Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related
thereto which are included in “Part II, Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form
10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth
under “Special Note Regarding Forward-Looking Statements,” “Part I, Item 1A. Risk Factors” and elsewhere in this
Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in the
Cayman Islands on June 13, 2024 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase,
reorganization or similar business combination with one or more businesses (the “initial business combination”). We intend
to effectuate our business combination using cash derived from the proceeds of the initial public offering and the sale of the private
placement warrants, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs
in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Recent Developments
The registration statement for the Company’s
initial public offering was declared effective on November 20, 2024. On November 22, 2024, the Company consummated the initial public
offering of 16,600,000 units (the “Units”), which includes the partial exercise by the underwriters of their over-allotment
option in the amount of 1,600,000 Units, at $10.00 per Unit. Each Unit consists of one Class A ordinary share and one-half of one redeemable
warrant (the “public warrant”).
Simultaneously with the closing of the initial
public offering, the Company consummated the sale of 5,985,000 warrants (the “private placement warrants”) at a price of $1.00
per private placement warrant, in a private placement to DynamixCore Holdings, LLC, the Company’s sponsor (the “sponsor”),
and Cohen & Company Capital Markets, a division of J.V.B. Financial Group, LLC and Seaport Global Securities LLC, the representatives
of the underwriters of the initial public offering.
Of those 5,985,000 private placement warrants,
the sponsor purchased 3,910,000 private placement warrants and the underwriters purchased 2,075,000 private placement warrants.
On December 9, 2024, the Company’s Class
A ordinary shares and warrants began separately trading from the Units. Those Units not separated will continue to trade on the Nasdaq
Global Market under the symbol “DYNXU,” and each of the Class A ordinary shares and warrants that are separated will trade
on the Nasdaq under symbols “DYNX” and “DYNXW,” respectively.
On June 18, 2024, the Company issued 5,750,000
Class B ordinary shares to the sponsor for $25,000, or approximately $0.004 per share. The number of founder shares included an aggregate
of up to 750,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option is not fully exercised,
so that the number of founder shares will represent 25.0% of the Company’s issued and outstanding shares after the initial public
offering. As of December 31, 2024, there were 5,750,000 Class B ordinary shares issued and outstanding. In January 2025, the underwriters’
over-allotment option expired, resulting in the sponsor forfeiting 216,667 founder shares and causing the number of outstanding founder
shares to be 5,533,333.
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Results of Operations
We have neither engaged in any operations nor
generated any revenues to date. Our only activities from June 13, 2024 (inception) through December 31, 2024 were organizational activities,
those necessary to prepare for the initial public offering, described below, and identifying a target company for a business combination.
We do not expect to generate any operating revenues until after the completion of our initial business combination. We generate non-operating
income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the period from June 13, 2024 (inception)
through December 31, 2024, we had a net loss of $135,571, which consisted of changes in fair value of warrant liabilities of $415,000,
general and administrative expenses of $375,613, and transaction costs of $116,039, offset by dividends earned on investments held in
trust account of $749,825, change in fair value – over-allotment liability of $12,792 and interest earned in cash account of $8,464.
Liquidity and Capital Resources
On November 22, 2024, we consummated the initial
public offering of 16,600,000 Units, at $10.00 per Unit, generating gross proceeds of $166,000,000. Simultaneously with the closing of
the initial public offering, we consummated the sale of 5,985,000 private placement warrants at a price of $1.00 per private placement
warrant to the sponsor, generating gross proceeds of $5,985,000.
Following the initial public offering, the partial
exercise of the over-allotment option, and the sale of the private placement warrants, a total of $166,415,000 was placed in the trust
account. We incurred $10,605,256 in initial public offering related costs, including $3,320,000 of cash underwriting fees, $6,640,000
of deferred underwriting fee, and $645,256 of other offering costs.
For the period from June 13, 2024 (inception)
through December 31, 2024, net cash used in operating activities was $132,820. Net loss of $135,571 was affected by change in fair value
of warrant liabilities of $415,000, transaction costs of $116,039, formation cost paid by sponsor in exchange for issuance of founder
shares of $16,241, payment of operation costs through promissory note of $15,420, dividends earned on investments held in trust account
$749,825, change in fair value of over-allotment liability of $12,792. Changes in operating assets and liabilities provided $202,668 of
cash from operating activities.
