Contract analysis

I. Executive Summary The purpose of this memorandum is to alert Skybridge Fintech Ltd. ("SBF") leadership to a material servicing-data discrepancy discovered on April 22, 2024, by Broadleaf Analytics Group LLC ("Broadleaf") during independent loan-level re-underwriting of the receivables pool proposed for the $200,000,000 securitization through SkyLend Receivables Trust 2024-1 (the "Trust" or "SRT 2024-1"). This memo

II. Background A. Transaction Overview SkyLend Receivables Trust 2024-1 is a proposed securitization structured as a Rule 144A / Regulation S private placement of asset-backed notes secured by a pool of unsecured consumer installment-loan receivables originated by Skybridge Fintech Ltd. through the SkyLend digital lending platform. The aggregate deal value is $200,000,000, representing SBF's inaugural term securitiza

III. Summary of Broadleaf Findings A. Nature of the Discrepancy Broadleaf's re-underwriting of its 1,500-loan stratified random sample identified that the monthly servicing tapes provided by Clearview to SBF, Halcyon, and the rating agencies reported delinquency, default, and loss data using a payment-application waterfall that differs materially from the contractual waterfall specified in Section 4.03 of the Master

IV. Root Cause Analysis (Preliminary) A. Clearview ClearCore Platform Migration Based on the information available to us as of the date of this memorandum — including the Broadleaf preliminary summary, SBF's internal records regarding the Clearview servicing relationship, and the communications from Halcyon and WDP — the root cause of the servicing-data discrepancy appears to be an error in the payment-application wa

V. Impact on the Transaction A. Preliminary Offering Memorandum The Preliminary Offering Memorandum dated April 5, 2024, contains static-pool performance tables (Appendix C) that are based directly on the incorrect Clearview servicing data. These tables present historical delinquency and loss data for SBF's SkyLend origination vintages, broken down by vintage quarter, and are a central component of the disclosure pro

Section 17(a) of the Securities Act. Section 17(a) prohibits fraudulent practices in connection with the offer or sale of securities. Unlike Rule 10b-5, Section 17(a)(2) does not require scienter; negligent conduct is sufficient to establish liability. The distribution of the Preliminary OM containing incorrect data may constitute an "offer" of the Notes for purposes of Section 17(a), even though no sale has occurred

Section 12(a)(2) of the Securities Act. Section 12(a)(2) provides a cause of action for purchasers of securities offered by means of a prospectus or oral communication that contains a material misstatement or omission. The applicability of Section 12(a)(2) in the Rule 144A context is limited and has been the subject of divergent judicial authority, particularly in light of the Supreme Court's decision in Gustafson v.

VI. Immediate Action Items In light of the foregoing, we recommend that SBF undertake the following action items immediately. Each of these items is urgent and should be commenced no later than April 24, 2024. A. Data Preservation Preservation of all relevant data and communications is the threshold obligation in any matter that may give rise to litigation, regulatory inquiry, or indemnification proceedings. SBF shou

1. SBF Internal Records. SBF should immediately institute a litigation hold — also referred to as a legal hold or document preservation notice — on all data, documents, communications (including emails, text messages, instant messages, and voicemails), and records relating to the following subjects: (i) The Clearview servicing relationship, including the Master Servicing Agreement, Amendment No. 1, all monthly servic

2. Clearview Data. SBF should promptly send a formal data-preservation notice to Clearview Loan Servicing, Inc. (attention: Meredith Sloane, Vice President of Operations, and Warren Pettigrew, Chief Executive Officer) demanding that Clearview preserve all records relating to the LoanTrax-to-ClearCore migration, including but not limited to migration planning documents, configuration specifications, validation testing

3. Broadleaf Work Papers. SBF should request, through Halcyon and/or directly, that Broadleaf Analytics Group LLC preserve its complete re-underwriting work papers, sample-selection methodology documentation, loan-level analysis files, and all communications with Halcyon regarding the discrepancy findings. While Broadleaf is engaged by Halcyon (not SBF), it is in all parties' interest to ensure complete preservation.

1. Demand for Explanation. C&H will prepare a formal written demand to Clearview Loan Servicing, Inc. (Warren Pettigrew, Chief Executive Officer, and Meredith Sloane, Vice President of Operations; address: 8800 Brecksville Road, Suite 300, Cleveland, Ohio 44141), requesting a detailed written explanation of the following matters: (a) The precise cause of the payment-waterfall error in the ClearCore platform, includin

2. Indemnification Notice. C&H will prepare a formal indemnification notice for delivery to Clearview under Section 9.02 of the MSA, notifying Clearview that SBF intends to assert indemnification claims for all losses, costs, expenses, and damages arising from Clearview's breach of its data-accuracy representations under Section 5.01 of the MSA and its servicing obligations under Section 4.03 of the MSA. The notice w

3. Assessment of Broader Portfolio Impact. In addition to the SRT 2024-1 pool, SBF must determine whether the payment-waterfall error affects the entire $640 million of SBF receivables under Clearview management, including receivables held in SBF's warehouse facility and any other portfolios. If the error is systemic across the ClearCore platform, the implications extend well beyond the current transaction and may af

1. Halcyon Securities. C&H will prepare a formal written response to Halcyon Securities LLC (and WDP as underwriter's counsel) acknowledging the discrepancy and outlining the corrective steps that SBF is undertaking. This response must be coordinated carefully to provide sufficient transparency to maintain Halcyon's confidence and engagement while avoiding admissions or characterizations that could be used against SB

