Contract analysis

I. Executive Summary You have asked us to analyze the federal income tax and Delaware tax implications arising from Skybridge Fintech Ltd.'s (the "Company") proposed issuance of $60,000,000 in aggregate principal amount of convertible promissory notes (the "Notes" or "Convertible Notes") to a syndicate of institutional investors led by Ridgeline Ventures Fund IV, L.P. (the "Lead Investor" and, together with the other

1. Debt versus Equity Classification. Whether the Notes should be properly classified as debt instruments, rather than equity, for federal income tax purposes — a threshold determination that governs the applicability of the interest deduction rules, original issue discount provisions, and the tax treatment of conversion and repayment events.

2. Original Issue discount (OID). Whether the stated interest payable on the Notes constitutes "qualified stated interest" under the applicable Treasury Regulations or, alternatively, is required to be treated as OID, with the attendant accrual and reporting consequences for both the Company and the Purchasers.

3. Treatment of Stated Interest. The federal income tax characterization and timing of the 6.00% per annum simple interest (600 basis points) accruing on the Notes, computed on a 365-day year basis, including the deductibility of such interest by the Company.

4. Tax Consequences of Conversion. The federal income tax treatment of the automatic conversion of the Notes into equity securities of the Company upon the occurrence of a Qualified Financing, as well as the optional conversion at maturity, including the treatment of accrued but unpaid interest that converts into equity.

5. Tax Treatment at Maturity. The federal income tax consequences to both the Company and the Purchasers if the Notes are not converted and are instead repaid in cash at maturity.

6. Change of Control Payment. The federal income tax implications of the change of control provision, which entitles holders to the greater of a 2.0x multiple of outstanding principal plus accrued interest or the amount payable upon conversion at the Valuation Cap.

7. Delaware Tax Considerations. The impact of the Transaction on the Company's Delaware franchise tax obligations, including the potential effects of conversion on the franchise tax calculation, as well as related Delaware unclaimed property and state income tax considerations. In addition, this memorandum addresses the applicability of Section 409A of the Internal Revenue Code, information reporting and withholding

II. Background and Transaction Summary A. The Company Skybridge Fintech Ltd. (the "Company") is a Delaware C-corporation (EIN: 83-2147605; Delaware File Number: 6384291) incorporated in 2017. The Company operates a cloud-based payments orchestration and embedded lending platform, providing integrated financial technology infrastructure to enterprise and mid-market clients across multiple industry verticals. The Compa

III. Debt vs. Equity Classification A. General Principles A threshold question in analyzing the federal income tax consequences of the Notes is whether they should be treated as debt or equity for federal income tax purposes. This classification is critical because it determines whether the Company is entitled to deduct interest payments, whether holders must accrue original issue discount, and whether the conversion

IV. Original Issue discount (OID) Analysis A. General Framework — IRC Sections 1272, 1273, and 1274 Under Section 1273(a) of the Internal Revenue Code, original issue discount is defined as the excess, if any, of a debt instrument's "stated redemption price at maturity" over its "issue price." The stated redemption price at maturity includes all payments required to be made under the instrument other than payments of

V. Tax Treatment of Interest — Company Deductions A. Interest Expense Deduction Under Section 163 Under Section 163(a) of the Internal Revenue Code, the Company is generally entitled to deduct "all interest paid or accrued within the taxable year on indebtedness." To the extent the Notes are properly classified as debt (as analyzed in Section III above), the interest accruing on the Notes — whether characterized as s

VI. Tax Consequences of Conversion A. Automatic Conversion Upon Qualified Financing Upon the occurrence of a Qualified Financing — defined as a Series D preferred stock financing in which the Company raises at least $80,000,000 in new equity capital — all outstanding principal and accrued but unpaid interest on the Notes automatically convert into equity securities of the Company at the Conversion Price (the lower of

VII. Tax Treatment at Maturity (If No Qualified Financing Occurs) A. Repayment in Cash If no Qualified Financing occurs prior to the Maturity Date (January 15, 2026), each holder has the right to demand repayment in cash of the outstanding principal amount plus all accrued and unpaid interest on its Note. Principal Repayment. The repayment of the principal amount of a debt instrument at maturity does not give rise to

VIII. Tax Consequences of Change of Control A. Change of Control Payment Analysis The Notes provide that upon the occurrence of a Change of Control prior to conversion, each holder is entitled to receive the greater of: (i) 2.0x the outstanding principal amount plus all accrued and unpaid interest on such holder's Notes; or (ii) the amount that would be payable to such holder upon conversion of the Notes at the Cap-I

IX. Most Favored Nation (MFN) Provision — Tax Implications The Notes include a most favored nation provision that provides the holders with the right to amend the terms of their Notes to incorporate any more favorable terms offered by the Company in a subsequent convertible note or SAFE issuance. This provision could be triggered if, for example, the Company issues a subsequent convertible note with a lower valuation

X. Section 409A Considerations

Section 409A of the Internal Revenue Code imposes significant restrictions on "nonqualified deferred compensation" arrangements, including requirements as to the timing of deferral elections, the timing and form of distributions, and the prohibition of acceleration of benefits. Failure to comply with Section 409A can result in immediate income inclusion, a 20% additional tax, and interest penalties. Exclusion for Bon

XI. Delaware Tax Considerations A. Delaware Franchise Tax Skybridge Fintech Ltd. is a Delaware C-corporation and is subject to the annual Delaware franchise tax. The Delaware franchise tax is not an income tax but rather a tax imposed on the privilege of incorporation in Delaware, calculated based on the corporation's authorized and outstanding capital stock and total gross assets. Methods of Calculation. Delaware la