital efficient, and we talked about it earlier. We've demonstrated this over the last 2 to 3 years. We're a pure-play OEM with a hybrid propulsion system. We avoid a lot of the material infrastructure and operating costs that make our peers are incurring. And we're not going to have to spend near the announce that we're observing in the broader industry.

The second thing I would say is that -- and we've talked about it, a relentless pursuit of non-dilutive sources. So we talked about INSAT. I mentioned Shred earlier, and there are many more. As a Canadian aerospace and defense company with sustainable energy system, we're seeing a lot of opportunities in this area. And then finally, with $70 million on the balance sheet at our current run rate, our projected needs, we can be efficient. We can be patient with any third-party capital. If we look out to 2028, 2029, any financing needs would be influenced by a number of factors, including the non-dilutive sources I mentioned, potential partners on the defense side, the manufacturing side and also cash deposits on aircraft, which could come in as well.

Matt Chesler

Thanks, Brian. Back to certification and testing, there is a question or a from Sky -- thank you, that given the change from half-scale to full-scale for the current X7 build, what aspects are you most excited to test or to validate? Brandon?

Eric Robinson

No, a great question. I mean -- and we're excited about a lot of stuff. So -- for those of you who haven't seen it on YouTube, we have a pretty cool video of the aircraft, the X5, so the smaller version, transitioning from vertical flight to forward flight and then back for landing. That was really, really cool to see. And the systems that support that on the X7, I've been really exciting to test. So first is the vertical propulsion system. So we have fans with final sort of designs, spinning up, producing enough thrust. We're seeing thermals that make sense. We're developing battery packs.

Our simulations for transition on the X7 are really exciting as well. People will note that the transition for the X5, the smaller 1 was as boring as it could possibly be. We've designed this aircraft to be as safe as possible. And in aerospace boring is absolutely safe and that means potentially a quicker route through certification. And all the X7 simulations, and we'll see that in the real aircraft when we roll it out and start doing flight testing shortly, are really positive around transition. There's a lot of other things I could talk about. The flight controls are going to be exciting. We're putting the -- we have flight control computers. We're wiring everything together. It is absolutely leading-edge aerospace equipment that BETA's produced. And we're really excited to get going and working on that on the flight control system. We just a major engineering review on the flight controls that went quite well.

Yes, so a lot of things to be excited about. I could go on and on, but those are some of the top ones. And of course, I'll finally say bringing the aero structure in, so having wing structure and fuselage structure here in the next several months, and seeing an aircraft that looks like an aircraft. I mean, that's -- you can't get much better than that.

Matt Chesler

The next question is from Arnab and it does relate to a thread that I saw online. So I'm happy to have you answer it here. You're looking for your thoughts on potential brown out, white out debris and strong ground level out wash when operating from unprepared surfaces, especially military medevac or remote ops.

Eric Robinson

So this is a really complicated topic. I currently have put together a 14-page port on the engineering that goes behind this and has entrainment particle size, all that sort of good stuff, or possible flow fields. And for any vital operator, so any helicopter operator at any traditional eVTOL OEM. Anything that takes out vertically and has to push against the ground. If anyone tells you that there's no potential for brown out or white out, yes, they're basically alarmed to you, right?

Now the X7, some advantages, with stronger downwash from each of the smaller vertical Pulsion units, you have some unique flow fields that actually push a lot of the stuff away from the cockpit before it starts flying up if that makes any sense. So create a little more visibility to what we're seeing in some of the simulations in front of the aircraft, which is nice. And what we're seeing is a lot less sort of outwash along the lateral axis, if that makes any sense.

So brown out and white out is a thing. It's different in our aircraft and there are some technical engages that we can get into, if there's more questions later. You also have a lot of synthetic vision stuff that we're planning, right? So whether it's a LIDAR-based system to aid in landing, EO/IR system to help at night. There's a lot of modern equipment now that is possible to really provide a lot of pilot aid during that difficult period of landing, like I said, in its -- it's pretty exciting to solve some of these problems and again, deliver an operational product that has all of these advantages stacked up to make it a lot more safe than some of the other machines. Great question.

Matt Chesler

Well, we have several more great questions, I think, that are all in the topic of certification and testing, which I think makes a lot of sense given where we're at in the evolution. Let me start with a question that came in through Reddit, which was what do you see as biggest hurdle in getting certification from Transport Canada for the X7?

Eric Robinson

So I'll start with what I think are some of the advantages. Like I said, we're kind of a Vital 2.0 company. We get started just a little bit later. And a huge advantage for that was having a lot of the regulatory structures in place the major OEMs, they did an amazing job. Job Archer BETA kind of blazing the way, but it took a while to get [ 2117 ] Bravo from the FAA, the structure that allows certification of Power lift in the U.S. And in Europe, the SCB to regulations that are really well written. We had the advantage of putting the concept together when we had visibility on a lot of those regulations. So that helps us given -- have a significant advantage. We get to read both of those excellent pieces of literature and take a look at what is going to be required.

Now there are several steps, right? We have to develop our means of compliance. So that's the first hurdle. We're working on that right now on a certification basis, of course, and the means of compliance for that basis. But like I said, we have a lot of work that we can copy if that makes sense. Yes. And then, of course, getting just getting through certification flight testing. So with the hybrid electric system, our flights can be a lot longer. We get a lot more data per flight, so that's exciting. But of course, then it's just flying the aircraft enough, getting the data back and working through each means of compliance. So a great question.