2. Rating Agencies. SBF should notify both Meridian Credit Ratings, Inc. (Gregory Fontaine, lead analyst) and Carrollton Ratings Group LLC (Teresa Kobayashi, lead analyst) that the static-pool performance data provided in the April 8, 2024 rating-agency presentations contained errors attributable to a third-party servicer data issue, and that corrected data will be supplied once Clearview completes its remediation. T

3. Investors. The question of whether and when to notify the 28 institutional investors who received the Preliminary OM during the April 15–19, 2024 roadshow requires careful analysis. On one hand, investors received materially incorrect performance data, and a failure to correct the record promptly could give rise to liability exposure. On the other hand, the offering has not been priced, no Notes have been sold, an

4. Board and Pinnacle. SBF should brief Marcus Yoon (Pinnacle Capital Partners board representative) and Catherine Drexler (Pinnacle Managing Partner) on the servicing-data discrepancy and its potential impact on the transaction timeline, costs, and SBF's market reputation. This briefing should be conducted orally and followed up with a written summary prepared or reviewed by C&H to ensure appropriate privilege prote

1. Quarterly Data-Reconciliation Procedures. A comprehensive review of SBF's quarterly data-reconciliation procedures to determine (i) the scope and methodology of the reconciliation process as actually performed (as opposed to the process as contemplated by the MSA), (ii) the specific reconciliation steps and checks conducted during each quarterly cycle from Q3 2022 through Q1 2024, (iii) the reasons why the payment

2. Reliability of Other Clearview-Derived Data. An assessment of the reliability of all other data and metrics derived from Clearview servicing tapes that are currently in use for SBF's internal risk management, board reporting, investor communications, warehouse-facility covenant compliance, and any other regulatory or contractual purposes. If the payment-waterfall error extends beyond the SRT 2024-1 pool, the impli

3. Documentation of Findings. All findings of the internal investigation should be documented in a memorandum prepared under the supervision of C&H and addressed to SBF's General Counsel, to preserve attorney-client privilege and work-product protection. The documented findings will be essential in any future indemnification proceedings against Clearview, as they will establish the scope of SBF's own diligence and th

1. Halcyon Engagement. SBF should evaluate, in consultation with C&H and in dialogue with Halcyon, whether the transaction can proceed on a revised timeline incorporating corrected data, a refreshed rating-agency analysis, and a supplemented or re-issued Offering Memorandum, or whether termination of the transaction is the more prudent course of action. The key factors to be weighed include: (a) The feasibility and t

2. Estimated Remediation Timeline. Halcyon has indicated informally that a full data remediation and refreshed rating-agency process would require approximately 8 to 12 weeks from the date that corrected servicing data is received from Clearview. This estimate assumes that Clearview can provide corrected data within 3 to 4 weeks, followed by a Broadleaf verification process of 2 to 3 weeks and a rating-agency re-eval

3. Cost Exposure. SBF should begin compiling a comprehensive accounting of sunk transaction costs to date for board-level reporting and for potential inclusion in any indemnification claim against Clearview. Based on information available to us as of the date of this memorandum, the key cost items are as follows: These figures are preliminary estimates and may be revised as additional cost information becomes availab

1. All communications relating to the servicing-data discrepancy and its legal implications should be channeled through Calderwood & Harkness LLP to preserve attorney-client privilege and work-product protection to the fullest extent possible. SBF personnel should not engage in substantive written or oral communications with Clearview, Halcyon, the rating agencies, investors, or any other third party regarding the di

2. SBF personnel should be instructed that internal discussions and analyses regarding the discrepancy and its implications should be conducted under the supervision of, or at the direction of, C&H and/or Tomás Reyes, and should be clearly marked as privileged and confidential attorney-client communications when reduced to writing.

3. This memorandum and all related analyses, communications, and work product prepared by or at the direction of C&H constitute privileged and confidential attorney-client communications and attorney work product, protected by the attorney-client privilege, the work-product doctrine, and all other applicable privileges and protections. This memorandum should not be disclosed, in whole or in part, to any person or ent

VII. Next Steps and Anticipated Work Product In light of the immediate action items set forth in Section VI, C&H will prepare and deliver the following work product within the coming days:

1. Formal Response Letter to Halcyon Securities LLC. A formal written response to Halcyon (and WDP as underwriter's counsel) acknowledging the servicing-data discrepancy, outlining the corrective steps being undertaken by SBF, and setting forth SBF's position regarding the continuation or restructuring of the transaction. This letter will be drafted for SBF's review and approval prior to transmission. Target delivery

2. Analysis of Clearview Indemnification Rights. A comprehensive memorandum analyzing SBF's indemnification rights under Section 9.02 of the MSA, including an assessment of the estimated range of indemnifiable losses, the strength of the indemnification claim, Clearview's potential defenses (including contributory negligence and limitation-of-liability provisions), and strategic considerations regarding the timing an

3. Securities-Law Exposure Memorandum. A detailed memorandum analyzing the potential securities-law exposure arising from the distribution of the Preliminary OM containing materially incorrect static-pool data, with particular focus on Rule 10b-5 under the Securities Exchange Act of 1934, Section 12(a)(2) of the Securities Act (including the question of applicability in the Rule 144A context), and Section 17(a) of th