Hennessy Capital Investment Corp VII-A(HVII) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents HVII's unaudited condensed financial statements as of March 31, 2025, and for the three months then ended, along with comprehensive explanatory notes Condensed Balance Sheets | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :----------------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $2,044,292 | $20,005 | | Total current assets | $2,210,643 | $40,834 | | Marketable securities held in Trust Account | $191,494,489 | — | | Total Assets | $193,708,570 | $993,266 | | Total current liabilities | $145,297 | $566,218 | | Total Liabilities | $8,470,297 | $1,016,218 | | Class A ordinary shares subject to possible redemption | $191,419,764 | — | | Total Shareholders' Deficit | $(6,181,491) | $(22,952) | - The company's total assets significantly increased from $993,266 at December 31, 2024, to $193,708,570 at March 31, 2025, primarily due to the proceeds from the Initial Public Offering and Private Placement Units, with $191,494,489 placed in the Trust Account[10] - Shareholders' Deficit increased from $(22,952) at December 31, 2024, to $(6,181,491) at March 31, 2025, reflecting the impact of the IPO and related accounting adjustments[10] Condensed Statement of Operations | Metric | For the Three Months Ended March 31, 2025 (Unaudited) | | :------------------------------------------ | :---------------------------------------------------- | | General and administrative costs | $489,035 | | Loss from operations | $(489,035) | | Interest earned on cash equivalents | $12,553 | | Interest earned on marketable securities held in Trust Account | $1,494,489 | | Total other income | $1,507,042 | | Net income | $1,018,007 | | Basic and diluted net income per ordinary share, Class A ordinary shares | $0.05 | | Basic and diluted net income per ordinary share, Class B ordinary shares | $0.05 | - The company reported a net income of $1,018,007 for the three months ended March 31, 2025, primarily driven by interest earned on marketable securities held in the Trust Account ($1,494,489), offsetting general and administrative costs[14] Condensed Statement of Changes in Shareholders' Deficit | Item | January 1, 2025 Balance | March 31, 2025 Balance | | :------------------------------------------ | :---------------------- | :--------------------- | | Class A Ordinary Shares (Shares) | — | 690,000 | | Class A Ordinary Shares (Amount) | $— | $69 | | Class B Ordinary Shares (Shares) | 6,708,333 | 6,333,333 | | Class B Ordinary Shares (Amount) | $671 | $633 | | Additional Paid-in Capital | $24,329 | $— | | Accumulated Deficit | $(47,952) | $(6,182,193) | | Total Shareholders' Deficit | $(22,952) | $(6,181,491) | - The total shareholders' deficit increased significantly from $(22,952) at January 1, 2025, to $(6,181,491) at March 31, 2025, primarily due to accretion for Class A ordinary shares to redemption amount ($15,504,819) and net income ($1,018,007), alongside the sale of Private Placement Units and forfeiture of founder shares[16] Condensed Statement of Cash Flows | Cash Flow Activity | For the Three Months Ended March 31, 2025 (Unaudited) | | :-------------------------------- | :---------------------------------------------------- | | Net cash used in operating activities | $(488,511) | | Net cash used in investing activities | $(190,000,000) | | Net cash provided by financing activities | $192,512,798 | | Net change in cash and cash equivalents | $2,024,287 | | Cash and cash equivalents, end of the period | $2,044,292 | - The company experienced a net increase in cash and cash equivalents of $2,024,287, ending the period with $2,044,292. This was driven by significant financing activities from the IPO and private placement, offset by investment into the Trust Account[19] Notes to Condensed Financial Statements NOTE 1 — ORGANIZATION AND BUSINESS OPERATIONS - Hennessy Capital Investment Corp. VII (HVII) is a blank check company incorporated on September 27, 2024, for the purpose of effecting a business combination[21] - The company consummated its Initial Public Offering (IPO) on January 21, 2025, selling 19,000,000 units at $10.00 per unit, generating $190,000,000 gross proceeds, including a partial exercise of the over-allotment option[23] - Simultaneously with the IPO, HVII sold 690,000 private placement units at $10.00 each, generating $6,900,000 gross proceeds, with the Sponsor and underwriters as purchasers[24] - Transaction costs for the IPO amounted to $12,656,782, comprising cash underwriting fees, deferred underwriting fees, and other offering costs[25] - Substantially all net proceeds from the IPO and private placement are intended for a Business Combination, with $190,000,000 placed in a Trust Account to be invested in U.S. government treasury obligations or money market funds[26][29] - Public shareholders have redemption rights upon completion of a Business Combination or if the company fails to complete one within the Completion Window (24 months from IPO closing)[30][31] - The Sponsor and officers/directors