BLUW 10-Q
Blue Water Acquisition Corp. III (BLUW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of August 12, 2026, there were
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
BLUE WATER ACQUISITION CORP. III
CONDENSED BALANCE SHEETS
June 30, | December 31, | |||||
| 2026 | | 2025 | |||
ASSETS | (Unaudited) | |||||
Current Assets: | | |||||
Cash | $ | | $ | — | ||
Prepaid expenses – current | |
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Total Current Assets |
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Non-current Assets: |
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Cash and marketable securities held in Trust Account |
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Prepaid expenses – non-current |
| — |
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Total Non-current Assets |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES, ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT |
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Current Liabilities: |
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Accounts payable | $ | | $ | | ||
Advisory fee payable – related party |
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Accrued expenses |
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Due to related party |
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Working capital note – related party | | — | ||||
Total Current Liabilities |
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Non-current Liabilities: |
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Deferred underwriter fee liability |
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Total Non-current Liabilities |
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TOTAL LIABILITIES |
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Commitments and Contingencies (Note 7) |
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Class A ordinary shares subject to possible redemption; |
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Shareholders’ Deficit |
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Preference shares, $ |
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Class A ordinary shares, $ |
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Class B ordinary shares, $ |
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Additional paid-in capital |
| — |
| — | ||
Accumulated deficit |
| ( |
| ( | ||
Total Shareholders’ Deficit |
| ( |
| ( | ||
TOTAL LIABILITIES, ORDINARY SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
BLUE WATER ACQUISITION CORP. III
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the | For the | |||||||||||
Three Months Ended | Six Months Ended | |||||||||||
| June 30, | | June 30, | |||||||||
2026 | | 2025 | 2026 | | 2025 | |||||||
Operating expenses: | ||||||||||||
Formation, general and administrative expenses | $ | | $ | | $ | | $ | | ||||
Legal and accounting expenses | |
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Listing fees | | — |
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Administrative services fee – related party | — |
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Insurance expense | |
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Total operating expenses | | |
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Loss from operations | ( |
| ( |
| ( |
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Other income: |
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Income earned on cash and marketable securities held in Trust Account | |
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Other income | | |
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Net income | $ | | $ | | $ | | $ | | ||||
Weighted average shares outstanding of redeemable Class A ordinary shares | |
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Basic and diluted net income per share, redeemable Class A ordinary shares | $ | | $ | | $ | | $ | | ||||
Weighted average shares outstanding of non-redeemable Class A and Class B ordinary shares | |
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Basic and diluted net loss per share, non-redeemable Class A and Class B ordinary shares | $ | ( | $ | ( | $ | ( | $ | ( | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
BLUE WATER ACQUISITION CORP. III
CONDENSED STATEMENTS OF CHANGES IN ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2026
| Class A ordinary shares | ||||||||||||||||||||||||
subject to possible | Class A ordinary | Class B ordinary | Additional | Total | |||||||||||||||||||||
redemption | shares | shares | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||
| Shares | | Amount | | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Deficit | |||||||
Balance – January 1, 2026 | | $ | | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | | — | — | — | — | — | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance – March 31, 2026 | | $ | | | $ | | | $ | | $ | — | $ | ( | $ | ( | ||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption |
| — |
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| — |
| — |
| — |
| — |
| — |
| ( | ( | ||||||||
Net income |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
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Balance – June 30, 2026 |
| | $ | |
| | $ | |
| | $ | | $ | — | $ | ( | ( | ||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2025
Class A ordinary shares | | ||||||||||||||||||||||||
subject to possible | Class A ordinary | Class B ordinary | Additional | Total | |||||||||||||||||||||
redemption | shares | shares | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||
| Shares | | Amount | | | Shares | | Amount | | Shares | | Amount | | Capital | | Deficit | | Deficit | |||||||
Balance – January 1, 2025 | — | $ | — | — | $ | — | | $ | | $ | | $ | ( | $ | ( | ||||||||||
Net loss |
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| — |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||||
Balance – March 31, 2025 | — | $ | — | — | $ | — | | $ | | $ | | $ | ( | $ | ( | ||||||||||
Share recapitalization | — | — | — | — | | | ( | — | — | ||||||||||||||||
Issuance of Class A ordinary shares in IPO | | | — | — | — | — | | — | | ||||||||||||||||
Sale of private placement units | — | — | | | — | — | | — | | ||||||||||||||||
Remeasurement of Class A ordinary shares subject to possible redemption | — | | — | — | — | — | ( | ( | ( | ||||||||||||||||
Net income | — | — | — | — | — | — | — | | | ||||||||||||||||
Balance – June 30, 2025 |
| | $ | |
| | $ | |
| | $ | | $ | — | $ | ( | $ | ( | |||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
BLUE WATER ACQUISITION CORP. III
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the | For the | |||||
Six Months Ended | Six Months Ended | |||||
June 30, | June 30, | |||||
| 2026 | | 2025 | |||
Cash Flows from Operating Activities: | | |||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash used in operating activities: |
| | ||||
Formation, general and administrative costs paid by Sponsor under promissory note – related party | — |
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Income earned on cash and marketable securities held in Trust Account | ( |
| ( | |||
Changes in operating assets and liabilities: |
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Prepaid expenses | |
| ( | |||
Accounts payable | ( |
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Accrued expenses | |
| ( | |||
Administrative support fee - related party | — | | ||||
Due to related party | |
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Net cash used in operating activities | ( |
| ( | |||
Cash Flows from Investing Activities: |
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Investment in Trust Account | — |
| ( | |||
Net cash used in investing activities | — |
| ( | |||
Cash Flows from Financing Activities: |
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Proceeds from working capital note – related party | |
| — | |||
Proceeds from issuance of Class A ordinary shares | — | | ||||
Proceeds from sale of private placement units | — |
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Payment of underwriting fees and reimbursements | — |
| ( | |||
Payment of promissory note – related party | — |
| ( | |||
Due from related party, net | — | ( | ||||
Payment of deferred offering costs | — |
| ( | |||
Net cash provided by financing activities | |
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Net Change in Cash | |
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Cash – Beginning of period | |
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Cash – End of period | $ | | $ | | ||
Supplemental Non-Cash Investing and Financing Activities: |
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Remeasurement of Class A ordinary shares subject to possible redemption | $ | | $ | | ||
Deferred offering costs included in accrued offering costs | $ | — | $ | | ||
Prepaid expenses paid by Sponsor under promissory note – related party | $ | — | $ | | ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
BLUE WATER ACQUISITION CORP. III
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2026
Note 1 — Organization and Business Operations
Blue Water Acquisition Corp. III (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on November 1, 2024. The Company was incorporated 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 “Business Combination”). The Company has not selected any specific Business Combination target.
As of June 30, 2026, the Company has not commenced any operations. All activity for the period from November 1, 2024 (inception) through June 30, 2026 relates to the Company’s formation and its initial public offering (the “Initial Public Offering”), as discussed in Note 3, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company may generate non-operating income in the form of interest income on cash and cash equivalents and dividend income from marketable securities purchased from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
On June 11, 2025, the Company consummated the Initial Public Offering of
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of
Transaction costs amounted to $
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 Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).
Following the closing of the Initial Public Offering, on June 11, 2025, an amount of $
5
The Company will provide the Company’s public shareholders with the opportunity to redeem all or a portion of their Public Shares, regardless of whether they abstain, vote for, or vote against, the initial Business Combination upon completion of the initial Business Combination either (i) in connection with a general meeting called to approve the initial Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public shareholders will be entitled to redeem their shares at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of business days prior to the consummation of the initial Business Combination, including interest earned on the funds held in the Trust Account (less taxes payable (but without deduction for any excise or similar tax that may be due or payable)), divided by the number of then outstanding Public Shares, subject to the limitations. The amount in the Trust Account is initially anticipated to be $
The Company will have only the duration of the Completion Window to complete the initial Business Combination. However, if the Company is unable to complete its initial Business Combination within the Completion Window, the Company will as promptly as reasonably possible but not more than business days thereafter, 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 (net of amounts withdrawn to pay the Company’s taxes (but without deduction for any excise or similar tax that may be due or payable) and up to $
The Business Combination must be with one or more target businesses that together have a fair market value equal to at least
On July 28, 2025, the Company announced that, on or about July 31, 2025, the holders of the Company’s Public Units may elect to separately trade the Class A ordinary shares and warrants included in the Public Units.
