Senti Biosciences Holdings, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS DYNAMICS SPECIAL PURPOSE CORP. CONDENSED BALANCE SHEET JUNE 30, 2021 (UNAUDITED) ASSETS Current assets: Cash $ 1,096,895 Prepaid expenses 787,491 Total current assets 1,884,386 Investments held in Trust Account 230,000,965 TOTAL ASSETS $ 231,885,351 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,513 Accrued expenses and other current liabilities 2,347 Franchise tax payable 54,165 Total current liabilities 61,025 Deferred underwriting fee payable 8,050,000 Total Liabilities 8,111,025 Commitments and C ontingencies (Note 6) Class A common stock subject to possible redemption, 21,877,432 shares at redemption value 218,774,320 Stockholders’ Equity Preferred stock, $ 0.0001 par value; 1,000,000 shares authorized; no ne issued and outstanding — Class A common stock, $ 0.0001 par value; 100,000,000 shares authorized; 23,715,500 shares issued; 1,838,068 shares outstanding (excluding 21,877,432 shares subject to possible redemption) 184 Class B common stock, $ 0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding 575 Additional paid-in capital 5,206,491 Accumulated deficit ( 207,244 ) Total Stockholders’ Equity 5,000,006 Total Liabilities and Stockholders’ Equity $ 231,885,351 The accompanying notes are an integral part of the unaudited condensed financial statements. 1 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended June 30, 2021 For the Period from March 1, 2021 (Inception) Through June 30, 2021 Operating and formation costs $ 152,866 $ 154,044 Franchise tax expense 54,165 54,165 Loss from operations $ ( 207,031 ) $ ( 208,209 ) Interest and dividend income on investments held in Trust Account 965 965 Net loss $ ( 206,066 ) $ ( 207,244 ) Basic and diluted weighted average shares outstanding, Redeemable Class A Common Stock 21,877,432 21,877,432 Basic and diluted net earnings per share, Redeemable Class A Common Stock $ 0.00 $ 0.00 Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock 7,110,046 7,042,613 Basic and diluted net loss per share, Non-Redeemable Class A and Class B Common Stock $ ( 0.03 ) $ ( 0.03 ) The accompanying notes are an integral part of the unaudited condensed financial statements. 2 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM MARCH 1, 2021 (INCEPTION) THROUGH JUNE 30, 2021 (UNAUDITED) Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholder’s Equity Shares Amount Shares Amount Balance - March 1, 2021 (Inception) — $ — — $ — $ — $ — $ — Issuance of Class B common stock to Sponsor — — 5,750,000 575 24,425 — 25,000 Net loss — — — — — ( 1,178 ) ( 1,178 ) Balance - March 31, 2021 — $ — 5,750,000 $ 575 $ 24,425 $ ( 1,178 ) $ 23,822 Sale of 23,000,000 shares of Class A common stock in Initial Public Offering, net of offering costs 23,000,000 2,300 — — 217,197,468 — 217,199,768 Sale of 715,500 shares of Class A common stock in private placement to Sponsor, net of offering costs 715,500 72 — — 6,756,730 — 6,756,802 Class A ordinary shares subject to possible redemption ( 21,877,432 ) ( 2,188 ) — — ( 218,772,132 ) — ( 218,774,320 ) Net loss — — — — — ( 206,066 ) ( 206,066 ) Balance - June 30, 2021 1,838,068 $ 184 5,750,000 $ 575 $ 5,206,491 $ ( 207,244 ) $ 5,000,006 The accompanying notes are an integral part of the unaudited condensed financial statements. 3 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. CONDENSED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM MARCH 1, 2021 (INCEPTION) THROUGH JUNE 30, 2021 (UNAUDITED) Cash Flows from Operating Activities: Net loss $ ( 207,244 ) Adjustments to reconcile net loss to net cash used in operating activities: Interest and dividend income on investments held in Trust Account ( 965 ) Changes in operating assets and liabilities: Prepaid expenses ( 787,491 ) Accounts payable 4,513 Accrued expenses and other current liabilities 2,347 Franchise tax payable 54,165 Net cash used in operating activities ( 934,675 ) Cash Flows from Investing Activities: Cash deposited into Trust Account ( 230,000,000 ) Net cash used in investing activities ( 230,000,000 ) Cash Flows from Financing Activities: Proceeds from promissory note - related party 250,000 Repayment of promissory note - related party ( 250,000 ) Proceeds from initial public offering, net of underwriting discount paid 225,400,000 Proceeds from sale of private placement shares 7,155,000 Payment of offering costs ( 523,430 ) Net cash provided by financing activities 232,031,570 Net Change in Cash 1,096,895 Cash - Beginning of period — Cash - End of period $ 1,096,895 Supplemental disclosures of non-cash investing and financing activities: Class A common stock subject to possible redemption $ 218,774,320 Deferred underwriting fee payable $ 8,050,000 Offering costs paid in exchange for issuance of Class B common stock to Sponsor $ 25,000 The accompanying notes are an integral part of the unaudited condensed financial statements. 