Hennessy Capital Investment Corp. VII 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of HVII’s financial condition and results of operations should be read in conjunction with its audited financial statements and the notes related thereto which are included in “ Item 8. Financial Statements and Supplementary Data ” of this Report, as well as the sections of this Report entitled “ Item 1. Business ” and “ Item 1A. Risk Factors .” Certain information contained in the discussion and analysis set forth below includes forward-looking statements. HVII’s actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “ Cautionary Note Regarding Forward-Looking Statements ,” “ Item 1A. Risk Factors ” and elsewhere in this Report on Form 10-K. Overview HVII is a SPAC incorporated in the Cayman Islands on September 27, 2024, formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar business combination with one or more businesses. HVII intends to effectuate its business combination using cash derived from the proceeds of its initial public offering and the sale of the private placement units and any sale of securities in connection with its initial business combination, its shares, debt or a combination of cash, shares and debt. The issuance of additional ordinary shares in an initial business combination: ● may significantly dilute the equity interest of HVII’s public shareholders, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares; ● may subordinate the rights of holders of ordinary shares if preference shares is issued with rights senior to those afforded to ordinary shares; ● could cause a change of control if a substantial number of ordinary shares are issued, which may affect, among other things, HVII’s ability to use its net operating loss carry forwards, if any, and could result in the resignation or removal of HVII’s present officers and directors; ● may have the effect of delaying or preventing a change of control of HVII by diluting the equity ownership or voting rights of a person seeking to obtain control of HVII; and ● may adversely affect prevailing market prices for Class A ordinary shares and/or share rights. Similarly, if HVII issues debt securities or otherwise incur significant indebtedness, it could result in: ● default and foreclosure on HVII’s assets if its operating revenues after an initial business combination are insufficient to repay its debt obligations; ● acceleration of HVII’s obligations to repay the indebtedness even if it makes all principal and interest payments when due if HVII breaches certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; ● HVII’s immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; ● HVII’s inability to obtain necessary additional financing if the debt contains covenants restricting its ability to obtain such financing while the debt is outstanding; ● HVII’s inability to pay dividends on ordinary shares; 73 ● using a substantial portion of HVII’s cash flow to pay principal and interest on its debt, which will reduce the funds available for dividends on ordinary shares, expenses, capital expenditures, acquisitions and other general corporate purposes; ● limitations on HVII’s flexibility in planning for and reacting to changes in its business and in the industry in which it operates; ● increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; ● limitations on HVII’s ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of its strategy and other purposes; and ● other disadvantages compared to its competitors who have less debt. HVII expects to continue to incur significant costs in the pursuit of its acquisition plans. It cannot provide any assurance that its plans to complete an initial business combination will be successful. Factors That May Adversely Affect HVII’s Results of Operations HVII’s results of operations and its ability to complete a business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond HVII’s control. HVII’s results of operations and its ability to consummate a business combination could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, fluctuations in interest rates, increases in tariffs, supply chain disruptions, declines in consumer confidence and spending, public health considerations, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. HVII cannot at this time predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact HVII’s business and its ability to complete an initial business combination. Recent Events Business Combination Agreement On October 22, 2025, HVII, Merger Sub and ONE Nuclear entered into the Business Combination Agreement, which contemplates an all-stock business combination transaction and aggregate consideration of $1.0 billion payable to the ONE Nuclear Members. ONE Nuclear is an independent developer of large-scale energy solutions powered by natural gas and advanced nuclear small modular reactor (SMR) technologies. ONE Nuclear is a development stage entity, with de minimis assets, no historic business operations and no revenues or developments currently under construction, and investors and potential investors should consider the financial constraints, uncertainties and risks described in the section of the S-4 Registration Statement entitled “ Risk Factors — Risks Related to ONE Nuclear’s Business and Industry .” Pursuant to the Business Combination Agreement, the parties thereto will enter into a business combination