[slide 1]
Cover Slide
Skybridge Fintech Ltd.
$60,000,000 Convertible Note Bridge Financing
Summary of Transaction Terms for Board of Directors
Prepared by Calderwood & Harkness LLP
January 10, 2024
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED
[slide 2]
Agenda
Transaction Overview & Strategic Rationale
Company Financial Snapshot
Investor Syndicate & Allocations
Key Economic Terms of the Convertible Notes
Conversion Mechanics — Discount, Cap, and Qualified Financing
Change of Control and Maturity Provisions
MFN and Anti-Dilution Protections
Subordination & Kelvantis Consent
Investor Rights Agreement & Related Amendments
Closing Mechanics & Timeline
Post-Closing Obligations & Path to Series D
Board Actions Requested
[slide 3]
Transaction Overview & Strategic Rationale
Instrument: Convertible promissory notes — $60,000,000 aggregate principal
Purpose: Bridge financing to extend runway and fund operations pending planned Series D equity round (targeted Q3–Q4 2024)
Pre-bridge cash runway of approximately 3.9 months necessitates near-term capital raise
Bridge extends runway to approximately 16.4 months post-closing, providing sufficient time to execute on Series D
Issuer: Skybridge Fintech Ltd., a Delaware C-corporation (DE File No. 6384291)
Private placement exempt under Section 4(a)(2) / Rule 506(b) of Regulation D
[slide 4]
Company Financial Snapshot (as of September 30, 2023)
Annual Recurring Revenue (ARR): ~$78 million
Annualized Gross Payment Volume (GPV): ~$4.2 billion
Net Revenue Retention: 128%
Cash on Hand (pre-bridge): ~$18.5 million
Monthly Burn Rate: ~$4.8 million
Employee Headcount: ~310 FTEs
Outstanding Venture Debt: $15 million (Kelvantis Lending Corp., maturing August 15, 2025)
Last Series C Post-Money Valuation (July 2021): $620 million
Most Recent 409A FMV: $8.42 per common share (Atlas Valuation Services, Inc., September 15, 2023)
Fully Diluted Shares Outstanding (pre-bridge): ~48.5 million
[slide 5]
Investor Syndicate & Allocations
Ridgeline Ventures Fund IV, L.P. (Lead Investor) — $30,000,000 (50.00%)
Beacon Hill Capital Partners, LLC — $15,000,000 (25.00%)
Northstar Innovation Fund II, L.P. — $10,000,000 (16.67%)
Halcyon Growth Equity, L.P. — $5,000,000 (8.33%)
Total Commitment: $60,000,000
Three existing investors (Ridgeline, Beacon Hill, Halcyon) plus one new investor (Northstar)
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Key Economic Terms of the Convertible Notes
Aggregate Principal Amount: $60,000,000
Interest Rate: 6.00% per annum (600 basis points), simple interest, 365-day year
Annual Interest Accrual (on full principal): $3,600,000
Maturity Date: January 15, 2026 (24 months from Closing Date)
Governing Law: State of Delaware
Dispute Resolution: Exclusive jurisdiction — Delaware Court of Chancery / Superior Court / U.S. District Court for the District of Delaware
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Conversion Mechanics
Automatic Conversion: Triggered upon a Qualified Financing (Series D raising at least $80,000,000 in new equity capital)
Conversion discount: 20% discount to the per-share price in the Qualified Financing
Valuation Cap: $750,000,000 pre-money
Conversion Price: Lower of (a) 80% of Series D price per share, or (b) cap-implied price per share
Cap-Implied Price Per Share: $750,000,000 ÷ ~48,500,000 FD shares = ~$15.46/share
Upon automatic conversion, all outstanding principal and accrued interest convert into equity
Optional Conversion at Maturity: If no Qualified Financing by January 15, 2026 — at each holder's election: (a) convert at valuation cap price, or (b) demand repayment of principal plus accrued interest
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Change of Control & MFN Provisions
Change of Control Premium: Holders receive the greater of:
(i) 2.0x outstanding principal plus accrued interest, or
(ii) Amount payable upon conversion at the Valuation Cap
Maximum CoC payment at issuance (if 2x exceeds cap-conversion value): $120,000,000 (2.0 × $60M)
Most Favored Nation (MFN): Any subsequent convertible note or SAFE issued on more favorable terms triggers MFN adjustment rights for existing holders
MFN interacts with existing anti-dilution protections for Series A (Crestpoint), Series B (Halcyon), and Series C (Ridgeline III / Beacon Hill) preferred stockholders
[slide 9]
Subordination to Existing Kelvantis Venture Debt
Convertible notes are subordinated to the existing Kelvantis Lending Corp. $15 million venture debt facility
Loan and Security Agreement dated August 15, 2022; facility matures August 15, 2025
Kelvantis lender consent and waiver required for issuance of additional indebtedness
