Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the U.S. federal income tax consequences of the proposed de-SPAC business combination (the "Transaction") involving Pinnacle Growth Acquisition Corp., a Cayman Islands exempted company ("Pinnacle" or "PGAC"), and Skybridge Fintech Ltd., a Delaware corporation ("Skybridge" or "SBF"), for the benefit of Skybridge and its shareholders. This memorandum is prepared for interna

1. Domestication. Immediately prior to the merger effective time, Pinnacle will re-domicile from the Cayman Islands to the State of Delaware (the "Domestication"). The Domestication is treated as a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code"), constituting a "mere change in identity, form, or place of organization." The Domestication has significant implicati

2. Merger. Following the Domestication, Merger Sub will merge with and into Skybridge under the Delaware General Corporation Law (the "DGCL"), with Skybridge surviving as a wholly owned subsidiary of SFH (the "Merger"). The Merger is intended to qualify as a tax-free reorganization under Section 368(a)(1)(A) of the Code by reason of Section 368(a)(2)(E) (a forward triangular merger). C. Additional Topics In addition

II. FACTUAL BACKGROUND A. The Parties

1. Skybridge Fintech Ltd. ("Skybridge" or "SBF") Skybridge Fintech Ltd. is a Delaware corporation (EIN 83-2471560) incorporated on June 15, 2018. Skybridge maintains its principal executive offices at 1200 Market Street, Suite 1400, Wilmington, Delaware 19801, and operates an engineering and product development office at 450 Folsom Street, 7th Floor, San Francisco, California 94105. Skybridge operates a cloud-based p

2. Pinnacle Growth Acquisition Corp. ("Pinnacle" or "PGAC") Pinnacle Growth Acquisition Corp. is a Cayman Islands exempted company (EIN 88-3654921) organized as a blank-check company for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses. Pinnacle maintains its registered office at c/o Harborstone Corporate

3. Ridgeway Capital Holdings LLC ("Sponsor") Ridgeway Capital Holdings LLC is a Delaware limited liability company (EIN 87-1093847) that serves as the sponsor of Pinnacle. The managing member of the Sponsor is Jonathan Mercer, the Chief Executive Officer and Chairman of Pinnacle. The Sponsor holds 7,500,000 Class B ordinary shares of Pinnacle (the "Founder Shares"), which were issued in connection with the formation

4. Pinnacle Merger Sub Inc. ("Merger Sub") Pinnacle Merger Sub Inc. is a Delaware corporation that will be formed as a direct, wholly owned subsidiary of Pinnacle in connection with the Domestication. Merger Sub will be organized solely for the purpose of consummating the forward triangular merger with Skybridge and will have no prior operations, assets, or liabilities other than those incident to its formation. An E

5. Skybridge Fintech Holdings, Inc. ("Combined Company" / "SFH") Skybridge Fintech Holdings, Inc. is the post-closing name of domesticated Pinnacle. Upon consummation of the Transaction, SFH will be a Delaware corporation and will be the publicly traded parent entity of the combined enterprise. SFH's shares of Class A common stock are expected to trade on the Nasdaq Capital Market under the ticker symbol "SBFT." B. T

1. Step 1 — Domestication Immediately prior to the merger effective time, Pinnacle will re-domicile from the Cayman Islands to the State of Delaware (the "Domestication") pursuant to Section 388 of the DGCL and the applicable provisions of the Cayman Islands Companies Act (as revised). In connection with the Domestication, a Certificate of Domestication and a Certificate of Incorporation will be filed with the Secret

2. Step 2 — Merger Following the effectiveness of the Domestication, Merger Sub will merge with and into Skybridge pursuant to Section 251 of the DGCL, with Skybridge surviving the Merger as a wholly owned subsidiary of SFH (the "Merger"). The Certificate of Merger will be filed with the Secretary of State of the State of Delaware. Following the effective time of the Merger, Skybridge will continue to operate its bus

3. Merger Consideration In the Merger, each issued and outstanding share of Skybridge common stock (including shares issued upon the exercise or conversion of Skybridge options or other equity awards prior to or at closing) will be converted into the right to receive a number of shares of SFH Class A common stock based on an exchange ratio determined by dividing (a) the merger consideration of $450,000,000 by (b) the

4. Earnout. In addition to the merger consideration described above, former Skybridge shareholders will be entitled to receive up to an aggregate of 5,000,000 additional shares of SFH Class A common stock (the "Earnout Shares") pursuant to the Earnout Agreement, in the form to be executed at the closing of the Transaction, upon the achievement of the following stock-price milestones: • Tranche 1: 2,500,000 Earnout Sh