4 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Dynamics Special Purpose Corp. (the “Company”) is a blank check company incorporated in Delaware on March 1, 2021 . The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of June 30, 2021, the Company had not commenced any operations. All activity for the period from March 1, 2021 (inception) through June 30, 2021 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end. The registration statement for the Company’s Initial Public Offering was declared effective on May 25, 2021. On May 28, 2021, the Company consummated the Initial Public Offering of 23,000,000 shares of Class A common stock (the “Public Shares”), including 3,000,000 shares of Class A common stock that were issued pursuant to the underwriter’s exercise of their over-allotment option in full, at $ 10.00 per Public Share, generating gross proceeds of $ 230,000,000 , which is discussed in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 715,500 shares of Class A common stock (the “Private Placement Shares”) at a price of $ 10.00 per Private Placement Share in a private placement to Dynamics Sponsor LLC (the “Sponsor”), generating gross proceeds of $ 7,155,000 , which is described in Note 4. Transaction costs amounted to $ 13,198,430 consisting of $ 4,600,000 of underwriting fees, $ 8,050,000 of deferred underwriting fees, and $ 548,430 of other offering costs. Following the closing of the Initial Public Offering on May 28, 2021, an amount of $ 230,000,000 ($ 10.00 per Public Share) from the net proceeds of the sale of the Public Shares in the Initial Public Offering and the sale of the Private Placement Shares was placed in a trust account (the “Trust Account”), and will be invested only in U.S. government securities with maturities of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Shares, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more target businesses that together have an aggregate fair market value of at least 80 % of the value of the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion, subject to applicable law and stock exchange listing requirements. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially anticipated to be 5 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 $ 10.00 per share), calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. The Company will proceed with a Business Combination if the Company has net tangible assets of at least $ 5,000,001 upon consummation of such Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required under applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If the Company seeks stockholder approval in connection with a Business Combination, the holders of the Founder Shares (as defined in Note 5) have agreed to vote their Founder Shares and any Public Shares purchased in or after the Initial Public Offering in favor of approving a Business Combination and to waive their redemption rights with respect to any such shares in connection with a stockholder vote to approve a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination. Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15 % of the Public Shares without the Company’s prior written consent. The initial stockholders have agreed to waive (a) their redemption rights with respect to any Founder Shares and Public Shares they hold in connection with the completion of an initial Business Combination, (b) their redemption rights with respect to any Founder Shares, Private Placement Shares and Public Shares they hold in connection with a stockholder vote to approve an amendment to the Amended and Restated Certificate of Incorporation to modify the substance or timing of the Company’s obligation to allow redemption in connection with an initial Business Combination or to redeem 100 % of the Public Shares if the Company has not consummated an initial Business Combination within 24 months from the closing of the Initial Public Offering or with respect to any other provisions relating to stockholders’ rights or pre-initial Business Combination activity and (c) their rights to liquidating distributions from the Trust Account with respect to any Founder Shares and Private Placement Shares they hold if the Company fails to complete an initial Business Combination within 24 months from the closing of the Initial Public Offering. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period (as defined below). The Company will have until May 28, 2023 to complete a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The underwriter has agreed to waive its rights to its deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be 6 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Public Share ($10.00). In order to protect the amounts in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $ 10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Liquidity As of June 30, 2021, the Company had $ 1,096,895 in cash held outside of the Trust Account and working capital of 1,823,361 . The Company’s liquidity needs prior to the consummation of the Initial Public Offering were satisfied through the proceeds of $ 25,000 from the sale of the Founder Shares, and a loan of up to $ 300,000 under an unsecured and non-interest bearing promissory note (see Note 5). Subsequent to the consummation of the Initial Public Offering, the Company’s liquidity will be satisfied through the net proceeds from the private placement held outside of the Trust Account and proceeds made available to the Company under the Working Capital Loan (as defined in Note 5). Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing accounts payable and accrued liabilities, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, and structuring, negotiating and consummating the Business Combination. Risks and Uncertainties Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s final prospectus for its Initial Public Offering as filed with the SEC on May 27, 2021, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC on May 28, 2021 and June 4, 2021. The interim results for the period from March 1, 2021 (inception) through June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future periods. Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. 