Blue Water Acquisition Corp. III

Blue Water Acquisition Corp. III (the "Company") is a blank check company incorporated on November 1, 2024, as a Cayman Islands exempted company, with no material operations of its own ¹. The Company was formed for the purpose of effecting a Business Combination with one or more businesses, with an expected focus on biotechnology, healthcare, and technology companies ¹. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest, and currently generates non-operating income from interest and dividend income on cash and marketable securities from its Initial Public Offering proceeds ¹.

The core business model of Blue Water Acquisition Corp. III is to identify and acquire a target business through a Business Combination, effectively taking the target public. The Company intends to effectuate its initial Business Combination using cash from the proceeds of its Initial Public Offering and the private placement of Private Placement Units, proceeds from the sale of its shares in connection with the Business Combination, shares issued to target owners, debt issued to lenders or target owners, other securities issuances, or a combination thereof ². The Company's management has broad discretion in applying the net proceeds, with substantially all intended for consummating a Business Combination, less deferred underwriting commissions ².

The Company's strategy involves capitalizing on its management team's significant experience in financial services, transaction experience, and relationship networks to evaluate businesses and acquisition opportunities ³. Key criteria for evaluating prospective Business Combination opportunities include opportunities for growth, financial value, technology and risk management infrastructure, a strong management team, and strength, reach, and yield opportunities ³. The Company may deviate from these criteria if justified ³. The acquisition process involves due diligence, including meetings with management and employees, document reviews, interviews, facility inspections, and review of financial, operational, and legal information ⁴.

For the year ended December 31, 2025, the Company reported a net income of $4,667,721 ⁵. This was primarily driven by $5,796,563 of income earned on cash and marketable securities held in the Trust Account ⁵. These gains were partially offset by $502,754 in formation, general, and administrative expenses, $474,966 in legal and accounting expenses, $54,583 in listing fees, $54,398 in administrative support fees, and $42,141 in insurance expense ⁵. In contrast, for the period from November 1, 2024 (inception) through December 31, 2024, the Company reported a net loss of $48,541, consisting entirely of formation, general, and administrative expenses ⁶.

As of December 31, 2025, the Company had no cash or cash equivalents in its operating account and a working capital deficiency of $109,004 ⁷. This compares to a working capital deficiency of $48,541 as of December 31, 2024 ⁷. Net cash used in operating activities for the year ended December 31, 2025, was $938,877 ⁸. This figure resulted from the net income of $4,667,721, adjusted by an increase of $101,708 in formation, general, and administrative costs paid by the Prior Sponsor under a promissory note, and an $88,257 increase in operating assets and liabilities, offset by $5,796,563 of interest income on the trust account ⁸. For the period from November 1, 2024 (inception) through December 31, 2024, net cash used in operating activities was $0 ⁹.

Significant operational developments during the reported period include the consummation of the Initial Public Offering on June 11, 2025, which generated gross proceeds of $253,000,000 from the sale of 25,300,000 units, including the full exercise of the over-allotment option ¹⁰. Simultaneously, the Company sold 683,000 Private Placement Units at $10.00 per unit, generating gross proceeds of $6,830,000 ¹¹. Following the IPO, $253,000,000 was placed in the Trust Account ¹². On November 25, 2025, a Purchase Agreement was executed, under which Yorkville BW Acquisition Sponsor, LLC (the "New Sponsor") acquired 6,325,000 Class B Ordinary Shares and 430,000 Private Placement Units from the Prior Sponsor for an aggregate purchase price of $7,200,000 ¹³. This transaction also involved the resignation of the prior board and officers and the appointment of a new board and management team by the New Sponsor ¹⁴. The Administrative Services Agreement with the Prior Sponsor, under which $54,398 of administrative costs had been incurred and paid as of November 25, 2025, was terminated on that date ¹⁵.

The Company's primary objective is to complete an initial Business Combination, with an expected focus on biotechnology, healthcare, and technology companies ¹. The Company has a "Completion Window" of 24 months from the closing of its Initial Public Offering to consummate an initial Business Combination, or an earlier liquidation date as approved by the board of directors ¹⁶. If the Company anticipates being unable to complete the Business Combination within this 24-month period, it may seek shareholder approval to amend its amended and restated memorandum and articles of association to extend the date ¹⁷. However, the Company does not currently intend to seek such an extension and does not expect to extend the time period beyond 36 months from the IPO closing ¹⁸. If an initial Business Combination is not completed within the Completion Window, the Company will redeem its Public Shares at a per-share price equal to the aggregate amount then on deposit in the Trust Account, including interest earned thereon (net of taxes and up to $100,000 for dissolution expenses), divided by the number of outstanding Public Shares ¹⁹. The Warrants will expire worthless in this scenario ²⁰.

The Company intends to effectuate its initial Business Combination using a combination of cash from the IPO and private placement proceeds, proceeds from the sale of shares in connection with the Business Combination, shares issued to target owners, debt, or other securities issuances ². The Company may issue additional Class A Ordinary Shares or preference shares to complete its initial Business Combination or under an employee incentive plan after completion, which could dilute existing shareholders ²¹. The Class B Ordinary Shares will automatically convert into Class A Ordinary Shares on a one-for-one basis, subject to adjustment, concurrently with or immediately following the Business Combination ²². The conversion ratio will be adjusted if additional Class A Ordinary Shares or equity-linked securities are issued in excess of IPO amounts and related to the Business Combination closing, so that the number of Class A Ordinary Shares from conversion equals approximately 20% of the sum of total Class A Ordinary Shares outstanding post-IPO, plus all Class A Ordinary Shares and equity-linked securities issued in connection with the Business Combination (excluding certain shares), minus any redemptions ²³.