have waived redemption rights for their founder shares and private placement shares and agreed to vote in favor of a Business Combination[33] - As of March 31, 2025, HVII had cash and cash equivalents of $2,044,292 and working capital of $2,065,346, with sufficient funds for working capital needs for at least one year[35] NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC rules, with certain disclosures condensed or omitted[37] - HVII is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[39][40] - Cash equivalents include short-term investments with original maturities of three months or less; as of March 31, 2025, cash equivalents were $2,044,292[44] - Marketable securities held in the Trust Account ($191,494,489 as of March 31, 2025) are classified as held-to-maturity (U.S. Treasury securities) or trading securities (money market funds)[45] - Offering costs allocated to Class A ordinary shares subject to redemption were charged to temporary equity, while those allocated to Share Rights were charged to shareholders' deficit[47] - The company is an exempted Cayman Islands company and is not subject to income taxes in the Cayman Islands or the United States, resulting in a zero tax provision[53] - Class A ordinary shares subject to possible redemption are classified as temporary equity and adjusted to redemption value at each reporting period end[55] Class A Ordinary Shares Subject to Possible Redemption Reconciliation (March 31, 2025) | Item | Amount | | :------------------------------------------ | :------------- | | Gross proceeds | $190,000,000 | | Less: Proceeds allocated to Share Rights | $(1,577,000) | | Less: Class A ordinary shares issuance costs | $(12,508,055) | | Plus: Remeasurement to redemption value | $15,504,819 | | Total Class A ordinary shares subject to possible redemption | $191,419,764 | - Net income per ordinary share (basic and diluted) for Class A and Class B ordinary shares was $0.05 for the three months ended March 31, 2025[57] NOTE 3 — INITIAL PUBLIC OFFERING - On January 21, 2025, HVII sold 19,000,000 Units in its IPO, including a partial exercise of the over-allotment option, at $10.00 per Unit[61] - Each Unit consists of one Class A ordinary share and one Share Right, entitling the holder to receive one-twelfth (1/12) of one Class A ordinary share upon consummation of a Business Combination[61] NOTE 4 — PRIVATE PLACEMENT - Simultaneously with the IPO, the Sponsor and Underwriters purchased 690,000 Private Placement Units at $10.00 per unit, totaling $6,900,000[62] - Private Placement Units are identical to IPO Units but have transfer restrictions until 30 days after a Business Combination and include certain registration rights[63] - The Sponsor and officers/directors have waived redemption rights for their founder shares and private placement shares and agreed to vote in favor of a Business Combination[65] NOTE 5 — RELATED PARTY TRANSACTIONS - The Sponsor initially received 5,750,000 founder shares for $25,000 and an additional 958,333 founder shares for no additional consideration on January 10, 2025[66] - Due to the partial exercise of the over-allotment option, 375,000 founder shares were forfeited, resulting in the Sponsor holding 5,203,333 founder shares as of March 31, 2025[66] - Founder shares were transferred to the CFO, COO, and independent directors for $0.004 per share, with a fair value of $0.99 per share, recognized as share-based compensation when the performance condition (Business Combination) is probable[67] - A Promissory Note from the Sponsor for up to $250,000 for IPO expenses was fully repaid on January 21, 2025, with $0 outstanding as of March 31, 2025[71] - The Sponsor or affiliates may provide Working Capital Loans up to $2,500,000, convertible into Private Placement Units, to finance transaction costs for a Business Combination; no such loans were outstanding as of March 31, 2025[72] - HVII pays $15,000 per month to the Sponsor for administrative services and $10,000 per month to the CFO for services, commencing January 17, 2025[73][74] NOTE 6 — COMMITMENTS AND CONTINGENCIES - Geopolitical instability (Russia-Ukraine, Israel-Hamas conflicts) and U.S. tariff policies could adversely affect HVII's search for a Business Combination and the performance of any target business[76][77] - Holders of founder shares, Private Placement Units, and related securities have registration rights, entitling them to require HVII to register the sale of their securities[78] - Underwriters partially exercised their over-allotment option for 1,500,000 Units on January 21, 2025, forfeiting the remaining 1,125,000 Units[79] - A deferred underwriting discount of up to $7,600,000 is payable to underwriters from the Trust Account upon completion of a Business Combination, subject to reduction based on redemptions[80] - Deferred legal fees totaled $725,000 as of March 31, 2025, classified as a non-current liability, payable upon consummation of a Business Combination[82] NOTE 7 — SHAREHOLDERS' DEFICIT - HVII is authorized to issue 1,000,000 preference shares