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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

10-K

(Amendment No. 1)

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20202022


OR


TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________


Commission file number:number 001-38633


BM Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware82-3410369
(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer

Identification Number)

No.)
201 King of Prussia Road, Suite 650
Wayne, Pennsylvania
19087

535 5th Ave, 29th Floor

New York, NY 10017

22066
(Address of principal executive offices)Principal Executive Offices)(Zip Code)
(877) 327-9515

Registrant’sRegistrant's telephone number, including area code: (212) 235-0430code


Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:each classTrading Symbol(s)Name of Each Exchangeeach exchange on Which Registered:which registered
Class A Common Stock par value $0.0001 per shareBMTXThe New York Stock ExchangeNYSE American LLC
Warrants, to purchaseeach whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share.BMTX-WTThe New York Stock Exchange
Units, each consisting of one share of Class A Common Stock and one WarrantThe New York Stock ExchangeNYSE American LLC

Securities registered pursuant to Sectionsection 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange

Act. Yes No

Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),; and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

 


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes     No  

 


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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer,filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. Yes No  

 


Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  Yes 

   No  


If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ☐   No  


AsThe aggregate market value of voting stock held by non-affiliates of the Registrant on June 30, 2020,2022, the last day of the registrant’s most recently completed second fiscal quarter, was approximately $51 million. This value is based on the aggregate market valueclosing price of $5.89 for shares of the Registrant’s Class A common stock outstanding, otheras reported by the New York Stock Exchange. Shares of common stock beneficially owned by each executive officer, director, and holder of more than shares held by10% of our common stock have been excluded in that such persons who may be deemed affiliatesto be affiliates. This determination of theaffiliate status is not necessarily a conclusive determination for other purposes.


The registrant computed by reference to the closing sales price for the Class A common stock on such date, was approximately $35.0 million.

As of March 29, 2021, there were 12,200,378had 11,861,510 shares of Common Stock,common stock, par value $0.0001 per share, issued and outstanding.

Documents Incorporated By Reference – None.

outstanding as of March 31, 2023.

EXPLANATORY NOTE

On January 4, 2021 (the “Closing Date”), subsequentSpecified portions of the registrant’s definitive proxy statement relating to the endregistrant’s 2023 Annual Meeting of the fiscal year endedStockholders (the “2023 Proxy Statement”), which is to be filed within 120 days after December 31, 2020, the fiscal year to which2022, are incorporated by reference into Part III of this Annual Report on Form 10-K/A relates, BM Technologies Inc. (f/k/a Megalith Financial Acquisition Corp.), a Delaware corporation (the “Company”), consummated its previously announced business combination (as defined below), pursuant to which the Company acquired BankMobile Technologies, Inc. (“BankMobile”) (such acquisition is referred to as the “business combination”). In connection with the closing10-K.

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Table of the business combination (the “Closing”), pursuant to the Agreement and PlanContents
Table of Merger (the “Merger Agreement”) between the Company, MFAC Merger Sub, Inc., a Pennsylvania corporation and wholly-owned subsidiaryContents

Cautionary Note Regarding Forward-looking StatementsPage
Item 16. Form 10-K Summary 

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Table of the Company (“Merger Sub”), BankMobile, Customers Bank and Customers Bancorp Inc., Merger Sub merged with BankMobile, with the Merger Sub surviving the merger as a wholly-owned subsidiary of the Company named BMTX, Inc., and in connection therewith the Company changed its name to BM Technologies, Inc. (the “Merger”). BM Technologies, Inc. is filing this Amendment No.1 to Form 10-K (this “Amendment” or “Form 10-K/A”) for the year ended December 31, 2020 originally filed with the Securities and Exchange Commission (“SEC”) on March 31, 2021 by the Company (the “Original Filing”). This Amendment restates the Company’s previously issued consolidated financial statements and related footnote disclosures as of and for the years ended December 31, 2020 and 2019 and the interim periods ended March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020, and September 30, 2020. See Note 9, Restatement of Previously Issued Consolidated Financial Statements, in Item 15, Exhibits, Financial Statements and Financial Statement Schedules, for additional information.

Contents

Background of Restatement

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused in part on provisions in warrant agreements that provide for settlement of cash in a tender offer that is different than the underlying stock and the potential changes to the settlement amounts dependent upon the characteristics of the warrant holder, and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such provisions would preclude the warrant from being classified in equity and thus the warrant should be classified as a liability. As a result of the SEC Statement, the Company reevaluated the accounting treatment of the Public Warrants and the Private Placement Warrants (collectively, the “Warrants”) issued in connection with the Company’s initial public offering.

On June 4, 2021, the Audit Committee, after consultation with the Company’s management team, concluded that the Company’s previously issued audited financial statements as of December 31, 2020 and December 31, 2019 (the “Relevant Periods”), which were included in the Company’s Original 10-K should no longer be relied upon because the Company accounted for its outstanding warrants issued in connection with the Company’s initial public offering as components of equity instead of liabilities. The Company re-evaluated its accounting for its public and private placement warrants issued in connection with its initial public offering and concluded that the Warrants should be treated as derivative liabilities pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging - Contract in Entity’s Own Equity (“ASC 815-40”) rather than as equity. Based on this, the original filing must be amended to classify the warrants as liabilities measured at fair value upon issuance, with any subsequent changes in fair value reported in our Statement of Operations each reporting period.

As all material restatement information will be included in this Report, we do not intend to separately amend Megalith Financial Acquisition Corp.’s (“Megalith”) Annual Reports on Form 10-K for the years ended December 31, 2019 and 2018, or any of Megalith’s previously filed Quarterly Reports on Form 10-Q. Accordingly, investors and others should rely on the financial information and other disclosures regarding the periods described above in this Report and in future filings with the SEC (as applicable) and should not rely on any previously issued or filed reports, press releases, corporate presentations or similar communications relating to the Relevant Period.

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Internal Control Considerations

In connection with the restatement, management has re-evaluated the effectiveness of Megalith’s disclosure controls and procedures and internal control over financial reporting as of December 31, 2020 and 2019. As a result of that assessment and in light of the SEC Statement, management has concluded that Megalith’s disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2020, due to material weakness in Megalith’s internal control over financial reporting related to accounting for warrants. For a discussion of management’s consideration of Megalith’s disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part II, Item 9A, “Controls and Procedures” of this Report.

Items Amended

Part I, Item 1A. Risk Factors is amended to add certain additional risks factors associated with the reclassification of warrants as a liability. In addition, each of the following items are amended and restated in their entirety in this Report: (i) Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations; (ii) Part II, Item 8. Financial Statements and Supplementary Data (found in the F-Pages of this filing); (iii) Part II, Item 9A. Controls and Procedures; and (iv) Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Except for the foregoing amended and/or restated information required to reflect the effects of the restatement of the financial statements for the Relevant Period, and applicable cross-references within this report and the certifications of management attached as exhibits hereto, this Amendment does not amend, update, or change any other items or disclosures contained in the Original Filing. This report continues to describe conditions as of the date of the Original Filing, and the disclosures herein have not been updated to reflect events, results or developments that have occurred after the date of the original Filing, or to modify or update those disclosures affected by subsequent events, including the closing of the Business Combination. Accordingly, forward looking statements included in this report represent management’s views as of the date of the Original Filing and should not be assumed to be accurate as of any date thereafter. This Amendment should be read in conjunction with the Original Filing and our filings made with the SEC subsequent to the Original Filing date.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


This report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”Operations”, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 or the Exchange Act. These forward-looking(the “Exchange Act”). Forward-looking statements generally, but not always, can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,”“believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “may”, “will”, “potential”, “projects”, “predicts”, “continue”, or “should,”“should”, or, in each case, their negative or other variations or comparable terminology. These forward-looking statements reflect our current views with respect to, among other things, statements relating to the Company’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives, the benefits, cost, and synergies of completed acquisitions or dispositions, and the timing, benefits, costs, and synergies of future acquisitions, dispositions, and other growth opportunities. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other business combination and any other statements that are not statements of current or historical facts. These statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:factors.

the benefits of our initial business combination;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination;

the future financial performance of the combined company following the business combination;

failure to maintain the listing on, or the delisting of our securities from, NYSE American or an inability to have our securities listed on NYSE American or another national securities exchange following our initial business combination;

our public securities’ potential liquidity and trading;

the lack of a market for our securities;

our growth plans and opportunities; and

our financial performance.

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties


Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to (1) difficulty attracting and retaining highly-effective employees; (2) our ability to successfully execute our business plan; (3) changes in consumer preferences, spending, and borrowing habits, and demand for our products and services; (4) general economic conditions, especially in the communities and markets in which we conduct our business; (5) market risk, including interest rate and liquidity risk; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) increased competition, including competition from other bank and non-bank financial institutions; (8) changes in regulations, laws, taxes, government policies, monetary policies, and accounting policies; (9) regulatory enforcement actions and adverse legal actions; and (10) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations, including, those factors summarized in the immediately following section titled “Summary of Principal Risk Factors”, which we encourage you to read.These risks and others described under the heading “Risk Factors.”Factors” may not be exhaustive. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.


By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition, and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results or operations, financial condition, and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.


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SUMMARY OF PRINCIPAL RISK FACTORS

PART I

Item 1A.Risk Factors

The disclosure in Item 1A. Risk Factors in the Original Filing is hereby amended to add the following risk factors. As used in this Item 1A. Risk Factors, “we” and “our” shall mean Megalith or Megalith’s management, as the context may require, if relating to a statement made prior to the Business Combination. If a statement is made in regards to any time after the Business Combination, “we” and “our” shall refer to the Company (as successor registrant to Megalith) or the Company’s management. Any material weakness described herein with respect to a Relevant Period means the material weakness of Megalith. Except for the additional risk factors below, this Amendment does not amend, update or change any other items or disclosures contained in Item 1A. Risk Factors in the Original Filing. This Amendment should be read in conjunction with the Original Filing. 

Risk Related to our Common Stock and Warrants

Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.

On April 12, 2021, the SEC Staff issued a statement (the “Statement”) discussing the accounting implications of certain terms that are common in warrants issued by special purpose acquisition companies (“SPACs”). In light of the Statement and guidance in ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity,” the Company’s management evaluated the terms of the Warrant Agreement entered into in connection with the Company’s initial public offering and concluded that the Company’s Warrant include provisions that, based on the Statement, preclude the Warrants from being classified as components of equity. As a result of the Statement, the Company has re-evaluated the accounting treatment of its 15,000,000 warrants issued in connection with Megalith’s IPO (the “Public Warrants”) and 6,945,778 private placement warrants (the “private Warrants”, and together, the “Warrants”), and determined the Warrants should be classified as derivative liabilities. Under this accounting treatment, the Company is required to measure the fair value of the Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.

As a result, included on our balance sheets as of December 31, 2020 and 2019, contained in the F-pages at the end of this report, are derivative liabilities related to embedded features contained within our Warrants. ASC 815 provides for the recurring fair value measurement, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. The result of this recurring fair value measurement will appear on our financial statements and our results of operations may fluctuate quarterly based on factors which are outside our control. We expect that we will recognize non-cash gains or losses due to the quarterly fair valuation of our Warrants and that such gains or losses could be material.

We have identified a material weakness in our internal control over financial reporting as of December 31, 2020 and December 31, 2019. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified in those controls.

Following the issuance of the SEC Statement, on April 12, 2021, after consultation with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued audited financial statements as of and for the years ended December 31, 2020 and December 31, 2019. See “—Our warrants are accounted for as liabilities and the changes in value of our Warrants could have a material effect on our financial results.” As part of such process, we identified a material weakness in our internal controls over financial reporting.


A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.

As a result of the restatement and material weakness in our internal control over financial reporting described above, the error in accounting for the warrants in light of the SEC Statement, and other matters raised or that may in the future be raised by the SEC, we face potential for litigation, inquiries from the SEC and other regulatory bodies, other disputes or proceedings which may include, among others, monetary judgments, penalties or other sanctions, claims invoking the federal and state securities laws and contractual claims. As of the date of this Amendment, we have no knowledge of any such litigation, inquiries, dispute or proceedings. However, we can provide no assurance that such litigation, inquiries, disputes or proceedings will not arise in the future. Any such litigation, inquiries, disputes or proceedings, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete our initial business combination.

Warrants that are accounted for as liabilities will be recorded at fair value each reporting period and may have an adverse impact on operating results, and therefore an adverse effect on the market price of our common stock.

The Warrants issued in accordance with our initial public offering are accounted for using the guidance contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging - Contract in Entity’s Own Equity (ASC 815-40). This guidance provides explanation as to why these Warrants do not meet the requirement to be accounted for as equity-classified instruments and, therefore, must be recorded as a liability. Accordingly, we will classify each warrant as a liability at its fair value, with adjustments to fair value remeasured and recorded in the statement of operations, and therefore our reported earnings, each reporting period. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.


PART II

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion of the Company’s financial condition and results of operation should be read in conjunction with Megalith’s audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K/A. References in this discussionreport to “the Company,” “BMTX,” “we,” “us” or the “Company”“us,” and “our” refer to Megalith Financial Acquisition Corp.BM Technologies, Inc., a Delaware corporation. References to our “management” or our “management team” refer to our officers and directors,directors.


Below is a summary of the principal risk factors we face. Please read it carefully and referencesrefer to the “sponsor” refermore detailed descriptions of the risk factors in Item 1A, “Risk Factors.”

Risks Related to MFA Investor Holdings LLC. This discussion contains forward-looking statements reflectingour Business and Industry
a.Dependence on key individuals;
b.Our limited operating history;
c.Our ability to identify, recruit, and retain skilled personnel;
d.Our ability to implement our strategy;
e.Our ability to successfully implement our Profit Enhancement Plan (the “PEP”);
f.Growth of adoption and retention rates;
g.Our ability to manage growth effectively;
h.Assumptions related to our growth strategy;
i.The partnership with Customers Bank and T-Mobile may expose us to additional risks;
j.The partnership and private label agreement with T-Mobile might not be renewed;
k.Dependence on our partner banks, including our announced plans to transition certain deposit relationships from our current expectations, estimatespartner bank, to a new partner bank;
l.Termination of, or changes to, the MasterCard association registration;
m.Our ability to expand our market reach and assumptions concerning eventsproduct portfolio;
n.Length and financial trends that may affectunpredictability of our future operating resultssales cycle;
o.Competition;
p.The strength of our brand;
q.The risk of systems or product failures;
r.Demand for our products and services;
s.Changes in the demand or availability of student loans or financial position. Actual resultsaid;
t.Changes in government financial aid regime;
u.Exposure to global economic and other broader economic factors;
v.Data breaches, fraud, and cybersecurity issues;
w.Inability to protect or enforce our intellectual property;
x.Infringement of our intellectual property or allegations of infringement by us;
y.Our fees and charges;
z.Outsourcing critical operations;
aa.Ability to maintain an effective system of disclosure controls and internal control over financial reporting; and
ab.Our ability to integrate future acquisitions.

Risks Related to our Common Stock and Warrants
a.Whether an active, liquid trading market for our common stock is sustained;
b.Coverage by securities analysts;
c.Future sales of common stock;
d.Anti-takeover provisions under our charter and Delaware law;
e.Forum selection clauses under our charter and Delaware law;
f.A recent Delaware Court of Chancery Ruling has created potential uncertainty regarding the timingvalidity of events may differ materially from those contained in these forward-looking statements dueour authorized shares of Common Stock;
g.Our ability to aredeem unexpired warrants; and
h.Exercises of warrants increasing the number of factors,shares eligible for future resale and dilution to stockholders.

Regulatory Risks
a.Changes in regulation related to interchange or methods of payments;
b.Regulations related to higher education and disbursements;
c.Regulation applicable to our partner banks, including those discussed inCustomers Bank, which is a related party of the sections entitled “Risk Factors”Company; and “Forward-Looking Statements” appearing elsewhere in this Annual Report on
d.We are subject to the original filing Form 10-KFamily Educational Rights and in this form 10-K/A.Privacy Act (“FERPA”) and Gramm-Leach-Bliley Act (“GLBA”).


General Risk Factors
a.

RestatementAdequacy of Previously Issued Financial Statementsinsurance;

b.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been amended and restated in connection with the restatementThe limited experience of our financial statements for the Relevant Period, as describedmanagement team in Note 1managing a public company; and Note 9 to our financial statements entitled “Restatement

c.Capitalized assets could become impaired.
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Table of Previously Issued Financial Statements.” Further detail regarding the restatement can be found in the “Explanatory Note” and “Item 9A. Internal Controls and Procedures.”

Contents
Part I

ITEM 1. BUSINESS
Company Overview

Overview

We are a blank checkfinancial technology (“fintech”) company that facilitates deposits and banking services between a customer and our partner bank, Customers Bank, which is a related party and is a Federal Deposit Insurance Corporation (“FDIC”) insured bank. We provide state-of-the-art high-tech digital banking and disbursement services to consumers and students nationwide through a full service fintech banking platform, accessible to customers anywhere and anytime through digital channels. Our fintech business model leverages Banking-as-a-Service (“BaaS”) partners’ and University partners’ existing customer bases to achieve high volume, low-cost customer acquisition in our Higher Education Disbursement, BaaS, and niche Direct to Consumer (“D2C") banking businesses.


We are not a bank, do not hold a bank charter, and do not provide banking services. Our partner bank, Customers Bank, is subject to regulation by the Pennsylvania Department of Banking and Securities and the Federal Reserve Bank, and is periodically examined by those regulatory authorities. We are subject to the regulations of the Department of Education (“ED”), due to our Disbursement business, and are periodically examined by them.

BankMobile Technologies, Inc. (“BankMobile”) was incorporated in May 2016 as a Delaware corporation in November 2017 and formed for the purposewholly-owned subsidiary of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this report as our initial business combination.

