Contract analysis

I. Executive Summary This memorandum summarizes the results of Calderwood & Harkness LLP's regulatory and compliance due diligence review of Skybridge Fintech Ltd. ("Skybridge," the "Company," or "you"), a Delaware C-corporation headquartered at 1400 Market Street, Suite 2200, Wilmington, DE 19801, in connection with the proposed $60,000,000 convertible promissory note bridge financing (the "Bridge Financing" or the

1. Pending License Applications. The Company's money transmitter license applications remain pending in four (4) states—Alabama, Maine, North Dakota, and Montana—in which the Company is currently conducting activities that may constitute money transmission. While the Company has submitted applications in each of these states and represents that it does not engage in material transmission volume in these jurisdictions

2. New York BitLicense. The Company holds a New York money transmitter license issued under Article XIII-B of the New York Banking Law but has not applied for a separate BitLicense under 23 NYCRR Part 200. While the Company does not currently transmit or facilitate the transmission of virtual currency, the Company's product roadmap includes the potential integration of stablecoin settlement functionality in calendar

3. California Examination Findings. The California Department of Financial Protection and Innovation ("DFPI") conducted a routine examination in June 2023 and issued a report containing three findings related to the timeliness of suspicious activity report ("SAR") filings and certain deficiencies in the Company's consumer complaint handling procedures. The Company has submitted a corrective action plan and has implem

4. Embedded Lending Licensing. The Company's embedded lending product, which facilitates merchant cash advances through a partner bank arrangement, may require separate state lending, finance lender, or commercial financing disclosure licenses in certain states. Our review has identified eight (8) states where the Company's current exemption analysis may be insufficient and where additional licensing or registration

5. Change-of-Control Considerations. The conversion of the convertible notes upon a Qualified Financing (anticipated Series D round of at least $80,000,000 in Q3–Q4 2024) could result in Ridgeline Ventures holding an equity stake sufficient to trigger control person or passive investor reporting thresholds in numerous states, requiring advance filings or pre-clearance with state regulators. This memorandum is prepare

II. Scope of Review and Materials Examined A. Documents and Materials Reviewed In connection with the preparation of this memorandum, we reviewed the following categories of documents and materials, substantially all of which were provided by the Company through the virtual data room maintained by Thackeray Solutions (the "Data Room") and supplemented by direct production from the Company's General Counsel and compli

1. State Money Transmitter License Applications, Approvals, Renewals, and Correspondence. Complete license application files, including original applications, amendments, and renewal submissions, for all jurisdictions in which the Company holds or has applied for a money transmitter license or similar authorization. Regulatory correspondence files for all such jurisdictions, including approval letters, conditional ap

2. State Examination Reports and Regulatory Correspondence Files. All examination reports issued by state regulatory authorities within the past five (5) years, including findings, management responses, corrective action plans, and follow-up correspondence. Regulatory correspondence files, including informal supervisory letters, guidance letters, and requests for information from state banking departments and departm

3. Company Compliance Policies and Procedures Manuals. The Company's comprehensive compliance policies and procedures manual (Version 7.2, last updated September 2023), including policies related to BSA/AML compliance, sanctions screening, customer identification, know-your-customer procedures, consumer complaint handling, vendor management, information security, and data privacy. The Company's Code of Business Condu

4. Bank Partnership and Sponsor Bank Agreements. Copies of all agreements with the Company's bank partners, including the Master Services Agreement with Keystone Federal Savings Bank, dated April 12, 2021, as amended (the "Keystone MSA"), and the Program Agreement with Pacific Commerce Bank, N.A., dated November 3, 2022 (the "Pacific Commerce Agreement"), pursuant to which the Company conducts certain payments proces

5. Compliance Officer Reports and Internal Audit Findings. Quarterly compliance reports prepared by the Company's Chief Compliance Officer, Reginald H. Tanaka, for the period from Q1 2022 through Q3 2023. Internal audit findings and reports relating to regulatory compliance matters for the same period, prepared by the Company's internal audit function.

6. Company Organizational Charts for Compliance Function. Current organizational chart for the Company's Legal, Compliance, and Risk Management department, including reporting lines, headcount, and functional responsibilities.