On November 25, 2025, the Company, the Prior Sponsor and Yorkville BW Acquisition Sponsor, LLC (the “New Sponsor”) entered into a Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, on November 25, 2025, the New Sponsor (i) purchased from the Prior Sponsor (a)
As a condition to consummation of the Purchase, all of the then-existing members of the board of directors (the “Prior Board”) and all then-existing officers of the Company resigned, and the New Sponsor designated (i) a new board of directors, which was elected immediately prior to the closing of the Purchase by the Prior Sponsor as the then-sole holder of the Class B Ordinary Shares in accordance with the terms of the Company’s amended and restated memorandum and articles of association, and (ii) a new management team, which was appointed immediately prior to the closing of the Purchase by the Prior Board, effective as of the closing of the Purchase. Except as otherwise specified or where the context requires otherwise, references in this Quarterly Report on Form 10-Q (the “Quarterly Report”) to “the board of directors” (the “Board”), “our directors,” “our officers,” or “management” shall refer to the board of directors, officers, and management team designated by the New Sponsor and serving following the closing of the Purchase.
6
Pursuant to the terms of the Purchase Agreement, the New Sponsor (i) executed a joinder agreement to become a party to the Registration Rights Agreement, dated June 9, 2025 (the “Registration Rights Agreement”), among the Company, the Prior Sponsor, BTIG, and the other parties thereto and (ii) entered into a side letter agreement with the Company (the “New Insider Letter”) providing for, among other things, voting obligations and certain transfer restrictions. All parties to the letter agreement dated June 9, 2025, by and among the Company, the Prior Sponsor and each of the then directors and officers of the Company (the “Prior Insider Letter”), executed a waiver to certain requirements of the Prior Insider Letter such that the New Sponsor need not execute a joinder or become a party to the Prior Insider Letter. Upon the closing of the Purchase, the Prior Insider Letter was terminated.
Pursuant to the terms of the New Insider Letter, the New Sponsor, and our current directors and officers agreed to (i) waive their redemption rights with respect to their Founder Shares (as defined below) and Public Shares in connection with the completion of the proposed Business Combination; (ii) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association; (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete an initial Business Combination within the Completion Window, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Completion Window and to liquidating distributions from assets outside the Trust Account; (iv) vote any Founder Shares or other shares acquired by them in favor of the proposed Business Combination, except that the New Sponsor and our current directors and officers shall not vote any Class A Ordinary Shares that they purchase after the Company publicly announces its intention to engage in such proposed Business Combination for or against such proposed Business Combination; (v) not redeem any Class A Ordinary Shares owned by them in connection with shareholder approval of a proposed Business Combination; and (vi) not sell or tender any Ordinary Shares in the event the Company seeks to consummate a proposed Business Combination by engaging in a tender offer. Additionally, the New Sponsor agreed that it would not directly or indirectly, enter into any agreement or arrangement to, or actually sell or transfer any of the Acquired Securities, with such sale or transfer to occur prior to the closing of the Company’s initial Business Combination, subject to certain exceptions.
The New Sponsor 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 entered into a written letter of intent, confidentiality or other similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $
Liquidity, Capital Resources and Going Concern
As of June 30, 2026 and December 31, 2025, the Company had $
The Company’s liquidity needs through June 30, 2026 had been satisfied through a payment from the Prior Sponsor of $
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Although the New Sponsor may extend Working Capital Loans (defined in Note 6) as needed, the Company cannot ensure that its plans to raise additional funds or to consummate an initial Business Combination will be successful.
7
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these unaudited condensed financial statements are issued. These unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the U.S. Securities and Exchange Commission (“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, the accompanying unaudited condensed financial statements do not include all the information and footnotes necessary for a complete 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 period presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2025 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on April 14, 2026. The interim results for the six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the year ending December 31, 2026 or for any future periods.
Emerging Growth Company Status
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 auditor 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 shareholder approval of any golden parachute payments not previously approved.
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 Securities Exchange Act of 1934, as amended (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.
8
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires 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. 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 had $
Cash Held in Trust Account
As of June 30, 2026 and December 31, 2025, the assets held in Trust Account, amounting to $
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of the ASC 340-10-S99 and SEC Staff Accounting Bulletin Topic 5A, “Expenses of Offering.” Offering costs consist principally of professional and registration fees that are related to the Initial Public Offering. FASB ASC 470-20, “Debt with Conversion and Other Options,” addresses the allocation of proceeds from the issuance of convertible debt into its equity and debt components. The Company applies this guidance to allocate Initial Public Offering proceeds from the Public Units between Public Shares and Public Warrants, using the residual method by allocating Initial Public Offering proceeds first to assigned value of the Public Warrants and then to the Public Shares. Offering costs allocated to the Public Shares were charged to temporary equity, and offering costs allocated to the Public Warrants and Private Placement Units were charged to shareholders’ deficit as the Company evaluated the Public Warrants and Private Placement Warrants to be equity classified financial instruments.
Warrant Instruments
The Company accounts for the Public Warrants and Private Placement Warrants issued in connection with the Initial Public Offering and the private placement in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company evaluated the warrant instruments to be equity classified financial instruments that are initially measured at their relative fair values and do not require fair value remeasurement on a recurring basis.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximate the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
9
Net income (loss) per ordinary share
The Company has two classes of shares, non-redeemable Class A ordinary shares and Class B ordinary shares and redeemable Class A ordinary shares. Non-redeemable Class A ordinary shares are the Class A ordinary shares underlying the Private Placement Units sold in the private placement and do not have redemption rights to the amounts held in the Trust Account. Class B ordinary shares are the Founder Shares which do not have redemption rights on the amounts held in the Trust Account. Redeemable Class A ordinary shares are the Class A ordinary shares underlying the Public Units issued at the Initial Public Offering and have redemption rights to the amounts held in the Trust Account.
The Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share”. The unaudited condensed statements of operations include a presentation of income (loss) per redeemable Class A ordinary shares and income (loss) per non-redeemable Class A ordinary shares and Class B ordinary (“non-redeemable ordinary shares”) shares following the two-class method of income (loss) per ordinary shares. In order to determine the net income (loss) attributable to both the redeemable Class A ordinary shares and non-redeemable ordinary shares, the Company first considered the total income allocable to both classes of ordinary shares. This is calculated using the total net income (loss) less any dividends paid. For purposes of calculating net income (loss) per share, income earned on marketable securities and cash held in Trust Account is economically attributable to redeemable Class A ordinary shares. As such, any remeasurement of the redeemable Class A ordinary shares as a result of income earned on marketable securities and cash held in Trust Account was treated as dividends paid to the public shareholders and is reflected as an adjustment through accretion applicable to remeasurement of Class A redeemable shares to redemption value. Subsequent to calculating the total income (loss) allocable to both classes of ordinary shares, the Company split the amount to be allocated using the weighted average shares outstanding ratio for the redeemable Class A ordinary shares and for the non-redeemable ordinary shares for the three and six months ended June 30, 2026 and 2025.