On August 28, 2018, the Company consummated its IPO of 15,000,000 units (the “Initial Units”). Each Unit consists of one share of Class A common stock of the Company, $0.0001 par value per share (“Class A Common Stock”), and one warrant of the Company (“Public Warrant”), with each warrant entitling the holder to purchase one share of Class A Common Stock at $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $150,000,000. The Company granted the underwriters in the IPO a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments, if any (the “Over-Allotment Units”). On September 21, 2018, the underwriters exercised the option in part and purchased an aggregate of 1,928,889 Over-Allotment Units, which were sold at an offering price of $10.00 per Unit, generating gross proceeds of $19,288,890. 

Simultaneously with the consummation of the IPO, the Company consummated the private placement (“Private Placement”) of an aggregate of 6,560,000 warrants (“Placement Warrants”) at a price of $1.00 per Placement Warrant, generating total proceeds of $6,560,000. On September 21, 2018, in connection with the sale of Over-Allotment Units, the Company consummated a private sale of an additional 385,778 Private Placement Warrants to the Sponsor, generating gross proceeds of $385,778.

A total of $170,981,779, (or $10.10 per Unit) comprised of $164,036,001 of the proceeds from the IPO (including the Over-Allotment Units) and $6,945,778 of the proceeds of the sale of the Private Placement Warrants, was placed in a U.S.-based trust account, maintained by Continental Stock Transfer & Trust Company, acting as trustee.

Our Units began trading on August 24, 2018 on the NYSE under the symbol MFAC.U. Commencing on September 21, 2018, the securities comprising the units began separate trading. The units, common stock, and warrants are trading on the NYSE under the symbols “MFAC.U,” “MFAC” and “MFAC.W,” respectively.

On May 26, 2020, our stockholders voted to amend the Investment Management Trust Agreement with Continental Stock Transfer & Trust Company (the “Transfer Agent”) to extend the date on which we would have to complete an initial business combination to August 28, 2020 (or November 30, 2020 if the Company had executed a definitive agreement for an initial business combination by August 28, 2020). In connection with the stockholder vote, stockholders redeemed 13,733,885 of the shares of our Class A common stock, leaving approximately $33,167,514 in our Trust Account.


Customers Bank. On August 6, 2020, the Company entered into an Agreement and Plan of Merger, (as amended, the “Merger Agreement”), by and among Megalith Financial Acquisition Corporation, a special purpose acquisition company (“Megalith”), incorporated in Delaware in November 2017, MFAC Merger Sub Inc., a Pennsylvania corporation and (“Merger Sub”) a wholly-owned subsidiary of Megalith, BankMobile Technologies, Inc., a Pennsylvania corporation (“BankMobile”) and Customers Bank, a Pennsylvania state chartered bank and the sole stockholder of BankMobile. The Merger Agreement was subsequently amended on November 2, 2020 and December 8, 2020 by the parties and Customers Bancorp, Inc., a Pennsylvania corporation.

Subsequent Events

On January 4, 2021, BankMobile became an independent company after the completion of a divestiture transaction and was rebranded BM Technologies, Inc.


Emerging Growth Company consummatedStatus

We are an “emerging growth company,” as defined in Section 2(a) of the business combination (as defined below), pursuantSecurities Act, as modified by the JOBS Act. As such, we are eligible to which the Company acquired BankMobile (the acquisition is referredtake advantage of certain exemptions from various reporting requirements that are applicable to herein as the “business combination”). In connectionother public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the closingindependent registered public accounting firm attestation requirements of Section 404 of the business combination (the “Closing”), pursuant toSarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the Merger Agreement, Merger Sub merged withrequirements of holding a non-binding advisory vote on executive compensation and into BankMobile, with Merger Sub surviving the mergerstockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a direct, wholly-owned subsidiaryresult, there may be a less active trading market for our securities and the prices of our securities may be more volatile.

In addition, Section 107 of the Company, andJOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in connection therewithSection 7(a)(2)(B) of the Company changed its name from Megalith Financial Acquisition CorporationSecurities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to BM Technologies, Inc. (the “Merger”).

In connection withprivate companies. We intend to take advantage of the business combination, 500 sharesbenefits of this extended transition period.


We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock were redeemed atthat is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.


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Employees and Human Capital Resources

As of December 31, 2022, we employed approximately 275 full-time employees, all located in the United States, however technology has allowed us to expand our reach to include a per share pricelarger demographic with more remote employees working outside of approximately $10.42. Uponour physical locations and throughout the Closing, thecountry. None of these employees are covered by a collective bargaining agreement. The Company had 12,200,378 sharesprovides its employees with comprehensive benefits, some of common stock outstanding.

Further information regarding the business combinationwhich are provided on a contributory basis, including medical and the Companydental plans, a 401(k) savings plan with a company match component, and short-term and long-term disability coverage. Additional benefits offered include paid time off, life insurance, and employee assistance. The Company's compensation package is set forthdesigned to maintain market competitive total rewards programs for all employees in (i) the Company’s definitive proxy statement filedorder to attract and retain superior talent.


Available Information

We are required to file with the U.S. Securities and Exchange Commission (the “SEC”) Annual Reports on December 11, 2020 (the “Proxy Statement”) and (ii) the Company’sForm 10-K, Quarterly Reports on Form 10-Q, Current ReportReports on Form 8-K, and proxy statements, as well as any amendments to those reports. The SEC maintains an Internet website that contains reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at http://www.sec.gov. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to those reports and statements filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are also accessible at no cost on our website after they are electronically filed with the SEC on January 8, 2021.

ResultsSEC. Reference to our website does not constitute incorporation by reference of Operations

We have neither engaged in any operations nor generated any operating revenues through December 31, 2020. Our only activities from inception through December 31, 2020 were organizational activities, efforts relating to the Initial Public Offering, identifying a target company for a Business Combination and the acquisition of BankMobile. We generated non-operating income in the form of interest income on cash marketable securities held in the Trust Account.

For the year ended December 31, 2020, we had net (loss) of $(69,224,745) which consists of operating costs of $2,210,594, a (loss)information contained on the change in fair value of Warrant liability of approximately $(68,334,046),website and a provision for income taxes of $297,748, offset by interest income on marketable securities held in the Trust Account of $1,405,514 and other income of $212,129.

For the year ended December 31, 2019, we had net income of $4,273,495, which consists of operating costs of $799,387, a gain on the change in fair value of Warrant liability of approximately $1,909,973, and a provision for income taxes of $788,018, offset by interest income on marketable securities held in the Trust Account of $3,950,927.

Liquidity and Capital Resources

The completion of the Initial Public Offering and simultaneous Private Placement, inclusive of the underwriters’ exercise of their over-allotment option, generated gross proceeds to the Company of $170,981,779. Related transaction costs amounted to $10,521,211, consisting of $3,192,889 of underwriting fees, $6,771,556 of deferred underwriting commissions payable (which are held in the Trust Account) and $556,766 of other costs.

As of December 31, 2020, $43,178 of cash was held outside of the Trust Account and was available for working capital purposes, including paying business, legal and accounting due diligence costs on prospective acquisitions and continuing general and administrative expenses.

Following the Initial Public Offering and the exercise of the over-allotment option, a total of $170,981,778 was placed in the Trust Account and we had $1,785,062 of cash held outside of the Trust Account, after payment of all costs related to the Initial Public Offering and the exercise of the over-allotment option.


Off-balance sheet financing arrangements

As of December 31, 2020 and 2019, we didshould not have obligations, assets or liabilities which would be considered off-balance sheet arrangements as defined in Item 303(a)(4)(ii). We are not a party to any transaction that creates relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established forpart of this Report.

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ITEM 1A. RISK FACTORS
You should carefully consider all the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Related Party

The Company paid an entity affiliatedrisks described below, together with the President a fee of approximately $16,667 per month until the consummation of the Business Combination. A bonus of $78,000 was paid out after the successful completion of the Initial Public Offering.

Contractual obligations

As of December 31, 2020, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than the deferred underwriter commission discussed above, payment to an entity affiliated with the President a fee of approximately $16,667 per month until the consummation of the Business Combination, as well as a bonus of $78,000 which was paid out after the successful completion of the Initial Public Offering, and an agreement to pay the sponsor a monthly fee of $2,000 for office space, utilities and administrative support provided to the Company. We began incurring these fees on August 24, 2018 and continued to incur these fees monthly through October 31, 2020 for the office space and November 15, 2020 for the fee to the entity affiliated with the President.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosuresinformation contained in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date ofthis report, including the financial statements, before making a decision to invest in our securities. If any of the following risks occur, our business, financial condition or operating results may be materially and incomeadversely affected. In that event, the trading price of our securities could decline, and expenses duringyou could lose all or part of your investment. In this section, “we,” “us,” and “our,” refers to the periods reported. Actual results could materially differ from those estimates.consolidated Company.


Item 8.Financial Statements and Supplementary Data

Reference is madeRisks Related to pages F-1 through F-41 comprising a portion of this Annual ReportOur Business and Industry


We will be dependent on Form 10-K.

Item 9A.Controls and Procedures.

This disclosure Item 9A Controls and Procedures has hereby been amended from the original filing. References in this disclosure to “we” or “our”key individuals, and the “Company” shall mean Megalithloss of one or more of these key individuals could curtail our growth and Megalith’s management, if the context relatesadversely affect our prospects.


Our success will depend on our ability to a statement made prior to the merger. If the context relates to a statement made after the merger, then “we” or “our” and the “company” shall mean BM Technologies or BM Technologies’ management. Any material weakness described herein with respect to any Relevant Period means the material weakness of Megalith.

Disclosure controls and procedures are controlsretain key individuals and other procedures that are designed to ensure that information required to be disclosed inmanagement personnel. Members of our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to ourexecutive management team, including our Chief Executive Officer and(“CEO”), Luvleen Sidhu, our Co-CEO, Rajinder Singh, our President, Jamie Donahue, our Chief Financial Officer, James Dullinger, and our Chief Customer Officer, Warren Taylor, have been integral in building our digital banking platform and developing and growing our Higher Education Disbursement business and BaaS programs. In addition, several members of our executive management team who had been employed by Higher One, Inc. prior to our acquisition of that business, have unique and valuable business experience, relationships, and knowledge of the higher education disbursement business. Although we have entered into employment agreements with certain of these executives, their continued service cannot be assured, and if we lose the services of any of these individuals, they would be difficult to replace, and our business and development could be materially and adversely affected.


We have a limited history operating as appropriatea separate entity and a limited history operating independently of Customers Bank, and our management team has limited experience managing us.

We are a relatively new legal entity and have a limited operating history and limited history operating independently of Customers Bank since our January 2021 divestiture. An integral portion of our business was acquired from Higher One in June 2016, and our business had been operating primarily as a division of Customers Bank, and since September 2017, a wholly-owned subsidiary of Customers Bank. There may be unanticipated risks and expenses that come from no longer operating as a division or wholly-owned subsidiary of a bank, such as increased compliance costs and licensing requirements. In addition, we have a limited history of managing cash, liquidity, financial obligations, and resources, and other operational needs independent of Customers Bank. Because of our limited operating history, there are only limited historical results of operations for you to allow timely decisions regarding required disclosure.

It is understood thatreview and consider in evaluating our controlsresults of operations, and procedures inherently acceptour prospects. We will be subject to the business risks and uncertainties associated with recently formed entities with limited operating history, including the risk that they cannot provide absolute assurance thatwe will not achieve our strategic plan, which could have a material effect on our business, financial condition, and results of operations.


Our success depends in part on our ability to identify, recruit, and retain skilled sales, management, and technical personnel.

Our future success depends upon our continued ability to identify, attract, hire, and retain highly qualified personnel, including skilled technical, management, product, technology, and sales and marketing personnel, all whom are in high demand and are often subject to competing offers. Competition for qualified personnel in the objectives of the disclosure controls and procedures are met. Due to this we must conclude that not all errors or instances of fraud may be prevented, and that no evaluation of the controls and procedures can provide absolute assurance that we have detected all of our controls’ deficiencies or instances of fraud. Instead, the design of the controls must reflect that there are resource constraints, and the benefits of these controls and procedures should be considered relative to the cost of these controls and procedures. Furthermore, the design of the controls and procedurestechnology industry is based partly on certain assumptions about the likelihood of future events,intense and there can be no assurance that any designwe will succeed in achieving its stated goals under all potential future conditions.


Evaluationbe able to hire or retain a sufficient number of Disclosure Controlsqualified personnel to meet our requirements, or that we will be able to do so at salary, benefit and Procedures

Underother compensation costs that are acceptable. A loss of a substantial number of qualified employees, or an inability to attract, retain, and motivate additional highly skilled employees required for the supervision and with the participationexpansion of our management,business, could have a material adverse effect on our business and growth prospects.


Our business and future success may suffer if we are unable to continue to successfully implement our strategy.

Our future success will depend, in part, on our ability to generate revenues by providing financial transaction services to higher education institutions and their students directly and through our referral partners, including our Chief Executive OfficerTouchNet, and our Chief Financial Officer (together,ability to implement and grow our BaaS and D2C banking businesses, including the “Certifying Officers”),growth of T-Mobile MONEY. The market for these services has only recently developed and our viability and profitability is therefore unproven. Our business will be materially and adversely affected if we carried outare unable to develop and market products and services that achieve and maintain market acceptance.


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Outsourcing disbursement services may not become as widespread in the higher education industry as anticipated, and our products and services may not achieve continued commercial success. In addition, higher education institutional clients could discontinue using our services and return to in-house disbursement and payment solutions. If outsourcing disbursement services does not become widespread, or if institutional clients return to their prior methods of disbursement, our growth prospects, business, financial condition, and results of operations could be materially and adversely affected.

Our strategic growth plan depends, in part, on our ability to enter into new agreements with higher education institutions and new BaaS partners as well as to grow our D2C banking business. These contracts can generally be terminated by the client at will and, therefore, there can be no assurance that we will be able to maintain these clients or maintain agreements with clients on terms and conditions acceptable to us. In addition, we may not be able to continue to establish new relationships with higher education institutional clients or new BaaS partners at our historical growth rate or at all. The termination of current client contracts or an evaluationinability to continue to attract new clients could have a material adverse effect on our business, financial condition, and results of the effectiveness of the designoperations.

Not only are establishing new client relationships and operationmaintaining current ones critical to our business, they are also essential components of our disclosure controlsstrategy for maximizing student usage of our products and proceduresservices and attracting new student customers as definedwell as our graduate strategy. A reduction in Rules 13a-15(e)enrollment, a failure to attract and 15d-15(e) undermaintain student customers, as well as any future demographic trends that reduce the Exchange Act. Based on the foregoing,number of higher education students, could materially and adversely affect our Certifying Officers concluded that our disclosure controlscapability for both revenue and procedures were not effective as of the end of the period covered by this report solely related to the accounting for warrants.

Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Subsequently,cash generation and, as a result, could have a material adverse effect on our business, financial condition, and results of operations.


Our strategic growth plan relies on our ability to increase customers’ debit card spending and attract them to our new products. If we are unable to increase debit card usage through product education, marketing, promotions, and technological improvements, or if debit card usage drops as a result of trends, market perception, or new or competing products, our growth prospects, financial condition, and results of operations could be materially and adversely affected.

Finally, an integral part of our growth strategy is our ability to expand our disbursements expertise into new markets and product offerings, including BaaS partnerships. Our management team has limited experience forming and developing BaaS partnerships. If we are unable to develop BaaS partnerships, or if we cannot gain market adoption of our BaaS partnerships due to competition, regulatory issues, or constraints, or otherwise, if large businesses pursue other alternatives to a BaaS partnership, or if the market for BaaS products and services is smaller than anticipated, our earnings and results of operations will be adversely affected, and we may not grow at our projected rates.

Our profit enhancement plan may not be successful in improving our results of operations or financial condition.

On January 26, 2023, we announced a targeted Profit Enhancement Plan (the “PEP”) that we expect to deliver approximately $18 million in annualized cost reductions with approximately $15 million of savings expected in 2023. The PEP is intended to reduce operating costs, improve operating margins, improve operating cash flow, and continue advancing the Company’s ongoing commitment to profitable growth and continued innovation, and direct the Company’s resources toward its best opportunities. It may take longer than anticipated to generate the expected benefits from these changes and there can be no guarantee that these changes will result in improved operating results. If we are not successful in implementing these changes and executing the PEP in a timely and efficient manner, we may not realize the benefits we expect.

We may not be able to grow adoption and retention rates.

Our growth strategy and business projections contemplate a significant increase in adoption and retention rates for our products. A significant component of our growth strategy is dependent on our ability to have students of our Higher Education institution clients, and customers of our BaaS partners, including T-Mobile MONEY customers, select our services and become long-term users of our products. Additionally, a significant component of our growth strategy is to successfully reach new customers via our D2C banking businesses. In particular, our growth strategy will depend on our ability to successfully cross-sell our core products and services to students after they leave college as well as growth in product usage from BaaS and D2C banking customers. We may not be successful in implementing this strategy because these students and customers may believe that our products and services are unnecessary or unattractive. In addition to a sensitivity to adoption rates, we are also sensitive to retention rates. As students leave college or customers leave a BaaS partner or change employers, we will face increasing competition from banks and other financial services providers.


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Our failure to attract and retain students and other customers could have a material adverse effect on our prospects, business, financial condition, and results of operations. If we are unable to increase our adoption and retention rates, our growth, revenues, and results of operations may not meet our projections, which could have a material adverse effect on our prospects, business, financial condition, and results of operations.

Failure to manage future growth effectively could have a material adverse effect on our business, financial condition, and results of operations.

The continued rapid expansion and development of our business may place a significant strain upon our management, administrative, operational, and financial infrastructure. Our growth strategy contemplates further increasing the number of our Higher Education institutional clients and student banking customers.

