Dynamix Corporation(DYNX) - 2024 Q4 - Annual Report

Part I Business Dynamix Corporation is a Cayman Islands-incorporated blank check company aiming to complete a business combination in the energy and power value chain by November 2026 - The company is a blank check company formed for the purpose of effecting a business combination with one or more businesses and is considered a "shell company" with no current operations or revenue[19] Initial Public Offering and Trust Account Details | Metric | Value | | :--- | :--- | | IPO Gross Proceeds | $166,000,000 | | Private Placement Gross Proceeds | $5,985,000 | | Amount Placed in Trust Account | $166,415,000 | | Transaction Costs | ~$10,605,256 | | Funds in Trust Account (as of Dec 31, 2024) | $167,164,825 | - The company plans to focus its search for a business combination on companies operating in the energy and power value chain, including traditional energy sectors (E&P, midstream, oilfield services) and opportunities driven by the surge in power demand from artificial intelligence (AI)[29][30][31] - The company has until November 22, 2026, to complete its initial business combination. The target business must have a fair market value of at least 80% of the assets held in the trust account[40][41] Risk Factors This section details substantial risks of investing in the company's securities, including challenges in business combination, post-combination operations, conflicts of interest, and legal structure Risks Relating to Search and Consummation of a Business Combination This section details risks in finding and executing a business combination, including shareholder redemptions, competition, fixed timelines, and regulatory changes - The ability of public shareholders to redeem their shares for cash could make the company's financial condition unattractive to potential targets, especially if the deal has a minimum cash requirement[74] - The requirement to complete a business combination within a specific timeframe (the "completion window") may give potential targets leverage in negotiations and limit the time available for due diligence[78] - There is a risk the company may not complete its initial business combination within the required timeframe, which would lead to the redemption of public shares and liquidation of the company, rendering the warrants worthless[82] - If deemed an investment company under the Investment Company Act, the company would face burdensome compliance requirements and restrictions, making it difficult to complete a business combination. To mitigate this, the company may liquidate investments in the trust account and hold cash, which would likely result in lower interest income[107][108][113] Risks Relating to the Post-Business Combination Company This section outlines risks affecting the company post-business combination, including potential write-downs, loss of control, and management's lack of public company experience - The company may be forced to take significant write-downs, write-offs, or restructuring charges post-combination if due diligence does not identify all material issues with the target business[166] - The company may not be able to maintain control of the target business after the combination, as its original shareholders could own a minority interest in the post-transaction entity[168] - The company's ability to assess the target's management may be limited, potentially resulting in a combination with a team that lacks the skills or qualifications to manage a public company[170] Risks of Acquiring and Operating a Foreign Business This subsection discusses additional risks of merging with a non-U.S. entity, such as currency fluctuations, regulatory differences, and adverse tax consequences from reincorporation - If the company combines with a non-U.S. business, it would be subject to additional risks such as currency fluctuations, tariffs, trade barriers, and unexpected regulatory changes[175][177] - The company may reincorporate in another jurisdiction in connection with the business combination, which could result in adverse tax consequences for shareholders and warrant holders, who may have to recognize taxable income without receiving any cash distributions to pay such taxes[179][180] Risks Relating to the Sponsor and Management Team This part focuses on risks related to the company's sponsor and management, including potential conflicts of interest and misaligned incentives due to their nominal investment in founder shares - The company is dependent on its officers and directors, who are not required to commit a specific amount of time to its affairs and have other business interests, creating potential conflicts of interest[193][196] - The sponsor, officers, and directors may have conflicts of interest as they could lose their entire investment if a business combination is not completed, potentially influencing their selection of a target[142][143] - The sponsor paid a nominal price of approximately $0.004 per founder share, meaning they are likely to make a substantial profit even if the company's stock price declines significantly after a business combination, creating a conflict of interest with public shareholders[199][207] Risks Relating to Securities This section details risks specific to the