The Company has not considered the effect of the
The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per ordinary share for each class of ordinary shares for the three months ended June 30, 2026:
| For the Three Months Ended | ||
June 30, | |||
| 2026 | ||
Net income | $ | | |
Less: Remeasurement of Class A redeemable shares to redemption value |
| ( | |
Net loss including accretion of Class A redeemable shares to redemption value | $ | ( | |
For the Three Months Ended | |||||||
June 30, 2026 | |||||||
Non-redeemable | Redeemable shares | ||||||
Class A and Class B | Class A | ||||||
| Ordinary shares | | Ordinary shares | ||||
Total number of shares | | | |||||
Ownership percentage | | % | | % | |||
Net income allocated by class | $ | |
| $ | |
| |
Less: Remeasurement of Class A redeemable shares to redemption value based on ownership percentage | ( |
| ( |
| |||
Plus: Accretion applicable to remeasurement of Class A redeemable shares to redemption value | — |
| |
| |||
Total (loss) income based on ownership percentage | $ | ( | $ | | |||
Weighted average shares outstanding | |
| | ||||
Basic and diluted net (loss) income per share | $ | ( | $ | | |||
10
The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per ordinary share for each class of ordinary shares for the six months ended June 30, 2026:
For the Six Months Ended | |||
June 30, | |||
| 2026 | ||
Net income | $ | | |
Less: Remeasurement of Class A redeemable shares to redemption value |
| ( | |
Net loss including accretion of Class A redeemable shares to redemption value | $ | ( | |
For the Six Months Ended | |||||||
June 30, 2026 | |||||||
Non-redeemable | Redeemable shares | ||||||
Class A and Class B | Class A | ||||||
| Ordinary shares | | Ordinary shares | ||||
Total number of shares | | | |||||
Ownership percentage | | % | | % | |||
Net income allocated by class | $ | |
| $ | |
| |
Less: Remeasurement of Class A redeemable shares to redemption value based on ownership percentage | ( |
| ( |
| |||
Plus: Accretion applicable to remeasurement of Class A redeemable shares to redemption value | — |
| |
| |||
Total (loss) income based on ownership percentage | $ | ( | $ | | |||
Weighted average shares outstanding | |
| | ||||
Basic and diluted net (loss) income per share | $ | ( | $ | | |||
The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per ordinary share for each class of ordinary shares for the three months ended June 30, 2025:
| For the Three Months Ended | ||
June 30, | |||
2025 | |||
Net income | $ | | |
Less: Remeasurement of Class A redeemable shares to redemption value |
| ( | |
Net loss including accretion of Class A redeemable shares to redemption value | $ | ( | |
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For the Three Months Ended |
| ||||||
June 30, 2025 |
| ||||||
Non-redeemable | Redeemable shares |
| |||||
Class A and Class B | Class A |
| |||||
| Ordinary shares | | Ordinary shares |
| |||
Total number of shares |
| |
| | |||
Ownership percentage |
| | % | | % | ||
Net income allocated by class(1) | $ | | $ | | |||
Less: Remeasurement of Class A redeemable shares to redemption value based on ownership percentage |
| ( |
| ( | |||
Plus: Accretion applicable to remeasurement of Class A redeemable shares to redemption value |
| — |
| | |||
Total (loss) income based on ownership percentage | $ | ( | $ | | |||
Weighted average shares outstanding |
| |
| | |||
Basic and diluted net (loss) income per share | $ | ( | $ | | |||
| (1) | Net income allocated by class was calculated by allocating net loss for the period from April 1, 2025 to June 11, 2025, the date the Company consummated the Initial Public Offering, to non-redeemable Class A and Class B ordinary shares, as only non-redeemable Class B ordinary shares were issued and outstanding during that period. Net income for the period from June 11, 2025 through June 30, 2025 was then allocated to non-redeemable Class A and Class B ordinary shares and redeemable Class A ordinary shares based on ownership percentage. |
The following table presents a reconciliation of the numerator and denominator used to compute basic and diluted net income (loss) per ordinary share for each class of ordinary shares for the six months ended June 30, 2025:
| For the Six Months Ended | ||
June 30, | |||
2025 | |||
Net income | $ | | |
Less: Remeasurement of Class A redeemable shares to redemption value |
| ( | |
Net loss including accretion of Class A redeemable shares to redemption value | $ | ( | |
For the Six Months Ended |
| ||||||
June 30, 2025 |
| ||||||
Non-redeemable | Redeemable shares |
| |||||
Class A and Class B | Class A |
| |||||
| Ordinary shares | | Ordinary shares |
| |||
Total number of shares |
| |
| | |||
Ownership percentage |
| | % | | % | ||
Net (loss) income allocated by class(1) | $ | ( | $ | | |||
Less: Remeasurement of Class A redeemable shares to redemption value based on ownership percentage |
| ( |
| ( | |||
Plus: Accretion applicable to remeasurement of Class A redeemable shares to redemption value |
| — |
| | |||
Total (loss) income based on ownership percentage | $ | ( | $ | | |||
Weighted average shares outstanding |
| |
| | |||
Basic and diluted net (loss) income per share | $ | ( | $ | | |||
| (1) | Net income allocated by class was calculated by allocating net loss for the period from February 10, 2025 (inception) to June 11, 2025, the date the Company consummated the Initial Public Offering, to non-redeemable Class A and Class B ordinary shares, as only non-redeemable Class B ordinary shares were issued and outstanding during that period. Net income for the |
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| period from June 11, 2025 through June 30, 2025 was then allocated to non-redeemable Class A and Class B ordinary shares and redeemable Class A ordinary shares based on ownership percentage. |
Income Taxes
The Company accounts for income taxes under ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 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’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of June 30, 2026 and December 31, 2025, there were
The Company is considered to be a Cayman Islands exempted company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was
Class A Ordinary Shares Subject to Possible Redemption
The Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder vote or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company classifies Public Shares subject to possible redemption outside of permanent equity as the redemption provisions are not solely within the control of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of redeemable shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption value. The change in the carrying value of redeemable shares will result in charges against additional paid-in capital (to the extent available) and accumulated deficit. Accordingly, as of December 31, 2025, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ deficit section of the Company’s condensed balance sheets. As of June 30, 2026, the Class A ordinary shares subject to possible redemption reflected in the unaudited condensed balance sheets are reconciled in the following table:
Gross proceeds from Initial Public Offering | | $ | |
Less: |
|
| |
Proceeds allocated to public warrants |
| ( | |
Offering costs allocated to Class A ordinary shares subject to possible redemption |
| ( | |
Plus: |
|
| |
Accretion of Class A ordinary shares subject to possible redemption |
| | |
Class A ordinary shares subject to possible redemption at December 31, 2025 | | ||
Plus: | |||
Accretion of Class A ordinary shares subject to possible redemption | | ||
Class A ordinary shares subject to possible redemption at June 30, 2026 | $ | |
Recent Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”), which provides for additional disclosures primarily related to the income tax rate reconciliations and income taxes paid. ASU 2023-09 requires entities to annually disclose the income tax rate reconciliation using both amounts and percentages, considering several categories of reconciling items, including state and local income taxes, foreign tax effects, tax credits and nontaxable or nondeductible items, among others. Disclosure of the reconciling items is subject to a quantitative threshold and disaggregation by
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nature and jurisdiction. ASU 2023-09 also requires entities to disclose net income taxes paid or received to federal, state and foreign jurisdictions, as well as by individual jurisdiction, subject to a five percent quantitative threshold. ASU 2023-09 may be adopted on a prospective or retrospective basis and is effective for fiscal years beginning after December 15, 2024, and for interim periods for fiscal years beginning after December 15, 2025, with early adoption permitted. Adoption of ASU 2023-09 did not impact the Company’s unaudited condensed financial statements or related income tax disclosures.
In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses,” which requires disclosures of certain disaggregated income statement expense captions into specified categories within the footnotes to the financial statements. The requirements of the ASU are effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact ASU 2024-03 will have on its financial statements.
In April 2026, the FASB issued Accounting Standards Update 2026-01, “Initial Measurement of Paid-in-Kind Dividends on Equity-Classified preferred Stock”, which provides authoritative guidance on how an issuer should initially measure paid-in-kind (“PIK”) dividends on equity-classified preferred stock. ASU 2026-01 is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal year reporting periods. Early adoption is permitted in an interim or fiscal year reporting period in which financial statements have not yet been issued or made available for issuance. The Company does not believe ASU 2026-01 will have a significant impact on the Company’s financial position, results of operations or cash flows. However, the Company would need to evaluate its impact in the event the Company issues preference shares.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed financial statements.
Note 3 — Initial Public Offering
Pursuant to the Initial Public Offering on June 11, 2025, the Company sold
Warrants — As of June 30, 2026 and December 31, 2025, there were
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Warrant and will have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the Class A ordinary shares underlying the Warrants is then effective and a prospectus relating thereto is current.