7 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did no t have any cash equivalents as of June 30, 2021. Investments Held in Trust Account As of June 30, 2021, the assets held in the Trust Account were comprised of U.S. government securities, within the meaning set forth in Section 2(a) (16) of the Investment Company Act, with maturities of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the condensed balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are reported in the statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. Class A Common Stock Subject to Possible Redemption The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity . Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. As of June 30, 2021, 21,877,432 shares of Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet. Offering Costs Associated with the Initial Public Offering The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A—Expenses of Offering. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. Accordingly, as of June 30, 2021, offering costs in the aggregate of $ 13,198,430 have been charged to stockholders’ equity (consisting of a $ 4,600,000 underwriting fee, $ 8,050,000 of deferred underwriting fees, and $ 548,430 of other offering costs). 8 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of June 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The provision for income taxes was deemed to be de minimis for the period from March 1, 2021 (inception) through June 30, 2021. Net Earnings (Loss) Per Share of Common Stock Net earnings (loss) per common share is computed by dividing net earnings (loss) by the weighted-average number of shares of common stock outstanding during the period. The Company’s condensed statements of operations include a presentation of net earnings (loss) per share for common shares subject to possible redemption and applies the two-class method in calculating net earnings (loss) per share. Net earnings per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the allocable interest and dividend income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A common stock subject to possible redemption outstanding since original issuance. Net loss per share, basic and diluted, for Class A and Class B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock, by the weighted average number of Class A and Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares (as defined in Note 5) as these shares do not have any redemption features and do not participate in the income earned on the Trust Account. The following table reflects the calculation of basic and diluted net earnings (loss) per common share (in dollars, except per share amounts): Three Months Ended June 30, 2021 For the Period from March 1, 2021 (Inception) Through June 30, 2021 Class A Common Stock subject to possible redemption Numerator: Earnings attributable to Class A Common Stock subject to possible redemption Interest and dividend income on investments held in Trust Account $ 890 $ 890 Less: Interest available to be withdrawn for payment of taxes ( 890 ) ( 890 ) Net earnings attributable to Class A Common Stock subject to possible redemption $ — $ — 9 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 Denominator: Weighted average Class A Common Stock subject to possible redemption Basic and diluted weighted average shares outstanding, Class A Common Stock subject to possible redemption 21,877,432 21,877,432 Basic and diluted net earnings per share, Class A Common Stock subject to possible redemption $ 0.00 $ 0.00 Non-Redeemable Class A and Class B Common Stock Numerator: Net loss minus net earnings Net loss $ ( 206,066 ) $ ( 207,244 ) Less: Net earnings attributable to Class A Common Stock subject to possible redemption — — Non-redeemable net loss $ ( 206,066 ) $ ( 207,244 ) Denominator: Weighted average Non-Redeemable Class A and Class B Common Stock Basic and diluted weighted average shares outstanding, Non-Redeemable Class A and Class B Common Stock 7,110,046 7,042,613 Basic and diluted net loss per share, Non-Redeemable Class A and Class B Common Stock $ ( 0.03 ) $ ( 0.03 ) Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $ 250,000 . The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account. Fair Value of Financial Instruments The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances. The carrying amounts reflected in the balance sheet for cash, prepaid expenses and accrued offering costs approximate fair value due to their short-term nature. Level 1 — Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 — Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. 10 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 Level 3 — Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. See Note 8 for additional information on assets and liabilities measured at fair value. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. NOTE 3. INITIAL PUBLIC OFFERING The registration statement for the Company’s Initial Public Offering was declared effective on May 25, 2021. On May 28, 2021, the Company completed its Initial Public Offering of 23,000,000 shares of Class A common stock, including 3,000,000 shares of Class A common stock that were issued pursuant to the underwriter’s exercise of its over-allotment option in full, at $ 10.00 per Public Share, generating gross proceeds of $ 230,000,000 . NOTE 4. PRIVATE PLACEMENT Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 715,500 Private Placement Shares at a price of $ 10.00 per Private Placement Share, generating gross proceeds of $ 7,155,000 . A portion of the proceeds from the sale of the Private Placement Shares has been added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Shares