Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this Quarterly Report on Form 10-Q (this "Quarterly Report") to "HVII" refer to Hennessy Capital Investment Corp. VII. References to HVII's "management" or HVII's "management team" refer to HVII's officers and directors. References to the "Sponsor" refer to HC VII Sponsor LLC. The following discussion and analysis of HVII's financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained elsewhere in this Quarterly Report.

Special Note Regarding Forward Looking Statements

This Quarterly Report (including, without limitation, statements under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations") includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). HVII's forward-looking statements include, but are not limited to, statements regarding HVII or HVII's management team's expectations, hopes, beliefs, intentions or strategies regarding the future and any other statements that are not statements of current or historical facts. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements may be identified by the use of forward-looking terminology, including the words "anticipates," "believes," "continues," "could," "estimates," "expects," "intends," "may," "might," "plans," "possible," "potential," "projects," "predicts," "should," "will," or "would," or, in each case, their negative or other variations or comparable terminology, but the absence of these words does not mean that a statement is not forward-looking.

HVII cautions that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity, and developments in the industry in which it operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report, and undue reliance should not be placed on forward-looking statements. In addition, even if HVII's results or operations, financial condition and liquidity, and developments in the industry in which it operates are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. The forward-looking statements contained in this Quarterly Report are based on HVII's current expectations and beliefs concerning future developments and their potential effects on HVII. There can be no assurance that future developments affecting HVII will be those that it has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond HVII's control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.

These risks, uncertainties and assumptions include, but are not limited to, the following risks, uncertainties, assumptions and other factors:

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HVII's ability to select an appropriate target business or businesses;

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HVII's ability to complete its Initial Business Combination (as defined below), including the Proposed Business Combination (as defined below) with ONE Nuclear;

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HVII's expectations around the performance of a prospective target business or businesses;

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HVII's success in retaining or recruiting, or changes required in, its officers, key employees or directors following its Initial Business Combination;

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HVII's officers and directors allocating their time to other businesses and potentially having conflicts of interest with HVII's business or in approving its Initial Business Combination;

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HVII's potential ability to obtain additional financing to complete its Initial Business Combination;

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HVII's pool of prospective target businesses, including the location and industry of such target businesses;

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the ability of HVII's officers and directors to generate a number of potential Initial Business Combination opportunities;

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HVII's public securities' potential liquidity and trading;

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the lack of a market for HVII's securities;

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the availability to HVII of funds from interest income on the trust account (the "Trust Account") balance;

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the Trust Account not being subject to claims of third parties;

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HVII's financial performance; or

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the other risks and uncertainties discussed under the heading "Risk Factors" and elsewhere in this Quarterly Report, in HVII's final prospectus filed in connection with its initial public offering (the "IPO") and Annual Report on Form 10-K for the year ended December 31, 2025 and in the registration statement on Form S-4 (File No. 333-292440) filed by HVII, as registrant, and ONE Nuclear (as defined below), as co-registrant (as may be amended and supplemented from time to time, the "S-4 Registration Statement") in connection with the Proposed Business Combination.

The foregoing risks and uncertainties may not be exhaustive. Should one or more of these risks or uncertainties materialize, or should any of HVII's assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. HVII undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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 (the "Initial Business Combination"). HVII intends to effectuate its Initial Business Combination using cash derived from the proceeds of the IPO and the sale of an aggregate of 690,000 private placement units (each a "Private Placement Unit" and collectively, 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 HVII Ordinary Shares (as defined below) in an Initial Business Combination:

●	may significantly dilute the equity interest of HVII's public shareholders (the "HVII Public Shareholders"), which dilution would increase if the anti-dilution provisions in the Class B ordinary shares of HVII ("HVII Class B Ordinary Shares") resulted in the issuance of Class A ordinary shares of HVII ("HVII Class A Ordinary Shares," and together with the HVII Class B Ordinary Shares, "HVII Ordinary Shares") on a greater than one-to-one basis upon conversion of the HVII Class B Ordinary Shares;
●	may subordinate the rights of holders of HVII Ordinary Shares if preference shares is issued with rights senior to those afforded to HVII Ordinary Shares;
●	could cause a change of control if a substantial number of HVII 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 HVII 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 HVII Ordinary Shares;
●	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 HVII 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 an Initial 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 an Initial 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, Solis Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of HVII ("Merger Sub"), and ONE Nuclear Energy LLC, a Delaware limited liability company ("ONE Nuclear"), entered into a business combination agreement (the "Business Combination Agreement") that contemplates an all-stock business combination transaction (the "Proposed Business Combination"). Pursuant to the terms of the Business Combination Agreement, the aggregate consideration to be paid to the existing equity holders of ONE Nuclear at the Closing (as defined below) will be in the form of stock, comprised of newly issued shares of Common Stock (as defined below). The number of shares to be issued at the Closing will be calculated by dividing $1.00 billion by an amount equal to the price at which each HVII Public Share may be redeemed in connection with the Proposed Business Combination. 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 company, with nominal assets, no operating history or revenue to date and no 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."