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Under the terms of the warrant agreement, the Company will agree that, as soon as practicable, but in no event later than
If the holders exercise their Public Warrants on a cashless basis, they would pay the warrant exercise price by surrendering the warrants for that number of Class A ordinary shares equal to the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the warrants, multiplied by the excess of the “fair market value” of the Class A ordinary shares over the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the Class A ordinary shares for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable.
Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon a minimum of |
| ● | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
Additionally, if the number of outstanding Class A ordinary shares is increased by a share capitalization payable in Class A ordinary shares, or by a subdivision of ordinary shares or other similar event, then, on the effective date of such share capitalization, subdivision or similar event, the number of Class A ordinary shares issuable on exercise of each Warrant will be increased in proportion to such increase in the outstanding ordinary shares. A rights offering made to all or substantially all holders of ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the fair market value will be deemed a share capitalization of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A ordinary shares) and (ii) the quotient of (x) the price per Class A ordinary share paid in such rights offering and (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
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Note 4 — Private Placement
Simultaneously with the closing of the Initial Public Offering, the Prior Sponsor and BTIG purchased an aggregate
The Private Placement Warrants are identical to the Public Warrants sold in the Initial Public Offering except that, so long as they are held by the Prior Sponsor, BTIG, or their permitted transferees, the Private Placement Warrants (i) may not (including the Class A ordinary shares issuable upon exercise of these Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until
On November 25, 2025, the Company, the Prior Sponsor and the New Sponsor entered into the Purchase Agreement, pursuant to which, the New Sponsor purchased
Pursuant to the terms of the New Insider Letter, the New Sponsor, and our current directors and officers agreed to (i) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of the proposed Business Combination; (ii) waive their redemption rights with respect to their Founder Shares and Public Shares in connection with a shareholder vote to approve an amendment to the Company’s amended and restated memorandum and articles of association; (iii) waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails to complete an initial Business Combination within the Completion Window, although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold if the Company fails to complete the initial Business Combination within the Completion Window and to liquidating distributions from assets outside the Trust Account; (iv) vote any Founder Shares or other shares acquired by them in favor of the proposed Business Combination, except that the New Sponsor and our current directors and officers shall not vote any Class A Ordinary Shares that they purchase after the Company publicly announces its intention to engage in such proposed Business Combination for or against such proposed Business Combination; (v) not redeem any Class A Ordinary Shares owned by them in connection with shareholder approval of a proposed Business Combination; and (vi) not sell or tender any Ordinary Shares in the event the Company seeks to consummate a proposed Business Combination by engaging in a tender offer. Additionally, the New Sponsor agreed that it would not directly or indirectly, enter into any agreement or arrangement to, or actually sell or transfer any of the Acquired Securities, with such sale or transfer to occur prior to the closing of the Company’s initial Business Combination, subject to certain exceptions.
Note 5 — Segment Information
ASC Topic 280, Segment Reporting, establishes standards for companies to report, in their financial statements, information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.
The Company’s chief operating decision maker (“CODM”) has been identified as the Chief Financial Officer, who reviews the assets, operating results, and financial metrics for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company only has
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The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the statement of operations as net income or loss. The measure of segment assets is reported on the unaudited condensed balance sheets as total assets. When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several key metrics included in total assets and net income (loss), which include the following:
| June 30, | December 31, | ||||
Assets: | | 2026 | | 2025 | ||
Cash | $ | | $ | — | ||
Cash and marketable securities held in Trust Account | $ | | $ | | ||
Total Assets | $ | | $ | | ||
The CODM reviews cash to assess if the Company has sufficient resources available to discharge its current liabilities, and whether the Company can leverage its cash position with other liquid assets to do so or whether the Company may need to seek additional funding. The CODM also reviews cash and marketable securities held in Trust Account to ensure sufficient capital is available to complete a business combination or similar transaction within the business combination period.
For the Three | ||||||
Months Ended | ||||||
June 30, | ||||||
Net Income: | | 2026 | | 2025 | ||
Net loss from operations | $ | ( | $ | ( | ||
Income earned on cash and marketable securities held in Trust Account | $ | | $ | | ||
Net income | $ | | $ | | ||
For the Six Months | ||||||
Ended | ||||||
June 30, | ||||||
Net Income: | | 2026 | | 2025 | ||
Net loss from operations | $ | ( | $ | ( | ||
Income earned on cash and marketable securities held in Trust Account | $ | | $ | | ||
Net income | $ | | $ | | ||
The CODM reviews net loss from operations to manage and forecast cash to ensure capital is available to complete a business combination or similar transaction within the business combination period. The CODM also reviews net loss from operations to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget. The CODM also reviews interest income on Trust Account to forecast the amount of cash and marketable securities held in Trust Account.
Note 6 — Related Party Transactions
Founder Shares
On December 3, 2024, the Prior Sponsor made capital contributions of $
The Company’s initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issued upon conversion thereof until the earlier to occur of (i)
17
results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the Lock-up.
Promissory Note — Related Party
The Prior Sponsor agreed to loan the Company an aggregate of up to $
Administrative Services Agreement
Commencing on June 11, 2025, the Company entered into an agreement with an affiliate of the Prior Sponsor to pay an aggregate of $
CEO Advisory Fee
On December 26, 2025, the Board of Directors of the Company approved the payment by the Company of a monthly advisory fee of $
Prior Sponsor Distribution
In connection with the Purchase Agreement on November 25, 2025, the Prior Sponsor received a cash distribution of $
Due to Related Party
Prior to the drawdown of the Working Capital Note on March 23, 2026, YA II PN, Ltd., an affiliate of the New Sponsor (the “Affiliate”), paid for certain expenses on behalf of the Company, amounting to $
18
Related Party Loans
In order to finance transaction costs in connection with an intended initial Business Combination, the New Sponsor or an affiliate of the New Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required on a non-interest basis. If the Company completes an initial Business Combination, the Company would repay such loaned amounts. In the event that the initial Business Combination does not close, the Company may use amounts held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $
On January 26, 2026, the Company issued a convertible unsecured promissory note (the “Working Capital Note”) in the aggregate principal amount of $
On August 11, 2026, the Company and the New Sponsor entered into an amendment to the Working Capital Note to increase the aggregate principal balance from $
Note 7 — Commitments and Contingencies
Risks and Uncertainties
Various social and political circumstances in the U.S. and around the world (including rising trade tensions between the U.S. and China, the escalating conflict in Iran, and other uncertainties regarding actual and potential shifts in the U.S. and foreign, trade, economic and other policies with other countries), may contribute to increased market volatility and economic uncertainties or deterioration in the U.S. and worldwide.
As a result of these circumstances and the ongoing conflicts in Ukraine, the Middle East and Southwest Asia and/or other future global conflicts, the Company’s ability to consummate a Business Combination, or the operations of a target business with which the Company ultimately consummates a Business Combination, may be materially and adversely affected. In addition, the Company’s ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity in third-party financing being unavailable on terms acceptable to the Company or at all. The impact of this action and potential future sanctions on the world economy and the specific impact on the Company’s financial position, results of operations or ability to consummate a Business Combination are not yet determinable. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the Initial Public Offering, (ii) Private Placement Units (and the securities comprising such units and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) which were issued in a private placement simultaneously with the closing of the Initial Public Offering and (iii) Private Placement Units (and the securities comprising such units and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of the Company’s securities held by them and any other securities of the Company acquired by them prior to the consummation of an initial Business Combination pursuant to a registration rights agreement signed on the effective date of the Initial Public Offering.
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The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial Business Combination. Notwithstanding anything to the contrary, BTIG may only make a demand on one occasion and only during the five-year period beginning the commencement of sales of the Initial Public Offering. In addition, BTIG may participate in a “piggy-back” registration only during the seven-year period beginning the commencement of sales of the Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
The underwriters were paid a cash underwriting discount of
In connection with the Purchase Agreement, the Company and BTIG entered into Amendment No. 1 to the underwriting agreement, dated November 25, 2025, terminating all of BTIG’s rights of first refusal to act as capital markets advisor, placement agent, or book-running lead manager for future Company financings. The amendment expressly preserved all rights relating to the deferred underwriting commissions under the underwriting agreement in full force and effect.