The rate at which we have been able to establish relationships with our customers in the past, however, may not be indicative of the rate at which we will be able to establish additional customer relationships in the future. Further, our growth contemplates an increase in BaaS business, including growth of T-Mobile MONEY, and new initiatives with additional BaaS partners. Our success will depend, in part, upon the ability of our executive officers to manage growth effectively. Our ability to grow will also depend on our ability to successfully hire, train, supervise, and manage new employees, obtain financing for capital needs, expand our systems effectively, allocate human resources optimally, assure regulatory compliance, and address any regulatory issues, maintain clear lines of communication between our operational functions and our finance and accounting functions, and manage the pressures on management, administrative, operational, and financial infrastructure. There can be no assurance that we will be able to accurately anticipate and respond to the changing demands we will face as we continue to expand our operations, or that we will be able to manage growth effectively or achieve further growth at all. If our business does not continue to grow, or if we fail to manage any future growth effectively, our business, financial condition, and results of operations could be materially and adversely affected.

Our growth strategy is based on assumptions, which may not be accurate; additionally, macro trends and key partner actions are not fully within our control.

Our growth strategy and business outlook are based on estimates our management believes to be reasonable, but there are many factors that may be outside of management’s control or may be difficult to predict. Some of these uncertainties include:

Our growth strategy is dependent on adding additional BaaS partners. The timing, size, and partnership terms of future BaaS partners are currently unknown and could have a significant impact on our outlook and results of operations. Currently, T-Mobile is our only material weaknessBaaS partner.

Our current BaaS business is significantly dependent on T-Mobile, and T-Mobile’s efforts to market the program and promote growth in accounts. If T-Mobile does not market the product as expected, or if there are changes in the economic relationship with T-Mobile or its investment appetite in the business, it could impact our financial projections and results of operations.

Macro industry trends may impact the amounts of student disbursements or the likelihood that students choose a BankMobile-serviced account. Department of Education (“ED”) regulation, industry competition, the rise of competing low-cost products, or other unknown shifts could impact the growth in the student business. Student revenue growth is dependent on our ability to charge the current level of fees, which could be negatively impacted by competition or changes in industry trends. Revenue growth is also dependent on interchange income rates, ATM visits, and other factors that may shift over time. Macro industry trends may also cause consumers to be more price-sensitive than they otherwise would be, which may impact our success in reaching new customers for our D2C banking business.

Interest rates are unknown; higher rates of interest may reduce the relative attractiveness of the deposit products we service for our partner banks. Rising interest rates may reduce the servicing fees that are paid to us which could affect our margins.

Future bank partnerships will have individually negotiated terms; the economics of those partnerships may differ from the current arrangement.

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Our failure to meet our growth strategy, could materially impact our business, financial condition, and results of operations, regardless of whether the failure to meet our strategy is due to factors in our control, or decisions by key partners or other external parties.

The partnership with Customers Bank and T-Mobile may expose us to additional risks.

In February 2017, Customers Bank entered into a significant strategic partnership with T-Mobile for the development and roll-out of a mobile banking platform, referred to as T-Mobile MONEY, which was publicly announced in the third quarter of 2018. As the former digital banking division of Customers Bank, BMTX was utilized by Customers Bank to develop and maintain the T-Mobile MONEY mobile banking platform. The T-Mobile MONEY program was extended to the Sprint customers acquired by T-Mobile in August 2020.

T-Mobile MONEY represents the most significant BaaS initiative undertaken by us to date. However, T-Mobile MONEY may not be as successful as currently expected for a variety of reasons, including customer adoption of the product, the level of marketing by T-Mobile, general economic conditions, competition and product alternatives, and other factors. If T-Mobile MONEY does not reach the anticipated activity levels or if the deposit balances sourced from T-Mobile MONEY customers are lower than projected, it could adversely affect our business, financial condition, and results of operations.

We have, and will in the future, create new products in connection with the T-Mobile MONEY offering, many of which will be complex, with possible conditional requirements, options, and variations, along with changes to terms that necessitate additional disclosures or actions to comply with legal and regulatory requirements. The offerings through T-Mobile MONEY may be marketed similar to retail products, with a variety of ancillary offerings, such as rewards programs, further increasing the inherent compliance risk. While we will have final authority on the design of products, some components of the product life cycle may be managed by T-Mobile, such as promotions of the product by T-Mobile. Since we will not have direct control over all aspects of the product life cycle, the relationship involves significant third-party relationship management requirements, indicating a significant level of inherent compliance risk.

Demographically, the T-Mobile MONEY product seeks to serve a broader and more diverse population than traditional banking. The BaaS market is very competitive, requiring products, channels, and services to be recalibrated often to remain attractive to potential customers and BaaS partners. As such, the level and maturity of new product approval processes, change management, and the level of strategic planning must be sophisticated enough to respond to competitive demands with timely and meaningful evaluation of compliance risk.

Our agreements with BaaS partners, such as T-Mobile, may expose us to additional compliance risk. For example, employees of the BaaS partner may be incentivized to promote products under a discretionary compensation program to promote financial products to customers, thus increasing exposure to compliance risk. BaaS partnerships may also expose us to issues in connection with privacy-related regulations based on the partner receiving certain data regarding the account holders and their use of the program, which may also be used for marketing purposes. Opt-out and notice may be required in connection with these disclosures.

Short message service (“SMS”) text messaging is used extensively in carrying out service-related communications and possibly marketing-related communications as well. Since express consent is required for service-related communications to wireless subscribers, it will be critical to ensure that the language in disclosures and the account agreement indicate this consent. Moreover, the consumer must have the right to revoke all these communications to their wireless numbers. Failure to comply with the Telephone Consumer Protection Act of 1991, enforced by the Federal Communications Commission (“FCC”), could result in significant litigation risk and potential fines to T-Mobile and/or to us.

The T-Mobile MONEY agreement has been renewed for an additional term of two years, but may be terminated by T-Mobile with 30 days’ written notice to Customers Bancorp, Inc.;

The Private Label Banking Program Agreement (the “PLBPA”) that governs T-Mobile MONEY, is between Customers Bancorp, Inc. and T-Mobile. We do not contract directly with T-Mobile, but we are a beneficiary of the agreement through the Deposit Processing Services Agreement with Customers Bank. The PLBPA was entered into on February 2017 and had an initial term of three years. The term was extended an additional three years to February 2023. On February 22, 2023, the agreement between Customers Bancorp, Inc. and T-Mobile was extended an additional two years to February 2025. Beginning February 24, 2023, T-Mobile may terminate the agreement with 30 days written notice to Customers Bancorp, Inc. T-Mobile’s failure to continue the agreement for the full term may have a material adverse effect on our business. T-Mobile may also choose to renew the agreement in the future on terms that are different or less favorable to us, which would impact our business, financial condition, and results of operations.
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We face a number of risks relating to using a new partner bank, including our announced plans to transition certain deposit relationships from our current partner bank, to the new partner bank.
On November 7, 2022, the Company and Customers Bank amended the Deposit Processing Services Agreement dated January 4, 2021 (the “DPSA Amendment”) to extend the Deposit Processing Services Agreement termination date to the earlier of the Company’s successful completion of the transfer of the Company’s serviced deposits to a new partner bank or June 30, 2023.
On March 16, 2023, we entered into a Deposit Servicing Agreement (the “FCB Deposit Servicing Agreement”) with a new partner bank, First Carolina Bank, a North Carolina chartered, non-member community bank (“FCB”), which provides that FCB will establish and maintain deposit accounts and other banking services in connection with customized products and services offered by the Company to its Higher Education clients, and the Company will provide certain other related services in connection with the accounts.
Performance under the FCB Deposit Servicing Agreement will depend, in part, on our ability to successfully and efficiently transition the Higher Education Disbursement deposits and accounts from Customers Bank to FCB in a cost-effective manner that does not significantly disrupt our operations. There can be no assurance that we will be able to maintain and grow our business and operations during, and following, the transition. Transitioning and coordinating certain aspects involves complex operational and personnel-related challenges. The potential challenges, and resulting costs and delays, include failure to obtain regulatory approval for the transaction, unforeseen and unexpected expenses or liabilities related to the transition, a loss of customers, or inability to attract new customers. Additionally, the transition may place a significant burden on management and other internal resources, and could materially and adversely affect our business, financial condition, and results of operations.

In addition to successfully transitioning the Higher Education Disbursement deposits and accounts from Customers Bank to FCB, we face a number of risks due to our association with FCB that will continue after deposits and accounts have been transferred. These risks include, but are not limited to, reputational risks due to material data breaches or other cybersecurity incidents at FCB, reputational risk due to illegal or otherwise disreputable business activities that could cause our reputation to be harmed by association with FCB, FCB could lose its FDIC license, FCB could fail to maintain adequate risk management, and FCB could fail to maintain adequate regulatory capital potentially resulting in bankruptcy or insolvency. If any of the preceding items were to occur, whether caused by FCB, or by factors beyond its control, our business, financial condition, and results of operations could be adversely affected.

Termination of, or changes to, the MasterCard association registration could materially and adversely affect our business, financial condition, and results of operations.

The student checking account debit cards issued in connection with our disbursement business and the consumer checking account debit cards issued in connection with BaaS programs and D2C programs are subject to MasterCard association rules that could subject us to a variety of fines or penalties that may be levied by MasterCard for acts or omissions by us or businesses that work with us. The termination of the card association registration held by us or any changes in card association or other network rules or standards, (including interpretation and implementation of existing rules or standards), to the extent that they increase the cost of doing business or limit our ability to provide products and services, could materially and adversely affect our business, financial condition, and results of operations.

To date we have derived our revenue from a limited number of products and markets. Our efforts to expand our market reach and our service and product offerings may not succeed and may reduce revenue growth.

Our BaaS strategy entails facilitating deposits and banking services between a customer and an FDIC insured partner bank. While we offer our digital banking platform and disbursements services to our customers, the lending products and other services historically offered to non-enrolled students and other customers through our business have been limited. Many competitors offer a more diverse set of products and services to customers and operate in additional markets.

While we intend to eventually broaden the scope of products offered to customers with our banking partners through our BaaS and mobile banking product offerings, there can be no assurance that these efforts will be successful. Our failure to broaden the scope of the products we offer to potential customers may inhibit the growth of repeat business from customers and harm our operating results. There also can be no guarantee that we will be successful with respect to our expansion through our mobile banking platform with new partners and into new markets, which could also inhibit the growth of our business, financial condition, and results of operations.

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The length and unpredictability of the sales cycle for signing potential Higher Education institutional clients and BaaS partners could delay new sales of our products and services, which could materially and adversely affect our business, financial condition, and results of operations.

The sales cycle between our business’ initial contact with potential Higher Education institutional clients, BaaS partners, and large employers, and the signing of a contract with that client, partner, or employer can be lengthy, as the individual agreements need to be negotiated and partnerships customized. As a result of this lengthy sales cycle, our ability to forecast accurately the timing of revenues associated with new sales is limited. The sales cycle will vary widely due to significant uncertainties, over which we have little or no control, including:

the individual decision-making processes of each Higher Education institutional client, BaaS partner, or large employer, which typically include extensive and lengthy evaluations and will require spending substantial time, effort, and money educating each client and partner about the value of our products and services;
the budgetary constraints and priorities and budget cycle of each Higher Education institutional client or partner;
the reluctance of higher education staff, BaaS partners, or large employers to change or modify existing processes and procedures; and
the amount of customization and negotiation required for any given collaboration.

In addition, there is significant upfront time and expense required to develop relationships and there is no guarantee that a potential client will sign a contract with our business even after substantial time, effort, and money has been spent on the potential client. A delay in our ability or a failure to enter into new contracts with potential Higher Education institutional clients and BaaS partners could materially and adversely affect our business, financial condition, and results of operations.

Our operating results may suffer because of substantial and increasing competition in the industries in which we do business.

The market for our products and services is competitive, continually evolving and, in some cases, subject to rapid technological change. Our disbursement services compete against all forms of payment, including paper-based transactions (principally cash and checks), electronic transactions such as wire transfers and Automated Clearing House (“ACH”) payments, and other electronic forms of payment, including card-based payment systems. Many competitors, including Blackboard, Heartland Payment Systems, and Nelnet, Inc., provide payment software, products, and services that compete with those that we and our partner banks, now and in the future, may offer. In addition, the banking products and services offered on our platform will also compete with banks that focus on the higher education market, including U.S. Bancorp and Wells Fargo & Company. Future competitors may begin to focus on higher education institutions in a manner similar to us. We also face significant competition for our BaaS products and D2C banking services from other BaaS providers and digital consumer banking platforms such as Chime and Green Dot, as well as from traditional consumer banks. Many of our competitors will have substantially greater financial and other resources than we have, may in the future offer a wider range of products and services, and may use advertising and marketing strategies that achieve broader brand recognition or acceptance. In addition, competitors may develop new products, services, or technologies that render our products, services, or technologies obsolete or less marketable. If we are unable to compete effectively against our competitors, our business, financial condition, and results of operations will be materially and adversely affected.

We depend on a strong brand and a failure to maintain and develop that brand in a cost-effective manner may hurt our ability to expand our customer base.

Maintaining and developing the “BankMobile,” “BankMobile’s Student Banking” and “BankMobile’s Disbursements” brands, which we license to our bank partners, is critical to expanding and maintaining our base of Higher Education institution clients, students, and other account holders.

We believe the importance of brand recognition will increase as competition in our market further intensifies. Maintaining and developing our brand will depend largely on our ability to continue to provide high quality products and services at cost effective and competitive prices, as well as after-sale customer service. While we intend to continue investing in our brand, no assurance can be given as to the success of these investments. If we fail to maintain and enhance our brand, incur excessive expenses in this effort, or our reputation is otherwise tainted, including by association with the wider financial services industry or because of data security breaches or negative press, we may be unable to maintain loyalty among our existing customers or attract new customers, which could materially and adversely affect our business, financial condition, and results of operations.

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We may be liable to, or we may lose customers if, we provide poor service or if we experience systems or product failures, if any agreements that we maintain with colleges, universities, and BaaS partners are terminated, or if other performance triggers or other performance conditions are triggered.

We are required to fulfill our contractual obligations with respect to our products and services and our high quality service to meet the expectations of customers. Failure to meet these expectations or fulfill our contractual obligations could cause us to lose customers and bear additional liability.

Because of the large amount of data we collect and manage, hardware failures and errors in our systems could result in data loss or corruption or cause the information that we collect to be incomplete or contain significant inaccuracies. For example, errors in our processing systems could delay disbursements or cause disbursements to be made in the wrong amounts or to the wrong person. Our systems may also experience service interruptions as a result of undetected errors or defects in software, fire, natural disasters, power loss, disruptions in long distance or local telecommunications access, fraud, terrorism, accident, or other similar reason, in which case we may experience delays in returning to full service, especially with regard to data centers and customer service call centers. If problems such as these occur, our customers may seek compensation, withhold payments, seek full or partial refunds, terminate their agreements, or initiate litigation or other dispute resolution procedures. In addition, we may be subject to claims made by third-parties also affected by any of these problems.

In addition, our agreements with colleges, universities, BaaS partners, and large employers contain and will contain certain termination rights, performance triggers, and other conditions which, if exercised or triggered, may result in penalties and/or early termination of such agreements, which could cause us to be liable to customers or lose customers, thereby materially impacting our business, financial condition, and results of operations.

Demand for our products and services may decline if we do not continue to innovate or respond to evolving technological changes.

We operate in a dynamic industry characterized by rapidly evolving technology and frequent product introductions. We rely on proprietary technology to pass on cost savings to customers and make our platform convenient for customers to access. In addition, we may increasingly rely on technological innovation as we introduce new products, expand current products into new markets, and operate a full service digital banking platform. The process of developing new technologies and products is complex, and if we are unable to successfully innovate and continue to deliver a superior customer experience, customers’ demand for our products and services may decrease and our growth and operations may be harmed. This could materially impact our business, financial condition, and results of operations.

A change in the availability of student loans or financial aid, as well as budget constraints, could materially and adversely affect our financial performance by reducing demand for our services.

The higher education industry depends heavily upon the ability of students to obtain student loans and financial aid. As part of our contracts with higher education institutional clients that use our disbursements services, students’ financial aid and other refunds are sent to us for disbursement. The fees that we will charge most of our clients will be based on the number of financial aid disbursements made to students. In addition, our relationships with higher education institutional clients will provide us with a market for BankMobile Vibe accounts, from which we anticipate we will derive a significant proportion of our revenues. If the availability of student loans and financial aid were to decrease, the number of enrolled students could decrease, and our addressable market for student disbursement services would shrink. Future legislative and executive branch efforts to reduce the U.S. federal budget deficit or worsening economic conditions may require the government to severely curtail its financial aid spending, which could materially and adversely affect our business, financial condition, and results of operations. Changes in the availability and cost of student loans could also affect enrollment, in turn affecting our business, financial condition, and results of operations.


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Our disbursement business depends in part on the current government financial aid regime that relies on the outsourcing of financial aid disbursements through higher education institutions.

In general, the U.S. federal government distributes financial aid to students through higher education institutions as intermediaries. Following the receipt of financial aid funds and the payment of tuition and other expenses, higher education institutions have typically processed refund disbursements to students by preparing and distributing paper checks. Our disbursements service provides higher education institutional clients with an electronic system for improving the administrative efficiency of this refund disbursement process. If the government, through legislation or regulatory action, restructured the existing financial aid regime in such a way that reduced or eliminated the intermediary role played by higher education financial institutions or limited or regulated the role played by service providers such as us, our business, financial condition, and results of operations and prospects for future growth could be materially and adversely affected.

Global economic and other conditions may adversely affect trends in consumer spending and demand for our products and services, which could materially and adversely affect our business, financial condition, and results of operations.

A decrease in consumer confidence due to the weakening of the global economy, may cause decreased spending among our student and graduate customers and may decrease the use of account and card products and services. Factors such as: increases in college tuition, stagnation, or reduction in available financial aid, and reductions in the size of disbursements, may restrict spending among college students, which would reduce the use of our account and debit card products and services. Weakening economic conditions, such as decreases in consumer spending, increased consumer credit defaults and bankruptcies, inflation, and rising unemployment, may also adversely affect the demand for and use of our BaaS products and D2C banking platform and associated products, which could materially and adversely affect our business, financial condition, and results of operations.