Subordination Agreement executed by Kelvantis, the Purchasers, and Skybridge
Consent and waiver letter received from Kelvantis (Ted Marsh) on January 12, 2024
C&H prepared the form of lender consent and waiver letter
[slide 10]
Investor Rights & Related Amendments
Amendment No. 1 to Amended and Restated Investors' Rights Agreement — adds Purchasers as parties with information rights and pro rata participation rights
Amendment No. 1 to Right of First Refusal and Co-Sale Agreement — extends ROFR and co-sale rights to Purchasers
Northstar Innovation Fund II, L.P. joins via Joinder Agreement at Final Closing
Information rights for new investor Northstar were a negotiated point — resolved in final documentation
Existing rights of Series A (Crestpoint Seed Partners), Series B (Halcyon), and Series C (Ridgeline III / Beacon Hill) holders preserved
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Closing Structure & Funding Mechanics
Two-tranche closing structure:
Initial Closing (January 15, 2024): $45,000,000 — Ridgeline: $30M / Beacon Hill: $10M / Halcyon: $5M
Final Closing (January 26, 2024): $15,000,000 — Beacon Hill: $5M / Northstar: $10M
Escrow Agent: Granite Trust Company, N.A. (Escrow Account No. 4401-7829-SBF)
Escrow fee: $7,500 flat fee, borne by Skybridge
Funds released from escrow upon satisfaction of closing conditions
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Transaction Timeline
November 6, 2023: Calderwood & Harkness LLP engagement opened
December 4, 2023: Term sheet executed (Arjun Mehta / Samuel Okonkwo)
December 11, 2023: Initial draft NPA and Convertible Note circulated
January 10, 2024: Board of Directors approval (today's action)
January 12, 2024: Stockholder written consent & Kelvantis consent (expected)
January 15, 2024: Signing of Note Purchase Agreement & Initial Closing ($45M)
January 26, 2024: Final Closing ($15M) — Transaction fully closed
Q3–Q4 2024: Planned Series D equity round (Qualified Financing)
[slide 13]
Fee Arrangements & Transaction Costs
Calderwood & Harkness LLP: Fees capped at $275,000, plus disbursements; $75,000 retainer received November 15, 2023
Whitfield, Pratt & Soo LLP (investor counsel): Fees reimbursed by Skybridge up to $125,000 per the Note Purchase Agreement
Granite Trust Company, N.A. (escrow agent): $7,500 flat fee, borne by Skybridge
Total estimated transaction costs: up to ~$407,500 (exclusive of disbursements)
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Key Risk Considerations
Dilution: Conversion at the valuation cap implies ~$15.46/share; conversion of $60M+ accrued interest will add significant new shares to the cap table
Change of Control Exposure: Up to $120,000,000 payable (2.0x principal) if CoC occurs pre-conversion
Maturity Risk: If Series D does not close by January 15, 2026, holders may elect repayment of principal + accrued interest (~$67.2M at maturity)
MFN Exposure: Any future bridge round on better terms triggers adjustment rights for these noteholders
Kelvantis Facility Sequencing: Kelvantis debt matures August 15, 2025 — approximately 5 months before note maturity
Subordination: Notes are structurally junior to Kelvantis — limits Company flexibility if distressed
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Board Actions Requested
Approve the Note Purchase Agreement and the form of Convertible Promissory Note
Approve the Subordination Agreement with Kelvantis Lending Corp.
Approve Amendment No. 1 to the Amended and Restated Investors' Rights Agreement
Approve Amendment No. 1 to the Right of First Refusal and Co-Sale Agreement
Approve the Escrow Agreement with Granite Trust Company, N.A.
Authorize Arjun Mehta (CEO) and David Lindstrom (CFO) to execute and deliver all transaction documents on behalf of the Company
Authorize officers to take all actions necessary to effect the Initial Closing and Final Closing
Authorize the solicitation of the Written Consent of Stockholders pursuant to DGCL § 228
Authorize Form D and state blue sky filings
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Post-Closing Obligations & Path to Series D
Section 228(e) notice to non-consenting stockholders (within 10 days of stockholder action)
SEC Form D filing — Initial Closing (due within 15 days of first sale)
Form D amendment following Final Closing to add Northstar and update total offering amount
State blue sky notice filings (Delaware, Massachusetts, Illinois, California, Washington)
Ongoing information rights obligations to Purchasers under amended IRA
Series D target timeline: Q3–Q4 2024
Qualified Financing threshold: $80,000,000 minimum new equity capital
Updated 409A valuation will be needed in advance of Series D