On March 31, 2026, HVII, Merger Sub, and ONE Nuclear entered into an Omnibus Amendment, amending the Business Combination Agreement to extend the Outside Date (as defined in the Business Combination Agreement) from March 31, 2026 to June 30, 2026.

Pursuant to the Business Combination Agreement, the parties thereto will enter into the Proposed Business Combination 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."

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 HVII Public Shareholders 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 Quarterly 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 U.S. Securities and Exchange Commission (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 March 31, 2026, were organizational activities and those necessary to prepare for the IPO, described below, and identifying a target company for an initial Business Combination after the completion of the IPO. 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 IPO. Subsequent to the IPO, 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 three months ended March 31, 2026, HVII had net income of $575,611, which consisted of interest earned on cash held in the Trust Account of $1,668,676 and interest earned on cash equivalents of $3,879 offset by $1,096,944 of general and administrative costs.

For the three months ended March 31, 2025, HVII had net income of $1,018,007, which consisted of interest earned on cash held in the Trust Account of $1,494,489, interest earned on cash equivalents of $12,553 offset by $489,035 of general and administrative costs.

Liquidity and Capital Resources; Going Concern

Until the consummation of the IPO, HVII's only source of liquidity was an initial purchase of HVII Class B Ordinary Shares ("Founder Shares"), by the Sponsor for $25,000 and loans from the Sponsor, which were repaid at the closing of the IPO.

On January 21, 2025, HVII consummated the IPO of 19,000,000 units (the "HVII Units"), which includes the partial exercise by the IPO underwriters of their over-allotment option in the amount of 1,500,000 HVII Units, at $10.00 per HVII Unit, generating gross proceeds of $190,000,000. Simultaneously with the closing of the IPO, 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 Sponsor, and an aggregate of 190,000 Private Placement Units were purchased by the IPO underwriters: Cohen & Company Capital Markets (133,000); Clear Street LLC (28,500); and Loop Capital Markets LLC (28,500).

Following the closing of the IPO 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 commissions being held in the Trust Account that HVII agreed to pay to the underwriters of the IPO upon the consummation of an Initial Business Combination (the "Deferred Underwriting Commissions") 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 interest earned on the funds in the Trust Account that may be released to HVII to fund its working capital requirements, subject to an annual limit of 5.0%, and to pay its taxes, other than excise taxes, if any 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 $323,217 in cash and working capital of $600,019 of working capital at March 31, 2026.

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 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 19, 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 agreed to pay to HVII a monthly non-refundable fee equal to $10,000, 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) June 30, 2026 (as extended), (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 Proposed 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, the 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 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. Those units would be identical to the Private Placement Units. Except for the foregoing, the terms of such loans by the 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 HVII Class A Ordinary Shares sold as part of the HVII Units in the IPO (the "HVII 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, HVII 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 HVII 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 the IPO, 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 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 March 31, 2026. 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 the Sponsor for services related to the execution and consummation of an Initial Business Combination, which payments commenced in September 2025. An aggregate of approximately $9,355 was charged to operations for the three months ended March 31, 2026 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 $121,734, was charged to operations for the three months ended March 31, 2026, for such services. Effective March 1, 2026, the CFO, consultant advisor and Vice President agreed to waive further payments for their services to the Company until such time as they may notify the Company otherwise.

The underwriters of the IPO were entitled to a cash underwriting discount of $0.20 per HVII Unit, or $3,800,000 in the aggregate, which was paid to the underwriters in cash at the closing of the IPO. Additionally, the underwriters are entitled to the Deferred Underwriting Commissions of up to $0.40 per HVII 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 HVII 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 HVII Public Shareholders have been met. The Deferred Underwriting Commissions 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 unaudited condensed consolidated 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 unaudited condensed consolidated 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.