5. PIPE Investment Concurrently with the execution of the Business Combination Agreement, SFH entered into subscription agreements with four institutional investors (collectively, the "PIPE Investors") for the purchase of an aggregate of 15,000,000 shares of SFH Class A common stock at a price of $10.00 per share, for total gross proceeds of $150,000,000 (the "PIPE Investment"). The PIPE Investors and their respectiv

6. Backstop Arrangement Velthryn Strategic Investments, LP ("Velthryn") has committed, pursuant to a Non-Redemption/Backstop Agreement dated as of April 14, 2025 (the "Backstop Agreement"), to purchase up to 5,000,000 shares of SFH Class A common stock from shareholders of Pinnacle who elect to redeem their shares in connection with the Transaction, at a price of $10.25 per share (for a maximum aggregate commitment o

7. Sponsor Forfeiture Pursuant to the Sponsor Support Agreement dated as of April 14, 2025 (the "Sponsor Support Agreement"), the Sponsor has agreed to forfeit 500,000 Class B ordinary shares at the closing of the Transaction. The Sponsor has further agreed to forfeit an additional 500,000 Class B ordinary shares if redemptions by public shareholders exceed 75% of the total outstanding Class A ordinary shares (i.e.,

8. Warrants Outstanding As of the date of this memorandum, there are 18,000,000 warrants of Pinnacle outstanding, consisting of: • 10,000,000 public warrants (the "Public Warrants"), issued in connection with the IPO as part of the units, each exercisable for one Class A ordinary share at an exercise price of $11.50 per share; and • 8,000,000 Private Placement Warrants, held by the Sponsor, each exercisable for one C

III. TAX ANALYSIS — DOMESTICATION (SECTION 368(a)(1)(F) AND SECTION 367(b)) A. Classification of Pinnacle for U.S. Tax Purposes

1. Foreign Corporation Status Pinnacle is organized as an exempted company under the laws of the Cayman Islands. As such, Pinnacle is treated as a foreign corporation for U.S. federal income tax purposes. A corporation organized or created under the laws of a jurisdiction other than the United States, a state, or the District of Columbia is classified as a foreign corporation under Section 7701(a)(5) of the Code.

2. Entity Classification Pinnacle has not made an election on Form 8832 (Entity Classification Election) to be treated as other than a corporation for U.S. federal income tax purposes. Under the default classification rules set forth in Treasury Regulation § 301.7701-2(b)(8)(i) and § 301.7701-3(a), a business entity with more than one member that is organized under the laws of a foreign jurisdiction is classified as

3. Passive Foreign Investment Company (PFIC) Analysis Under Section 1297 of the Code, a foreign corporation is a PFIC if either (a) 75% or more of its gross income for the taxable year is "passive income" (the "income test") or (b) 50% or more of the average value of its assets during the taxable year produce, or are held for the production of, passive income (the "asset test"). Pinnacle's PFIC status is directly rel

1. Characterization of the Domestication The Domestication of Pinnacle from the Cayman Islands to Delaware constitutes a transfer of all assets and liabilities of a foreign corporation (Cayman Islands Pinnacle) to a domestic corporation (Delaware Pinnacle/SFH) in exchange for stock of the domestic corporation, followed by the distribution of such stock to the shareholders of the foreign corporation in cancellation of

2. Section 368(a)(1)(F) Qualification Under Section 368(a)(1)(F) of the Code, a reorganization includes "a mere change in identity, form, or place of organization of one corporation, however effected." The IRS has long recognized that a redomiciliation or continuance of a corporation from one jurisdiction to another qualifies as a reorganization under Section 368(a)(1)(F). See Revenue Ruling 88-25, 1988-1 C.B. 116 (h

3. Conclusion. Based on the foregoing analysis, the Domestication of Pinnacle from the Cayman Islands to Delaware should qualify as a reorganization under Section 368(a)(1)(F) of the Code. As such, the Domestication will be treated as a tax-free transaction at the corporate level, subject to the shareholder-level consequences under Section 367(b) discussed immediately below. C. Section 367(b) Consequences of the Dome

1. Overview of Section 367(b) When a foreign corporation is involved in a transaction that otherwise qualifies as a tax-free reorganization under Section 368, Section 367(b) of the Code and the Treasury Regulations promulgated thereunder may require shareholder-level income inclusions to preserve the U.S. taxing jurisdiction over previously untaxed earnings and profits ("E&P") of the foreign corporation. The policy u