Data-breaches, unauthorized access to or disclosure of data relating to clients, fraudulent activity, and infrastructure failures could materially and adversely affect our reputation or harm our financial condition and results of operations.

We will have access to certain “personally identifiable” information of customers, including student contact information, identification numbers, and the amount of credit balances, which customers expect will be maintained confidentially. It is possible that hackers, customers, or employees acting unlawfully or contrary to our policies or other individuals, could improperly access our or our vendors’ systems and obtain or disclose data about customers. Further, because customer data may also be collected, stored, or processed by third-party vendors, it is possible that these vendors could intentionally or negligently disclose data about our clients or customers. Data breaches could also occur at our partner banks, Higher Education institution clients, BaaS partners, or large employer partners, which could negatively affect our reputation, relationships with end users, and could harm the Company, our clients, or our customers. Any such breaches or loss of data could negatively affect our business, growth prospects, financial condition, and results of operations.

We will rely to a large extent on sophisticated information technology systems, databases, and infrastructure, and will take reasonable steps to protect them. However, due to their size, complexity, content, and integration with or reliance on third-party systems, they are potentially vulnerable to breakdown, malicious intrusion, natural disaster, and random attack, all which pose a risk that sensitive data may be exposed to unauthorized persons or to the public. A breach of our information systems could lead to fraudulent activity, including but not limited to, identity theft, losses on the part of banking customers, additional security costs, negative publicity, and damage to our reputation and brand.

In addition, our customers could be subject to scams that may result in the release of sufficient information concerning the customer or our accounts to allow others unauthorized access to our accounts or our systems (e.g., “phishing” and “smishing”). Claims for compensatory or other damages may be brought against us as a result of a breach of our systems or fraudulent activity. If we are unsuccessful in defending against any resulting claims, we may be forced to pay damages, which could materially and adversely affect our profitability.

In addition, a significant incident of fraud, or an increase in fraud levels generally involving our products, such as our cards, could result in reputational damage, which could reduce the use of our products and services. Such incidents of fraud could also lead to regulatory intervention, which could increase our compliance costs. Accordingly, account data breaches and related fraudulent activity could have a material adverse effect on our future growth prospects, business, financial condition, and results of operations.


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If we are unable to protect or enforce our intellectual property rights, we may lose a competitive advantage and incur significant expenses.

Our business will depend on certain registered and unregistered intellectual property rights and proprietary information. We will rely on a combination of patent, copyright, trademark, service mark and trade secret laws, as well as nondisclosure agreements and technical measures (such as the password protection and encryption of our data and systems) to protect our technology and intellectual property rights, including our proprietary software. Existing laws afford only limited protection for our intellectual property rights. Intellectual property rights or registrations granted to us may provide an inadequate competitive advantage or be too narrow to protect our products and services. Similarly, there is no guarantee that our pending applications for intellectual property protection will result in registrations or issued patents or sufficiently protect our rights. The protections outlined above may not be sufficient to prevent unauthorized use, misappropriation or disclosure of our intellectual property or technology, and may not prevent competitors from copying, infringing, or misappropriating our products and services. We cannot be certain that others will not independently develop, design around, or otherwise acquire equivalent or superior technology or intellectual property rights. If we are unable to adequately protect our intellectual property rights, our business and growth prospects could be materially and adversely affected.

One or more of the issued patents or pending patent applications relating to us may be categorized as so-called “business method” patents. The general validity of software patents and business method patents has been challenged in a number of jurisdictions, including the United States. Our patents may become less valuable or unenforceable if software or business methods are found to be a non-patentable subject matter or if additional requirements are imposed that our patents do not meet.

We also rely on numerous marks, trademarks, and service marks, including “BankMobile,” “BankMobile Vibe,” and “BankMobile Disbursements.” In addition, we rely on certain affiliated brands licensed to us or our bank partners such as “T-Mobile Money” and any other brands that may be developed as part of our BaaS or D2C banking businesses. If the validity of these marks were challenged, our brand may be damaged or we may be required to face considerable expense defending or changing our marks.

We may incorporate open source software into our products. While the terms of many open source software licenses have not been interpreted by U.S. or foreign courts, such licenses could be construed in a manner that imposes conditions or restrictions on our ability to offer our products and services. In such event, we could be required to make any open source code utilized in certain of our proprietary software available to third-parties, (including competitors), to seek licenses from third-parties, to re-engineer, or to discontinue the offering of our products or services, or we could become subject to other consequences, any of which could adversely affect our business, financial condition, and results of operations.

We may be subject to claims that our services or solutions violate the patents or other intellectual property of others, which would be costly and time-consuming to defend. If our services and solutions are found to infringe the patents or other intellectual property rights of others, we may be required to change our business practices or pay significant costs and monetary penalties.

The services and solutions that we provide may infringe upon the patents or other intellectual property rights of others. The industry in which we operate is characterized by frequent claims of patent or other intellectual property infringement. We cannot be sure that our services and solutions, or the products of others that we use or offer to our clients, do not and will not infringe upon the patents or other intellectual property rights of third-parties, and we may have infringement claims asserted against us or our clients. If others claim that we have infringed upon their patents or other intellectual property rights, we could be liable for significant damages and incur significant legal fees and expenses. In addition, we have agreed to indemnify many of our clients against claims that our services and solutions infringe upon the proprietary rights of others. In some instances, the potential amount of these indemnities may be greater than the revenues received from the client.

Regardless of merit, any such claims could be time-consuming, result in costly litigation, be resolved on unfavorable terms, damage our reputation, or require us to enter into royalty or licensing arrangements. Such results could limit our ability to provide a solution or service to clients and have a material adverse effect on our business, results of operations, or financial condition.


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The fees that we will generate are subject to competitive pressures, which may materially and adversely affect our revenue and profitability.

We generate revenue from, among other sources, agreements with our partner banks to share the banking services fees charged to our account holders, interchange fees related to purchases made through our debit cards, servicing fees from our partner banks, and fees charged to our Higher Education institution clients.

We have a Deposit Processing Services Agreement in place with Customers Bank. The Deposit Processing Services Agreement was originally set to expire on December 31, 2022, and to automatically renew for an additional three year term unless either party elected not to renew. On November 7, 2022, the Company and Customers Bank entered into the DPSA Amendment. The DPSA Amendment, among other things, will facilitate the transfer of the Company’s serviced deposits to a new partner bank and extends the termination date of the Deposit Processing Services Agreement until the earlier of: (i) entry into a definitive agreement with a new partner bank to transfer the Company’s serviced deposits to such partner bank and the successful completion of such transfer; or (ii) June 30, 2023. The DPSA Amendment also removes Customers Bank’s obligation to pay the Company the difference between the Durbin exempt and Durbin regulated interchange revenues. The other terms of the Deposit Processing Services Agreement remain in effect through the new termination date.

On March 22, 2023, we signed a Second Amendment to the Deposit Processing Services Agreement (the “DPSA Second Amendment”). The DPSA Second Amendment, among other things, extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s serviced deposits to a Durbin exempt sponsor bank; or (ii) June 30, 2024; and revises the fee structure of the Deposit Processing Services Agreement. The other terms of the Deposit Processing Services Agreement, as amended by the DPSA Amendment, remain in effect through the new termination date.
On March 22, 2023, the Company and Customers Bank entered into the 2023 Deposit Servicing Agreement, under which, effective March 31, 2023, the Company will perform, on behalf of Customers Bank, Customer Bank’s services, duties, and obligations under the PLBPA by and between Customers Bank and T-Mobile USA, Inc. that are not required by Applicable Law (as defined in the 2023 Deposit Servicing Agreement) to be provided by an FDIC insured financial institution.
As compensation under the 2023 Deposit Servicing Agreement, Customers Bank will retain any and all revenue generated from the funds held in the deposit accounts, and Customers Bank will pay the Company monthly servicing fees as set forth in the 2023 Deposit Servicing Agreement. In addition, the Company will have the right to retain all revenue generated by or from the Depositor Accounts (as defined in the 2023 Deposit Servicing Agreement), including, but not limited to, fees and all other miscellaneous revenues. The Company also shall retain all fees (including without limitation interchange fees), and charges generated by its ATMs and from its payment processing services. The Company will be solely liable for any and all fees, expenses, costs, reimbursements, and other amounts that are or may become due and payable under the PLBPA, including, without limitation, any Durbin-Exempt Interchange (as defined in the 2023 Deposit Servicing Agreement) fees payable to T-Mobile under the PLBPA. Customers Bank may set off any and all PLBPA amounts against any compensation payable to the Company under the 2023 Deposit Servicing Agreement.
In an increasingly price-conscious and competitive market, it is possible that to maintain our competitive position with higher education institutions, BaaS partners, and large employers, we may have to decrease the fees charged for our services. Similarly, in order to maintain our competitive position with our partner banks, we may need to reduce the servicing fees we charge. In order to maintain our competitive position with account holders, we and our partner banks may need to reduce banking service fees charged to account holders. Changes to the agreements and structures under which these fees and expenses are prescribed could materially impact our business, financial condition, and results of operation.

We outsource critical operations, which will expose us to risks related to our third-party vendors.

We have entered into contracts with third-party vendors to provide critical services, technology, and software used in our operations. These outsourcing partners include, among others, FIS, which provides back-end account and transaction data processing as well as web and application hosting services in secure data centers; MasterCard, which provides the payment network for our cards, as well as for certain other transactions; and Ubiquity Global Services, which provides customer care services.


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Accordingly, we depend, in part, on the services, technology, and software of these and other third-party service providers. In the event that these service providers fail to maintain adequate levels of support, do not provide high quality service, discontinue their lines of business, terminate our contractual arrangements, or cease or reduce operations, we may be required to pursue new third-party relationships, which could materially disrupt our operations and could divert management’s time and resources. We may also be unable to establish comparable new third-party relationships on as favorable terms or at all, which could materially and adversely affect our business, financial condition, and results of operations.

Even if we are able to obtain replacement technology, software, or services there may be a disruption or delay in our ability to operate our business or to provide products and services, and the replacement technology, software, or services might be more expensive than those we have currently. The process of transitioning services and data from one provider to another can be complicated, time consuming, and may lead to significant disruptions in our business. In addition, any failure by third-party service providers to maintain adequate internal controls could negatively affect our internal control over financial reporting, as described in this amended filing, management has concluded thatwhich could impact the preparation and quality of our financial statements.

Failure to maintain an effective system of disclosure controls and procedures were not effective as of December 31, 2020 and 2019, due solely to the material weakness in our internal control over financial reporting could affect our ability to produce timely and accurate financial statements or comply with respectapplicable laws and regulations.

As a public company, we are required to comply with the classificationSEC’s rules implementing Sections 302 and 404 of the Company’s WarrantsSarbanes-Oxley Act. The Company is an emerging growth company and as componentsmay choose to take advantage of equity insteadexemptions from various reporting requirements applicable to other public companies but not to emerging growth companies. As an emerging growth company, the Company is not subject to Section 404(b) of as derivative liabilities. In lightthe Sarbanes-Oxley Act of this material weakness, we performed additional analysis as deemed necessary to ensure2002, which would require that our financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the financial statements included in this Annual Report on Form 10-K/A present fairly in all material respects our financial position, results of operationsindependent auditors review and cash flows for the periods presented.

Management’s Report on Internal Controls over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reportingattest as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation ofto the effectiveness of our internal control over financial reporting asreporting. Management is required to make an annual assessment of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), in which management concluded the internal controls over financial reporting was effective.

In lightpursuant to Section 404(a), including the disclosure of the restatement discussed herein,any material weaknesses identified by management has re-evaluated the effectiveness of our disclosure controls and procedures and internal controls over financial reporting as of December 31, 2020 and 2019. Management has concluded that our disclosure controls and procedures and internal controls over financial reporting were not effective for the quarters ended March 31, 2019, June 30, 2019, September 30, 2019, December 31, 2019, March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020 due to a material weakness in the internal control over financial reporting related to the accounting for complex accounting instruments. We have developed and are implementing a plan to remediate this material weakness and to address the restatement noted above to improve the process and controls in the determination of the appropriate accounting and classification of our financial instruments and key agreements.

reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’sCompany's annual or interim financial statements will not be prevented or detected on a timely basis. We


As described in Part II, Item 9A — Controls and Procedures, management identified a material weaknessweaknesses in the Company’s controls over the accounting for temporary and permanent equity and complex financial instruments. The company’s controls to evaluate the accounting for complex financial instruments, such as temporary and permanent equity and warrants issued by a SPAC, did not operate effectively to appropriately apply the provisions of Accounting Standards Codification (“ASC”), Contracts in Entity’s Own Equity (ASC 815-40). This material weakness resulted in the failure to prevent material errors in the Company’s accounting for temporary and permanent equity and warrants and the resulting restatement of the company’s previously issued financial statements.

The Company’s internal controls over financial reporting did not prevent the improper classification of the Warrants as equity instruments. Due to the material impact this improper classification has on the financial statements of the Company, it was determined that this was a material weakness in the internal controls over financial reporting. Based on this evaluation, our management has concluded that our internal control over financial reporting wasfor the 2021 fiscal year that were remediated during the fourth quarter of fiscal 2022. If we identify new material weaknesses in the future, or otherwise fail to maintain an effective system of internal controls, we may not effectivebe able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.


Any inability to successfully integrate our recent or future mergers and acquisitions could have a material adverse effect on us.

Mergers and acquisitions typically require integration of the acquired companies’ sales and marketing, operating, manufacturing, distribution, finance, and administrative functions, as well as exposure to different legal and regulatory regimes in jurisdictions in which we have not previously operated. We may not be able to integrate successfully any business we acquire into our existing business, or may not be able to do so in a timely, efficient and cost-effective manner. Our inability to complete the integration of December 31, 2020new businesses in a timely and December 31, 2019.

orderly manner could increase costs and lower profits.


Acquisition or other integration-related issues could divert management’s attention and resources from our day-to-day operations, cause significant disruption to our businesses, and lead to substantial additional costs. Our inability to realize the anticipated benefits of a merger or acquisition, or to successfully integrate acquired companies, as well as other transaction-related issues could have a material adverse effect on our businesses, financial condition, and results of operations.

In addition, possible future mergers, acquisitions, or dispositions may trigger a review by the U.S. Department of Justice, the FDIC, and/or the State Attorneys General under their respective regulatory authority, focusing on the effects on competition, including the size or structure of the relevant markets and the pro-competitive benefits of the transaction. Any delay, prohibition, or modification required by regulatory authorities could adversely affect the terms of a proposed merger or acquisition or could require us to modify or abandon an otherwise attractive acquisition opportunity.



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Risks Related to our Common Stock and Warrants

An active, liquid trading market for our common stock may not be sustained.

We cannot predict the extent to which investor interest in our company will lead to the further development of an active trading market on NYSE American. If an active and liquid trading market is not sustained, you may have difficulty selling our common stock. Among other things, in the absence of a liquid public trading market:

you may not be able to liquidate your investment in shares of common stock;
you may not be able to resell your shares of common stock at or above the price attributed to them in the business combination;
the market price of shares of common stock may experience significant price volatility; and
there may be less efficiency in carrying out your purchase and sale orders.

If securities analysts publish negative evaluations of our common stock or if we lose analysts resulting in loss of research coverage or their evaluations of our stock are downgraded, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We currently are implementing a numberhave limited research coverage by industry and financial analysts. However, the few analysts that provide coverage of actions, as described below,us could stop and the trading price of our stock could be negatively affected. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. If one or more of these analysts cease to remediate the material weakness described in this Item 9A. Our management is committed to ensuring thatcover our internal controls over financial reporting are designed and operating effectively. Our remediation plan includes, but is not limited to, thatcommon stock, we will improve the process and controlscould lose visibility in the determination of the appropriate accounting and classificationmarket for our stock, which in turn could cause our common stock price to decline.

Substantial future sales of our financial instruments and key agreements. When fully implemented and operational, we believecommon stock, or the controls we have designed or plan to design will remediateperception in the control deficiency that have led to the material weakness we have identified and strengthen our internal controls over financial reporting. The material weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing,public markets that these controls are operating effectively.sales may occur, may depress our stock price.

This Amendment report does not include an attestation reportSales of substantial amounts of our independent registeredcommon stock in the public accounting firm duemarket, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to a transition period establishedraise capital through the sale of additional shares. Certain shares of our common stock are freely tradable without restriction under the Securities Act, except for any shares of our common stock that may be held or acquired by rules of the SEC for newly public companies.

Changes in Internal Control over Financial Reporting

We have undertakenour directors, executive officers, and will undertake strategic remediation actions,other affiliates, as discussed above, to address the material weakness in our internal controls over financial reporting. There were no changes in our internal control over financial reporting (as suchthat term is defined in Rules 13a-15(f)the Securities Act, which are restricted securities under the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. Certain of our stockholders and 15d-15(f)members of our management have rights, subject to certain conditions, to require us to file registration statements covering shares of our common stock or to include shares in registration statements that we may file for ourselves or other stockholders. Any such sales, including sales of a substantial number of shares, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. We may also issue shares of our common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise. Any such issuance could result in ownership dilution to you as a stockholder. and cause the trading price of our common stock to decline.


Provisions in our charter and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.

Our amended and restated certificate of incorporation and bylaws contain provisions to limit the ability of others to acquire control of the Exchange Act)Company or cause us to engage in change-of-control transactions, including, among other things:

provisions that authorize our board of directors, without action by our stockholders, to authorize by resolution the issuance of shares of preferred stock and to establish the number of shares to be included in such series, along with the preferential rights determined by our board of directors;

provided that, our board of directors may also, subject to the rights of the holders of preferred stock, authorize shares of preferred stock to be increased or decreased by the approval of the board of directors and the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the corporation;

provisions that impose advance notice requirements, minimum shareholding periods, and ownership thresholds, and other requirements and limitations on the ability of stockholders to propose matters for consideration at stockholder meetings; and
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a staggered board whereby our directors are divided into three classes, with each class subject to retirement and reelection once every three years on a rotating basis.

These provisions could have the effect of depriving stockholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third-parties from seeking to obtain control of our business in a tender offer or similar transaction. With our staggered board of directors, at least two annual meetings of stockholders will generally be required in order to effect a change in a majority of our directors. Our staggered board of directors can discourage proxy contests for the election of directors and purchases of substantial blocks of our shares by making it more difficult for a potential acquirer to gain control of our board of directors in a relatively short period of time.

Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or stockholders.

Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers, and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees, or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results, and financial condition.

A recent Delaware Court of Chancery Ruling has created potential uncertainty regarding the validity of our authorized shares of Common Stock.

On January 4, 2021, BM Technologies consummated its business combination with Delaware Special Purpose Acquisition Company Megalith. Megalith obtained its shareholder approval on December 21, 2020 at a special meeting of stockholders, where the Megalith shareholders approved the proposals set forth in the definitive proxy statement filed with the SEC on December 11, 2020. At the December 21, 2020 meeting (the “Special Meeting”), a majority of the holders of then outstanding shares of our Class A common stock voted to approve our Second Amended and Restated Certificate of Incorporation, which, among other things, reclassified the Class A Common Stock and the Class B Common Stock as Common Stock, increased the authorized shares of our capital stock to 1,010,000,000 shares, consisting of 1,000,000,000 shares of Common Stock and 10,000,000 shares of “blank check” preferred stock, to 1,000,000 shares of common stock (the “Amended Charter”).

A recent decision of the Delaware Court of Chancery has created uncertainty regarding the validity of the Amended Charter and whether the vote to approve the Amended Charter met the requirements under Section 242(b)(2) of the Delaware General Corporation Law. We continue to believe that the vote to approve the Amended Charter was appropriate. To date, no stockholder has given us notice of any allegations that our shares are unauthorized. Even if the Amended Charter increasing the number of authorized shares was found to be defective, BM Technologies has not issued any shares in excess of the number authorized under the prior Megalith charter. However, the potential uncertainty with respect to our capitalization resulting from the Delaware Court of Chancery’s decision could have a material adverse effect on our operations, including our ability to complete financing transactions, until the underlying issues are definitively resolved.


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We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.

We will have the ability to redeem outstanding warrants (excluding any placement warrants held by our Sponsor or its permitted transferees) at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price (or the closing bid price of our common stock in the event the shares of our common stock are not traded on any specific trading day) of our common stock equals or exceeds $24.00 per share for any 20 trading days within a 30 trading-day period ending on the third business day prior to the date we send proper notice of such redemption, provided that on the date it gives notice of redemption, and during the entire period thereafter until the time it redeems the warrants, we have an effective registration statement under the Securities Act covering the shares of our common stock issuable upon exercise of the warrants and a current prospectus relating to them is available.

If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force a warrant holder (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants, or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, will be substantially less than the market value of your warrants.

Our Warrants could increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.

As of December 31, 2022, there were warrants outstanding to purchase an aggregate of 22,703,004 shares of our common stock. These warrants consist of 17,227,189 public warrants and 5,475,815 private placement warrants. Each warrant entitles its holder to purchase one share of our common stock at an exercise price of $11.50 per share and will generally expire at 5:00 p.m., New York time, on January 4, 2026, or earlier upon redemption of our common stock. To the extent warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to our then existing stockholders and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could depress the market price of our common stock.

Regulatory Risks

A change in regulations related to interchange or methods of payments could materially and adversely affect our financial performance.

Future federal, state, or network regulations could be changed in a way that could negatively affect our business. Additionally, with the advent of creative money movement systems that bypass card networks, a large future proportionate share of “spend” could leverage a less income producing method. In turn, these events could significantly reduce our interchange income from which we currently expect to derive a significant proportion of our revenues, which could adversely affect our financial condition and results of operations.

We are subject to various regulations related to higher education and disbursements.

Because we provide services to some higher education institutions that involve handling federal student financial aid funds, we are considered a “third-party servicer” under Title IV of the Higher Education Act of 1965, which governs the administration of federal student financial aid programs. Those regulations require a third-party servicer annually to submit a compliance audit conducted by outside independent auditors that cover the servicer’s Title IV activities. Each year we are required to submit a “Compliance Attestation Examination of the Title IV Student Financial Assistance Programs” audit to the ED, which includes a report by an independent audit firm. This yearly compliance audit submission to ED provides comfort to our Higher Education institution clients that we are in compliance with applicable third-party servicer regulations. We also provide and will provide this compliance audit report to clients upon request to help them fulfill their compliance audit obligations as Title IV participating institutions.


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Under ED’s regulations, a third-party servicer that contracts with a Title IV institution acts in the nature of a fiduciary in the administration of Title IV programs. Among other requirements, the regulations provide that a third-party servicer is jointly and severally liable with its client institution for any liability to ED arising out of the servicer’s violation of Title IV or its implementing regulations, which could subject us to material fines related to acts or omissions of entities beyond our control. ED is also empowered to limit, suspend, or terminate the violating servicer’s eligibility to act as a third-party servicer and to impose significant civil penalties on the violating servicer. We may enter into “Tier 1” arrangements with educational institutions, which are subject to more stringent regulations than certain other “Tier 2” or “non-covered” arrangements.

Additionally, on behalf of our Higher Education institution clients, we are required to comply with ED’s cash management regulations regarding payment of financial aid credit balances to students and providing bank accounts to students that may be used for receiving such payments. In the event ED concludes that we have violated Title IV or its implementing regulations and should be subject to one or more sanctions, our business and results of operations could be materially and adversely affected. There is limited enforcement and interpretive history of Title IV regulations.

Final rules relating to Title IV Cash Management were published in the Federal Register on October 30, 2015. The Final Rules include, among others, provisions related to (i) restrictions on the ability of higher education institutions and third-party servicers like us to market financial products to students including sending unsolicited debit cards to students, (ii) prohibitions on the assessment of certain types of account fees on student account holders, and (iii) requirements related to ATM access for student account holders that became effective as of July 1, 2016.

These regulations also require institutions to: offer students additional choices regarding how to receive their student aid funds (including prohibiting an institution from requiring students to open an account into which their credit balances must be deposited); provide a list of account options from which a student may choose to receive credit balance funds electronically, where each option is presented in a neutral manner and the student’s preexisting bank account is listed as the first and most prominent option with no account preselected; ensure electronic payments made to a student’s preexisting account are initiated in a manner as timely as, and no more onerous than, payments made to an account with the institution; include additional restrictions on the institution’s use of personally identifiable information; require that the terms of the contractual arrangements between institutions and schools be publicly disclosed; and require that schools establish and evaluate the contractual arrangements with institutions in light of the best financial interests of students. These regulations increase our compliance costs and could negatively affect our results of operations.

Our partner banks are subject to extensive regulation as a bank, which could limit or restrict our activities.

Banking is a highly regulated industry and our partner banks are subject to examination, supervision, and comprehensive regulation by various regulatory agencies. As a service provider, we will be required to comply with many of these regulations on behalf of our partner banks, which will be costly and restrict certain of our activities, including loans and interest rates charged, and interest rates paid on deposits.

The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our partner banks, and our own business and profitability. Because government regulation greatly affects the business and financial results of all commercial banks, our cost of compliance could adversely affect our ability to operate profitably.

The Dodd-Frank Act Wall Street Reform and Consumer Protection Act, enacted in July 2010, which we refer to as the Dodd-Frank Act, instituted major changes to the banking and financial institutions regulatory regimes in light of the recent performance of and government intervention in the financial services sector. The “Durbin Amendment” of the Dodd-Frank Act limits the amount of interchange fees chargeable by a bank with over $10 billion in assets. Additional legislation and regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations, or policies, could significantly affect our revenues, business, and operations in substantial and unpredictable ways.

Further, regulators have significant discretion and power to prevent or remedy unsafe or unsound practices or violations of laws by banks in the performance of their supervisory and enforcement duties. The exercise of this regulatory discretion and power could have a negative impact on our partner banks, and by extension, a negative impact on us. Failure to comply with laws, regulations, or policies could result in sanctions by regulatory agencies, civil money penalties, and/or reputational damage, which could have a material adverse effect on our partner banks and on our own business, financial condition, and results of operations.


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We are subject to the Family Educational Rights and Privacy Act (“FERPA”) and Gramm-Leach-Bliley Act (“GLBA”)

Our Higher Education institution clients are subject to the Family Educational Rights and Privacy Act of 1995 (“FERPA”), which provides, with certain exceptions, that an educational institution that receives any federal funding under a program administered by ED may not have a policy or practice of disclosing education records or “personally identifiable information” from education records, other than directory information, to third-parties without the student’s or parent’s written consent. Our Higher Education institution clients disclose to us certain non-directory information concerning their students, including contact information, student identification numbers, and the amount of students’ credit balances. We believe that our Higher Education institution clients are and will be able to disclose this information without the students’ or their parents’ consent pursuant to one or more exceptions under FERPA. However, if ED asserts that we do not fall into one of these exceptions, or if future changes to legislation or regulations require student consent before our Higher Education institution clients can disclose this information, a sizable number of students may cease using our products and services, which could materially and adversely affect our business, financial condition, and results of operations.

Additionally, as we are indirectly subject to FERPA, we cannot permit the transfer of any personally identifiable information to another party other than in a manner in which a higher education institution may disclose it. In the event that we re-disclose student information in violation of this requirement, FERPA requires our clients to suspend our access to any such information for a period of five years. Any such suspension could have a material adverse effect on our business, financial condition, and results of operations.

We also are and will be subject to certain other federal rules regarding safeguarding personal information, including rules implementing the privacy provisions of the Gramm-Leach-Bliley Act of 1999, or GLBA State Laws. We may also become subject to similar state laws and regulations, including those that restrict higher education institutions from disclosing certain personally identifiable information of students. State attorneys general and other enforcement agencies may monitor our compliance with state and federal laws and regulations that affect our business, including those pertaining to higher education and banking, and conduct investigations of our business that are time consuming and expensive and could result in fines and penalties that have a material adverse effect on our business, financial condition, and results of operations.

Additionally, individual state legislatures may propose and enact new laws that will restrict or otherwise affect our ability to offer our products and services, which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, regulations related to higher education change frequently, and new or additional regulations in the future may increase compliance costs, limit our business and prospects and adversely affect our results of operations.

Compliance with the various complex laws and regulations is costly and time consuming, and failure to comply could have a material adverse effect on our business. Additionally, increased regulatory requirements on our businesses may increase costs, which could materially and adversely affect our business, financial condition, and results of operations. If we do not devote sufficient resources to additional compliance personnel and systems commensurate with our anticipated growth, we could be subject to fines, regulatory scrutiny, or adverse public reception to our products and services.

General Risk Factors

Our ability to limit our liabilities by contract or through insurance may be ineffective or insufficient to cover future liabilities.

We will attempt to limit, by contract, our liability for damages arising from negligence, errors, mistakes, or security breaches. Contractual limitations on liability, however, may not be enforceable or may otherwise not provide sufficient protection to us from liability for damages. We will maintain liability insurance coverage, including coverage for errors and omissions. It is possible, however, that claims could exceed the amount of applicable insurance coverage, if any, or that this coverage may not continue to be available on acceptable terms or in sufficient amounts. Even if these claims do not result in liability to us, investigating and defending against them could be expensive and time consuming and could divert management’s attention away from our operations. In addition, negative publicity caused by these events may delay market acceptance of our products and services, any of which could materially and adversely affect our reputation and business.


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Our management team has limited experience in managing a public company and the business and financing activities of an organization of our size, which could impair our ability to comply with legal and regulatory requirements.

Our management team has had limited public company management experience or responsibilities, and has limited experience managing a business and related financing activities of our size. This could impair our ability to comply with various legal and regulatory requirements, such as public company compliance, and filing required reports and other required information on a timely basis. It may be expensive to develop, implement, and maintain programs and policies in an effective and timely manner that adequately respond to increased legal, regulatory compliance, and reporting obligations imposed by such laws and regulations, and we may not have the resources to do so. Any failure to comply with such laws and regulations could lead to the imposition of fines and penalties and further result in the deterioration of our business.

We capitalize certain development costs related to internal software development; this capitalized asset could become impaired if there are changes in our business model that impact the expected use of that software.

At December 31, 2022, the net carrying value of our developed software was $22.3 million, which made up a significant portion of our consolidated assets. This amount reflects the capitalized cost, net of accumulated amortization, of software that we developed internally as well as the remaining value of the acquired Higher One Disbursement business developed software. Changes in technology, our internal processes, or our business strategies or those of our partners could impact our ability to realize the value of our developed software, which could result in an impairment of the asset.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

Our corporate headquarters, which occupies approximately 134 square feet and houses our executive and administrative operations under a short-term lease arrangement, is located at 201 King of Prussia Road, Suite 650, Wayne, PA. We believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed.
ITEM 3. LEGAL PROCEEDINGS

We may be involved from time to time in various legal and administrative proceedings and litigation arising in the ordinary course of business. We are not currently engaged in any legal proceedings that are expected to have a material effect on our financial position, cash flows, or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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Part II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock and warrants are each traded on the NYSE American Market under the symbols “BMTX,” “BMTX-WT,” respectively.
Holders
On March 31, 2023, there were 692 holders of record of our common stock and 12 holders of record of our warrants.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the related notes included in Item 8 “Consolidated Financial Statements and Supplementary Data” of this Form 10-K.
BUSINESS OVERVIEW
BMTX provides state-of-the-art high-tech digital banking and disbursement services to consumers and students nationwide through a full service fintech banking platform, accessible to customers anywhere and anytime through digital channels.
BMTX facilitates deposits and banking services between a customer and our partner bank, Customers Bank, a Pennsylvania state-chartered bank, which is a related party and is a FDIC insured bank. BMTX’s business model leverages partners’ existing customer bases to achieve high volume, low-cost customer acquisition in its Higher Education Disbursement, BaaS, and D2C banking businesses. BMTX has four primary revenue sources: interchange and card revenue, servicing fees, account fees, and university fees. The majority of revenues are driven by customer activity (deposits, spend, transactions, etc.) and may be paid or passed through by Customers Bank, universities, or paid directly by customers.
BMTX is a Delaware corporation, originally incorporated as Megalith Financial Acquisition Corp in November 2017 and renamed BM Technologies, Inc. in January 2021 at the time of the merger between Megalith and BankMobile. Until January 4, 2021, BankMobile was a wholly-owned subsidiary of Customers Bank, a wholly-owned subsidiary of Customers Bancorp, Inc.
Customers Bank holds the FDIC insured deposits that BMTX sources and services and is the issuing bank on BMTX’s debit cards. Customers Bank pays the Company a servicing fee for the deposits generated and passes through interchange income earned from transactions on debit cards. On November 7, 2022, the Company and Customers Bank entered into the DPSA Amendment. The DPSA Amendment, among other things, will facilitate the transfer of the Company’s serviced deposits to a new partner bank and extends the termination date of the Deposit Processing Services Agreement until the earlier of: (i) entry into a definitive agreement with a new partner bank to transfer the Company’s serviced deposits to such partner bank and the successful completion of such transfer; or (ii) June 30, 2023.

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BMTX is not a bank, does not hold a bank charter, and does not provide banking services, and as a result, is not subject to direct banking regulation, except as a service provider to any partner banks. BMTX is also subject to the regulations of the ED, due to our student disbursements business, and is periodically examined by it. BMTX’s contracts with most of its Higher Education institution clients require it to comply with numerous laws and regulations, including, where applicable, regulations promulgated by the ED regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV of the Higher Education Act of 1965; the Family Educational Rights and Privacy Act of 1995; the Electronic Fund Transfer Act and Regulation E; the USA PATRIOT Act and related anti-money laundering requirements; and certain federal rules regarding safeguarding personal information, including rules implementing the privacy provisions of the Gramm-Leach-Bliley Act. Other products and services offered by BMTX may also be subject to other federal and state laws and regulations.

Seasonality
BMTX’s Higher Education serviced deposits fluctuate throughout the year due primarily to the inflow of funds typically disbursed at the start of a semester. Serviced deposit balances typically experience seasonal lows in December and July and experience seasonal highs in September and January when individual account balances are generally at their peak. Debit spend follows a similar seasonal trend, but may slightly lag increases in balances.
Merger with Megalith Financial Acquisition Corp

On January 4, 2021, BankMobile, Megalith, and MFAC Merger Sub Inc., consummated the transaction contemplated by the merger agreement entered into on August 6, 2020, as amended. In connection with the closing of the merger, Megalith changed its name to BM Technologies, Inc. Effective January 6, 2021, the Company’s units ceased trading, and the Company’s common stock and warrants began trading on the NYSE American under the symbols “BMTX” and “BMTX-WT,” respectively.

The merger was accounted for as a reverse recapitalization in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Under U.S. GAAP, BankMobile was treated as the “acquirer” company for financial reporting purposes, and as a result, the transaction was treated as the equivalent of BankMobile issuing stock for the net assets of Megalith, accompanied by a recapitalization. The excess of the fair value of the shares issued over the value of the net monetary assets of Megalith was recognized as an adjustment to shareholders’ equity. There was no goodwill or other intangible assets recorded in the merger.

As a result of the merger transaction, BankMobile used proceeds from the recapitalization transaction to pay down its $15.6 million outstanding loan from Customers Bank, its former parent, received $1.3 million of cash, net of transaction costs, and issued an additional 6,076,946 shares of common stock.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We have adopted various accounting policies that govern the application of U.S. GAAP and that are consistent with general practices within the fintech industry in the preparation of these financial statements. Our significant accounting policies are described in Note 2 - Basis of Presentation and Significant Accounting Policiesin the Notes to the Consolidated Financial Statements herein.