and 200,000,000 Class A ordinary shares; 690,000 Class A ordinary shares were issued/outstanding (excluding redeemable shares) as of March 31, 2025[83][84] - HVII is authorized to issue 20,000,000 Class B ordinary shares; 6,333,333 Class B ordinary shares were issued/outstanding as of March 31, 2025, after forfeiture of 375,000 founder shares[85] - Founder shares (Class B) automatically convert to Class A ordinary shares on a one-for-one basis upon Business Combination, subject to anti-dilution adjustments[86] - Holders of Class A and Class B ordinary shares are entitled to one vote per share, but prior to a Business Combination, only Class B holders vote on director appointments/removals and continuation in other jurisdictions[89] - Each Share Right automatically converts to one-twelfth (1/12) of one Class A ordinary share upon Business Combination; Share Rights expire worthless if a Business Combination is not completed within the required timeframe[90] NOTE 8 — FAIR VALUE MEASUREMENTS - The fair value of HVII's financial assets and liabilities approximates their carrying amounts due to their short-term nature[48] - Assets held in the Trust Account as of March 31, 2025, were $191,494,489, primarily in a money market account, classified as Level 1 in the fair value hierarchy[94][95] Fair Value of Share Rights at Issuance (January 21, 2025) | Metric | Value | | :-------------------------- | :---- | | Underlying share price | $9.91 | | Pre-adjusted value per share right | $0.83 | | Market adjustment | 10.0% | | Fair Value per share right | $0.083 | - The fair value of Share Rights issued in the IPO was $1,577,000 ($0.083 per Share Right) as of January 21, 2025, classified under equity treatment and not requiring remeasurement[95] NOTE 9 — SEGMENT REPORTING - HVII operates as a single reportable segment, with the Chief Financial Officer (CODM) reviewing overall assets, operating results, and financial metrics[97] - Key metrics reviewed by the CODM include general and administrative costs ($489,035 for Q1 2025) and interest earned on marketable securities held in the Trust Account ($1,494,489 for Q1 2025)[100] NOTE 10 — SUBSEQUENT EVENTS - The company did not identify any subsequent events requiring adjustment or disclosure in the unaudited condensed financial statements up to the date of issuance[102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses HVII's financial condition and operational results, including forward-looking statements, risk factors, liquidity, and critical accounting estimates for the three months ended March 31, 2025 Special Note Regarding Forward Looking Statements - The report contains forward-looking statements regarding HVII's future performance, financial condition, and industry developments, which are not guarantees and may differ materially from actual results due to various risks and uncertainties[104][105] - Key risks include HVII's ability to select and complete a business combination, obtain additional financing, and potential conflicts of interest among officers and directors[106] Overview - HVII is a Cayman Islands-incorporated SPAC formed on September 27, 2024, to effect a business combination using IPO proceeds, private placement funds, and potentially additional securities or debt[108] - Issuance of additional ordinary shares in a business combination could significantly dilute public shareholders, subordinate rights if preference shares are issued, cause a change of control, or adversely affect market prices[111] - Incurring significant indebtedness could lead to default, acceleration of obligations, inability to pay dividends, and limitations on financial flexibility[109][115] Factors That May Adversely Affect HVII's Results of Operations - HVII's operations and ability to complete a business combination may be adversely affected by economic uncertainty, financial market volatility, and geopolitical instability, such as the conflicts in Ukraine and the Middle East[112] Results of Operations - HVII has not generated operating revenues to date, with activities focused on organizational efforts and the IPO[113] - For the three months ended March 31, 2025, HVII reported a net income of $1,018,007, primarily from $1,494,489 in interest earned on marketable securities in the Trust Account, offset by $489,035 in general and administrative costs[114] Liquidity and Capital Resources - Following the IPO and private placement on January 21, 2025, HVII raised gross proceeds of $190,000,000 and $6,900,000, respectively, with $190,000,000 placed in the Trust Account[117][118] - Transaction costs amounted to $12,656,782, including cash and deferred underwriting fees and other offering costs[118] - Funds in the Trust Account are primarily intended for a business combination, while funds outside the Trust Account are used for identifying and evaluating target businesses, due diligence, and operational expenses[119][120] - The Sponsor or affiliates may provide working capital loans, convertible into units, to finance transaction costs, but no such loans were outstanding[121] - HVII