What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-12 compared with 2026-05-15 · 48 added, 40 removed, 138 unchanged (39% of the section changed)

2 unchanged sentences

III, a Cayman Islands exempted company;

(ii) “Founder Shares” are to shares of our Class B ordinary shares initially purchased by our 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) “Sponsor” are to Blue Water Acquisition III LLC, a Delaware limited liability 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.

15 unchanged sentences

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 March 31, 2026, the Company has not commenced any operations.

All activity for the period from November 1, 2024 (inception) through March 31, 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.

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.

9 unchanged sentences

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 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).

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.

2 unchanged sentences

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.

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).

3 unchanged sentences

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, and all references to the “Sponsor” refer to the “New Sponsor.”

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.

3 unchanged sentences

We have neither engaged in any operations nor generated any revenues to date.

Our only activities from November 1, 2024 (inception) through March 31, 2026 relate to organizational activities, our Initial Public Offering, and, subsequent to the Initial Public Offering, our pursuit of an initial business combination.

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.

3 unchanged sentences

Additionally, we expect our expenses to increase substantially after identifying a target for our initial business combination.

For the three months ended March 31, 2026, we had net income of $1,924,957, which consisted of $2,278,517 of income earned on cash and marketable securities held in the Trust Account, offset by $52,487 of formation, general and administrative expenses, $261,698 of legal and accounting expenses, $20,783 of listing fees, and $18,592 of insurance expense.

For the three months ended March 31, 2025, we had net loss of $75,822 consisting of $75,822 of formation, general and administrative expenses.

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 March 31, 2026 and December 31, 2025, we had $420,414 and no cash, respectively, no cash equivalents, and a working capital (deficit) of $56,028 and $(109,004), respectively.

For the three months ended March 31, 2026, net cash used in operating activities was $79,586.

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.

For the three months ended March 31, 2025, net cash used in operating activities was $0.

Net loss of $75,822 was increased by $67,465 formation, general and administrative costs paid by the Sponsor under the promissory note – related party, and an $8,357 increase in operating assets and liabilities.

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 no formal agreement exists, the Sponsor is committed to extending 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.

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.

18 unchanged sentences

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, 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.

Such provisions may be amended if approved by a special resolution,

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 March 31, 2026 and December 31, 2025, we have $420,414 and no cash held outside of the trust account generated from the proceeds of the Initial Public Offering, respectively.

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 Sponsor in order to provide the Company with additional working capital.

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 Sponsor’s election upon the consummation of the Company’s initial Business Combination.

Should the 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.

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 March 31, 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.

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 March 31, 2026 or December 31, 2025.

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 Sponsor have the right, in the Company and the 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.

(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”).

3 unchanged sentences

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 will be 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 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.

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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

2 unchanged sentences

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, New Sponsor purchased from the Prior Sponsor 6,325,000 Founder Shares pursuant to the Purchase Agreement.

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 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.

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

5 unchanged sentences

The Promissory Note is no longer available as of December 31, 2025.

as of March 31, 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.

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

1 unchanged sentence

Upon completion of the initial Business Combination or the liquidation, the Company will cease paying the $10,000 per month fee.

The Company did not incur administrative service fees for the three months ended March 31, 2026 and 2025.

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.

2 unchanged sentences

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 months ended March 31, 2026, the Company incurred $45,000 of such advisory fees with $15,000 accrued and unpaid as of March 31, 2026.

For the year ended December 31, 2025, the Company incurred $15,000 of such advisory fees with $15,000 accrued and unpaid as of December 31, 2025.

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, 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.

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 Sponsor (the “Affiliate”), paid for certain expenses on behalf of the Company, amounting to $250,371 in the aggregate, as of March 31, 2026.

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.

5 unchanged sentences

Such units would be identical to the Private Placement Units.

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.

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 March 31, 2026, there was $500,000 outstanding 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

1 unchanged sentence

Actual results could materially differ from those estimates.

We have not identified any critical accounting estimates as of March 31, 2026.

We have not identified any critical accounting estimates as of June 30, 2026.

Recent Accounting Pronouncements

2 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

As smaller reporting company, we are not required to make disclosures under this Item.

As a smaller reporting company, we are not required to make disclosures under this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis