You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our unaudited condensed financial
statements and related notes included in Part I, Item 1 of this Quarterly
Report. This discussion and other parts of this report contain forward-looking
statements that involve risks and uncertainties, such as statements of our
plans, objectives, expectations and intentions. Our actual results could differ
materially from those discussed in these forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed in Part I, Item 1A "Risk Factors" of our Annual Report on
Form 10-K, as supplemented by Part II, Item 1A "Risk Factors" of this Quarterly
Report.
References to "we", "us", "our" or the "Company" are to PepperLime Health
Acquisition Corporation, except where the context requires otherwise. The
following discussion should be read in conjunction with our unaudited condensed
financial statements and related notes thereto included 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 includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report on Form 10-Q including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the completion of the Proposed Business Combination (as
defined below), the Company's financial position, business strategy and the
plans and objectives of management for future operations, are forward-looking
statements. Words such as "expect," "believe," "anticipate," "intend,"
"estimate," "seek" and variations and similar words and expressions are intended
to identify such forward-looking statements. 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,
including that the conditions of the Proposed Business Combination are not
satisfied. For information identifying important factors that could cause actual
results to differ materially from those anticipated in the forward-looking
statements, please refer to the Risk Factors section of the Company's Annual
Report on Form 10-K filed with the SEC. 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, the Company disclaims 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 were incorporated as a Cayman Islands exempted company on June 29, 2021. We
were incorporated for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the "Business Combination"). We have not selected any
specific Business Combination target.
On October 19, 2021, we consummated the IPO of 15,000,000 Units, at a price of
$10.00 per Unit, generating gross proceeds of $150,000,000 and incurring
offering costs of approximately $16,900,000, (of which $5,300,000 was for
deferred underwriting commissions), and approximately $7,987,000 was the excess
of fair value over price paid for Founder Shares sold to the Anchor Investors.
Simultaneously with the closing of the IPO, we consummated the sale of 7,500,000
Private Placement Warrants, at a price of $1.00 per Private Placement Warrant,
in a Private Placement to the Sponsor, generating gross proceeds of $7,500,000.
On October 29, 2021, the underwriters purchased an additional 2,000,000 Units,
generating net proceeds to the Company of approximately $20,000,000 in the
aggregate, and incurring an additional offering costs of $1,100,000 in
connection with the over-allotment (of which $700,000 was for deferred
underwriting fees) and substantially concurrently with the closing of the
partial exercise of the over-allotment option relating to the IPO, the Company
completed the private sale of an aggregate of 600,000 additional Private
Placement Warrants to our Sponsor at a purchase price of $1.00 per Private
Placement Warrant, generating gross proceeds to the Company of $600,000.
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Upon the closing of the IPO, the over-allotment and the Private Placement,
approximately $171.7 million ($10.10 per unit) of the net proceeds of the sale
of the Units and the Private Placement Warrants were placed in the Trust Account
and will continue to be invested in United States government treasury bills with
a maturity of 185 days or less or in money market funds investing solely in U.S.
Treasuries and meeting certain conditions under Rule 2a-7 under the Investment
Company Act of 1940, as amended, or the Investment Company Act, as determined by
the Company, until the earlier of: (i) the completion of a Business Combination
and (ii) the distribution of the Trust Account.
We cannot assure you that our plans to complete our Business Combination will be
successful.
Liquidity and Capital Resources
We consummated our IPO and consummated the exercise of our over-allotment option
as set forth above and completed the sale of our Private Placements Warrants.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Placements Warrants, a total
of approximately $171.7 million was placed in the Trust Account. We incurred
$16.9 million in Initial Public Offering related costs, of which $5.3 million
was for deferred underwriting commissions, and $7.9 million was the excess of
fair value over price paid for Founder Shares sold to certain qualified
institutional buyers or institutional accredited investors.
For the nine months ended September 30, 2022, cash used in operating activities
was $270,326. Net income of $160,032 was affected by interest earned on
investments held in the Trust Account of $991,565. Changes in operating assets
and liabilities provided $561,207 of cash for operating activities.
For the period from June 29, 2021 (Inception) Through September 30, 2021, cash
used in operating activities was $546. Net loss of $41,230 was affected by
general and administrative expenses paid by related party under promissory note
of $1,803 and general and administrative expenses paid by a related party in
exchange for issuance of Founder Shares of $25,000. Changes in operating assets
and liabilities provided $13,881 of cash for operating activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $172,693,471 (including $993,471 of interest income) consisting of U.S.
Treasury Bills with a maturity of 185 days or less. We may withdraw interest
from the Trust Account to pay taxes, if any. We intend to use substantially all
of the funds held in the Trust Account, including any amounts representing
interest earned on the Trust Account (which interest shall be net of taxes
payable and excluding deferred underwriting commissions), to complete our
Business Combination. To the extent that our share capital or debt is used, in
whole or in part, as consideration to complete our 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.
As of September 30, 2022, we had cash of $1,057,077. We intend to use the funds
held outside the Trust Account primarily to 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.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1.5 million of such Working Capital Loans may be
convertible into warrants of the post Business Combination entity at a price of
$1.00 per warrant. The warrants would be identical to the Private Placement
Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
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In connection with our assessment of going concern considerations in accordance
with the FASB ASU 2014-15, "Disclosures of Uncertainties about an Entity's
Ability to Continue as a Going Concern," we have determined that if we are
unable to complete a Business Combination by April 19, 2023, then we will cease
all operations except for the purpose of liquidating. The date for mandatory
liquidation and subsequent dissolution raises substantial doubt about our
ability to continue as a going concern. We plan to consummate a Business
Combination prior to the mandatory liquidation date. No adjustments have been
made to the carrying amounts of assets or liabilities should we be required to
liquidate after April 19, 2023.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from June 29, 2021 (inception) through September 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering and identifying a target company for a Business Combination. We
do not expect to generate any operating revenues until after the completion of
our Business Combination. We generate non-operating income in the form of
interest income on investments held in the Trust Account. We incur expenses as a
result of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2022, we had a net income of $538,356,
which consists of interest income on investments held in the Trust Account of
$755,321, offset by general and administrative expenses of $216,965.
For the nine months ended September 30, 2022, we had a net income of $160,032,
which consists of interest income on investments held in the Trust Account of
$991,565, offset by general and administrative expenses of $831,533.
For the three months ended September 30, 2021, we had a net loss of $25,725,
which consists of general and administrative expenses. For the period from June
29, 2021 (Inception) through September 30, 2021, we had a net loss of $41,230,
solely consisting of general and administrative expenses.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022 and December 31, 2021.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
approximately $6.0 million in the aggregate. The deferred fee will become
payable to the underwriters from the amounts held in the Trust Account solely in
the event that the Company completes a Business Combination, subject to the
terms of the underwriting agreement.
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 unaudited condensed financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
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Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption are classified as a
liability instrument and measured at redemption value. Conditionally redeemable
ordinary shares (including ordinary shares that feature redemption rights that
are either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within our control) are classified as
temporary equity. At all other times, ordinary shares are classified as
shareholders' deficit. Our Class A ordinary shares feature certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A ordinary shares
subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders' deficit section of our balance sheets.
Immediately upon the closing of the Initial Public Offering, the Company
recognized the accretion from initial book value to redemption amount value. The
change in the carrying value of redeemable Class A ordinary shares resulted in
charges against additional paid-in capital and accumulated deficit.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary shares outstanding during the period.
Accretion associated with the redeemable ordinary shares is excluded from
earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
unaudited condensed financial statements.
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