may need additional financing to complete a business combination or meet redemption obligations, potentially through equity, equity-linked securities, or debt, which could result in material dilution for public shareholders[123] Off-Balance Sheet Financing Arrangements - As of March 31, 2025, HVII has no off-balance sheet obligations, assets, or liabilities[124] Contractual Obligations - HVII has an agreement to pay $15,000 per month for office space and administrative support to the Sponsor and $10,000 per month to its CFO, commencing January 17, 2025, until a business combination or liquidation[125] - A deferred underwriting discount of up to $7,600,000 is payable to underwriters upon completion of a business combination[126] Critical Accounting Estimates - HVII has not identified any critical accounting estimates[127] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, HVII is exempt from providing quantitative and qualitative disclosures about market risk - HVII is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[128] Item 4. Controls and Procedures This section details the evaluation of HVII's disclosure controls and procedures and reports on any changes in internal control over financial reporting - HVII's Certifying Officers concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[129] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, HVII's internal control over financial reporting[131] PART II - OTHER INFORMATION Item 1. Legal Proceedings HVII's management reports no pending litigation against the company or its officers and directors - To the knowledge of HVII's management, there is no litigation currently pending against HVII, its officers, or directors[133] Item 1A. Risk Factors This section updates the risk factors, highlighting the potential adverse effects of changes in international trade policies, tariffs, and treaties on HVII's search for a business combination target or the performance of a post-business combination company - Changes in international trade policies, tariffs, and treaties, including those implemented by the U.S. and retaliatory measures by other countries, may materially adversely affect HVII's search for a business combination target or the performance of a post-business combination company[135][136][137] - Such changes could reduce the pool of potential target companies, making it costly or impractical to complete a business combination, and adversely affect the market value of the post-business combination company's securities[138] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sales of equity securities, specifically the issuance and transfers of Class B ordinary shares (founder shares) and the private placement of units, along with the use of proceeds from the initial public offering - HVII's sponsor purchased 5,750,000 Class B ordinary shares for $25,000 on October 8, 2024, and received an additional 958,333 Class B ordinary shares on January 10, 2025, for no additional consideration[139] - Class B ordinary shares were transferred to HVII's CFO, COO, and independent directors in December 2024 and January 2025[139] - The company consummated its IPO on January 21, 2025, selling 19,000,000 units at $10.00 per unit, generating $190,000,000 gross proceeds[140] - Simultaneously, 690,000 private placement units were sold at $10.00 per unit, generating $6,900,000 gross proceeds, purchased by the sponsor and underwriters under a Section 4(a)(2) exemption[141] - Underwriters received a $3,800,000 cash underwriting discount and are entitled to a deferred underwriting discount of up to $7,600,000, payable upon completion of a business combination[142] Item 3. Defaults Upon Senior Securities HVII reports no defaults upon senior securities - There are no defaults upon senior securities[144] Item 4. Mine Safety Disclosures This item is not applicable to HVII - Mine Safety Disclosures are not applicable to HVII[145] Item 5. Other Information This section confirms that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025 - No director or officer of HVII adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended March 31, 2025[146] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including agreements related to underwriting, corporate governance, trust management, registration rights, and certifications - The report includes various exhibits such as the Underwriting Agreement, Amended and Restated Memorandum and Articles of Association, Share Rights Agreement, Investment Management Trust Agreement, Registration Rights Agreement, Administrative Support Agreement, and certifications by the CEO and CFO[147] Signatures This section contains the duly authorized signatures of HVII's Chairman of the Board of Directors and Chief Executive Officer, and the Executive Vice President, Chief Financial Officer and Secretary, certifying the report - The report is signed by Daniel J. Hennessy, Chairman of the Board of Directors and Chief Executive Officer, and Nicholas Geeza, Executive Vice President, Chief Financial Officer and Secretary, on May 15, 2025[152]