Hennessy Capital Investment Corp. VII 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. Market Information HVII’s units, Class A ordinary shares and share rights are each traded on the Nasdaq Global Market under the symbols “HVIIU,” “HVII” and “HVIIR,” respectively. HVII’s units commenced public trading on January 17, 2025 and its Class A ordinary shares and share rights commenced separate public trading on February 6, 2025. Holders On March 28, 2025, there were five holders of record of HVII’s units, one holder of record of HVII’s Class A ordinary shares, eight holders of record of HVII’s Class B ordinary shares and one holder of record of HVII’s share rights. Securities Authorized for Issuance Under Equity Compensation Plans None. Dividends HVII has not paid any cash dividends on its ordinary shares to date and does not intend to pay cash dividends prior to the completion of its initial business combination. The payment of cash dividends in the future will be dependent upon HVII’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of HVII’s initial business combination. The payment of any cash dividends subsequent to HVII’s initial business combination will be within the discretion of its board of directors at such time and HVII will only pay such dividend out of its profits or share premium (subject to solvency requirements) as permitted under Cayman Islands law. In addition, HVII’s board of directors is not currently contemplating and does not anticipate declaring any share dividends in the foreseeable future. Further, if HVII incurs any indebtedness in connection with its initial business combination, HVII’s ability to declare dividends may be limited by restrictive covenants it may agree to in connection therewith. 72 Performance Graph The performance graph has been omitted as permitted under rules applicable to smaller reporting companies. Recent Sales of Unregistered Securities On October 8, 2024, HVII’s sponsor purchased an aggregate of 5,750,000 Class B ordinary for an aggregate purchase price of $25,000, or approximately $0.004 per share. On January 10, 2025, the Company issued to the sponsor an additional 958,333 founder shares for no additional consideration, resulting in the sponsor holding a total of 6,708,333 founder shares. The number of founder shares issued was determined based on the expectation that the founder shares would represent 25% of the outstanding ordinary shares upon completion of HVII’s initial public offering. In December 2024, HVII’s sponsor transferred 250,000 founder shares to Nicholas Geeza, HVII’s Executive Vice President, Chief Financial Officer and Secretary and an aggregate of 130,000 founder shares to its independent directors. In January 2025, HVII’s sponsor transferred 750,000 founder shares to Thomas D. Hennessy, HVII’s President and Chief Operating Officer. 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. Each unit consists of one Class A ordinary share and one right to receive one-twelfth (1/12) of one Class A ordinary share upon the consummation of an initial business combination. Simultaneously with the closing of HVII’s initial public offering, HVII consummated the private placement and sale of an aggregate of 690,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds to HVII of $6,900,000. Of the 690,000 private placement units, 500,000 private placement units were purchased by HVII’s sponsor and 190,000 private placement units were purchased by the underwriters. The private placement units are identical to the units sold in HVII’s initial public offering, except that (i) the private placement units (and the Class A ordinary shares and share rights underlying the private placement units and the Class A ordinary shares issuable upon conversion of the share rights) may not be transferred, assigned or sold, subject to certain limited exceptions set forth in the letter agreement and as described in the registration statement filed in connection with HVII’s initial public offering, until 30 days after the completion of the HVII’s initial business combination, and (ii) the holders of the private placement units are entitled to certain registration rights in respect thereof (and with respect to the Class A ordinary shares and share rights underlying such private placement units and the Class A ordinary shares issuable upon conversion of the share rights). The issuance of the private placement units was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. 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 were 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. For a description of the use of the proceeds generated in HVII’s initial public offering, please see the section of this Report entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved.] 73 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 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; 74 ● 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 assure that its plans to complete a business combination will be successful. 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, 2024, were organizational activities and those necessary to prepare for HVII’s initial public offering, described below. HVII does not expect to generate any operating revenues until after the completion of its initial business combination. It expects to generate 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 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 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 the Sponsor for $25,000 and loans from the Sponsor, which were repaid at the closing of the initial public offering. Subsequent to the period covered by this Report, 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. 75 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 a 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. 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. 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 the 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 a 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 the 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 the sponsor, an affiliate of the 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. 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 initial 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 business combination, any backstop or similar agreements HVII may enter into following the consummation of this offering or otherwise. Subject to compliance with applicable securities laws, HVII would only complete such financing simultaneously with the completion of HVII’s 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. 76 Off-Balance Sheet Financing Arrangements HVII has no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2024. 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 an aggregate of $15,000 per month for office space, utilities and secretarial and administrative support services 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. 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 were 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.