Contract analysis

I. Executive Summary Calderwood & Harkness LLP has been engaged by Skybridge Fintech Ltd. ("Skybridge" or the "Company") to analyze the federal and state securities law exemptions available for the Company's proposed issuance of convertible promissory notes (the "Notes") in the aggregate principal amount of Sixty Million Dollars ($60,000,000) to a syndicate of four institutional investors (collectively, the "Purchase

II. Background and Transaction Overview A. The Company Skybridge Fintech Ltd. ("Skybridge" or the "Company") is a Delaware corporation (C-corporation) originally incorporated under the laws of the State of Delaware on March 14, 2017. The Company's Employer Identification Number is 83-2147605, and its Delaware Division of Corporations file number is 6384291. The Company's principal executive offices are located at 140

III. The Securities at Issue The threshold question in any securities law analysis is whether the instruments at issue constitute "securities" within the meaning of the applicable statutory definition. We address this question with respect to both the Notes themselves and the equity securities issuable upon their conversion. A. The Convertible Notes Are "Securities"

Section 2(a)(1) of the Securities Act defines the term "security" broadly to include, among other things, "any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, ... [or] investment contract." The statutory definition expressly includes "any note," which would, on its face, encompass th

1. The motivations of the buyer and seller. If the seller's purpose is to raise money for the general use of a business enterprise or to finance substantial investments, and the buyer is interested primarily in the profit the note is expected to generate, the note is more likely to be a security. Conversely, if the note is exchanged to facilitate the purchase and sale of a minor asset or consumer good, to correct for

2. The plan of distribution. If the note is offered and sold to a broad segment of the public, it is more likely a security. If the note is sold only to a limited class of persons, the analysis may cut either way, depending on the nature of those persons and the purpose of the transaction.

3. The reasonable expectations of the investing public. Whether the public would reasonably expect the note to be treated as a security is relevant to the analysis.

4. The existence of an alternative regulatory regime. If some factor, such as the existence of another regulatory scheme, significantly reduces the risk of the instrument, that factor suggests the note is not a security. Applying the Reves factors to the convertible promissory notes at issue: Motivations. The Company's motivation in issuing the Notes is to raise $60,000,000 in capital to fund the Company's ongoing op

IV. Section 4(a)(2) of the Securities Act — Statutory Private Placement Exemption A. Overview of Section 4(a)(2)

Section 4(a)(2) of the Securities Act (formerly Section 4(2), redesignated by the JOBS Act of 2012) provides an exemption from the registration requirements of Section 5 for "transactions by an issuer not involving any public offering." The statutory text is notable for its brevity; it does not prescribe specific conditions or requirements, but instead articulates a broad standard that has been developed through deca

V. Rule 506(b) of Regulation D — Safe Harbor Analysis A. Overview of Regulation D Regulation D, comprising Rules 500 through 508, was adopted by the SEC to provide a series of non-exclusive safe harbors under Section 4(a)(2) of the Securities Act. Compliance with the conditions of a particular Regulation D exemption provides an issuer with a greater degree of certainty that its offering will be deemed exempt from reg

VI. Form D Filing Requirements — Rule 503 A. Initial Filing Rule 503 of Regulation D requires the issuer to file a notice on Form D with the SEC no later than fifteen (15) calendar days after the first sale of securities in the offering. The "first sale" for purposes of this requirement will be the date of the Initial Closing — that is, the date on which the Company executes the NPA and the Notes are issued to the In

VII. State Securities ("Blue Sky") Considerations A. Federal Preemption Under NSMIA — Section 18 of the Securities Act As noted above, securities offered or sold in a transaction exempt under Rule 506 of Regulation D are "covered securities" under Section 18(b)(4)(D) of the Securities Act, as added by the National Securities Markets Improvement Act of 1996 ("NSMIA"). The designation of securities as "covered securiti