In terms of capital allocation, the Company's liquidity needs have been met through the purchase of founder shares for $25,000 ²⁴, $300,000 in loans from its Prior Sponsor ²⁵, and gross proceeds of $259,830,000 from its IPO and simultaneous private placement ²⁶. Of these proceeds, $253,000,000 is held in the Trust Account and is not available for working capital ²⁷. On January 26, 2026, the Company issued a convertible unsecured promissory note (the "Working Capital Note") in the aggregate principal amount of $500,000 to the Sponsor to provide additional working capital ²⁸. This note does not accrue interest and is payable on the earlier of the Business Combination consummation or the Company's winding up ²⁹. The Sponsor has the option to convert the principal balance into units identical to the Private Placement Units at a price of $10.00 per unit upon Business Combination consummation ³⁰. The Company expects to incur significant costs in pursuit of its acquisition plans ³¹.

The Company faces several structural headwinds and execution risks. The ability of public shareholders to redeem their shares for cash may make the Company's financial condition unattractive to potential Business Combination targets, potentially making it difficult to enter into a Business Combination ³². If too many public shareholders exercise their redemption rights, the Company may not meet minimum cash closing conditions, leading to the abandonment of a Business Combination ³³. The deferred underwriting commissions of $8,855,000, payable to BTIG upon completion of a Business Combination, are not adjusted for redemptions, which could further dilute non-redeeming shareholders ³⁴. The requirement to complete a Business Combination within the Completion Window may give target businesses leverage in negotiations and limit due diligence time ³⁵. Intense competition from other blank check companies, private equity groups, and operating businesses for attractive targets may increase acquisition costs or hinder the ability to find a target ³⁶.

Geopolitical and macro factors also pose risks. Current global geopolitical conditions, including the ongoing Russia-Ukraine conflict, the Israel-Hamas conflict, and the escalating military conflict involving the United States, Israel, and Iran, could materially adversely affect the Company's search for a Business Combination and any target business ³⁷. These conflicts have led to market volatility, disruptions in commodity prices, credit and capital markets, supply chain interruptions, and increased cyber-attacks ³⁸. Changes in international trade policies, tariffs, and treaties, such as the U.S. imposing new worldwide tariffs, could negatively affect the attractiveness of certain targets or lead to adverse effects on a post-Business Combination company ³⁹. Macro-economic turbulence, including reduced business activity, high unemployment, rising interest rates, and inflation, could adversely affect the Company's financial condition and its ability to locate a commercially viable target ⁴⁰.

The Company faces material risks including the potential for public shareholders to not have an opportunity to vote on a proposed initial Business Combination, and even if a vote is held, the Sponsor's participation may lead to approval despite a majority of public shareholders not supporting it ⁴¹. The ability of public shareholders to redeem shares for cash could make the Company's financial condition unattractive to potential targets, hindering Business Combination completion ⁴². A large number of redemptions, coupled with the unadjusted deferred underwriting compensation of $8,855,000 ³⁴, may prevent the Company from completing the most desirable Business Combination or optimizing its capital structure, leading to substantial dilution ⁴³. The 24-month Completion Window ¹⁶ creates leverage for target businesses and may limit due diligence time ³⁵. If the Company fails to complete a Business Combination within this window, public shareholders may receive less than $10.00 per share ⁴⁴, and Warrants will expire worthless ²⁰. Third-party claims against the Trust Account could reduce the per-share redemption amount below $10.00 ⁴⁵. Changes in laws or regulations, such as the SEC's new SPAC Rules, may increase costs and time needed for a Business Combination ⁴⁶. The Company may be deemed an investment company under the Investment Company Act, requiring burdensome compliance or restricting activities, potentially leading to liquidation and public shareholders receiving less upon redemption ⁴⁷. Global geopolitical conditions, including the Russia-Ukraine conflict, the Israel-Hamas conflict, and the escalating military conflict involving the United States, Israel, and Iran, along with changes in international trade policies and macro-economic turbulence, could materially adversely affect the Company's search for a Business Combination ³⁷. The Company identified a material weakness in its internal control over financial reporting related to the lack of properly designed, implemented, and effectively operating controls ⁴⁸. The independent registered public accounting firm's report expresses substantial doubt about the Company's ability to continue as a "going concern" due to no cash in its operating account and a working capital deficiency of $109,004 as of December 31, 2025 ⁴⁹.

Management's message emphasizes the Company's status as a blank check company focused on identifying and acquiring a target business, particularly in the biotechnology, healthcare, and technology sectors ¹. The Company's strategy relies on the management team's significant experience and networks to evaluate opportunities ³. Management has broad discretion in applying the net proceeds from the Initial Public Offering and private placement towards a Business Combination ². A key strategic priority is to complete an initial Business Combination within the 24-month Completion Window from the IPO closing ¹⁶, although there is no current intention to seek an extension beyond 36 months ¹⁸. Management acknowledges the financial challenges, including a working capital deficiency of $109,004 as of December 31, 2025 ⁷, and the need for additional working capital, as evidenced by the $500,000 Working Capital Note issued to the Sponsor on January 26, 2026 ²⁸. The overall tone indicates a focus on diligent search and evaluation, while also highlighting the inherent risks and competitive landscape of the SPAC market.