• Three out of four expect at least one more rate cut this year and all forecast further cuts in 2025
  
  
• 99% of fund managers expect small and micro-caps to deliver strong returns over the next 12 months

Three out of four (75%) fund managers who specialize in managing funds that invest primarily in small-cap and micro-cap stocks, are predicting further rate cuts from the Federal Reserve this year, according to new global research* from New Horizon Aircraft (NASDAQ: HOVR), doing business as Horizon Aircraft (“Horizon Aircraft” or the “Company”), the advanced aerospace engineering company and developer of eVTOL (electric Vertical Take-Off and Landing) aircraft.

The global study with small and micro-cap fund managers in the US, Canada, Europe, the Middle East and Asia who collectively have $82.4 billion assets under management, found three in five (59%) fund managers believe that the Federal Reserve will cut rates once more during 2024 and a further 16% believe that there could be more than one cut made by the end of the year.

Looking ahead, fund managers expect Federal Reserve interest rate cuts to continue, with one in five (19%) respondents in the study saying they expect three cuts during 2025, 59% expect two cuts and 20% anticipate there will be just a single cut made. This expectation for multiple interest rate cuts over the remainder of 2024 and 2025 is matched by the finding that 82% of fund managers interviewed believe that US interest rates will have fallen from their current level of 4.9% to 4.3% or less by the end of 2025. Some 14% believe that the rate could even fall below 4.1%.
 
Given the fact that 40% of the debt on Russell 2000 companies is short-term or floating rate, compared with around 9% for S&P companies,** the anticipated fall in interest rates is expected by 89% of fund managers to have a more positive impact on micro and small-cap valuations than on large caps. Seven per cent of fund managers were unsure, and only 4% disagreed.

Although US inflation had slowed to 2.5% in the year to August 2024, it still remains above the Federal Reserve’s 2% target, however nine in 10 (89%) of fund managers in the study believe that this target will be achieved within the next 12 months, by Q2 2025.

The research indicates that the expectation for rate cuts and easing of inflationary pressure spells good news for micro and small-cap company valuations, with 99% of fund managers interviewed in agreement that they expect the economy during 2024 and 2025 to provide a more favourable foundation for micro and small cap valuations. Against the current backdrop of global small caps trading at the largest discount to large caps in over 20 years, the same number (99%) of fund managers expect micro and small-caps to deliver strong returns over the next 12 months.

Brandon Robinson, CEO of Horizon Aircraft, said: “The predicted cuts in the Federal Reserve Rate could benefit small and micro-cap companies significantly. This view is shared by the fund managers who took part in our research, all of whom specialise in managing funds that invest in small- and micro-cap emerging companies that have high growth potential.

Small cap companies with unique and transformative technologies are once again poised to offer investors a way to realize significant gains. The fact that they can do so while helping companies like Horizon Aircraft build a better future is something that we’re extremely proud of.”

Horizon Aircraft’s Cavorite X7 aircraft will have a gross weight of an estimated 5,500 lbs with a projected useful load of 1,500 lbs. With an estimated maximum speed of 250 miles per hour and an average range of over 500 miles with fuel reserves, Horizon believes that this aircraft, if eventually licensed for commercial use, would be well-positioned to excel in medical evacuation, critical supply delivery, disaster relief, and special military missions. The Company believes that the proposed aircraft would also be attractive for Regional Air Mobility – moving people and cargo 50 to 500 miles.

Unlike many in its category, the Cavorite X7 is being designed with a hybrid electric power system. The Company is designing the Cavorite X7 such that it could, after its vertical takeoff, re-charge its batteries enroute when it is flying in a configuration like a traditional aircraft. After a vertical landing and completion of a mission, the Company is designing the Cavorite X7 to recharge its battery array in under 30 minutes to be ready for its next mission.

Horizon believes that its innovative approach and technology will allow the Cavorite X7 to fly 98% of its mission in a very low-drag configuration like a traditional aircraft. The Company believes that flying most of the time as a normal aircraft is also safer and will make the aircraft easier to certify than other radical new eVTOL designs. The Cavorite X7 is designed to be powered by a hybrid electric system that will recharge the battery array in-flight and post-flight, while also providing significant system redundancy. The Company is continuing the testing of its 50%-scale aircraft that it believes will reduce technical risk moving forward as it continues to develop its full-scale aircraft.

About Horizon Aircraft
Horizon Aircraft (Nasdaq: HOVR) is an advanced aerospace engineering company that is developing one of the world’s first hybrid eVTOL that is to be able to fly most of its mission exactly like a traditional aircraft while offering industry-leading speed, range, and operational utility. Horizon’s unique designs put the mission first and prioritize safety, performance, and utility. Horizon hopes to successfully complete testing and certification of its Cavorite X7 eVTOL quickly and then enter the market and service a broad spectrum of early use cases. Visit www.horizonaircraft.com for more information.

Forward-Looking Statements
The information in this press release contains certain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “aim,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (i) changes in the markets in which Horizon competes, including with respect to its competitive landscape, technology evolution or regulatory changes; (ii) the risk that Horizon will need to raise additional capital to execute its business plans, which may not be available on acceptable terms or at all; (iii) the ability of the parties to recognize the benefits of the business combination agreement and the business combination; (iv) the lack of useful financial information for an accurate estimate of future capital expenditures and future revenue; (v) statements regarding Horizon’s industry and market size; (vi) financial condition and performance of Horizon, including the anticipated benefits, the implied enterprise value, the expected financial impacts of the business combination, the financial condition, liquidity, results of operations, the products, the expected future performance and market opportunities of Horizon; (vii) Horizon’s ability to develop, certify, and manufacture an aircraft that meets its performance expectations; (viii) successful completion of testing and certification of Horizon’s Cavorite X7 eVTOL; (ix) the targeted future production of Horizon’s Cavorite X7 aircraft; and (x) those factors discussed in our filings with the SEC. You should carefully consider the foregoing factors and the other risks and uncertainties that will be described in the “Risk Factors” section of our Annual Report on Form 10-K filed with the SEC on August 15, 2024 and other documents to be filed by New Horizon from time to time with the SEC. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and while Horizon may elect to update these forward-looking statements at some point in the future, they assume no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. Horizon does not give any assurance that Horizon will achieve its expectations.