company's publicly traded securities, including potential delisting, limited shareholder rights in the Cayman Islands, and warrant redemption terms - Public shareholders only have rights to funds in the trust account under limited circumstances, such as a business combination, liquidation, or certain charter amendments. To liquidate their investment otherwise, they must sell their shares or warrants on the open market, potentially at a loss[203] - The company's securities could be delisted from Nasdaq if it fails to meet continued or initial listing requirements, which would limit liquidity and trading[204] - As a Cayman Islands company, it may be difficult for investors to enforce judgments from U.S. courts against the company or its directors and officers. The rights of shareholders under Cayman Islands law differ from those in the U.S[208][209][210] - The company can redeem outstanding warrants for $0.01 each if the Class A ordinary share price equals or exceeds $18.00 for a specified period, which could force holders to exercise or sell their warrants at a disadvantageous time[225] General Risk Factors This subsection covers broader risks, such as the company's blank check status, potential PFIC classification, and reduced disclosure standards as an emerging growth company - The company is a blank check company with no operating history or revenues, providing no basis for investors to evaluate its ability to achieve its business objective[240] - The company may be classified as a Passive Foreign Investment Company (PFIC), which could result in adverse U.S. federal income tax consequences for U.S. investors[243] - As an "emerging growth company" and a "smaller reporting company," the company is eligible for certain exemptions from standard public company disclosure requirements, which could make its securities less attractive to some investors[248][251] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - None[257] Properties The company operates as a remote-first entity without physical office properties, with its official address in Houston, Texas - The company is a remote-first company and does not own or lease any physical properties[259] Legal Proceedings The company is not a party to any material pending legal proceedings - The company is not currently involved in any material legal proceedings[260] Mine Safety Disclosures This section is not applicable to the company's business - None[261] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities This section provides information on the company's Nasdaq-traded securities, dividend policy, and the use of IPO proceeds placed in the trust account Market Information | Security | Trading Symbol | | :--- | :--- | | Units | DYNXU | | Class A ordinary shares | DYNX | | Warrants | DYNXW | - The company has never paid cash dividends and does not plan to do so prior to completing its initial business combination[264] - From the IPO and private placement, a total of $166,415,000 was placed in the trust account. Transaction costs amounted to approximately $10.6 million, including $6.64 million in deferred underwriting fees[269] Management's Discussion and Analysis of Financial Condition and Results of Operations This MD&A details the company's financial status as a blank check company, reporting a net loss of $135,571 for the period, with liquidity primarily held in the trust account for a future business combination Results of Operations (Inception to Dec 31, 2024) | Item | Amount | | :--- | :--- | | General and administrative expenses | $375,613 | | Dividends earned on investments in Trust Account | $749,825 | | Change in fair value of warrant liabilities | ($415,000) | | Net Loss | ($135,571) | Liquidity and Capital Resources (as of Dec 31, 2024) | Item | Amount | | :--- | :--- | | Cash held outside of trust account | $1,543,566 | | Cash and marketable securities in trust account | $167,164,825 | - The sponsor may provide working capital loans up to $1.5 million, which may be convertible into private placement warrants at $1.00 per warrant upon completion of a business combination[285] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is not required to provide the information for this item - The company is not required to provide this information as it qualifies as a smaller reporting company[296] Financial Statements and Supplementary Data This section refers to the full financial statements and supplementary data, which are included at the end of the report, starting on page F-1 - The company's financial statements are located after Item 15 of the report[297] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[298] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2024, with no material changes reported - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[299] - A management report on internal controls over financial reporting is not included due to the transition period for newly public companies[301] Part III Directors, Executive Officers and Corporate Governance This section provides biographical information for directors and executive officers, details board structure, Code of Ethics, and discusses potential conflicts of interest Directors and Executive Officers | Name | Title | | :--- | :--- | | Andrea Bernatova | Chief Executive Officer and