2. U.S. Holders of PGAC Class A Ordinary Shares a. General Rule Under Treasury Regulation § 1.367(b)-3. Under Treasury Regulation § 1.367(b)-3(b), a U.S. person who is a "shareholder" (as defined in Treasury Regulation § 1.367(b)-3(b)(1)) of the foreign corporation (Pinnacle) that transfers its assets to a domestic corporation (SFH) in connection with a Section 368(a)(1)(F) reorganization must include in income as a

3. Non-U.S. Holders of PGAC Class A Ordinary Shares Non-U.S. holders of PGAC Class A ordinary shares are generally not subject to U.S. federal income tax on the deemed exchange of PGAC ordinary shares for SFH common stock in the Domestication, except in the following circumstances: (a) Effectively connected income ("ECI"). If the non-U.S. holder holds the PGAC shares in connection with a U.S. trade or business, any g

4. Sponsor (Ridgeway Capital Holdings LLC) — Class B Ordinary Shares Ridgeway Capital Holdings LLC is a Delaware limited liability company and has not elected to be treated as a corporation for U.S. federal income tax purposes. Accordingly, the Sponsor is treated as a partnership (or, if it has only one member, a disregarded entity) for U.S. federal income tax purposes, and its tax consequences flow through to its me

5. Private Placement Warrants (Sponsor) and Public Warrants Warrants to purchase stock of a corporation are not "stock" for purposes of Section 367(b) of the Code. See Treasury Regulation § 1.367(b)-2(a)(1) (defining the scope of Section 367(b) to apply to "exchanging shareholders" who exchange "stock" of the foreign corporation). In the Domestication, each outstanding Cayman Islands warrant of Pinnacle (both Public

1. U.S. Holders For U.S. holders of PGAC ordinary shares, the tax basis in the shares of SFH Class A common stock received in the Domestication generally equals the holder's adjusted tax basis in the Cayman Islands ordinary shares surrendered, increased by any amount included in income under Section 367(b) (whether as a deemed dividend or as gain recognized under the PFIC rules). See Section 358(a)(1) of the Code; Tr

2. Sponsor. The same basis and holding period carryover rules apply to the Sponsor with respect to its Class B ordinary shares (converted into SFH Class A common stock in the Domestication), adjusted for any Section 367(b) inclusion amount.

IV. TAX ANALYSIS — THE MERGER AS A SECTION 368(a)(1)(A) REORGANIZATION (BY REASON OF SECTION 368(a)(2)(E)) A. Applicable Reorganization Provision The Merger of Pinnacle Merger Sub Inc. with and into Skybridge Fintech Ltd. is structured as a forward triangular merger, intended to qualify as a tax-free reorganization under Section 368(a)(1)(A) of the Code by reason of Section 368(a)(2)(E). Under this provision, a trans

1. Statutory Merger or Consolidation The transaction must constitute a "statutory merger or consolidation" under applicable state law. The Merger of Merger Sub with and into Skybridge will be effected pursuant to Section 251 of the DGCL, which governs mergers of domestic corporations. A Certificate of Merger will be filed with the Secretary of State of the State of Delaware, and the Merger will become effective upon

2. Target Survives Under Section 368(a)(2)(E), the acquired corporation (Skybridge) must be the surviving entity in the merger. This is the defining characteristic of a forward triangular merger, as distinguished from a reverse triangular merger under Section 368(a)(2)(D) (in which the subsidiary merges into the target and the target survives). Here, Skybridge will survive the Merger as a wholly owned subsidiary of S

3. Substantially All of Target's Assets

Section 368(a)(2)(E) requires that the surviving corporation hold "substantially all of its properties" after the merger. Revenue Procedure 77-37, 1977-2 C.B. 568, sets forth the IRS's administrative position that "substantially all" means at least 70% of the fair market value of the gross assets and at least 90% of the fair market value of the net assets of the target. These thresholds were developed in the context

4. Voting Stock Requirement (Section 368(a)(2)(E) / Section 368(c)) Under Section 368(a)(2)(E), the acquiring parent corporation (SFH) must acquire "control" (as defined in Section 368(c)) of the target in the merger. Section 368(c) defines "control" as ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote and at least 80% of the total number of shares

5. Control Requirement (Post-Merger Ownership) As noted above, following the Merger, SFH will own 100% of the total voting power and 100% of the total number of shares of all classes of stock of Skybridge. The Section 368(c) control requirement is therefore satisfied. Conclusion: Satisfied.