held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law). NOTE 5. RELATED PARTY TRANSACTIONS Founder Shares On March 8, 2021, the Sponsor was issued 5,750,000 shares (the “Founder Shares”) of Class B common stock for an aggregate price of $ 25,000 . The Founder Shares included an aggregate of up to 750,000 shares of Class B common stock subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment option was not exercised in full or in part, so that the Sponsor would own, on an as-converted basis, 20 % of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the Private Placement Shares) (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering). The underwriter fully exercised the over-allotment option on May 28, 2021; thus, these 750,000 Founder Shares are no longer subject to forfeiture. Promissory Note - Related Party On March 8, 2021, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow an aggregate of up to $ 300,000 to cover expenses related to the Initial Public Offering. The Promissory Note was non-interest bearing and was payable on the earlier of December 31, 2021 or the consummation of the Initial Public Offering. In April 2021, the Company borrowed $ 250,000 under the Promissory Note which was repaid on May 26, 2021. Related Party Loans In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds held in the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination is not completed, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be 11 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. Up to $ 2,000,000 of such Working Capital Loans may be convertible into shares at a price of $ 10.00 per share at the option of the lender. The share would be identical to the Private Placement Shares. Administrative Support Agreement The Company entered into an agreement, commencing on the effective date of the Initial Public Offering, to pay the Sponsor up to a total of $ 10,000 per month for office space, administrative and support services. Upon the completion of an initial Business Combination, the Company will cease paying these monthly fees. To date, the Company has not exercised its option to use such services. NOTE 6. COMMITMENTS AND CONTINGENCIES Registration Rights The holders of the Founder Shares, Private Placement Shares and any Class A common stock issuable upon conversion of the Working Capital Loans will be entitled to registration rights pursuant to a registration and stockholder rights agreement to be signed prior to or on the effective date of the Proposed Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriters Agreement The Company granted the underwriter a 45 -day option to purchase up to 3,000,000 additional shares of Class A common stock to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriters exercised the over-allotment option in full on May 28, 2021. The underwriter was paid a cash underwriting fee of $ 0.20 per share, or $ 4,600,000 in the aggregate, upon the closing of the Initial Public Offering. In addition, $ 0.35 per share, or $ 8,050,000 in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. NOTE 7. STOCKHOLDER’S EQUITY Preferred stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2021, there were no shares of preferred stock issued or outstanding. Class A common stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $ 0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At June 30, 2021, there were 23,715,500 shares of Class A common stock issued and 1,838,068 shares outstanding, excluding 21,877,432 shares of Class A common stock subject to possible redemption. Class B common stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $ 0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At June 30, 2021, there were 5,750,000 shares of Class B common stock issued and outstanding. Of the 5,750,000 shares of Class B common stock outstanding, up to 750,000 shares were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriter’s over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20 % of the Company’s issued and outstanding common stock after the Initial Public Offering (excluding the Private Placement Shares). The over-allotment option was exercised in full on May 28, 2021; thus, these shares are no longer subject to forfeiture. 12 Table of Contents DYNAMICS SPECIAL PURPOSE CORP. NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS JUNE 30, 2021 Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of stockholders, including any vote in connection with an initial Business Combination. The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of an initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of an initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (excluding the Private Placement Shares), plus (ii) all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with an initial Business Combination (excluding any shares of Class A common stock or equity-linked securities issued, or to be issued, to any seller in an initial Business Combination and any Private Placement Shares issued to the Sponsor or its affiliates upon conversion of Working Capital Loans). NOTE 8. FAIR VALUE MEASUREMENTS​​​​​​​ The following table presents information about the Company’s financial assets that are measured at fair value on a recurring basis at June 30, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: Description Amount at Fair Value Level 1 Level 2 Level 3 June 30, 2021 Assets Investments held in Trust Account: U.S. Treasury Securities $ 230,000,965 $ 230,000,965 $ — $ — NOTE 9. SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements. 13 Table of Contents