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 the sole purpose of effecting a Business Combination with one or more businesses ¹. The Company has not commenced any operations as of December 31, 2025, and will not generate operating revenues until after the completion of its initial Business Combination ². Its primary focus for potential acquisitions is expected to be in biotechnology, healthcare, and technology companies ³. The Company generates non-operating income from interest and dividend income on cash and marketable securities derived from its Initial Public Offering ⁴.

The Company's core business model is to identify and acquire an operating business through a Business Combination, offering an alternative to a traditional initial public offering for target businesses ⁵. Revenue generation is entirely dependent on the successful completion of an initial Business Combination, after which the acquired entity's operations would generate revenue ⁶. The primary customer segments are not applicable as the Company is a blank check company, but its target businesses are expected to be in biotechnology, healthcare, and technology ⁷. The Company's units include shares of a Cayman Islands blank check company, not the operating entities with which it may combine ⁸.

The Company's product and service lines are not applicable as it is a blank check company with no operations ⁹. Its strategic role is to serve as an acquisition vehicle, providing a public listing mechanism for a target business ¹⁰.

For the year ended December 31, 2025, the Company reported a net income of $4,667,721 ¹¹. This was primarily driven by $5,796,563 of income earned on cash and marketable securities held in the Trust Account ¹². These gains were partially offset by $502,754 in formation, general, and administrative expenses ¹³, $474,966 in legal and accounting expenses ¹⁴, $54,583 in listing fees ¹⁵, $54,398 in administrative support fees ¹⁶, and $42,141 in insurance expense ¹⁷. As of December 31, 2025, the Company had no cash or cash equivalents in its operating account ¹⁸ and a working capital deficiency of $109,004 ¹⁹. Net cash used in operating activities for the year ended December 31, 2025, was $938,877 ²⁰.

Comparing the year ended December 31, 2025, to the period from November 1, 2024 (inception) through December 31, 2024, the Company transitioned from a net loss of $48,541 ²¹ to a net income of $4,667,721 ²². This significant shift is attributable to the $5,796,563 ²³ in interest income generated from the Trust Account after the Initial Public Offering in June 2025, whereas the prior period only incurred formation and administrative expenses. The working capital deficiency increased from $48,541 ²⁴ in 2024 to $109,004 ²⁵ in 2025.

Significant operational developments during the period include the consummation of the Initial Public Offering of 25,300,000 units at $10.00 per unit on June 11, 2025, generating gross proceeds of $253,000,000 ²⁶. Simultaneously, 683,000 Private Placement Units were sold at $10.00 per unit, generating gross proceeds of $6,830,000 ²⁷. On November 25, 2025, a Purchase Agreement was executed where Yorkville BW Acquisition Sponsor, LLC (the "New Sponsor") purchased 6,325,000 Class B Ordinary Shares and 430,000 Private Placement Units from the Prior Sponsor for an aggregate price of $7,200,000 ²⁸. This transaction also involved the resignation of the prior board and officers and the appointment of a new management team and board of directors by the New Sponsor ²⁹. The Administrative Services Agreement with the Prior Sponsor, under which $54,398 ³⁰ of administrative costs had been incurred and paid, was terminated on November 25, 2025 ³¹.

The Company's primary objective for the upcoming period is to complete an initial Business Combination within 24 months from the closing of its Initial Public Offering, or by an earlier liquidation date approved by the board ³². No formal revenue, margin, or EPS guidance has been issued as the Company has no operations and will not generate operating revenues until after the completion of its initial Business Combination ³³.

The Company expects to focus on biotechnology, healthcare, and technology companies for its initial Business Combination ³⁴. Management intends to capitalize on its team's significant experience in financial services, transaction experience, and relationship networks to identify and acquire a business that can benefit from these strengths ³⁵. The Company may pursue an initial Business Combination with a company that is financially unstable or in its early stages of development or growth ³⁶.

Regarding operational outlook, the Company expects to incur increased expenses as a public company for legal, financial reporting, accounting, and auditing compliance, as well as for due diligence expenses ³⁷. Expenses are anticipated to increase substantially after identifying a target for the initial Business Combination ³⁸. The Company has identified a material weakness in its internal control over financial reporting related to the lack of properly designed, implemented, and effectively operating controls ³⁹. Management plans to implement a remediation plan, including designing and maintaining a formal control environment, accounting policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting, and disclosures ⁴⁰. They will also enhance processes to identify and apply complex accounting standards and make greater use of third-party professionals ⁴¹.