Matt Chesler

There's a separate question from Reddit talking about time line for the certification asking when Horizon will have approved certification with Transport Canada?

Eric Robinson

So we can't promise date. And any company that promised date is just guessing. But our goal -- and again, we have Dr. John Maris on her Board. He runs -- he's built a company called Certification Center It has expertise in doing this exact same thing, certifying new aircraft designs and modifications to existing commercial aircraft as well. So with them and their help and some other experts in the field, I mean, we built out a time line, and we hope to have the first aircraft certified in early 2030. And that -- like I said, that's our current goal. We have a plan to get there at that time. And that's the plan right now.

Matt Chesler

Okay. The next certification related question is from Paul O'Brian via e-mail. So -- it's about how are you going to do it? Will the first flights of the X7 be piloted or fly-by-wire as with the X5 flights? And if you pilot it by who?

Eric Robinson

So piloted or fly-by-wire, both is the answer. So the initial flights will have a pilot in it, taking a bit more of a traditional approach. There's a lot of advantage to having a pilot in the aircraft for initial flight testing. There's still a bit of old school where you pull back on the stick and you feel how the aircraft reacts and there's a lot of qualitative feedback and feedback. You notice vibrations that you might not pick up with just an instrumented aircraft that has no pilot in it. So there are a lot of advantages of putting a pilot in it to begin with. But it is a fly-by-wire aircraft, which is really cool. So it will have the additional stability of a fly-by-wire aircraft and all of the feedback to help tune it properly.

So just taking a bit more of a traditional approach for a bunch of reasons. I have a lot -- well, very fortunate to know a lot of military test pilots -- well, one of the people on our Board of Directors has taken Unity to space, one of the most preeminent test pilots in North America. We have one of our flight test pilots on a has flown as worked through the X35. So the military jet that can take off an over and transition to forward flight. So we're pretty stacked from that perspective. Yes. So hopefully, that answers it. So there will be a pilot in initially for flight testing. But we do have a fly-by-wire system board.

Matt Chesler

Okay. Terrific. Let's move on to another question here. This is for Brian. Does the recent share price decline adversely affect your ATM strategy?

Brian Merker

I don't think so. And I say that because we have a healthy balance sheet. We've talked about at $70 million. We're not spending as much as many of our peers. So we can be patient. We used the ATM very carefully. We wait for favorable market conditions. You can look at what we did last year when there was healthy liquidity, when there were tailwinds in the sector, that's when we think about it. So it doesn't change our strategy, which is essentially being patient and careful. It is an efficient way to bring capital in. But based on where we're at today, there's no urgent requirements. So -- yes, the strategy is being patient and waiting for the right market conditions.

Matt Chesler

Thank you. And then the next and likely final question is from Dave Levin from Trickle Research, which covers HOVR shares. And it's probably for Brandon and Brian, you have laid out a lot of progress -- a lot of great progress here, very impressive. Tell us, what's keep you up at night? Thanks, Dave.

Eric Robinson

Okay. Well, I'll go first. Well, the first thing that keeps me up at night is just the excitement of getting this aircraft put together and getting the flight testing going on this airplane. One thing that keeps me up at night is -- okay, so I mean, the industry has faced some headwinds recently, and there's been some delayed time lines. I'm worried about something happening in another company potentially affecting us. In many ways, we're quite differentiated. So for the folks that haven't looked at our specifications, right? We're not really a competitor to a lot of these folks. We're very much a complementary aircraft. The all electric, the S4, the BETA's Alia, Archer's midnight. They'll do some great work over shorter distances sort of within cities. And we can -- in a complementary way, take things between cities and move things around a lot quicker in many ways, a lot more efficiently over those longer ranges. But if something happens during testing with one of those major OEMs, that's something that we can't control.

And so that's -- yes, that keeps me up at night. I think more and more, the market is seeing us as quite, like I said, differentiated and so we're less and less coupled to the entire advanced mobility space, and as a unique OEM with some pretty special technology. But that's one thing, Brian, I guess you could probably jump in with something as well.

Brian Merker

I may I do sleep pretty well. So that's good. But when I think about some of -- the most the biggest concern I might have is just as we grow, and I've seen this before, we have to be -- we remain disciplined as it relates to governance, safety. And I'm seeing it and we're keeping our eyes on it, and we're going to have to continue to do that. And it's tough as companies grow, but we have the right crew to do it. These are people very experienced. You've heard Brandon's history. We have many others on the executive team that have been through this before. So I am confident that we're going to see success here, but it is a challenge for any growing company that has the potential and the promise that we do. You need to remain disciplined and very -- just careful about governance and safety. And I'm seeing it so far.

Eric Robinson

Great answer.

Matt Chesler

Terrific. Great answer for both of you. I really appreciate taking the questions from our investor community. There are no more at this time, and I'm going to turn the call back to Brandon for concluding remarks.

Eric Robinson

Yes. So thank you for joining us today. We really appreciate all your questions and continued interest. And we look forward to speaking with you again as the X7 program advances. So thank you all. Appreciate it.

Operator

Thank you. This does conclude today's call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.