Note 8 — Shareholders’ Deficit
Preference Shares — The Company is authorized to issue a total of
Class A Ordinary Shares — The Company is authorized to issue a total of
Class B Ordinary Shares — The Company is authorized to issue a total of
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The Founder Shares will automatically convert into Class A ordinary shares (which such Class A ordinary shares delivered upon conversion will not have any redemption rights or be entitled to liquidating distributions from the Trust Account if the Company fails to consummate an initial Business Combination) concurrently with or immediately following the consummation of an initial Business Combination or earlier at the option of the holder on a
Holders of record of the Company’s Class A ordinary shares and Class B ordinary shares are entitled to one vote for each share held on all matters to be voted on by shareholders. Unless specified in the Company’s amended and restated memorandum and articles of association or as required by the Companies Act or stock exchange rules, an ordinary resolution under Cayman Islands law and the Company’s amended and restated memorandum and articles of association, which requires the affirmative vote of at least a majority of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the Company is generally required to approve any matter voted on by the Company’s shareholders. Approval of certain actions require a special resolution under Cayman Islands law, which (except as specified below) requires the affirmative vote of at least two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting, and pursuant to the Company’s amended and restated memorandum and articles of association, such actions include amending the Company’s amended and restated memorandum and articles of association and approving a statutory merger or consolidation with another company. There is no cumulative voting with respect to the appointment of directors, meaning, following the Company’s initial Business Combination, the holders of more than
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Note 9 – Fair Value Measurements
Recurring Fair Value Measurements
At June 30, 2026 and December 31, 2025, the Company’s cash and marketable securities held in the Trust Account were valued at $
The following table presents the fair value information, as of June 30, 2026 and December 31, 2025, of the Company’s financial assets that were accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. As of June 30, 2026 and December 31, 2025, the Company’s cash and marketable securities held in the Trust Account are held in a demand deposit account carried at cost, and its carrying amount approximates its fair value as it is short-term in nature and payable on demand. Cash held in the Trust Account is classified within Level 1 of the fair value hierarchy.
The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value on a recurring basis:
| (Level 1) | | (Level 2) | | (Level 3) | ||||
As of June 30, 2026 |
|
|
| |
| | |||
Assets: |
|
|
| |
| | |||
Cash held in Trust Account | $ | | $ | — | $ | — | |||
As of December 31, 2025 | |||||||||
Assets: | |||||||||
Cash held in Trust Account | $ | | $ | — | $ | — | |||
Non-recurring Fair Value Measurements
The Company performed a non-recurring fair value measurement on the Public Warrants on date of the consummation of the Initial Public Offering to determine the allocation of the proceeds from the Public Units issued in the Initial Public Offering between the Class A ordinary shares and the Public Warrants. The Company applied the residual allocation method, first by assigning the value of the Warrants and then deriving the value of the Class A ordinary shares from the $
The fair value of the Public Warrants as of June 11, 2025, was $
| June 11, 2025 |
| ||
Implied ordinary share price | $ | | ||
Exercise price | $ | | ||
Simulation term (years) |
| |||
Risk-free rate |
| | % | |
Selected volatility |
| | % | |
Calculated value per warrant | $ | | ||
Market adjustment |
| | % | |
Note 10 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the 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 financial statements.
On August 11, 2026, the Company and the New Sponsor entered into the Amended Working Capital Note to increase the aggregate principal balance from $
22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise stated or the context otherwise requires, references in this Quarterly Report to (i) the “Company,” “us,” or “we” are to Blue Water Acquisition Corp. III, a Cayman Islands exempted company; (ii) “Founder Shares” are to shares of our Class B ordinary shares initially purchased by the Prior Sponsor in a private placement prior to our initial public offering, and the shares of our Class A ordinary shares issued upon the conversion thereof; and (iii) “New Sponsor” are to Yorkville BW Acquisition Sponsor, LLC, a Delaware limited liability company. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report, including statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying some of the important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the discussion under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 11, 2025. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on November 1, 2024, as a Cayman Islands exempted company with no material operations of our own. We were 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 “Business Combination”). We may pursue an initial Business Combination in any business or industry, but we expect to focus on biotechnology, healthcare and technology companies. Our units include shares of a Cayman Islands blank check company, not shares of any operating entities with whom we may ultimately combine.
As of June 30, 2026, the Company has not commenced any operations. All activity for the period from November 1, 2024 (inception) through June 30, 2026, relates to the Company’s formation, the initial public offering (the “Initial Public Offering”), as defined below, and activities associated with identifying and negotiating a potential Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on cash and cash equivalents and dividend income from marketable securities from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.
On December 3, 2024, the Company issued an aggregate of 5,750,000 Class B ordinary shares, $0.0001 par value (each, a “Class B Ordinary Share,” also referred to herein as a “Founder Share”), in exchange for a capital contribution of $25,000 (approximately $0.004 per share) from the Company’s prior sponsor, Blue Water Acquisition III LLC (the “Prior Sponsor”) to cover certain expenses on behalf of the Company. On June 9, 2025, through a share capitalization we issued an additional 575,000 Class B Ordinary Shares to our Prior Sponsor, resulting in our Prior Sponsor holding an aggregate of 6,325,000 Class B Ordinary Shares. The Class B Ordinary Shares will automatically convert into Class A Ordinary Shares concurrently with or immediately following the consummation of our initial Business Combination or earlier at the option of the holder on a one-for-one basis, subject to adjustment for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like, and subject to further adjustment.
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On June 11, 2025, the Company consummated the Initial Public Offering of 25,300,000 units (the “Public Units” and, with respect to the Class A ordinary shares included in the Public Units, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 3,300,000 Public Units, at $10.00 per unit, generating gross proceeds of $253,000,000. Each Public Unit consists of one Class A ordinary share (each, a “Class A Ordinary Share” and together with the Class B Ordinary Shares, the “Ordinary Shares”) and one-half of one redeemable warrant (each, a “Public Warrant”).
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 683,000 units (the “Private Placement Units” and, with respect to the Class A Ordinary Shares included in the Private Placement Units, the “Private Placement Shares”) at a price of $10.00 per Private Placement Unit, in a private placement to the Prior Sponsor, and BTIG, LLC (“BTIG”), the representative of the underwriters in the Initial Public Offering, generating gross proceeds of $6,830,000. Each Private Placement Unit consists of one Class A Ordinary Share and one-half of one redeemable warrant (the “Private Placement Warrants” and together with the Public Warrants, the “Warrants”). Each whole Warrant entitles the holder to purchase one Class A Ordinary Share at a price of $11.50 per share, subject to adjustment, and will become exercisable beginning at the later of 12 months from the closing of the Initial Public Offering and 30 days after the completion of an initial Business Combination, and will expire at 5:00 p.m., New York City time, five years after the consummation of the initial Business Combination, or earlier upon redemption or liquidation, and with respect to Private Placement Warrants held by BTIG or its designees, will not be exercisable more than five years from the commencement of sales in the Initial Public Offering in accordance with Financial Industry Regulatory Authority (“FINRA”) Rule 5110(g)(8). The Private Placement Warrants are identical to the Public Warrants sold in the Initial Public Offering except that, so long as they are held by the New Sponsor, BTIG, or their permitted transferees, the Private Placement Warrants (i) may not (including the Class A Ordinary Shares issuable upon exercise of these Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the initial Business Combination, (ii) will be entitled to registration rights and (iii) with respect to Private Placement Warrants held by BTIG, LLC and/or its designees, will not be exercisable more than five years from the commencement of sales in the Initial Public Offering in accordance with FINRA Rule 5110(g)(8).
