References to the "Company," "our," "us" or "we" refer to Proficient Alpha Acquisition Corp. References to our "management" or our "management team" refer to our officers and directors, references to the "Sponsor" refer to Complex Zenith Limited, a British Virgin Islands company wholly-owned by Mr. Shih-Chung Chou. 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.





Overview

We are a blank check company incorporated on July 27, 2018 as a Nevada corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more businesses. Our initial combination and value creation strategy is to identify, acquire and, after our initial Business Combination target, assist in the growth of a business which provides financial services in Asia, primarily China. We intend to effectuate our initial Business Combination using cash from the proceeds of the IPO and the sale of the Placement Warrants that occurred simultaneously with the closing of the IPO, our capital stock, debt or a combination of cash, stock and debt. We have until June 3, 2020 (or December 3, 2020 if we extend the period to consummate a Business Combination by the full amount) to complete a Business Combination.

On March 10, 2020, the Company entered into a Business Combination Agreement with Lion, Pubco, Merger Sub, Shih-Chung Chou, an individual, in the capacity as the Purchaser Representative thereunder, Jian Wang and Legend Success Ventures Limited, each, in the capacity as a Seller Representative thereunder, and the Sellers.

Pursuant to the Business Combination Agreement, subject to the terms and conditions set forth therein, at the Closing, (a) Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity, and with holders of the Company's securities receiving substantially identical securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares of Lion from the Sellers in exchange for Class A and Class B ordinary shares of Pubco, with Lion becoming a wholly-owned subsidiary of Pubco.

The issuance of additional shares of Common Stock or preferred stock:



     • may significantly reduce the equity interest of our stockholders;
     • may subordinate the rights of holders of shares of Common Stock if we issue
       shares of preferred stock with rights senior to those afforded to our
       shares of Common Stock;
     • will likely cause a change in control if a substantial number of our shares
       of Common Stock are issued, which may affect, among other things, our
       ability to use our net operating loss carry forwards, if any, and most
       likely will also result in the resignation or removal of our present
       officers and directors; and
     • may adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities, it could result in:



     • default and foreclosure on our assets if our operating revenues after a
       Business Combination are insufficient to pay our debt obligations;
     • acceleration of our obligations to repay the indebtedness even if we have
       made all principal and interest payments when due if the debt security
       contains covenants that required the maintenance of certain financial
       ratios or reserves and we breach any such covenant without a waiver or
       renegotiation of that covenant;
     • our immediate payment of all principal and accrued interest, if any, if the
       debt security is payable on demand; and
     • our inability to obtain additional financing, if necessary, if the debt
       security contains covenants restricting our ability to obtain additional
       financing while such security is outstanding.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.





Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through March 31, 2020 were organizational activities and those necessary to prepare for our IPO,described below, and since the IPO, identifying a target company for a Business Combination and activities in connection with the proposed acquisition of Lion. We do not expect to generate any operating revenues until after the closing of our Business Combination. We expect to generate non-operating income in the form of interest income on cash and government securities. During the three and six months ended March 31, 2020, we had unrealized gain of $720,402 and $1,223,678, respectively, due to the investment of net proceeds held in the Trust Account, which was invested in U.S. government treasury bills with a maturity of 180 days or less.



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Operating Expenses

We had operating expenses of $834,786 and $1,143,235 for the three and six months ended March 31, 2020, respectively, compared to operating expenses of $92,851 and $197,951 for the three and six months ended March 31, 2019, respectively. The operating expenses for the three and six months ended March 31, 2020 included audit fees of $4,800 and $14,800, respectively, legal fees of $574,722 and $701,024, respectively, general and administrative expenses of $198,078 and $306,522, respectively, and officers' compensation of $56,556 and $120,889, respectively, of which $1,111 and $4,444, respectively, were in connection with stock issuances to our Chief Executive Officer and Chief Financial Officer. Pursuant to certain offer letters, the Company agreed to pay the Company's Chief Executive Officer $2,000 in cash per month and 50,000 founder shares and pay the Company's Chief Financial Officer $5,000 in cash per month and 50,000 founder shares. The total 100,000 founder shares were issued in September of 2018. Accordingly, we recognized stock-based compensation of $1,111 and $4,444, respectively, during the three and six months ended March 31, 2020 to the statement of operations. The unrecognized stock-based compensation was $0 as of March 31, 2020.

Compared to the same periods in 2019, we incurred 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 in connection with completing a Business Combination. However, our operating expenses are difficult to predict due to the uncertainty of the Business Combination, and it may be necessary to continuously raise additional capital to sustain operations.

For the six months ended March 31, 2020, we had net income of $50,290, which consists of $1,223,678 unrealized gain on government securities held in the Trust Account, offset by operating costs of $1,143,235 and income tax of $35,867.

