Source: Investing Published 10/18/2024, 00:49
New Horizon Aircraft Ltd. (NASDAQ:HOVR), an aircraft manufacturer, is currently at risk of being delisted from the Nasdaq Stock Exchange. The company, formerly known as Pono Capital Three, Inc., received notice on August 28, 2024 from Nasdaq that it had failed to meet the net income standard required for a continued listing.
The specific rule in question, Nasdaq Listing Rule 5550(b)(3), requires net income from continuing operations of at least $500,000 in the most recently completed fiscal year. New Horizon also does not meet the alternative listing criteria related to the market value of listed securities and shareholders’ equity.
On October 11, 2024, the company received a communication from Nasdaq’s Listing Qualifications Department indicating that it had declined to accept New Horizon’s compliance plan. In response, New Horizon has requested a hearing with the Nasdaq Hearings Committee to challenge this decision. The hearing request will defer any delisting proceedings until the process is complete, allowing the company’s shares and common warrants to remain listed during this period.
New Horizon intends to present a comprehensive plan to restore compliance with listing standards at the upcoming hearing. While the outcome is uncertain, the company is confident in its strategy to address compliance issues.
A potential delisting could have significant implications for New Horizon, impacting its ability to raise capital and impacting its overall financial position and business operations. The company’s annual report filed on August 15, 2024 outlines the risks associated with non-compliance, including diversion of resources and attention from its core business.
In other recent news, Horizon Aircraft has seen increased activity. EF Hutton initiated coverage of the aerospace technology company with a “buy” rating and a $2.00 price target, highlighting the company’s revenue-generating potential and ability to avoid significant shareholder dilution due to its current financial condition. The company also noted Horizon Aircraft’s promising results in subscale testing, suggesting potential revenue potential from military applications.
The company also made significant adjustments to its warrant terms and took steps to address a potential delisting from Nasdaq due to non-compliance with net income, market value of listed securities, equity, and minimum offering price standards. Horizon Aircraft has until October 14, 2024, to submit a compliance plan.
In personnel news, Horizon Aircraft has appointed Tom Brassington, a veteran of eVTOL developer Lilium, as its new chief technology officer. On the financial front, the company has set terms for a public offering expected to raise approximately $2.9 million, with EF Hutton LLC as sole book-running manager.
In product development, Horizon Aircraft reported significant progress in testing its eVTOL prototype. The Cavorite X7 eVTOL design process is on track for completion and testing by 2026. Here are the latest developments with Horizon Aircraft.
InvestingPro Insights
Recent InvestingPro data paints a tough picture for New Horizon Aircraft Ltd. (NASDAQ:HOVR), as the company struggles to meet Nasdaq listing requirements. The company’s market cap is just $7.96 million, reflecting its current financial difficulties.
InvestingPro’s advice notes that HOVR is “burning cash rapidly” and “unprofitable over the past 12 months,” which directly correlates to the company’s failure to meet Nasdaq’s net income benchmark. The stock has performed particularly poorly, with InvestingPro’s data showing a YTD total price return of -95.97%, according to the latest data.
Despite these challenges, one InvestingPro advice notes that HOVR “holds more cash than debt on its balance sheet,” which could be a positive factor in its plan to regain compliance. However, investors should be aware that the stock “generally trades with high price volatility,” which adds to the uncertainty surrounding its future.