Following the closing of the Initial Public Offering, on June 11, 2025, an amount of $253,000,000 ($10.00 per unit) from the net proceeds of the sale of the Public Units and the sale of the Private Placement Units, was placed in the trust account (the “Trust Account”), with Continental Stock Transfer & Trust Company acting as trustee. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, if any, the proceeds from the Initial Public Offering and the sale of the Private Placement Units will not be released from the Trust Account until the earliest of (i) the completion of the Company’s initial Business Combination, (ii) the redemption of the Company’s Public Shares if the Company is unable to complete the initial Business Combination within 24 months from the closing of the Initial Public Offering or by such earlier liquidation date as the Company’s board of directors may approve (the “Completion Window”), subject to applicable law, or (iii) the redemption of the Company’s Public Shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association to (A) modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination or to redeem 100% of the Company’s Public Shares if the Company has not consummated an initial Business Combination within the Completion Window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public shareholders.
The Company has not selected any specific Business Combination target. We intend to effectuate our initial Business Combination using cash from the proceeds of the Initial Public Offering and the private placement of the Private Placement Units, the proceeds of the sale of our shares in connection with our initial Business Combination, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, other securities issuances, or a combination of the foregoing. 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 Units, although substantially all of the net proceeds are intended to be generally applied toward consummating a Business Combination (less deferred underwriting commissions).
On November 25, 2025, the Company, the Prior Sponsor and Yorkville BW Acquisition Sponsor, LLC (the “New Sponsor”) entered into a Purchase Agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, on November 25, 2025, the New Sponsor (i) purchased from the Prior Sponsor (a) 6,325,000 Class B Ordinary Shares and (b) 430,000 Private Placement Units (together with the 6,325,000 Class B Ordinary Shares, the “Acquired Securities”), for an aggregate purchase price of $7,200,000 and (ii) upon closing, became the sponsor of the Company (together, the “Purchase”). Pursuant to the Purchase Agreement, the non-managing sponsor investors of the Prior Sponsor have no further rights, claims or interests in or to any securities of the Company (other than any Public Units, Public Shares or Public Warrants they may hold).
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As a condition to consummation of the Purchase, all of the then-existing members of the board of directors (the “Prior Board”) and all then-existing officers of the Company resigned, and the New Sponsor designated (i) a new board of directors, which was elected immediately prior to the closing of the Purchase by the Prior Sponsor as the then-sole holder of the Class B Ordinary Shares in accordance with the terms of the Company’s amended and restated memorandum and articles of association, and (ii) a new management team, which was appointed immediately prior to the closing of the Purchase by the Prior Board, effective as of the closing of the Purchase. Except as otherwise specified or where the context requires otherwise, references in this Quarterly Report to “the board of directors” (the “Board”), “our directors,” “our officers,” or “management” shall refer to the board of directors, officers, and management team designated by the New Sponsor and serving following the closing of the Purchase.
Pursuant to the terms of the Purchase Agreement, the New Sponsor (i) executed a joinder agreement to become a party to the Registration Rights Agreement, dated June 9, 2025 (the “Registration Rights Agreement”), among the Company, the Prior Sponsor, BTIG, and the other parties thereto and (ii) entered into a side letter agreement with the Company (the “New Insider Letter”) providing for, among other things, voting obligations and certain transfer restrictions. All parties to the letter agreement dated June 9, 2025, by and among the Company, the Prior Sponsor and each of the then directors and officers of the Company (the “Prior Insider Letter”), executed a waiver to certain requirements of the Prior Insider Letter such that the New Sponsor need not execute a joinder or become a party to the Prior Insider Letter. Upon the closing of the Purchase, the Prior Insider Letter was terminated.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from November 1, 2024 (inception) through June 30, 2026 relate to organizational activities, our Initial Public Offering, and, subsequent to the Initial Public Offering, our pursuit of an initial business combination. We will not generate any operating revenues until after completion of our initial business combination. We have and will continue to generate non-operating income in the form of interest income on cash and cash equivalents and dividend income from marketable securities after the Initial Public Offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. We have incurred, and expect to incur, increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. Additionally, we expect our expenses to increase substantially after identifying a target for our initial business combination.
For the three months ended June 30, 2026, we had net income of $2,098,158, which consisted of $2,296,107 of income earned on cash and marketable securities held in the Trust Account, offset by $37,837 of formation, general and administrative expenses, $120,064 of legal and accounting expenses, $21,250 of listing fees, and $18,798 of insurance expense.
For the six months ended June 30, 2026, we had net income of $4,023,115, which consisted of $4,574,624 income earned on cash and marketable securities held in the Trust Account, offset by $90,324 of formation, general and administrative expenses, $381,762 of legal and accounting expenses, $42,033 of listing fees, and $37,390 of insurance expense.
For the three months ended June 30, 2025, we had net income of $444,392, which consisted of $556,881 of income earned on cash and marketable securities held in the Trust Account, offset by $89,301 of formation, general and administrative expenses, $12,723 of legal and accounting expenses, $6,333 of administrative support fees, and $4,132 of insurance expense.
For the six months ended June 30, 2025 we had net income of $368,570, which consisted of $556,881 of income earned on cash and marketable securities held in the Trust Account, offset by $165,123 of formation, general and administrative expenses, $12,723 of legal and accounting expenses, $6,333 of administrative support fees, and $4,132 of insurance expense.
Liquidity and Capital Resources
As of June 30, 2026 and December 31, 2025, we had $32,560 and no cash, respectively, no cash equivalents, and a working capital deficit of $627,254 and $109,004, respectively.
For the six months ended June 30, 2026, net cash used in operating activities was $467,440. Net income of $4,023,115 was increased by a $84,069 increase in operating assets and liabilities, offset by $4,574,624 of interest income on the trust account.
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For the six months ended June 30, 2025, net cash used in operating activities was $87,484. Net income of $368,570 was increased by $101,708 formation, general and administrative costs paid by the Prior Sponsor under the promissory note – related party, offset by $556,881 of interest income on the trust account, and a $881 decrease in operating assets and liabilities.
The Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans. The Company lacks the financial resources it needs to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. Although the New Sponsor may extend the Working Capital Loans (defined in Note 6) as needed, the Company cannot ensure that its plans to consummate an initial Business Combination will be successful.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these unaudited condensed financial statements are issued. These unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our liquidity needs have been satisfied to date through the purchase of Founder Shares from our Prior Sponsor for $25,000, $300,000 in loans from our Prior Sponsor, and proceeds generated from our Initial Public Offering and simultaneous private placement that generated gross proceeds of $259,830,000. $253,000,000 of the net proceeds are held in the trust account and are not available for the working capital needs of the Company.
Following the closing of the Initial Public Offering, on June 11, 2025, an amount of $253,000,000 ($10.00 per unit) from the net proceeds of the sale of the Public Units and the Private Placement Units, was placed in the trust account, with Continental Stock Transfer & Trust Company acting as trustee. The funds are initially to be held in cash, including demand deposit accounts at a bank, or invested only in U.S. government treasury obligations with a maturity 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; the holding of these assets in this form is intended to be temporary and for the sole purpose of facilitating the intended business combination. To mitigate the risk that we might be deemed to be an investment company for purposes of the Investment Company Act, which risk increases the longer that we hold investments in the trust account, we may, at any time (based on management team’s ongoing assessment of all factors related to the potential status under the Investment Company Act), instruct the trustee to liquidate the investments held in the trust account and instead to hold the funds in the trust account in cash or in an interest bearing demand deposit account at a bank. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our taxes, if any, the proceeds from the Initial Public Offering and the sale of the Private Placement Units will not be released from the trust account until the earliest of (i) the completion of our initial business combination, (ii) the redemption of our Public Shares if we are unable to complete the initial business combination within 24 months from the closing of the Initial Public Offering or by such earlier liquidation date as the Company’s board of directors may approve (the “Completion Window”), subject to applicable law, or (iii) the redemption of our Public Shares properly submitted in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to allow redemption in connection with the initial business combination or to redeem 100% of our Public Shares if we have not consummated an initial business combination within the Completion Window or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity. The proceeds deposited in the trust account could become subject to the claims of our creditors, if any, which could have priority over the claims of our public shareholders.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (excluding deferred underwriting commissions). We may withdraw interest to pay our taxes, if any (but without deduction for any excise or similar tax that may be due or payable). Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes, if any. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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.