Certain accounting policies involve significant judgment and assumptions by us that have a material impact on the carrying value of certain assets. We consider these accounting policies to be critical accounting policies. An accounting estimate is considered to be critical if it meets both of the following criteria (i) the estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate is made, and (ii) different estimates reasonably could have been used, or changes in the estimate that are reasonably likely to occur from period to period, may have a material impact on the presentation of our financial condition, changes in financial condition, or results of operations. As of, and for the year ended December 31, 20202022, we did not identify any critical accounting estimates.

The critical accounting policies that are both important to the portrayal of our financial condition and results of operations, and require complex, subjective judgments and are identified as critical accounting policies are share-based compensation, provision for operating losses, income taxes, goodwill and other intangibles, developed software, and accounting for public and private warrants.


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Share-Based Compensation Expense

The Company uses share-based compensation, including stock, restricted stock units, and performance stock units, to provide long-term performance incentives for its employees and directors. Share-based compensation is recognized on a straight-line basis over the requisite service period of the award based on the grant-date fair value for time-based awards. Compensation related to performance-based awards is recognized over the period the performance obligation is expected to be satisfied. For compensation related to performance-based awards with milestones, upon the grant date, and at each subsequent reporting period, we reassess whether it is probable that we will achieve each operational milestone, and if so, the period when we expect to achieve that operational milestone. For compensation related to performance-based awards with a market condition, we use a Monte Carlo simulation to determine the fair value of the award on the grant date, and recognize the share-based compensation expense over the derived service period. Forfeitures are recognized as they occur. Share-based compensation expense is included in Salaries and employee benefits. In addition, the holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligations.

Provision for Operating Losses

The provision for operating losses represents our payments for losses resulting from fraud or theft-based transactions that have materially affected,generally been disputed by our serviced deposit account holders and Regulation E card claim losses incurred by us, as well as an estimated liability for such losses where such disputes have not been resolved as of the end of the reporting period. Fraud or theft-based related losses are reasonablyrecognized when both probable and estimable. Regulation E claims made up a vast majority of the losses. The remaining fraud or theft-based losses are mostly Check Fraud and ACH/Wire Fraud.

The main source of Regulation E losses is card holder claims of unauthorized use of their debit card. Drivers include, but are not limited to, transaction purchase volume, in person vs. online, macroeconomic conditions, changes in customer behavior, and regulatory changes. A customer has 60 days to dispute a charge. BMTX may decline the claim within 10 days or advance the funds to the account holder if the investigation is still pending. BMTX may continue to investigate transactions for 35 more days, before making its final decision. At conclusion of the investigation, the advance is reversed or is made permanent. BMTX’s loss includes closed disputes where the customer is entitled to keep the funds advanced, an expected loss on actual disputes that are pending investigation, which is based on historical experience, as well as an estimate of disputes not yet disputed. The estimated liability for disputes not yet disputed is created by applying historical rates of transactions disputed after the reporting period end date and applying that rate to actual debit card volume in the period. This estimate of future disputes is then adjusted for our estimate of the amount disputed that we expect to result in a loss, which is estimated based on our historical experience. Our estimation process is subject to risks and uncertainties, including that future performance may be different from our historical experience. Accordingly, our actual loss experience may not match expectations.

Fraud or theft-based related losses are recognized when realized or incurred. Drivers include, but are not limited to, efforts by organized or unorganized fraudsters to target an account, customer complicity, customer lack of proper password safeguarding or other preventative measures, onboarding approval procedures, changes in account funds availability, in person vs. online transactions, macroeconomic conditions, changes in customer behavior, and regulatory changes.

Income Taxes

BMTX accounts for income taxes under the liability method of accounting for income taxes. The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. BMTX determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur.
In assessing the realizability of federal or state deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and prudent, feasible, and permissible as well as available tax planning strategies in making this assessment.


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A tax position is recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the term upon examination includes resolution of the related appeals or litigation process. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to materially affect, ourmanagement’s judgment.

Goodwill and Other Intangibles

Goodwill represents the excess of the purchase price over the identifiable net assets of businesses acquired through business combinations accounted for under the acquisition method. Other intangible assets represent purchased assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights. Intangible assets that have finite lives, such as university relationships, are subject to impairment testing. Intangible assets are amortized on a straight-line basis over twenty years.

Goodwill is reviewed for impairment annually as of October 31 and between annual tests when events and circumstances indicate that impairment may have occurred. The goodwill impairment charge represents the amount by which the reporting unit’s carrying amount exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. BMTX applies a qualitative assessment to determine if the Step 1 quantitative impairment test is necessary.

Other intangibles subject to amortization are reviewed for impairment under FASB ASC 360, Property, Plant and Equipment, which requires that a long-lived asset or asset group be tested for recoverability whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

As part of its qualitative assessment, BMTX reviews regional and national trends in current and expected economic conditions. BMTX also considers its own historical performance, expectations of future performance, indicative deal values, and other trends specific to its industry.

Developed Software

Developed software includes internally developed software and developed software acquired in the Higher One Disbursement business acquisition. Internally developed software and related capitalized work-in-process costs relate to the development of digital banking platforms to connect BaaS banking customers to partner banks.

BMTX capitalizes certain internal controland external costs incurred to develop internal-use software during the application development stage. BMTX also capitalizes the cost of specified upgrades and enhancements to internal-use software that result in additional functionality. Once a development project is substantially complete and the software is ready for its intended use, BMTX begins amortizing these costs on a straight-line basis over financial reporting.

the internal-use software’s estimated useful life, which ranges from three to seven years.


The Higher One Disbursement business developed software is related to the disbursement business services to colleges and universities and delivering services to students. The Higher One Disbursement business developed software was recorded at the amount determined by a third-party valuation expert at acquisition date and was estimated based on expected revenue attributable to the software utilizing a discounted cash flow methodology, giving consideration to potential obsolescence. The estimated useful life of the Higher One Disbursement business developed software is 10 years.

PART III

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information regardingCompany reviews the beneficial ownershipcarrying value of our sharesdeveloped software for impairment by measuring the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. If the Company determines that the carrying amount is impaired, the asset is written down to fair value. Fair value is determined based on discounted cash flows or management’s estimates, depending on the nature of the assets.



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Public & Private Warrants

The Company has Public and Private Warrants outstanding as a result of the merger transaction which occurred on January 4, 2021. Each whole warrant entitles the registered holder to purchase one whole share of common stock at a price of $11.50 a share. The warrants expire January 4, 2026, or earlier upon redemption or liquidation and the Company has redemption rights if our common stock trades above $24.00 for 20 out of 30 days. The Private Warrants are identical to the Public Warrants except that the Private Warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor and certain others.

The Private Warrants and the Public Warrants are treated differently for accounting purposes. In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, thePrivate Warrants are accounted for as liabilities and will be marked-to-market each reporting period with the change recognized in earnings. In general, under the mark-to-market accounting model, as the Company’s stock price increases, the warrant liability increases, and the Company recognizes additional expense in its Consolidated Statements of Income (Loss) – the opposite when the stock price declines. Accordingly, the periodic revaluation of the Private Warrants could result in significant volatility in our reported earnings. The amounts recognized are a mark-to-market accounting determination and are non-cash.

In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, for accounting purposes the Public Warrants are treated as equity instruments. Accordingly, the Public Warrants are not marked-to-market each reporting period, thus there is no impact to earnings. Any future exercises of the Public Warrants will be recorded as cash received and recorded in Cash and cash equivalents, with a corresponding offset to Additional paid-in capital in equity.


NEW ACCOUNTING PRONOUNCEMENTS
The FASB has issued accounting standards that have not yet become effective and that may impact BMTX’s consolidated financial statements or its disclosures in future periods. Note 2 — Basis of Presentation and Significant Accounting Policies provides information regarding those accounting standards.
RESULTS OF OPERATIONS
The following discussion of our results of operations should be read in conjunction with our Consolidated Financial Statements, including the accompanying notes.

The following summarized tables set forth our operating results for the twelve months ended December 31, 2022 and December 31, 2021:
Twelve Months Ended
December 31,
%
Change
(dollars in thousands, except per share data)20222021Change
Operating revenues$83,597 $94,705 $(11,108)(12)%
Operating expenses92,853 89,039 3,814 %
(Loss) income from operations(9,256)5,666 (14,922)NM
Gain on fair value of private warrant liability8,066 17,225 (9,159)(53)%
Interest expense— (96)96 (100)%
(Loss) income before income tax (benefit) expense    (1,190)22,795 (23,985)(105)%
Income tax (benefit) expense(411)5,752 (6,163)(107)%
Net (loss) income$(779)$17,043 $(17,822)(105)%
Net (loss) income per share - basic$(0.07)$1.44 $(1.50)(105)%
Net (loss) income per share - diluted$(0.07)$1.43 $(1.49)(105)%
NM refers to changes greater than 150%.

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During the twelve months ended December 31, 2022, we incurred a net loss of $0.8 million which resulted from: an $11.1 million (or 12%) decrease in our operating revenues, an increase of $3.8 million (or 4%) in our operating expenses, and decreases of $9.2 million (or 53%) and $6.2 million (or 107%), respectively, in the gain on fair value of private warrant liability, which represents the change in the fair value of our liability for private warrants, and income tax (benefit) expense as compared to the twelve months ended December 31, 2021. The key drivers of changes in operating revenues, operating expenses,income tax (benefit) expense, and resulting net (loss) income are discussed in greater detail below.
Basic and diluted earnings (loss) per share, which decreased to $(0.07) and $(0.07), respectively, are both driven primarily by the impact of the private warrant adjustments on the earnings per share calculations in addition to the current year net loss. During the twelve months ended December 31, 2022, the average common stock share price was below the warrant strike price, and as a result, the warrants are not considered dilutive. During the twelve months ended December 31, 2021, the average common stock share price was greater than the warrant strike price resulting in the warrants being considered dilutive.
Operating Revenues
Twelve Months Ended
December 31,
%
Change
20222021
(dollars in thousands)Change
Revenues:
Interchange and card revenue$22,318 $28,078 $(5,760)(21)%
Servicing fees44,581 45,105 (524)(1)%
Account fees8,992 10,543 (1,551)(15)%
University fees5,734 5,693 41 %
Other revenue1,972 5,286 (3,314)(63)%
     Total operating revenues$83,597 $94,705 $(11,108)(12)%

For the twelve months ended December 31, 2022, operating revenues decreased $11.1 million, (or 12%) as compared to the twelve months ended December 31, 2021. This decrease is primarily attributable to a $5.8 million, (or 21%), decrease in Interchange and card revenue resulting primarily from lower spend volumes as well as a $3.3 million (or 63%) decrease in Other revenue due to a reduction in development projects for our BaaS partners which vary based on project status, contracts, and milestones. To a lesser extent, the decrease in operating revenues resulted from a decrease in Account fees of $1.6 million (or 15%) caused by lower total active accounts, and a decrease of $0.5 million (or 1%) in Servicing fees due to rising interest rates partially offset by increases in average serviced deposit account balances.
Operating Expenses
Twelve Months Ended
December 31,
%
Change
(dollars in thousands)20222021Change
Technology, communication, and processing$29,176 $29,338 $(162)(1)%
Salaries and employee benefits39,926 38,036 1,890 %
Professional services10,747 10,395 352 %
Provision for operating losses6,798 5,419 1,379 25 %
Occupancy1,022 949 73 %
Customer related supplies894 1,815 (921)(51)%
Advertising and promotion741 654 87 13 %
Merger and acquisition related expenses290 65 225 NM
Other expense3,259 2,368 891 38 %
   Total operating expenses$92,853 $89,039 $3,814 %
NM refers to changes greater than 150%.


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Table of Contents
For the twelve months ended December 31, 2022, operating expenses increased $3.8 million, (or 4%), as compared to the twelve months ended December 31, 2021. The increase is primarily attributable to a $1.9 million, (or 5%), increase in Salaries and employee benefits driven primarily by increased employee costs resulting from an increase in average headcount, partially offset by increased capitalized labor. The increase was also due to a $1.4 million, (or 25%), increase in Provision for operating losses, driven by adverse loss experience in serviced deposit accounts, and a $0.9 million, (or 38%), increase in Other expense due primarily to increased insurance and employee travel expenses. These increases were partially offset by a $0.9 million, (or 51%), decrease in Customer related supplies, resulting from reduced consumption in card stock, mailers, and other customer supplies and vendor credits provided and utilized in the current year under the new service agreement negotiated in the prior year.

Income Tax (Benefit) Expense

The Company’s effective tax rate was a benefit of 34.6% and an expense of 25.2% for the twelve months ended December 31, 2022 and December 31, 2021, respectively.
The Company’s effective tax rate for the twelve months ended December 31, 2022 differs from the Company’s federal statutory rate of 21.0% primarily due to the non-taxable fair value adjustments related to the non-compensatory private warrant liability being recorded through earnings and available R&D tax credits, offset by nondeductible compensation related expense and the change in valuation allowance.
The Company’s effective tax rate for the twelve months ended December 31, 2021 differs from the Company’s federal statutory rate of 21.0% primarily due to the non-taxable fair value adjustments related to the non-compensatory private warrant liability being recorded through earnings as well as tax expense related to the estimated annual increase of the valuation allowance established against deferred tax assets.
LIQUIDITY AND CAPITAL RESOURCES
Our Cash and cash equivalents consist of non-interest bearing, highly-liquid demand deposits. We had $21.1 million of Cash and cash equivalents at December 31, 2022 as compared to $25.7 million of Cash and cash equivalents at December 31, 2021.
We currently finance our operations through cash flows provided by operating activities. We intend to fund our ongoing operating activities with our existing cash and expected cash flows from operations. However, should additional liquidity be necessary, the Company could consider equity or debt financing, but there are no assurances that additional capital would be available or on terms that are acceptable to us.
ASC 205-40, Presentation of Financial Statements - Going Concern, requires management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date.

Management has performed this required assessment as of March 29, 2021 based on information obtained from the persons named below, with respect to the beneficial ownership of shares of our common stock, by:

each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

each of our executive officers and directors that beneficially owns shares of our common stock; and

all our executive officers and directors as a group.

Beneficial ownership is determined according to the rules31, 2023, including consideration of the SEC,effect of the DPSA Second Amendment and the 2023 Deposit Servicing Agreement with Customers Bank, see Note 15 - Subsequent Events for additional information, and believes there is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of $21 million at March 31, 2024.


Management’s assessment is subject to known and unknown risks, uncertainties, assumptions, and changes in circumstances, many of which generally provide that a person has beneficial ownershipare beyond our control including the impact of a security if he, she or it possesses sole or shared voting or investment power over that security, including optionsthe macroeconomic environment, and warrants that are currently exercisable or exercisable within 60 days.difficult to predict as to timing, extent, likelihood, and degree of occurrence, and that could cause actual results to differ from estimates and forecasts, potentially materially.

26


In the table below, percentage ownership is based on 12,200,302 sharesTable of common stock outstanding as of March 29, 2021. Contents

The table below doessummarizes our cash flows for the periods indicated:
Twelve Months Ended
December 31,
%
Change
20222021
(dollars in thousands)Change
Net cash provided by operating activities$3,480 $27,543 $(24,063)(87)%
Net cash used in investing activities(5,675)(733)(4,942)NM
Net cash used in financing activities(2,401)(4,095)1,694 (41)%
Net (decrease) increase in cash and cash equivalents$(4,596)$22,715 $(27,311)(120)%
NM refers to changes greater than 150%.
Cash Flows Provided by Operating Activities
Cash provided by operating activities was $3.5 million in the twelve months ended December 31, 2022 compared to cash provided of $27.5 million in the twelve months ended December 31, 2021, a decrease of $24.1 million. The decrease in net cash provided by operating activities is driven primarily by a $11.8 million reduced source of cash from Deferred revenue, a $7.2 million increased use of cash for Prepaid expenses and other assets, and a $7.1 million increased use of cash for Accounts payable.

Cash Flows Used in Investing Activities
Cash used in investing activities increased $4.9 million as compared to the twelve months ended December 31, 2021, primarily due to increased capitalization of development costs related to internal use software.
Cash Flows Used in Financing Activities
Cash used in financing activities decreased $1.7 million as compared to the twelve months ended December 31, 2021, primarily due to the private warrant repurchase transaction during the current period versus the recapitalization transaction and payoff of borrowings in the prior period.
CONTRACTUAL OBLIGATIONS
During the twelve months ended December 31, 2022, we terminated our remaining operating leases. As of December 31, 2022, the Company had no material contractual debt obligations.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not includehave any off-balance sheet arrangements.
ITEM 7A. QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Credit Risk

We are exposed to economic risks in the common stock underlying the Placement Warrants held ornormal course of business primarily such as concentration of credit risk. Potential concentration of credit risk consists primarily of accounts receivable from Customers Bank, BaaS partners, MasterCard, and Higher Education institution clients. Historically, we have not experienced any material losses related to be held by the Company’s officers or Sponsor because these securities are not currently exercisable within sixty (60) days. This table also assumesbalances and believe that there areis minimal risk of expected future losses. However, there can be no issuancesassurance that there will not be losses on these balances.

At December 31, 2022 and December 31, 2021, Customers Bank accounted for 17% and 61% of equity securities under the 2020 Equity Incentive Plan.our total

Accounts receivable, net, respectively. At December 31, 2022 and December 31, 2021, a BaaS partner accounted for 60% and 13% of our total Accounts receivable, net, respectively. At December 31, 2022 and December 31, 2021, MasterCard accounted for 10% and 17% of our total

Accounts receivable, net, respectively.