6. No Deemed Exchange of Consideration by Merger Sub In a forward triangular merger under Section 368(a)(2)(E), all consideration flowing to the target shareholders must be provided by the parent corporation (SFH) rather than by the merging subsidiary (Merger Sub). Here, Merger Sub will not issue any stock to Skybridge shareholders; all SFH shares to be received by Skybridge shareholders in the Merger will be shares

1. Standard. Under Treasury Regulation § 1.368-1(e)(1)(i), the continuity of interest ("COI") requirement is satisfied if a substantial part of the value of the proprietary interest in the target is preserved through the issuance of stock of the acquiring corporation to the target's shareholders. The IRS has historically applied a threshold of approximately 40% of the total consideration for the target's shares (base

2. Application. In the present case, the COI requirement is satisfied by a wide margin. One hundred percent (100%) of the merger consideration payable to Skybridge shareholders consists of SFH Class A common stock. No cash, debt instruments, or other non-equity consideration is being paid to Skybridge shareholders. The sole exception is de minimis cash paid in lieu of fractional shares, which does not materially affe

3. Post-Signing/Pre-Closing Dispositions The COI analysis may be affected if target shareholders dispose of their target shares (or the acquiring corporation's shares received as merger consideration) prior to the effective time of the Merger. See Treasury Regulation § 1.368-1(e)(1)(ii) (providing that COI is tested by reference to the consideration issued in the merger, but that pre-merger dispositions by target sha

4. PGAC Redemptions We note that redemptions by PGAC public shareholders do not affect the COI analysis as applied to the Merger. COI is tested from the perspective of the target (Skybridge) shareholders, not the acquiring corporation's shareholders. The fact that PGAC shareholders may redeem their shares for cash from the Trust Account is a separate event relating to the acquiring corporation's capital structure and

1. Standard. Under Treasury Regulation § 1.368-1(d)(1), the continuity of business enterprise ("COBE") requirement is satisfied if the acquiring corporation (or, in the case of a triangular merger, the acquired subsidiary) either (a) continues the target's historic business (the "business continuity test") or (b) uses a significant portion of the target's historic business assets in a business (the "asset continuity

2. Application. The COBE requirement is clearly satisfied in the present case. Following the Merger, Skybridge will continue to operate as a wholly owned subsidiary of SFH, conducting the same cloud-based payment orchestration and embedded-finance SaaS business that it has conducted since its inception. Skybridge's technology platform, customer contracts, intellectual property, workforce, office locations, and operat

1. Business Purpose Treasury Regulation § 1.368-1(b) requires that a reorganization be motivated, in whole or in substantial part, by a legitimate business purpose other than tax avoidance. The Transaction is driven by substantial, legitimate, non-tax business purposes, including the following: (a) Providing Skybridge with access to the public capital markets, thereby enabling the company to raise additional equity c

2. Step Transaction Doctrine The Domestication and the Merger are two distinct steps in an integrated transaction plan, occurring sequentially on the same date (the projected closing date of July 21, 2025). Under the step transaction doctrine, two or more formally separate steps may be collapsed and treated as a single transaction for U.S. federal income tax purposes if they are so interdependent that the legal relat

V. TAX CONSEQUENCES TO SKYBRIDGE SHAREHOLDERS A. Receipt of SFH Shares in the Merger

1. Nonrecognition Under Section 354(a)(1) Under Section 354(a)(1) of the Code, no gain or loss is recognized by a shareholder of a target if such shareholder exchanges stock of the target solely for stock of the acquiring corporation (or its parent) in a transaction that qualifies as a reorganization under Section 368. Because the Merger is expected to qualify as a reorganization under Section 368(a)(1)(A) by reason

2. Basis Under Section 358(a)(1) Under Section 358(a)(1) of the Code, each Skybridge shareholder's aggregate adjusted tax basis in the SFH shares received in the Merger will equal the aggregate adjusted tax basis of the Skybridge shares surrendered in exchange therefor. This substituted basis rule ensures that any built-in gain or loss in the Skybridge shares is preserved in the SFH shares received, and will be recog

3. Holding Period Under Section 1223(1) Under Section 1223(1) of the Code, the holding period of the SFH shares received in the Merger will include the holding period of the Skybridge shares surrendered in exchange therefor, provided that the Skybridge shares were held as "capital assets" (within the meaning of Section 1221) or as property described in Section 1231 in the hands of the exchanging shareholder. For most

1. Harborview Partners (Approximately 38.2% Fully Diluted) Harborview Partners is a Delaware limited partnership and is treated as a partnership for U.S. federal income tax purposes. As a pass-through entity, Veltrano does not itself pay federal income tax; instead, the tax consequences of the Merger flow through to Veltrano's partners (limited partners and general partner) based on their respective distributive shar

2. Atlas Horizon Ventures Fund II, LP (Approximately 22.7% Fully Diluted) Atlas Horizon Ve