We will provide our public shareholders with the opportunity to redeem all or a portion of their Class A Ordinary Shares upon the completion of our initial Business Combination either (i) in connection with a general meeting called to approve the Business Combination or (ii) without a shareholder vote by means of a tender offer. The decision as to whether we will seek shareholder approval of a proposed Business Combination or conduct a tender offer will be made by us, solely in our discretion. The requirement that we provide our public shareholders with the opportunity to redeem their Public Shares by one of the two methods listed above are contained in provisions of our amended and restated memorandum and articles of association and will apply whether or not we maintain our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by a special resolution,
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which requires the affirmative vote of at least two-thirds of the votes cast by such shareholders as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at the applicable general meeting of the company, so long as we offer redemption in connection with such amendment. Valid redemptions by our public shareholders would reduce the amounts of cash we have to effect an initial business combination and may result in a need to seek additional financing in order to effect an initial business combination.
As of June 30, 2026 and December 31, 2025, we have $32,560 and no cash held outside of the trust account generated from the proceeds of the Initial Public Offering, respectively. We will seek funds to primarily 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, and structure, negotiate and complete a business combination.
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 New Sponsor in order to provide the Company with additional working capital. Pursuant to the terms of the Working Capital Note, the principal balance shall not accrue interest; shall be payable by the Company on the earlier of the date on which Company consummates its initial Business Combination or the date that the winding up of the Company is effective; and is convertible at the New Sponsor’s election upon the consummation of the Company’s initial Business Combination. Should the New Sponsor elect to convert all or a portion of the principal balance, the elected principal balance amount will convert, at a price of $10.00 per unit, into units identical to the Private Placement Units issued in connection with the Company’s Initial Public Offering (each, a “Working Capital Units”), rounded down to the nearest whole number. The Company has relied upon Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the issuance of the Working Capital Note.
On August 11, 2026, the Company and the New Sponsor entered into an amendment to the Working Capital Note to increase the aggregate principal balance from $500,000 to $750,000 (the “Amended Working Capital Note”). The terms of the Amended Working Capital Note otherwise remain unchanged. As of the date of the filing of this Quarterly Report, the Company has drawn $750,000 under the Amended Working Capital Note.
Off-Balance Sheet Arrangements
As of June 30, 2026, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No unaudited quarterly operating data is included in this report as we have not conducted any operations to date.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities as of June 30, 2026 or December 31, 2025.
Pursuant to the underwriting agreement for our Initial Public Offering, the underwriters are entitled to a deferred underwriting discount of 3.50% of the gross proceeds of the Initial Public Offering held in the trust account, or $8,855,000 in the aggregate, payable to BTIG, LLC to be deposited in the trust account and released to BTIG, LLC only upon the completion of an initial business combination. The deferred underwriting commissions will be payable as follows: (i) $0.30 per Public Unit sold in the Initial Public Offering will be paid to BTIG, LLC in cash upon the closing of the initial business combination and (ii) $0.05 per Public Unit sold in the Initial Public Offering will be payable to BTIG, LLC in cash, provided that the Company and the New Sponsor have the right, in the Company and the New Sponsor’s discretion, to reallocate any portion of the Allocable Amount to third parties not participating in the Initial Public Offering (but who are members of FINRA) that assist the Company in consummating the initial business combination.
On June 9, 2025, the Company entered into an administrative services agreement with the Prior Sponsor, to pay an aggregate of $10,000 per month for office space, utilities, and secretarial and administrative support, to commence on the date the securities of the Company are first listed on the Nasdaq (the “Administrative Services Agreement”). As of November 25, 2025, the Company had incurred and paid the Prior Sponsor $54,398 of administrative costs. Pursuant to the Purchase Agreement, the Administrative Services Agreement with the Prior Sponsor was terminated on November 25, 2025, and no further fees accrued thereafter.
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Commitments and Contingencies
Registration rights
The holders of the (i) Founder Shares, which were issued in a private placement prior to the closing of the Initial Public Offering, (ii) Private Placement Units (and the securities comprising such units and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) which were issued in a private placement simultaneously with the closing of the Initial Public Offering and (iii) Private Placement Units (and the securities comprising such units and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) that may be issued upon conversion of Working Capital Loans will have registration rights to require the Company to register a sale of any of the Company’s securities held by them and any other securities of the Company acquired by them prior to the consummation of an initial business combination pursuant to a registration rights agreement entered into on the effective date of the Initial Public Offering.
The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of an initial business combination. Notwithstanding anything to the contrary, BTIG, LLC may only make a demand on one occasion and only during the five-year period beginning the commencement of sales of the Company’s Initial Public Offering. In addition, BTIG, LLC may participate in a “piggy-back” registration only during the seven-year period beginning the commencement of sales of the Company’s Initial Public Offering. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to an additional 3,300,000 Public Units to cover over-allotments which was exercised in full on the date of the Initial Public Offering. The underwriters were entitled to cash underwriting discount of 2.00% of the gross proceeds of the units offered in the Initial Public Offering, or $5,060,000 in the aggregate, which was paid to the underwriters upon the closing of the Initial Public Offering. Additionally, the underwriters are entitled to a deferred underwriting discount of 3.50% of the gross proceeds of the Initial Public Offering held in the trust account, or $8,855,000 in the aggregate, payable to BTIG, LLC to be deposited in the trust account and released to BTIG, LLC only upon the completion of an initial business combination. The deferred underwriting commissions will be payable as follows: (i) $0.30 per Public Unit sold in the Initial Public Offering will be paid to BTIG, LLC in cash upon the closing of the initial business combination and (ii) $0.05 per Public Unit sold in the Initial Public Offering will be payable to BTIG, LLC in cash, provided that the Company and the New Sponsor have the right, in the Company and the New Sponsor’s discretion, to reallocate any portion of the Allocable Amount to third parties not participating in the Initial Public Offering (but who are members of FINRA) that assist the Company in consummating the initial business combination.
Related Party Transactions
Founder Shares
On December 3, 2024, the Prior Sponsor made capital contributions of $25,000, or approximately $0.004 per share, to cover certain of the Company’s expenses, for which the Company issued 5,750,000 Founder Shares to the Prior Sponsor. On June 9, 2025, the Company, through a share capitalization, issued the Prior Sponsor an additional 575,000 Founder Shares, resulting in the Prior Sponsor holding 6,325,000 Founder Shares in the aggregate. On November 25, 2025, the New Sponsor purchased from the Prior Sponsor 6,325,000 Founder Shares pursuant to the Purchase Agreement.
The Company’s initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares and any Class A ordinary shares issued upon conversion thereof until the earlier to occur of (i) one year after the completion of the initial Business Combination or (ii) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property. Any permitted transferees will be subject to the same restrictions and other agreements of the Company’s initial shareholders with respect to any Founder Shares (the “Lock-up”). Notwithstanding the foregoing, if (1) the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which
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results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the Lock-up.
Promissory Note — Related Party
The Prior Sponsor agreed to loan the Company an aggregate of up to $300,000 to be used for a portion of the expenses of the Initial Public Offering (the “Promissory Note”). The Promissory Note was non-interest bearing, unsecured and due at the earlier of (i) November 20, 2025, (ii) the closing of the Initial Public Offering or (iii) the date which the Company determines not to proceed with the Initial Public Offering. As of June 11, 2025, the date of the consummation of the Initial Public Offering, the Company had borrowed $242,397 under the Promissory Note. On June 11, 2025, the Company paid $283,472 to the Prior Sponsor, resulting in an overpayment of $41,075 that was recorded as a related party receivable and repaid in full as of December 31, 2025. The Promissory Note was repaid in full in connection with the Initial Public Offering. The Promissory Note is no longer available as of December 31, 2025. Accordingly, as of June 30, 2026 and December 31, 2025, the Company had no amounts outstanding under the Promissory Note, respectively, and the Promissory Note is no longer available for draw down.