Chairman | | Nader Daylami | Chief Financial Officer | | Diaco Aviki | Director | | Tyler Crabtree | Director | | Lynn A. Peterson | Director | | Philip Rajan | Vice President, M&A and Strategy | - The board has two standing committees: an audit committee and a compensation committee. The audit committee consists of three independent directors: Tyler Crabtree (chairman), Diaco Aviki, and Lynn A. Peterson[315][316] - The company has adopted a Code of Ethics applicable to all directors, officers, and employees[324] - Potential conflicts of interest are disclosed, noting that officers and directors have fiduciary duties to other entities and are not required to commit their full time to the company's affairs[327][332] Executive Compensation The company's executive officers and directors have not received cash compensation, with their compensation indirect through sponsor ownership interests and administrative reimbursements - No executive officers or directors have received any cash compensation for services rendered to the company[342] - Certain directors and an officer received membership interests in the sponsor, representing an aggregate of 100,000 founder shares, for their services[346][357] - The company reimburses Volta, an affiliate of the sponsor, $30,000 per month for utilities and administrative support[348][362] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters This section details beneficial ownership, with the sponsor owning 100% of Class B founder shares, representing 25% of total voting control, and lists key external investment funds Beneficial Ownership of Founder Shares (Class B) | Name of Beneficial Owner | Number of Shares | Percentage of Class | | :--- | :--- | :--- | | DynamixCore Holdings, LLC | 5,533,333 | 100% | | Andrea Bernatova | 5,533,333 | 100% | | All officers and directors as a group | 5,533,333 | 100% | - The sponsor's ownership of 100% of the Class B founder shares gives it 25% of the total voting control of the company[351][353] Certain Relationships and Related Transactions, and Director Independence This section outlines related party transactions, including founder share sales, private placement warrants, administrative service agreements, and identifies independent directors - The sponsor purchased 5,533,333 founder shares for an aggregate price of $25,000[357] - The sponsor and underwriters purchased an aggregate of 5,985,000 private placement warrants at a price of $1.00 per warrant[358] - The company has an agreement to pay an affiliate of the sponsor $30,000 per month for administrative support services[362] - The board of directors has determined that Diaco Aviki, Tyler Crabtree, and Lynn A. Peterson are independent directors[370] Principal Accountant Fees and Services The company's independent accounting firm is WithumSmith+Brown, PC, with total audit fees of $113,360 for the period, and all services pre-approved by the audit committee Accountant Fees (Inception to Dec 31, 2024) | Fee Category | Amount | | :--- | :--- | | Audit Fees | $113,360 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | Part IV Exhibits, Financial Statements Schedules This section lists documents filed as part of the Annual Report, including financial statements and various key legal and financial exhibits - The financial statements are indexed and begin on page F-1 of the report[376] - Key legal and financial documents, including the Warrant Agreement, Registration Rights Agreement, and various Private Placement Purchase Agreements, are filed as exhibits[378] Form 10-K Summary This item is not applicable to the company - Not applicable[379] Financial Statements Financial Statements The audited financial statements for the period from inception to December 31, 2024, show total assets of $168.7 million, total liabilities of $9.1 million, and a net loss of $135,571 Balance Sheet Summary (as of Dec 31, 2024) | Category | Amount | | :--- | :--- | | Assets | | | Cash and cash equivalents | $1,543,566 | | Investments held in Trust Account | $167,164,825 | | Total Assets | $168,710,028 | | Liabilities & Equity | | | Total Liabilities | $9,144,979 | | Class A ordinary shares subject to possible redemption | $167,164,825 | | Total Shareholders' Deficit | ($7,599,776) | | Total Liabilities, Redeemable Shares, and Deficit | $168,710,028 | Statement of Operations Summary (Inception to Dec 31, 2024) | Category | Amount | | :--- | :--- | | Loss from operations | ($375,613) | | Total other income, net | $240,042 | | Net loss | ($135,571) | Notes to Financial Statements The notes provide detailed context for the financial statements, outlining the company's formation, IPO terms, accounting policies, related party transactions, and fair value measurements - The company must complete its initial Business Combination within 24 months from the closing of the Initial Public Offering (by November 2026)[412] - Public Warrants are accounted for as liabilities and measured at fair value, while Private Placement Warrants are classified under equity[439] - On June 18, 2024, the Sponsor acquired 5,750,000 founder shares for a capital contribution of $25,000[460] - The company has an agreement to pay an affiliate of the Sponsor $30,000 per month for administrative services, commencing November 21, 2024[466]