For the three months ended March 31, 2020, we had net loss of $107,000 primarily due to the increase in legal expenses incurred during the proposed Transactions. The unrealized gain on government securities held in the Trust Account during the three months ended March 31, 2020 was not sufficient to cover the operating expenses.

Liquidity and Capital Resources

For the six months ended March 31, 2020, cash provided by operating activities amounted to $655,218, mainly due to the net income of $50,290, plus the increase in prepaid expenses by $70,000, the increase in accrued expenses and accrued expenses to related parties by $490,895 and $37,923, respectively, plus non-cash expenses of $4,444 as the stock based compensation to our Chief Executive Officer and Chief Financial Officer. Comparatively, cash of $199,431 used in operating activities during the six months ended March 31, 2019 was due to the net loss of $197,951, plus the decrease in accrued expenses to related parties amounted to $8,147, offset by non-cash expenses of $6,667 as the stock based compensation to our Chief Executive Officer and Chief Financial Officer.

For the six months ended March 31, 2020, cash used in investing activities amounted to $391,195, mainly due to unrealized gain from the trust account, offset by the release of $800,000 escrow deposit from an escrow account setup for a non-binding letter of intent with a potential target company for an initial Business Combination between the Company and such potential target company. The proposed transaction contemplated by this non-binding letter of intent did not proceed. There was no cash flow from investing activities during the six months ended March 31, 2019.

There was no cash flow from financing activities during the six months ended March 31, 2020. Comparatively, for the six months ended March 31, 2019, cash provided by financing activities amounted to $166,250 due to the collection of subscription receivable from founder shares.

As of March 31, 2020, we had cash and government securities held in the Trust Account of $117,116,839 (including approximately unrealized gain of $2,116,839 generated since the inception), substantially all of which has been invested in U.S. treasury bills with a maturity of 180 days or less. Interest income earned on the balance in the Trust Account may be available to us to pay taxes. On February 5, 2020, we withdrew $32,483 from the Trust Account to pay income tax for the fiscal year ended September 30, 2019.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our initial Business Combination. We may withdraw interest from the Trust Account to pay income taxes. To the extent that our capital stock 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.



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As of March 31, 2020, we had cash of $1,342,731 held outside the Trust Account. We intend to use the funds held outside the Trust Account to identify and evaluate target candidates, perform business and legal 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 business, and structure, negotiate and complete a Business Combination.

In order to finance transaction costs in connection with an intended initial Business Combination, our Sponsor, Initial Stockholders, officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial Business Combination, we would repay such loaned amounts. In the event that the initial 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 $1,500,000 of such loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private warrants. On July 24, 2019, we issued an unsecured promissory note to the Original Sponsor for a principal amount of up to $800,000 for working capital purposes. Pursuant to the Note, the Original Sponsor agreed to loan to us up to a total of $800,000 in the event our cash held outside of the Trust Account is less than $150,000.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business.

However, if the actual costs to identify a target business, undertake in-depth due diligence and negotiate a Business Combination exceed our estimated amount, we may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing by issuance of additional securities or incurrence of debt to consummate our initial Business Combination or to fulfill our obligations to redeem a significant number of our Public Shares upon closing of our initial Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the closing of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such initial Business Combination. We cannot provide any assurance that financing will be available to us on commercially acceptable terms, if at all. If we are unable to complete our initial Business Combination due to insufficient funds, we will be forced to cease operations and liquidate the Trust Account. In addition, following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements as of March 31, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.





Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than agreements to pay our directors and officers a monthly fee of total $17,000 for administrative support provided to the Company, which was discussed below in details.

We pay Kin Sze, our Chief Executive Officer, President, Secretary and Director, monthly fees of $2,000 for his service as Chief Executive Officer commencing on July 3, 2019 and Weixuan Luo, our Chief Financial Officer, monthly fees of $5,000 commencing on August 1, 2018. We issued each of Kin Sze and Weixuan Luo 50,000 founder shares. In addition, we pay each member of our board of directors $2,000 per month for his or her services commencing on August 1, 2018 and will issue an aggregate of 300,000 shares of Common Stock to Kin Sze, our Chief Executive Officer, President and Secretary, and certain members of our board of directors within 10 days following the Business Combination. They will receive repayment of any loans from our Sponsor, Initial Stockholders, officers and directors for working capital purposes and reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses for Business Combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us.

After our initial Business Combination, members of our management team who remain with the combined company may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider an initial Business Combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.



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Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP 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. The Company has identified the following critical accounting policy:

Common Stock Subject to Possible Redemption

We account for our Common Stock subject to possible conversion in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from Equity." Common Stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable Common Stock (including shares of Common Stock 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, shares of Common Stock are classified as stockholders' equity. Our Common Stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, as of March 31, 2020, the shares of Common Stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders' equity section of our balance sheet.

Recent Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.

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