Blue Acquisition Corp/Cayman Annual Report Summary for Investors

This annual report summarizes Blue Acquisition Corp/Cayman's (BACC) activities for the year ending December 31, 2025. BACC, a Special Purpose Acquisition Company (SPAC), aims to identify and merge with a private operating company, bringing it public.

Business Overview

Blue Acquisition Corp. (BACC) is a Cayman Islands-incorporated Special Purpose Acquisition Company (SPAC). Its only goal is to merge with an existing business. Until this merger happens, BACC has no operations and generates no revenue.

BACC completed its Initial Public Offering (IPO) in June 2025, raising capital for its acquisition strategy. A key development this year was signing a definitive Business Combination Agreement with Blockfusion USA, Inc. in November 2025. This agreement achieves the SPAC's core objective: transforming BACC into an operating entity through this merger. The company must complete this transaction by March 16, 2027.

If the merger succeeds, the combined company will operate Blockfusion USA, Inc.'s business.

Financial Performance

As a SPAC, Blue Acquisition Corp. does not generate revenue or profit from business operations. Its financial performance depends on its ability to secure and complete an acquisition and manage expenses.

• Revenue: The company generated no operating revenue for the year ended December 31, 2025. It primarily earns interest on funds held in its trust account.
• Operating Expenses: The company incurs general and administrative expenses for its acquisition search, due diligence, legal and accounting fees, and the merger process. This leads to a net loss for the period.
• Year-over-Year Changes: As a newly public entity following its IPO in June 2025, detailed year-over-year financial performance comparisons for operating activities are not applicable for the full fiscal year 2025.

Risk Factors

1. Failure to Complete Merger: The most significant risk is failing to finalize the Blockfusion merger by the March 16, 2027 deadline. If the deal falls through (e.g., due to lack of shareholder approval, Blockfusion's business changes, or regulatory hurdles), Blue Acquisition Corp. would likely liquidate and return trust funds to its public shareholders. Shareholders typically receive approximately $10.00 per share plus accrued interest, which could be less than their initial investment or current market value.
2. Blockfusion's Future Performance: Even if the merger succeeds, the combined company's stock price depends heavily on Blockfusion's ability to execute its business plan, generate revenue, and achieve profitability.
3. Shareholder Redemptions: A high rate of shareholder redemptions prior to the merger vote could significantly reduce the capital available to the combined company, potentially impacting its future growth and operational capabilities.
4. Regulatory Changes: The introduction of a U.S. federal 1% excise tax on stock repurchases, effective January 1, 2023, could impact the combined company's capital allocation strategies, particularly regarding share buybacks.

Management Discussion and Analysis (MD&A) Highlights

As a SPAC, Blue Acquisition Corp.'s MD&A primarily focuses on its financial condition, liquidity, and capital resources as it pursues a business combination.

• Results of Operations: The company's operations involve its formation, IPO, and the search for and negotiation of a business combination. Thus, it generates no operating revenue. Expenses primarily include general and administrative costs, professional fees, and other costs for identifying and evaluating target businesses and the proposed Blockfusion merger. The company expects net losses to continue until it completes a business combination.
• Liquidity and Capital Resources: After its IPO, most of the raised capital resides in a trust account, typically invested in U.S. government securities. This trust account provides the primary funding for the business combination or for public shareholder redemptions. The company also maintains a working capital account outside the trust for its operating expenses. Management plans to use these trust funds to complete the Blockfusion USA, Inc. business combination or, if unsuccessful, to liquidate and return funds to shareholders.
• Critical Accounting Policies: Key accounting policies for a SPAC typically include the accounting for the trust account, public shares subject to redemption, and warrants. These policies are applied consistently with generally accepted accounting principles.

Financial Health

• Trust Account: After its IPO, most of the raised capital resides in a trust account, typically invested in U.S. government securities, for the business combination or shareholder returns. A typical SPAC IPO of this scale places approximately $10.00 per share into the trust, suggesting an initial value over $200 million based on outstanding Class A shares. The trust account is the primary source of liquidity for the business combination.
• Operating Expenses: The company incurs general and administrative expenses for its acquisition search and merger process, leading to a net loss.
• Debt: As a pre-merger SPAC, Blue Acquisition Corp. typically operates with minimal to no long-term debt. Any short-term liabilities would primarily relate to accrued expenses for professional services.
• Market Valuation: As of June 30, 2025, the market valued the company's "Units" (BACCU) at approximately $202 million.
• Share Structure (as of February 19, 2026): Approximately 20.9 million Class A Ordinary Shares (BACC) and 7.1 million Class B Ordinary Shares were outstanding. The company's 'Rights' (BACCR) also trade on Nasdaq.
• Liquidity: The company's liquidity primarily comes from funds in the trust account and a small amount of working capital held outside the trust. These funds cover operating expenses and business combination costs.

Future Outlook

Blue Acquisition Corp.'s future focuses solely on successfully integrating with Blockfusion USA, Inc. If completed, the combined entity will transition from a shell company to an operating business. The long-term outlook will then depend on Blockfusion's industry, business model, and management's ability to execute its strategy in the public market. The company aims to complete the business combination by the March 16, 2027 deadline, leveraging its IPO capital to support Blockfusion's growth initiatives as a public company.

Competitive Position

• Blue Acquisition Corp. (as a SPAC): As a SPAC, BACC's competitive position depends on its ability to identify and attract suitable target companies for a business combination. It competes with other SPACs and traditional private equity firms for attractive acquisition opportunities. Key factors include its management team's experience, the size of its trust, and the terms it can offer.