transaction by which, among other things, (i) HVII will transfer by way of continuation and deregistration to and domesticate as a Delaware corporation (the “Domestication”) and (ii) Merger Sub will merge with and into ONE Nuclear (the “Merger”), with ONE Nuclear being the surviving entity of the Merger and becoming a direct, wholly-owned subsidiary of HVII. Upon closing of the Merger (the “Closing,” and the date on which the Closing occurs, the “Closing Date”), ONE Nuclear will become a direct, wholly-owned subsidiary of HVII, and HVII will be a publicly traded company operating under the name “ONE Nuclear.” Following the Closing, HVII’s shares of common stock following the Domestication (“Common Stock”) are expected to trade on Nasdaq under the ticker symbol “ONEN.” 74 The Closing will occur no later than the third business day following the satisfaction or waiver of all of the closing conditions, or at such other time or in such other manner as agreed upon by HVII and ONE Nuclear in writing. The obligations of the parties to consummate the Merger and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”) are subject to the satisfaction or waiver (where permissible) at or prior to the Closing of customary closing conditions set forth in the Business Combination Agreement, including: (i) approval of the Transactions by the shareholders of HVII and the equityholders of ONE Nuclear; (ii) the S-4 Registration Statement having become effective under the Securities Act; (iii) HVII’s shares of Common Stock to be issued in connection with the Transactions will be conditionally approved for listing upon the Closing on Nasdaq subject to any requirement to have a sufficient number of round lot holders of Common Stock; (iv) no governmental authority of competent jurisdiction will have enacted, issued, promulgated, enforced or entered any law or governmental order that is then in effect that makes the Merger illegal or otherwise prevents or prohibits the Closing; (v) no Purchaser Material Adverse Effect or Company Material Adverse Effect (each as defined in the Business Combination Agreement) will have occurred since the date of the Business Combination Agreement that is continuing; and (vi) the Domestication will have been completed. There is no minimum cash condition or financing condition to Closing. Unless specifically stated, this Report does not give effect to the proposed Transactions and does not contain the risks associated with the proposed Transactions. Such risks and effects relating to the proposed Transactions are included in the S-4 Registration Statement. For more information about the Proposed Business Combination and the Business Combination Agreement, see HVII’s Current Report on Form 8-K filed with the SEC on October 23, 2025. Results of Operations HVII has neither engaged in any operations nor generated any operating revenues to date. The only activities from inception through December 31, 2025, were organizational activities, those necessary to prepare for HVII’s initial public offering and those in connection with HVII’s pursuit of an initial business combination, described below. HVII does not expect to generate any operating revenues until after the completion of its business combination. Subsequent to its initial public offering, HVII has generated non-operating income in the form of interest income from funds held after the initial public offering. Subsequent to its initial public offering, HVII has incurred increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, an initial business combination. For the year ended December 31, 2025, HVII had net income of $3,687,416, which consisted of interest earned on marketable securities held in the trust account of $7,293,022 and interest earned on cash equivalents of $50,950 offset by $3,656,556 of general and administrative costs. For the period from September 27, 2024 (inception) through December 31, 2024, HVII had a net loss of $47,952, which consisted of formation and general and administrative costs. Liquidity and Capital Resources; Going Concern Until the consummation of the initial public offering, HVII’s only source of liquidity was an initial purchase of Class B ordinary shares, par value $0.0001 per share, by HVII’s sponsor for $25,000 and loans from HVII’s sponsor, which were repaid at the closing of the initial public offering. 75 On January 21, 2025, HVII consummated the initial public offering of 19,000,000 units, which includes the partial exercise by the underwriters of their over-allotment option in the amount of 1,500,000 units, at $10.00 per unit, generating gross proceeds of $190,000,000. Simultaneously with the closing of the initial public offering, HVII consummated the sale of an aggregate of 690,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds of $6,900,000. Of the 690,000 private placement units, 500,000 private placement units were purchased by the HVII’s sponsor, and an aggregate of 190,000 private placement units were purchased by the underwriters of HVII’s initial public offering: Cohen & Company Capital Markets (133,000); Clear Street LLC (28,500); and Loop Capital Markets LLC (28,500). Following the closing of the initial public offering and the sale of the private placement units, a total of $190,000,000 was placed in the trust account. HVII incurred $12,656,782 of transaction costs consisting of $3,800,000 of cash underwriting fee, $7,600,000 of deferred underwriting fee and $1,256,782 of other offering costs. HVII intends to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (which interest shall be net of permitted withdrawals and excluding deferred underwriting commissions), to complete its initial business combination. To the extent that HVII’s share capital or debt is used, in whole or in part, as consideration to complete its initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue its growth strategies. Excluding funds held in the Trust Account, HVII had approximately $984,245 in cash and cash equivalents and working capital of $999,376 of working capital (excluding approximately $334,716 of taxes payable that will be paid from interest income earned on assets held in the Trust Account) at December 31, 2025. HVII intends to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses and structure, negotiate and complete an initial business combination and to pay taxes to the extent the interest earned on the trust account is not sufficient to pay HVII’s income taxes. As discussed above under “— Recent Events ,” on October 22, 2025, HVII entered into a Business Combination Agreement. In addition, HVII may pay commitment fees for financing, fees to consultants to assist it with its search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although HVII does not have any current intention to do so. If HVII entered into an agreement where it paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific proposed initial business combination and the amount of HVII’s available funds at the time. HVII’s forfeiture of such funds (whether as a result of its breach or otherwise) could result in its not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses. On December 31, 2025, HVII loaned ONE Nuclear an aggregate principal amount of $300,000 solely to pay expenses incurred in connection with third-party legal, accounting, and audit services, including, without limitation, expenses related to the preparation, filing, and review of the ONE Nuclear’s financial statements, regulatory filings, and other related corporate and compliance matters. In consideration of HVII’s commitment to make available up to $300,000 for advances thereunder, and additionally to compensate HVII for any and all outstanding advances (including a reasonable rate of interest), ONE Nuclear agrees to pay to HVII a monthly non-refundable fee equal to $10,000 (the “Commitment Fee”), which fee shall be fully earned by HVII and paid in-kind in arrears, on the last calendar day of each month until the Maturity Date (as defined below) and on the Maturity Date (to the extent the Maturity Date does not occur on the last calendar day of a month), in each case pro-rated for any partial period. All outstanding and unpaid obligations shall be payable by ONE Nuclear to HVII upon the earliest of (the earliest such date, the “Maturity Date”): (i) March 31, 2026, (ii) the date upon which all or any part of the obligations have been declared or automatically have become due and payable (whether by acceleration or otherwise), and (iii) the date upon which the business combination between ONE Nuclear and HVII or any third-party bridge financing, outside financing or similar capital-raising transaction by ONE Nuclear is consummated. The obligations may be prepaid at any time without penalty. In order to fund working capital deficiencies or finance transaction costs in connection with an initial business combination, HVII’s sponsor or an affiliate of HVII’s sponsor or certain of HVII’s officers and directors may, but are not obligated to, loan HVII funds as may be required. If HVII completes an initial business combination, it may repay such loaned amounts out of the proceeds of the trust account released to HVII. In the event that an initial business combination does not close, HVII may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from the trust account would be used for such repayment. Up to $2,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the private placement units. Except for the foregoing, the terms of such loans by HVII’s sponsor, an affiliate of HVII’s sponsor or HVII’s officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. HVII does not expect to seek loans from parties other than HVII’s sponsor, an affiliate of HVII’s sponsor or its officers and directors, if any, as HVII does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the trust account. 76 HVII does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if HVII’s estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, HVII may have insufficient funds available to operate its business prior to its initial business combination. Moreover, HVII may need to obtain additional financing either to complete its initial business combination or because it becomes obligated to redeem a significant number of its public shares upon completion of its initial business combination, in which case HVII may issue additional securities or incur debt in connection with such initial business combination. If HVII raises additional funds through the incurrence of indebtedness, such indebtedness would have rights that are senior to HVII’s equity securities and could contain covenants that restrict HVII’s operations. Further, due to the anti-dilution rights of the founder shares, public shareholders may incur material dilution. In addition, HVII intends to