Unless otherwise indicated,
27


Table of Contents
Financial instruments that potentially subject the Company believes that all persons namedto credit risk consist principally of cash held in the table have sole votingCompany's operating account. Cash is maintained in accounts with Customers Bank, which, at times, may exceed the FDIC coverage limit of $250,000. At December 31, 2022, the Company has not experienced losses on these cash accounts and investment powermanagement believes, based upon the quality of Customers Bank, that the credit risk with respectregard to all shares of common stock beneficially owned by them. Unless otherwise noted, the business address of each of the following entities or individualsthese deposits is 201 King of Prussia Road, Suite 350, Wayne, PA 19087.not significant.


Name and Address of Beneficial Owner(1) Number of
Shares
Beneficially
Owned
  % of
Class
 
Directors and Named Executive Officers        
Luvleen Sidhu(1)  809,769   6.6%
Pankaj Dinodia  0   * 
Mike Gill  0   * 
Aaron Hodari(2)  0   * 
Brent Hurley  10,322   * 
A.J. Dunklau  2,064   * 
Marcy Schwab  0   * 
Robert Ramsey(3)  57,805   * 
Robert Diegel(4)  97,612   * 
All executive officers and directors as a group (9 individuals)  977,572   8.0%
         
Greater than Five Percent Holders:        
MFA Investor Holdings LLC(5)  1,019,802   8.4%
Jay S. Sidhu(5)(6)  1,288,870   10.1%
Bhanu Choudhrie(5)(7)  1,121,345   9.2%
Schechter Private Capital Funds(8)  1,912,599   15.7%

28


*

Less than 1%

(1)Includes 809,769 shares that Ms. Luvleen Sidhu was directed from CUBI in connection with a severance agreement she entered into with CUBI, which shares are subject to restrictions on transfer and clawback if Ms. Sidhu does not maintain her service to the Company.


Table of Contents


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

(2)Mr. Hodari has indirect interest in the shares of common stock of the Company through his ownership of membership interests in Schechter Private Capital, LLC, but does not have voting or dispositive control over the shares and disclaims ownership of any of the shares of common stock of the Company held by Schechter Private Capital Fund I, LLC.

(3)Includes 57,805 Merger Consideration Shares that Mr. Ramsey was directed from CUBI in connection with a severance agreement he entered into with CUBI, which shares are subject to restrictions on transfer and clawback if Mr. Ramsey does not maintain his service to the Company.
(4)Includes 96,339 Merger Consideration Shares that Mr. Diegel was directed from CUBI in connection with a severance agreement he entered into with CUBI, which shares are subject to restrictions on transfer and clawback if Mr. Diegel does not maintain his service to the Company.
(5)MFA Investor Holding LLC is the record holder of 1,019,802 of such shares. Jay S. Sidhu, and Bhanu Choudhrie are the managing members and have voting and investment discretion with respect to such shares. As such, they may be deemed to have beneficial ownership of the shares. Each such person disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly. Includes 300,000 issued and outstanding founders shares subject to forfeiture unless the stock price reaches $15 per share for 20 out of 30 days.
(6)Includes an estimated 209,068 merger consideration shares that Mr. Sidhu received as a CUBI Stockholder, based on Mr. Sidhu’s reported ownership in CUBI as of November 10, 2020.
(7)Includes an estimated 101,543 merger consideration shares that Mr. Choudhrie received as a CUBI Stockholder, based on Mr. Choudhrie’s reported ownership in CUBI as of December 17, 2020.
(8)According to a Form 3 filed with the SEC on February 3, 2021, includes 924,423 shares held by Schechter Private Capital Fund I, LLC – Series Q and 988,176 shares held by Schechter Private Capital Fund I, LLC – Series Q2. Schechter Private Capital Fund I, LLC is managed by Schechter Private Capital, LLC. Decisions regarding the voting or disposition of the shares held by the foregoing are made by the President of Schechter Private Capital, LLC, Marc Schechter. Mr. Hodari disclaims ownership of any of the shares of common stock of the Company held by Schechter Private Capital Fund I, LLC. The address of Schechter Private Capital Fund I, LLC-Series Q and Schechter Private Capital Fund I, LLC-Series Q2 is 251 Pierce Street, Birmingham, MI 48009.


PART IV

Item 15.Exhibits, Financial Statements and Financial Statement Schedules

(a)The following documents are filed as part of this Report:

(1)Financial Statements

(2)Financial Statements Schedule

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto in is Item 15 of Part IV below.

(3)Exhibits

We hereby file as part of this report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be obtained on the SEC website at www.sec.gov.


BM Technologies, Inc.

(formerly known as Megalith Financial Acquisition Corp.)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page No.
Report of Independent Registered Public Accounting Firm (KPMG, LLP; Philadelphia, PA; PCAOB ID#185)
F-230
Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Philadelphia, PA; PCAOB ID#243)
Consolidated Balance Sheets at December 31, 2020 and 2019 (as restated)
F-332
Consolidated Statements of Operations for the years ended December 31, 2020 and 2019 (as restated)Income (Loss)
F-433
Consolidated Statements of Changes in Stockholders’Shareholders’ Equity for the years ended December 31, 2020 and 2019 (as restated)
F-534
Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 (as restated)
F-635
Notes to the Consolidated Financial Statements (as restated)
F-7 - F-4036


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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm


To the StockholdersShareholders and the Board of Directors of

BM Technologies, Inc. (formerly known as Megalith Financial Acquisition Corp.)

:

Opinion on the Consolidated Financial Statements


We have audited the accompanying consolidated balance sheetssheet of BM Technologies, Inc. (formerly known as Megalith Financial Acquisition Corp.)and subsidiaries (the “Company”)Company) as of December 31, 2020 and 2019,2022, the related consolidated statements of operations,income (loss), changes in stockholders’shareholders’ equity, and cash flows for each of the two years in the periodyear ended December 31, 2020,2022, and the related notes (collectively, referred to as the “financial statements”)consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019,2022, and the results of its consolidated operations and its consolidated cash flows for each of the two years in the periodyear ended December 31, 2020,2022, in conformity with U.S. generally accepted accounting principles.


Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ KPMG LLP
We have served as the Company's auditor since 2022.

Philadelphia, Pennsylvania
March 31, 2023
30


Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors
BM Technologies, Inc.
Wayne, Pennsylvania

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of BM Technologies, Inc. (the “Company”) as of December 31, 2021, the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.


Restatement of Financial Statements

As discussed in Note 8 to the financial statements, the Securities and Exchange Commission issued a public statement entitled Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “Public Statement”) on April 12, 2021, which discusses the accounting for certain warrants as liabilities. The Company previously accounted for its warrants as equity instruments. Management evaluated its warrants against the Public Statement, and determined that the warrants should be accounted for as liabilities. Accordingly, the financial statements have been restated to correct the accounting and related disclosure for the warrants.

Basis for Opinion


These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditsaudit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.


Our auditsaudit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provideaudit provides a reasonable basis for our opinion.


/s/ WithumSmith+Brown, PC

BDO USA, LLP

We have served as the Company's auditor since 2017.

New York, New York

July 13, 2021

from 2018 to May 10, 2022.


Philadelphia, Pennsylvania

May 10, 2022
31


Table of Contents

BM TECHNOLOGIES, INC.

BM Technologies, Inc.

(formerly known as Megalith Financial Acquisition Corp.)

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share and per share data)
December 31,
2022
December 31,
2021
ASSETS
Cash and cash equivalents$21,108 $25,704 
Accounts receivable, net allowance for doubtful accounts of $305 and $79 at December 31, 2022 and December 31, 2021, respectively.8,2609,194 
Prepaid expenses and other assets9,0762,099 
Total current assets38,44436,997 
Premises and equipment, net508346 
Developed software, net22,32428,593 
Goodwill5,2595,259 
Other intangibles, net4,4294,749 
Other assets72398 
Total assets$71,036 $76,342 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities$12,684 $6,947 
Taxes payable— 1,807 
Current portion of operating lease liabilities— 416 
Deferred revenue, current6,647 15,387 
Total current liabilities19,331 24,557 
Non-current liabilities:
Deferred revenue, non-current— 190 
Liability for private warrants2,847 13,614 
Total liabilities22,178 38,361 
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock: Par value $0.0001 per share; 10,000,000 shares authorized, none issued or outstanding at both December 31, 2022 and December 31, 2021.$— $— 
Common stock: Par value $0.0001 per share; 1 billion shares authorized; 12,240,237 shares issued and outstanding at December 31, 2022; 12,193,378 shares issued and outstanding at December 31, 2021.
Additional paid-in capital72,342 60,686 
Accumulated deficit(23,485)(22,706)
   Total shareholders’ equity$48,858 $37,981 
   Total liabilities and shareholders’ equity$71,036 $76,342 

 December 31, 
 2020  2019 
 (As
Restated)
  (As
Restated)
 
ASSETS      
CURRENT ASSETS        
Cash $43,178  $482,665 
Prepaid expenses and other assets  40,672   37,571 
         
Total current assets  83,850   520,236 
         
OTHER ASSETS        
Marketable securities held in trust account  27,713,815   175,410,617 
Escrow for private placement  20,002,872   - 
         
Total other assets  47,716,687   175,410,617 
         
TOTAL ASSETS  47,800,537   175,930,853 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
CURRENT LIABILITIES        
Accounts payable  1,656,199   111,968 
Private placement received in advance  20,002,872   - 
Income taxes payable  -   572,160 
Franchise taxes payable  30,000   80,000 
Due to affiliates  45,000   - 
         
Total current liabilities  21,734,071   764,128 
         
LONG TERM LIABILITIES        
Deferred underwriting fee payable  6,771,556   6,771,556 
Warrant Liability  75,973,939   7,639,893 
         
Total long term liabilities  82,745,495   14,411,449 
         
Total liabilities  104,479,566   15,175,577 
         
COMMITMENTS AND CONTINGENCIES        
Class A common stock subject to possible redemption, $0.0001 par value, 2,651,614 and 15,421,314 shares at redemption value of $10.10 per share at December 31, 2020 and December 31, 2019, respectively.  26,781,301   155,755,276 
         
STOCKHOLDERS’ EQUITY        
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding  -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 0 and 1,507,575 shares issued and outstanding (excluding 2,651,614 and 15,421,314 shares subject to possible redemption), as of December 31, 2020 and December 31, 2019, respectively  -   151 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of December 31, 2020 and December 31, 2019.  423   423 
Additional paid-in capital  -   - 
Retained earnings  (83,460,753)  4,999,426 
         
Total stockholders’ equity  (83,460,330)  5,000,000 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $47,800,537  $175,930,853 

TheSee accompanying notes are an integral part of theseto the consolidated financial statements.


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Table of Contents

BM Technologies, Inc.

TECHNOLOGIES, INC.

(formerly known as Megalith Financial Acquisition Corp.)

CONSOLIDATED STATEMENTS OF OPERATIONS

INCOME (LOSS)
(amounts in thousands, except per share data)
Twelve Months Ended
December 31,
20222021
Operating revenues:
Interchange and card revenue$22,318 $28,078 
Servicing fees44,581 45,105 
Account fees8,992 10,543 
University fees5,734 5,693 
Other revenue1,972 5,286 
   Total operating revenues83,597 94,705 
Operating expenses:
Technology, communication, and processing29,176 29,338 
Salaries and employee benefits39,926 38,036 
Professional services10,747 10,395 
Provision for operating losses6,798 5,419 
Occupancy1,022 949 
Customer related supplies894 1,815 
Advertising and promotion741 654 
Merger and acquisition related expenses290 65 
Other expense3,259 2,368 
   Total operating expenses92,853 89,039 
 (Loss) income from operations(9,256)5,666 
Non-operating income and expense:
Gain on fair value of private warrant liability8,066 17,225 
Interest expense— (96)
(Loss) income before income tax expense(1,190)22,795 
Income tax (benefit) expense(411)5,752 
   Net (loss) income$(779)$17,043 
Weighted average number of shares outstanding - basic11,942 11,851 
Weighted average number of shares outstanding - diluted11,942 11,939 
Net (loss) income per share - basic$(0.07)$1.44 
Net (loss) income per share - diluted$(0.07)$1.43 

  For the year ended  For the year ended 
  December 31,
2020
(As Restated)
  December 31,
2019
(As Restated)
 
OPERATING EXPENSES        
General and administrative $292,252  $155,854 
Legal and professional fees  1,532,958   219,533 
Franchise tax  200,000   200,000 
Support services - related party  185,384   224,000 
         
Total expenses  2,210,594   799,387 
         
OTHER INCOME        
Other income  212,129   - 
Change in fair value of warrant liability  (68,334,046)  1,909,973 
Interest income on investments held in Trust Account  1,405,514   3,950,927 
         
Total other income  (66,716,403)  5,860,900 
         
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  (68,926,997)  5,061,513 
         
Income tax expense  297,748   788,018 
         
NET INCOME (LOSS) $(69,224,745) $4,273,495 
         
Weighted average shares outstanding of Class A common stock  8,655,806   16,928,889 
Basic and diluted net income per share, Class A $0.13  $0.18 
         
Weighted average shares outstanding of Class B common stock  4,232,222   4,232,222 
Basic and diluted net (loss) income per share, Class B $(16.62) $0.31 

TheSee accompanying notes are an integral part of theseto the consolidated financial statements.


33



Table of Contents

BM Technologies, Inc.

TECHNOLOGIES, INC.

(formerly known as Megalith Financial Acquisition Corp.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’SHAREHOLDERS’ EQUITY

For the Twelve Months Ended December 31, 2022 and 2021
(amounts in thousands, except share data)

(as restated)

Common Stock
Shares of
Common
Stock
Outstanding
Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Balance at December 31, 20206,123,432 $$64,017 $(39,749)$24,269 
Net income— — — 17,043 17,043 
Valuation of private warrants— — (30,839)— (30,839)
Recapitalization transaction4,759,911 — 16,148 — 16,148 
Issuance of common stock as compensation1,308,535 — 9,518 — 9,518 
Issuance of common stock upon exercise of warrants1,500 — 17 — 17 
Share-based compensation expense— — 1,825 — 1,825 
Balance at December 31, 202112,193,378 $$60,686 $(22,706)$37,981 
Net loss— — — (779)(779)
Conversion of private warrants to public warrants— — — 724 — 724 
Issuance of common stock as compensation6,000 — — 37 — 37 
Tax paid on behalf of employees related to net settlement of share-based awards— — (425)— (425)
Issuance of common stock upon exercise of warrants100 — — 
Share-based compensation expense40,759 — — 11,319 — 11,319 
Balance at December 31, 202212,240,237 $1 $72,342 $(23,485)$48,858 




  Common Stock  Additional     Total 
  Class A  Class B  paid-in  Retained  stockholder’s 
  Shares  Amount  Shares  Amount  capital  earnings  equity 
Balance, January 1, 2019 (as restated)  1,930,693  $193   4,232,222  $423  $-  $4,999,384  $5,000,000 
                             
Change in shares of Class A common stock subject to redemption  (423,118)  (42)  -   -   -   (4,273,453)  (4,273,495)
                             
Net income  -   -   -   -   -   4,273,495   4,273,495 
                             
Balance, December 31, 2019 (as restated)  1,507,575  $151   4,232,222  $423  $-  $4,999,426  $5,000,000 
                             
Reclassification from Temporary Equity to APIC  -   1,276   -   -   128,972,698   -   128,973,974 
         ��                   
Redemption of Class A common stock  (14,277,275)  (1,427)  -   -   (148,208,645)  -   (148,210,072)
                             
Reclassification from APIC to retained earnings  -   -   -   -   19,235,947   (19,235,435)  512 
                             
Net loss  -   -   -   -   -   (69,224,745)  (69,224,745)
                             
Balance, December 31, 2020 (as restated)  (12,769,700) $-   4,232,222  $423  $-  $(83,460,753) $(83,460,330)

TheSee accompanying notes are an integral part of theseto the consolidated financial statements.


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Table of Contents

BM Technologies, Inc.

TECHNOLOGIES, INC.

(formerly known as Megalith Financial Acquisition Corp.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

Twelve Months Ended
December 31,
20222021
Cash Flows from Operating Activities:
Net (loss) income$(779)$17,043 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation of premises and equipment298 193 
Loss on disposal of premises and equipment38 — 
Amortization of developed software11,445 11,444 
Amortization of other intangible assets320 321 
Amortization of leased assets326 820 
Provision for bad debt226 79 
Impairment of software assets— 215 
Share-based compensation expense11,356 11,343 
Gain on fair value of private warrant liability(8,066)(17,225)
Changes in operating assets and liabilities:
Accounts receivable708 760 
Prepaid expenses and other current assets(6,976)249 
Other assets— (365)
Accounts payable and accrued liabilities5,737 (1,314)
Taxes payable(1,807)1,807 
Operating lease liabilities(416)(715)
Deferred revenue(8,930)2,888 
Net Cash provided by Operating Activities3,480 27,543 
Cash Flows from Investing Activities:
Development of internal use software(5,176)(595)
Purchases of premises and equipment(499)(138)
Net Cash used in Investing Activities(5,675)(733)
Cash Flows from Financing Activities:
Repayments of borrowings— (21,000)
Proceeds from recapitalization transaction— 16,888 
Proceeds from exercise of warrants17 
Repurchase of private warrants(1,977)— 
Payments related to net settlement of share-based compensation awards(425)— 
Net Cash used in Financing Activities(2,401)(4,095)
Net (Decrease) Increase in Cash and Cash Equivalents(4,596)22,715 
Cash and Cash Equivalents – Beginning25,704 2,989 
Cash and Cash Equivalents – Ending$21,108 $25,704 
Supplementary Cash Flow Information:
Income taxes paid, net of refunds8,123 4,224 
Interest paid— 178 
Noncash Operating, Investing and Financing Activities:
Shares issued to settle Megalith accounts payable in connection with recapitalization transaction— 740 
  For the year ended  For the year ended 
  December 31,
2020
(As Restated)
  December 31,
2019
(As Restated)
 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income (loss) $(69,224,745) $4,273,495 
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Interest earned in Trust Account  (1,405,514)  (3,950,927)
Other income remitted directly to Trust Account  (212,129)  - 
Change in fair value of warrant liability  68,334,046   (1,909,973)
Changes in operating assets and liabilities:        
Prepaid expenses and other assets  (3,101)  34,298 
Accounts payable  1,544,231   (146,591)
Income taxes payable  (572,160)  355,314 
Franchise taxes payable  (50,000)  (120,000)
         
Net cash flows used in operating activities  (1,589,372)  (1,464,384)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Cash released from Trust Account for Class A common stock redemptions  148,155,560   - 
Cash moved to escrow from private placement received in advance  (20,002,872)  - 
Investment income released from Trust Account to pay taxes  1,104,885   754,104 
         
Net cash flows provided by financing activities  129,257,573   754,104 
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Cash used for Class A common stock redemptions  (148,155,560)  - 
Proceeds from private placement received in advance  20,002,872   - 
Proceeds from due to affiliates  45,000   - 
         
Net cash flows used in financing activities  (128,107,688)  - 
         
NET CHANGE IN CASH  (439,487)  (710,280)
         
CASH, BEGINNING OF YEAR  482,665   1,192,945 
         
CASH, END OF YEAR $43,178  $482,665 
         
Supplemental disclosure of noncash activities:        
Change in value of Class A common stock subject to possible redemption $(128,973,974) $4,273,495 
Supplemental cash flow disclosure:        
Income taxes paid $904,885  $432,704 

TheSee accompanying notes are an integral part of theseto the consolidated financial statements.