The Company's liquidity needs have been satisfied through the purchase of founder shares for $25,000 ⁴², $300,000 ⁴³ in loans from the Prior Sponsor, and gross proceeds of $259,830,000 ⁴⁴ from the Initial Public Offering and simultaneous private placement. Of these proceeds, $253,000,000 ⁴⁵ is held in the Trust Account and is not available for working capital. On January 26, 2026, the Company issued a convertible unsecured promissory note (Working Capital Note) in the aggregate principal amount of $500,000 ⁴⁶ to the Sponsor to provide additional working capital ⁴⁷. This note does not accrue interest and is convertible at the Sponsor's election upon consummation of the initial Business Combination into units identical to the Private Placement Units at a price of $10.00 per unit ⁴⁸. The Sponsor is committed to extending Working Capital Loans as needed, up to $1,500,000 ⁴⁹, which may be convertible into Private Placement Units ⁵⁰.

Management has flagged several structural headwinds and execution risks. The ability to complete the initial Business Combination may be negatively impacted by general market conditions, volatility in capital and debt markets, and intense competition from other blank check companies, private equity groups, and operating businesses ⁵¹. The requirement to complete the Business Combination within the Completion Window may give target businesses leverage in negotiations ⁵². The ability of public shareholders to redeem shares for cash may make the Company's financial condition unattractive to potential targets ⁵³. 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 search for a Business Combination and any target business ⁵⁴. Changes in international trade policies, tariffs, and treaties, such as the new 10% worldwide tariff effective February 24, 2026, could negatively affect the attractiveness of certain targets ⁵⁵. Macro-economic turbulence, including high unemployment, rising interest rates, and inflation, could also impact the Company's ability to consummate a Business Combination ⁵⁶. The recently adopted SEC rules relating to SPACs may increase costs and time needed to complete an initial Business Combination ⁵⁷.

The Company faces material risks including the possibility that public shareholders may not have an opportunity to vote on the proposed initial Business Combination, and even if a vote is held, the Sponsor's participation may lead to approval despite a lack of majority public shareholder support ⁵⁸. The ability of public shareholders to redeem shares for cash could make the Company's financial condition unattractive to potential targets, hindering the completion of a Business Combination ⁵⁹. The requirement to complete an initial Business Combination within the Completion Window may grant target businesses leverage in negotiations and limit due diligence time ⁶⁰. If the Company fails to complete a Business Combination within the Completion Window, public shareholders may receive less than $10.00 per share ⁶¹, and Warrants will expire worthless ⁶². Third-party claims against the Trust Account could reduce the per-share redemption amount to less than $10.00 ⁶³. A U.S. federal excise tax of 1% could be imposed on redemptions if the Company domesticates as a U.S. corporation ⁶⁴. The Company may be deemed an investment company under the Investment Company Act, leading to burdensome compliance or liquidation ⁶⁵. Changes in laws or regulations, particularly the new SEC SPAC Rules, may adversely affect the business and increase costs ⁶⁶. Global geopolitical conflicts, such as the Russia-Ukraine war and the escalating U.S.-Israel-Iran conflict, along with trade policy changes and macro-economic turbulence, could materially affect the search for and consummation of a Business Combination ⁶⁷. The Company has identified a material weakness in its internal control over financial reporting ⁶⁸.

Management's overall tone emphasizes the Company's status as a blank check company focused on identifying and acquiring a suitable target business, particularly in the biotechnology, healthcare, and technology sectors. They highlight their team's significant experience and networks as a competitive advantage in this pursuit. A key strategic priority is the timely completion of an initial Business Combination within the 24-month Completion Window from the Initial Public Offering closing, or an earlier liquidation date as approved by the board. Management also stresses the importance of addressing the identified material weakness in internal control over financial reporting by designing and maintaining a formal control environment, accounting policies, procedures, and controls to ensure complete, accurate, and timely financial reporting. Furthermore, the Company has secured additional working capital through a convertible unsecured promissory note of $500,000 ⁶⁹ from the Sponsor, with the potential for up to $1,500,000 ⁷⁰ in such loans, convertible into Private Placement Units at $10.00 per unit ⁷¹, to support its acquisition plans and ongoing operations.