target businesses with enterprise values that are greater than it could acquire with its current funds, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy redemptions by public shareholders, HVII may be required to seek additional financing to complete such proposed business combination. HVII may also obtain financing prior to the closing of its initial business combination to fund its working capital needs and transaction costs in connection with its search for and completion of its initial business combination. There is no limitation on HVII’s ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with its initial public offering, any backstop or similar agreements HVII may enter into following the consummation of its initial business combination. Subject to compliance with applicable securities laws, HVII would only complete such financing simultaneously with the completion of HVII’s initial business combination. If HVII is unable to complete its initial business combination because it does not have sufficient funds available to it, HVII will be forced to cease operations and liquidate the trust account. In addition, following its initial business combination, if cash on hand is insufficient, HVII may need to obtain additional financing in order to meet its obligations. HVII assessed going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Codification (“ ASC ”) Topic 205-40, “Basis of Presentation – Going Concern”. HVII has until January 21, 2027 (absent any extensions of such period by the HVII shareholders) to consummate an initial business combination. While HVII intends to complete an initial business combination before the mandatory liquidation date, it is uncertain that the HVII will be able to consummate an initial business combination by that time. If an initial business combination is not consummated by that date, there will be a mandatory liquidation and subsequent dissolution of the HVII. Management has determined that the liquidity condition and mandatory liquidation, should an initial business combination not occur, and potential subsequent dissolution, raises substantial doubt about the HVII’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should HVII be required to liquidate after January 21, 2027. Off-Balance Sheet Financing Arrangements HVII has no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2025. HVII does not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. HVII has not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities or purchased any non-financial assets. Contractual Obligations HVII does not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay, commencing on January 17, 2025, an aggregate of $15,000 per month for office space, utilities and secretarial and administrative support services, which amount increased to an aggregate of $25,000 per month beginning September 1, 2025, and an agreement to pay Nicholas Geeza, HVII’s chief financial officer, an aggregate of $10,000 per month. HVII began incurring these fees on January 17, 2025, and will continue to incur these fees monthly until the earlier of the completion of its initial business combination and its liquidation. HVII has agreed to pay consulting and advisory fees of $11,000 per month, with a discretionary annual bonus of up to $25,000, to an affiliate of HVII’s sponsor for services related to the execution and consummation of an initial business combination, which payments commenced in September 2025. An aggregate of approximately $42,068 was charged to operations for the year ended December 31, 2025 for such consulting and advisory services. In addition, in January 2025, HVII began to compensate a Vice President of HVII $16,500 per month, with a discretionary annual bonus of up to $165,000, for her services. An aggregate of approximately $212,258, was charged to operations for the year ended December 31, 2025, respectively, for such services. 77 The underwriters of HVII’s initial public offering were entitled to a cash underwriting discount of $0.20 per unit, or $3,800,000 in the aggregate, which was paid to the underwriters in cash at the closing of the initial public offering. Additionally, the underwriters are entitled to a deferred underwriting discount of up to $0.40 per unit, or up to $7,600,000 in the aggregate (subject to reduction based on the funds remaining in the trust account after giving effect to the public shares that are redeemed in connection with an initial business combination), payable to the underwriters for deferred underwriting commissions on amounts remaining in the trust account after all redemptions by public shareholders have been met. The deferred underwriting discount will become payable to the underwriters from the amounts held in the trust account solely in the event HVII completes its initial business combination. Critical Accounting Estimates The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and income and expenses during the periods reported. Actual results could materially differ from those estimates. HVII has not identified any critical accounting estimates. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. HVII is smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. Item 8. Financial Statements and Supplementary Data. HVII’s financial statements and notes thereto begin on page F-1 and are included herein by reference. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.