Administrative Services Agreement
Commencing on June 11, 2025, the Company entered into an agreement with an affiliate of the Prior Sponsor to pay an aggregate of $10,000 per month for office space, utilities, and secretarial and administrative support. Upon completion of the initial Business Combination or the liquidation, the Company will cease paying the $10,000 per month fee. The Company incurred administrative service fees of $0 and $6,333 for the three months ended June 30, 2026, and 2025, respectively, and $0 and $6,333 for the six months ended June 30, 2026, and 2025, respectively. In connection with the Purchase Agreement, the administrative services agreement was terminated and the outstanding balance, which totaled $25,683 as of November 25, 2025, the date of termination, was settled through a distribution to the Prior Sponsor.
CEO Advisory Fee
On December 26, 2025, the Board of Directors of the Company approved the payment by the Company of a monthly advisory fee of $15,000 payable to the Company’s Chief Executive Officer, Kevin McGurn, in connection with identifying, investigating, negotiating and completing the Company’s initial business combination and related matters. The advisory fee is effective as of December 2025 and will continue on a monthly basis until the earlier of (i) the closing and completion of the Company’s initial business combination and (ii) the liquidation of the Company. For the three and six months ended June 30, 2026, the Company incurred $45,000 and $90,000 of such advisory fees, respectively, with $15,000 accrued and unpaid as of June 30, 2026 and December 31, 2025. For the three and six months ended June 30, 2025, the Company incurred no such advisory fees.
Prior Sponsor Distribution
In connection with the Purchase Agreement on November 25, 2025, the Prior Sponsor received a cash distribution of $188,273, equivalent to the remaining cash after payment of all outstanding liabilities of the Company as of the closing of the Purchase, including all liabilities to the Prior Sponsor through the closing of the Purchase. The cash distribution was paid from the cash and cash equivalents of the Company and excluded amounts held in the Trust Account.
Due to Related Party
Prior to the drawdown of the Working Capital Note on March 23, 2026, YA II PN, Ltd., an affiliate of the New Sponsor (the “Affiliate”), paid for certain expenses on behalf of the Company, amounting to $259,017 in the aggregate. $250,371 was repaid during the three and six months ended June 30, 2026, resulting in a due to related party balance of $8,646 as of June 30, 2026. The amount due to the Affiliate is not a drawdown on the Working Capital Loan, it is non-interest bearing, and is due on demand.
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Related Party Loans
In order to finance transaction costs in connection with an intended initial Business Combination, the New Sponsor or an affiliate of the New Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required on a non-interest basis. If the Company completes an initial Business Combination, the Company would repay such loaned amounts. In the event that the initial Business Combination does not close, the Company may use amounts held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units of the post business combination entity at a price of $10.00 per unit at the option of the lender. Such units would be identical to the Private Placement Units.
On January 26, 2026, the Company issued a the Working Capital Note in the aggregate principal amount of $500,000 to the New Sponsor. Pursuant to the terms of the Working Capital Note, the principal balance does not accrue interest, is payable on the earlier of the date on which we consummate an initial Business Combination or the date that the Company’s winding up is effective, and is convertible at the New Sponsor’s election upon the consummation of an initial Business Combination into units identical to the Private Placement Units at a price of $10.00 per unit. On March 23, 2026, the Company drew $500,000 under the Working Capital Note. As such, as of June 30, 2026, there was $500,000 outstanding under the Working Capital Note.
On August 11, 2026, the Company and the New Sponsor entered into the Amended Working Capital Note to increase the aggregate principal balance from $500,000 to $750,000. The terms of the Amended Working Capital Note otherwise remain unchanged. As of the date of the filing of this Quarterly Report, the Company has drawn $750,000 under the Amended Working Capital Note.
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, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting estimates as of June 30, 2026.
Recent Accounting Pronouncements
Refer to Note 2. Summary of Significant Accounting Policies of the Notes to the Unaudited Condensed Financial Statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to make disclosures under this Item.
Item 4. Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of June 30, 2026 as a result of the material weakness described below.
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As of June 30, 2026, we have a material weakness in our internal controls over financial reporting due to a lack of properly designed, implemented, and effectively operating controls. Management, with oversight from the Board of Directors and the audit committee of the Board of Directors, will implement a remediation plan for this material weakness, including, among other things, designing and maintaining a formal control environment, accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures. We will also enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements including making greater use of third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
Not applicable.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
To the knowledge of our management, there is no material litigation, arbitration or governmental proceeding currently pending against us, any of our officers or directors in their capacity as such or against any of our property.
Item 1A. Risk Factors.
As of the date of this Report, there have been no material changes to the risk factors disclosed in our annual report on Form 10-K filed with the SEC on April 14, 2026. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
On December 3, 2024, the Prior Sponsor made capital contributions of $25,000 to cover certain of the Company’s expenses, for which the Company issued 5,750,000 Founder Shares, or approximately $0.004 per share, to the Prior Sponsor. On June 9, 2025, the Company, through a share capitalization, issued the Prior Sponsor an additional 575,000 Founder Shares, resulting in the Prior Sponsor holding 6,325,000 Founder Shares in the aggregate.
Simultaneously with the closing of the Company’s Initial Public Offering, the Company consummated a private placement of an aggregate of 683,000 Private Placement Units to the Prior Sponsor and BTIG, LLC, at a price of $10.00 per Private Placement Unit, generating total proceeds of $6,830,000. Each Private Placement Unit consists of one Class A Ordinary Share and one-half of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one Class A Ordinary Share for $11.50 per share (subject to adjustment). Of those 683,000 Private Placement Units, the Prior Sponsor purchased 430,000 Private Placement Units and BTIG purchased 253,000 Private Placement Units.
The Private Placement Units are identical to the Public Units sold in the Initial Public Offering except with respect to certain registration rights and transfer restrictions, as described in the registration statement relating to the Company’s Initial Public Offering. Additionally, such holders agreed not to transfer, assign or sell any of the Private Placement Units or underlying securities (except in limited circumstances, as described in the Registration Statement) until 30 days after the completion of the Company’s initial business combination. The holders were granted certain demand and piggyback registration rights in connection with the purchase of the Private Placement Units and the underlying securities.
The Private Placement Units were issued pursuant to Section 4(a)(2) of the Securities Act, as the transaction did not involve a public offering.
Use of Proceeds from our Initial Public Offering
On June 11, 2025, we consummated our Initial Public Offering of 25,300,000 Public Units, which included 3,300,000 Public Units issued pursuant to the exercise in full by the underwriters of its over-allotment option, which option was granted to the underwriters under the underwriting agreement for our Initial Public Offering. The Public Units were sold at a price of $10.00 per unit, and our Initial Public Offering generated gross proceeds of $253,000,000. The securities sold in our Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-285075). The SEC declared the registration statement effective on June 9, 2025.
At the time of the consummation of our Initial Public Offering, we paid a total of $5,060,000 in underwriting fees related to our initial public offering. In addition, the underwriters agreed to defer $8,855,000 in underwriting fees.
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On June 11, 2025, a total of $253,000,000 of the net proceeds from our Initial Public Offering and the private placement were deposited in the trust account. The net proceeds deposited into the trust account remain on deposit in the trust account and are available for a business combination, assuming no redemptions, before fees and expenses associated with our initial business combination. The proceeds held in the trust account will be invested only in U.S. government securities with a maturity 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.
Through June 11, 2025, the date we consummated our Initial Public Offering, we incurred $505,089 for other costs and expenses related to our Initial Public Offering
Purchases of Equity Securities by the Issuer and Affiliated Purchasers during the Quarter Ended June 30, 2026
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.
Exhibit No. | | Description |
|---|---|---|
3.1 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7 | ||
10.8 | ||
10.9 | ||
10.10 | ||
10.11 | ||
10.12 | ||
31.1* | ||
31.2* |
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Exhibit No. | | Description |
|---|---|---|
32.1** | ||
32.2** | ||
101. INS* | XBRL Instance Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
*Filed herewith
**Furnished herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Blue Water Acquisition Corp. III | ||
August 12, 2026 | By: | /s/ Kevin McGurn |
Name: | Kevin McGurn | |
Title: | Chief Executive Officer (Principal Executive Officer) | |
August 12, 2026 | By: | /s/ Troy Rillo |
Name: | Troy Rillo | |
Title: | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
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