At December 31, 2024, we had cash and marketable
securities held in the trust account of $167,164,825. We intend to use substantially all of the funds held in the trust account (including
any amounts representing dividends earned on investments held in trust account, which dividends shall be net of taxes payable and excluding
deferred underwriting fees) and not previously released to us pursuant to permitted withdrawals, to complete our initial business combination.
We may withdraw earnings from the trust account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or
in part, as consideration to complete a 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 our growth strategies.
At December 31, 2024, we had cash of $1,543,566
held outside of the trust account. We intend 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, structure, negotiate and complete a business combination.
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In order to fund working capital deficiencies
or finance transaction costs in connection with a business combination, our sponsor or an affiliate of our sponsor or certain of our officers
and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we may repay such
loaned amounts out of the proceeds of the trust account released to us. In the event that a business combination does not close, we may
use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account
would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible into private placement warrants of
the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the
private placement warrants.
We do not believe we will need to raise additional
funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target
business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so,
we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain
additional financing either to complete our initial business combination or because we become obligated to redeem a significant number
of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt
in connection with such business combination.
Going Concern
In connection with our assessment of going concern
considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an
Entity’s Ability to Continue as a Going Concern,” management believes that the funds which the Company has available following
the completion of the initial public offering will enable it to sustain operations for a period of at least one-year from the issuance
date of these financial statements.
Contractual Obligations
We do 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 $30,000 per month for
office space, utilities, and secretarial and administrative support services commencing on November 21, 2024 through the earlier of the
Company’s consummation of a business combination and its liquidation.
In addition, pursuant to the advisory services
agreement, we will pay to the service provider an annual fee, payable on a monthly basis, until the consummation of a business combination.
We will also reimburse the service provider and its affiliates for certain costs and expenses incurred in favor of third parties. The annual fee, together with any reimbursement, shall not exceed the Cap.
The underwriters were entitled to a cash underwriting
fee of $0.20 per Unit, or $3,320,000 in the aggregate. The deferred underwriting fee will become payable to the underwriters, upon the
completion of the Company’s initial business combination, from the amounts held in the trust account solely on amounts remaining
in the trust account following all properly submitted shareholder redemptions in connection with the consummation of the initial business
combination.
Pursuant to a registration rights agreement entered
into on November 20, 2024, the holders of the founder shares, private placement warrants and any warrants that may be issued upon conversion
of working capital loans (and any Class A ordinary shares issuable upon the exercise of the private placement warrants and warrants that
may be issued upon conversion of the working capital loans) will be entitled to registration rights. The holders of the majority of these
securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the
holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion
of a business combination. However, the registration rights agreement provides that we will not permit any registration statement filed
under the Securities Act to become effective until termination of the applicable lockup period. The registration rights agreement does
not contain liquidating damages or other cash settlement provisions resulting from delays in registering our securities. We will bear
the expenses incurred in connection with the filing of any such registration statements.
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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. Actual results could materially differ from those estimates. Over-allotment Option
The over-allotment option was accounted for as
a liability in accordance with ASC 815-40 and was presented within liabilities on the balance sheet. The over-allotment option liability
is measured at fair value at inception and on a recurring basis, with changes in fair value presented within changes in fair value of
over-allotment option liability in the statement of operations.
The Company used a Black-Scholes model to value
the over-allotment option. Valuation of the over-allotment option liability uses significant unobservable inputs related to expected share-price
volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary shares based on historical
volatility that matches the expected remaining life of the option. Deviations in the assumptions and estimates used could result in materially
different fair values and have a material impact to our financial statements.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures, on an annual
and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker (“CODM”),
as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. The ASU requires that
a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment
profit or loss in assessing segment performance and deciding how to allocate resources. Public entities will be required to provide all
annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide
all the disclosures required by the amendments in this ASU and existing segment disclosures in Topic 280. This ASU is effective for fiscal
years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption
permitted. The Company adopted ASU 2023-07 on June 13, 2024 (inception). The amendments will be applied prospectively. The adoption of
ASU 2023-07 has not had a material impact on the Company’s financial statements and disclosures.
Item 7A. Quantitative and Qualitative
Disclosures about Market Risk.
We are a 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.
This information appears following Item 15 of
this Report and is included herein by reference.
Item 9. Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure
None.
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