7. Responses to Due Diligence Request Lists. The Company's responses to the initial Due Diligence Request List dated November 13, 2023 (the "Initial DDRL"), and the Supplemental Due Diligence Request List dated December 6, 2023 (the "Supplemental DDRL"), the latter of which specifically requested detailed information regarding money transmission license status, state-by-state compliance, and bank partnership arrangem

8. Board Meeting Minutes. Minutes of the Company's Board of Directors meetings from January 2021 through November 2023, to the extent such minutes reference or discuss regulatory matters, compliance program updates, regulatory examinations, licensing status, or enforcement actions.

9. Regulatory Filings and Reports. FinCEN MSB registration filings and renewals. State call reports filed with the Nationwide Multistate Licensing System ("NMLS") for fiscal years 2021, 2022, and Q1–Q3 2023. BSA/AML filings, including Suspicious Activity Reports, Currency Transaction Reports, and related documentation.

10. Third-Party Compliance Audit Reports. The independent BSA/AML audit report prepared by Severin Beck CPAs LLP dated August 15, 2023, covering the twelve-month period ending June 30, 2023. The PCI-DSS Level 1 certification audit report prepared by Harborview Health IT, dated March 2023.

11. Audited and Reviewed Financial Statements. The Company's audited financial statements for fiscal year ending December 31, 2022, prepared by Pinnacle Audit Group LLP (engagement partner Lisa Johannsen), together with the accompanying auditor's report and notes to the financial statements. The Company's reviewed (unaudited) financial statements for the nine-month period ending September 30, 2023, also prepared by P

12. Interviews. Telephonic and video conference interviews conducted on December 11 and December 14, 2023, with Priya Ramanathan (General Counsel), Reginald H. Tanaka (Chief Compliance Officer), and Marcus Gillespie (Director, Regulatory Affairs). A follow-up written questionnaire was submitted to the compliance team on December 15, 2023, and responses were received on December 18, 2023. B. Limitations. This memorand

III. Overview of the Company's Business Model and Regulatory Touchpoints A. Payments Orchestration Platform Skybridge's core product is a cloud-based payments orchestration platform (the "Platform") designed to serve mid-market e-commerce companies, generally defined by the Company as merchants with annual online revenue between $10 million and $500 million. The Platform connects merchants with multiple payment proce

IV. Federal Regulatory Compliance A. FinCEN Registration Skybridge is registered with FinCEN as a Money Services Business in the category of "Money Transmitter" pursuant to 31 C.F.R. § 1022.380. The Company's initial MSB registration was filed on March 15, 2018, and became effective upon filing. The Company's registration has been renewed in accordance with FinCEN's biennial renewal requirement, with the most recent

V. State Money Transmission Licensing A. Licensing Framework Overview Money transmitter licensing is required in forty-nine (49) states and the District of Columbia for entities engaged in the business of money transmission, which is generally defined as receiving money or monetary value for the purpose of transmitting the same by any means, including electronic funds transfer, wire, or other method. Montana is the o

1. Alabama. Application filed with the Alabama State Banking Department on April 17, 2023. Status: Pending review. The Company has been processing transactions involving Alabama-based merchants while the application is pending. Alabama does not provide a statutory safe harbor for applicants operating during the pendency of a license application, which creates regulatory risk. The Company's GPV attributable to Alabama

2. Maine. Application filed with the Maine Bureau of Consumer Credit Protection on June 5, 2023. Status: Pending review; a deficiency notice was received on September 12, 2023 requesting additional documentation regarding the Company's compliance program. The Company submitted the requested documentation on October 20, 2023 and awaits further communication from the Bureau. Maine GPV is approximately $12 million annua

3. North Dakota. Application filed with the North Dakota Department of Financial Institutions on August 29, 2023. Status: Pending review. North Dakota GPV is approximately $8 million annualized.

4. Montana. As noted above, Montana does not currently have a money transmission licensing statute. However, the Company filed a precautionary application in anticipation of potential future legislation. This application is not pending before any regulatory body and is maintained internally for readiness purposes. C. Surety Bond and Net Worth Requirements The Company is required to maintain surety bonds in each state