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Table of Contents

BM Technologies, Inc.

TECHNOLOGIES, INC.

(formerly known as Megalith Financial Acquisition Corp.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NoteNOTE 1 — DESCRIPTION OF THE BUSINESS AND MERGER TRANSACTION

Description of Organization andthe Business Operations


BM Technologies, Inc. (“BMTX” or “the Company”) (formerly known as BankMobile) provides state-of-the-art high-tech digital banking and disbursement services to consumers and students nationwide through a full service fintech banking platform, accessible to customers anywhere and anytime through digital channels.

BMTX facilitates deposits and banking services between a customer and our partner bank, Customers Bank, a Pennsylvania state-chartered bank, which is a related party and is a Federal Deposit Insurance Corporation (“FDIC”) insured bank. BMTX’s business model leverages partners’ existing customer bases to achieve high volume, low-cost customer acquisition in its Higher Education Disbursement, Banking-as-a-Service (“BaaS”), and niche Direct to Consumer (“D2C”) banking businesses. BMTX has four primary revenue sources: interchange and card revenue, servicing fees, account fees, and university fees. The majority of revenues are driven by customer activity (deposits, spend, transactions, etc.) and may be paid or passed through by Customers Bank, universities, or paid directly by customers.

BMTX is a Delaware corporation, originally incorporated as Megalith in November 2017 and renamed BM Technologies, Inc. in January 2021 at the time of the merger between Megalith and BankMobile. Until January 4, 2021, BankMobile was a wholly-owned subsidiary of Customers Bank, a wholly-owned subsidiary of Customers Bancorp, Inc.

Customers Bank holds the FDIC insured deposits that BMTX sources and services and is the issuing bank on BMTX’s debit cards. Customers Bank pays the Company a servicing fee for the deposits generated and passes through interchange income earned from transactions on debit cards. On November 7, 2022, the Company and Customers Bank amended the Deposit Processing Services Agreement (the “DPSA Amendment”). The DPSA Amendment, among other things, will facilitate the transfer of the Company’s serviced deposits to a new partner bank and extends the termination date of the Deposit Processing Services Agreement until the earlier of: (i) entry into a definitive agreement with a new partner bank to transfer the Company’s serviced deposits to such partner bank and the successful completion of such transfer; or (ii) June 30, 2023.

BMTX is not a bank, does not hold a bank charter, and does not provide banking services, and as a result, it is not subject to direct banking regulation, except as a service provider to our partner bank. BMTX is also subject to the regulations of the Department of Education (“ED”), due to its student disbursements business, and is periodically examined by it. BMTX’s contracts with most of its Higher Education institution clients require it to comply with numerous laws and regulations, including, where applicable, regulations promulgated by the ED regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV of the Higher Education Act of 1965; the Family Educational Rights and Privacy Act of 1995; the Electronic Fund Transfer Act and Regulation E; the USA PATRIOT Act and related anti-money laundering requirements; and certain federal rules regarding safeguarding personal information, including rules implementing the privacy provisions of the Gramm-Leach-Bliley Act. Other products and services offered by BMTX may also be subject to other federal and state laws and regulations.
Seasonality

BMTX’s Higher Education serviced deposits fluctuate throughout the year due primarily to the inflow of funds typically disbursed at the start of a semester. Serviced deposit balances typically experience seasonal lows in December and July and experience seasonal highs in September and January when individual account balances are generally at their peak. Debit spend follows a similar seasonal trend, but may slightly lag increases in balances.

Merger with Megalith Financial Acquisition Corp.) (the “Company”) was incorporated in Delaware on November 13, 2017. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). 

Corporation

Business Combination

On January 4, 2021, the Company consummated the previously announced business combination pursuant to the AgreementBankMobile, Megalith, and Plan of Merger, dated as of August 6, 2020 (as amended, the “Merger Agreement”), by and among the Company, MFAC Merger Sub Inc., a Pennsylvania corporation and an indirect wholly-owned subsidiary ofconsummated the Company (“Merger Sub”), BankMobile Technologies, Inc., a Pennsylvania corporation (“BankMobile”), Customers Bank, a Pennsylvania state chartered bank andtransaction contemplated by the sole stockholder of BankMobile (“Customers Bank”), and Customers Bancorp, Inc., a Pennsylvania corporation and the parent bank holding company for Customers Bank. 

Business Prior to the Business Combination

All business activity of the Company through December 31, 2020 related to the Company’s formation and Initial Public Offering, which is described below, searching for a business target and consummation of the Business Combination. The Company did not generate any operating revenues through the completion of the Business Combination. The Company did generate non-operating income in the form of interest income earned on marketable securities from the proceeds derived from the Initial Public Offering. The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effectivemerger agreement entered into on August 23, 2018. On August 28, 2018, the Company consummated the Initial Public Offering of 15,000,000 units (“Units”) with respect to the Class A Common Stock included in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceeds of $150,000,000, which is discussed in Note 3. 

Simultaneously6, 2020, as amended. In connection with the closing of the Initial Public Offering, the Company consummated the sale of 6,560,000 warrants (“Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placementmerger, Megalith changed its name to BM Technologies, Inc. Effective January 6, 2021, Megalith’s units ceased trading, and the Company’s sponsor, MFA Investor Holdings, LLC ($5,810,000) (the “Sponsor”)common stock and Chardan Capital Markets, LLC ($750,000) (“Chardan”), generating gross proceedswarrants began trading on the NYSE American under the symbols “BMTX” and “BMTX-WT,” respectively.



36

Table of $6,560,000, which is describedContents
The merger was accounted for as a reverse recapitalization in Note 4. 

Offering costsaccordance with U.S. GAAP. Under U.S. GAAP, BankMobile was treated as the “acquirer” company for financial reporting purposes and as a result, the transaction was treated as the equivalent of BankMobile issuing stock for the Initial Public Offering amounted to $10,521,211, consistingnet assets of $3,192,889 of underwriting fees, $6,771,556 of deferred underwriting fees payable (which are held in the Trust Account (defined below)) and $556,766 of other costs. As described in Note 5, the $6,771,556 deferred underwriting fee became payable upon completionMegalith, accompanied by a recapitalization. The excess of the Business Combination.

Following the closingfair value of the Initial Public Offering on August 28, 2018, an amount of $151,500,000 ($10.10 per Unit) fromshares issued over the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants was placed in a trust account (“Trust Account”) and was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.

On September 21, 2018, the Company consummated the closing of the sale of 1,928,889 additional Units upon receiving notice of the underwriter’s election to partially exercise its overallotment option (“Overallotment Units”), generating additional gross proceeds of $19,288,890 and incurring additional offering costs of $964,445 in underwriting fees which were partially deferred until the completion of the Company’s initial Business Combination. Simultaneously with the exercise of the overallotment, the Company consummated the Private Placement of an additional 385,778 Private Placement Warrants to the Sponsor, generating gross proceeds of $385,778.


Entry Into a Materially Definitive Agreement

On August 6, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, MFAC Merger Sub Inc., a Pennsylvania corporation and (“Merger Sub”) a wholly-owned subsidiary of the Company, BankMobile Technologies, Inc., a Pennsylvania corporation (“BankMobile”) and Customers Bank, a Pennsylvania state chartered bank and the sole stockholder of BankMobile (the “Stockholder”).

Pursuant to the Merger Agreement, at the closing of the transactions contemplated by the Merger Agreement (the “Closing”), BankMobile will merge with and into Merger Sub, with Merger Sub continuing as the surviving corporation (the “Surviving Corporation”).

The aggregate consideration to be paid pursuant to the Merger Agreement to the Stockholder will be an amount (the “Merger Consideration”) equal to: (i) $140,000,000 (the “Enterprise value”), minus (ii) $9,324,323 (“Sponsor Equity Adjustment”), plus (or minus, if negative) (iii) BankMobile’s net working capital less a target net working capital of $10,000,000, minus (iv) the aggregate amount of any outstanding indebtedness of BankMobile at Closing, and minus (v) the amount of any unpaid transaction expenses of BankMobile, the Company’s transaction expenses and other liabilities of the Company due and owing at the Closing.

The Merger Consideration will consist of cash and stock. The cash portion of the Merger Consideration (“Cash Consideration”) will be equal to (A) the amount of any proceeds of the PIPE Investment (described below under “Private Placement”); plus (B) an amount equal to one-half (1/2) of the difference between the (i) cash and cash equivalents of the Company, including any funds in the Trust Account after giving effect to the completion of the redemption of shares of the Company’s public stockholders (“Redemption”), less (ii) a cash reserve to be used for the benefit of the Surviving Corporation in the Merger, in the amount of $10,000,000 (such difference between clause (i) and (ii) which resulting amount if otherwise negative shall be equal to zero, being the “Remaining Trust Account Amount”); minus (C) the Company’s transaction expenses and other liabilities of the Company due and owing at the Closing; plus (D) the cash and cash equivalents of BankMobile; minus (E) BankMobile’s unpaid transaction expenses; minus (F) a cash reserve in the amount of $5,000,000. The stock portion of the Merger Consideration consists of a number of shares of the Company’s Class A common stock (the “Merger Consideration Shares”) with an aggregate value equal to (the “Merger Consideration Share Amount”) (a) the Merger Consideration, minus (b) the Cash Consideration, with the Stockholder receiving a number of shares of the Company Class A common stock equal to the Merger Consideration Share Amount, divided by $10.38 (the “Per Share Price”).

The Merger Consideration is subject to adjustment after the Closing based on confirmed amounts of the net working capital,monetary assets of Megalith was recognized as an adjustment to shareholders’ equity. There was no goodwill or other intangible assets recorded in the outstanding indebtednessmerger. Prior periods presented for comparative purposes represent the balances and activity of BankMobile and any unpaid transaction expenses of BankMobile, asBM Technologies, Inc. (other than shares which were retroactively restated in connection with the merger).

The following table provides a summary of the Closing Date. If the adjustment is a negative adjustment in favorsignificant sources and uses of the Company, the Stockholder will deliver to the Company a number of shares of Class A common stock of the Company with a value equal to the absolute value of the adjustment amount (with each share valued at the Per Share Price). If the adjustment is a positive adjustment in favor of BankMobile, the Company will issue to the Stockholder an additional number of shares of Class A common stock of the Company with a value equal to the adjustment amount (with each share valued at the Per Share Price). The Merger Consideration is also subject to reduction for the indemnification obligations of the Stockholder. 

On November 2, 2020, the Company entered into a First Amendment to Agreement and Plan of Merger (the “First Amendment”) with the other parties to the Agreement and Plan of Merger, dated as of August 6, 2020 (the “Original Agreement”, and as amended, including by the First Amendment, the “Merger Agreement”), by and among, the Company, MFAC Merger Sub Inc., a Pennsylvania corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), BankMobile, and Customers Bank, a Pennsylvania state chartered bank and the sole stockholder of BankMobile (“Customers Bank”), and with Customers Bancorp, a Pennsylvania corporation and the sole shareholder of Customers Bank (“Customers Bancorp”).

The Original Agreement provided that a portion of the consideration payable to Customers Bank in the Proposed Transaction was to be paid in shares (the “Merger Consideration Shares”) of the Company’s Class A common stock to Customers Bank. Pursuant to the First Amendment, the Original Agreement was amended to provide that (i) Customers Bancorp would become a party to the Merger Agreement, (ii) the Merger Consideration Shares will now be issued to the stockholders of Customers Bancorp, and (iii) Customers Bancorp may at its discretion, upon written notice to the Company, redirect or reallocate the distribution of the Merger Consideration Shares at any time priorcash related to the closing of the Proposed Transaction (the “Closing”)merger transaction:

(amounts in thousands)
Cash at Megalith$27,669 
Cash from PIPE (private investment in public entity) investors20,003 
Total sources of cash47,672 
Cash paid to underwriters and other transaction costs(3,987)
Cash paid to Customers Bank as consideration(23,125)
Cash from recapitalization transaction (A)20,560 
Cash used to pay down BMTX debt(8,834)
Cash received by BMTX and used to pay down debt(6,738)
Total cash used to pay down outstanding debt (B)(15,572)
Net cash received by BMTX from the reverse recapitalization transaction through March 31, 2021 (A+B)4,988 
90 day merger true-up, cash paid by BMTX in May 2021(3,672)
Final cash received by BMTX from the reverse recapitalization transaction through December 31, 2021$1,316 

The following table provides a reconciliation of the common shares related to other parties. Additionally, the Original Agreementmerger:

Shares held by legacy BankMobile shareholders - December 31, 20206,123,432 
Shares related to the recapitalization transaction - January 4, 20216,076,946 
   Total shares issued and outstanding - January 4, 202112,200,378 

BankMobile was amendeddetermined to provide that, subject to certain exceptions, there will be restrictionsthe accounting acquirer based on the sale or transferfollowing predominant factors:

Customers Bank stockholders had the largest portion of voting rights in the post-combination company;
The board of directors and senior management of the Merger Consideration Shares forpost-combination company are primarily composed of individuals associated with BankMobile;
BankMobile was the larger entity based on historical operating activity, assets, revenues, and employees at the time of the closing of the merger;
The ongoing operating activities of the post-combination company comprise those of BankMobile; and
BankMobile paid a periodpremium in the exchange of twelve months after the Closing, rather than for a periodequity interests.

NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of 180 days after the Closing as contemplated by the Lock-Up Agreement attachedPresentation

These consolidated financial statements have been prepared in conformity with U.S. GAAP. Any reference to applicable guidance is meant to refer to the Original Agreement.


Going Concernauthoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Liquidity

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as athe Financial Accounting Standards Board (“FASB”).



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Table of Contents
ASC 205-40, Presentation of Financial Statements - Going Concern” the Company had until January 4, 2021, requires management to consummate one or more business combinations, meeting certain conditions, or else it would cease all operations except for the purpose of liquidating. The Company closed a qualified business combination on January 4, 2021. Management had initially determined that the mandatory liquidation, should a business combination not occur, and potential subsequent dissolution raised substantial doubt about the Company’s ability to continue as a going concern. Given that the Company underwent the business combination on January 4, 2021, the conditions raising substantial doubt concerning the Company’sassess an entity’s ability to continue as a going concern have been alleviated.

Restatementwithin one year of Previously Issued Annual Financial Statements

The Company has restatedthe date the financial statements are issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial statementsobligations within one year from the financial statement issuance date.


Management has performed this required assessment as of December 31, 2020, for the years ended December 31, 2020 and December 31, 2019, as well as the unaudited financial statements for the three month periods ended March 31, 2020 and 2019,2023, including consideration of the three and six month periods ended June 30, 2020 and 2019effect of the Second Amendment to the Deposit Processing Services Agreement (the “DPSA Second Amendment”) and the three and nine month periods ended September 30, 2020 and 2019, to correct misstatements in those prior periods primarily related to misstatements identified in improperly applying accounting guidance for warrants, recognizing them as equity instead of a warrant liability, under the guidance of ASC 815-40, Contracts in Entity’s Own Equity, and not properly accounting for the entire amount of redeemable common shares as temporary equity carried at redemption value in accordance2023 Deposit Servicing Agreement with the guidance in ASC 480.Customers Bank, see

See Note 915 - Restatement of Previously Issued Financial StatementsSubsequent Events for additional information, regardingand believes there is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the errors identifiednext 12 months with projected liquidity of $21 million at March 31, 2024.


Management’s assessment is subject to known and unknown risks, uncertainties, assumptions, and changes in circumstances, many of which are beyond our control including the restatement adjustments madeimpact of the macroeconomic environment, and that are difficult to predict as to timing, extent, likelihood, and degree of occurrence, and that could cause actual results to differ from estimates and forecasts, potentially materially.

Based upon the financial statements

Note 2 — Summaryresults of Significant Accounting Policies

Basis of Presentation

The accompanyingManagement’s assessment, these consolidated financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted inhave been prepared on a going concern basis. The consolidated financial statements do not include any adjustments that could result from the United States of America (“U.S. GAAP”) and pursuant to the rules and regulationsoutcome of the SEC.

aforementioned risks and uncertainties.

Principles of Consolidation

Consolidation Policy

The accompanying
These consolidated financial statements include the accounts of the Company and MFAC Merger Sub Inc., its wholly owned subsidiary.wholly-owned subsidiaries. All significant intercompany balancesaccounts and transactions have been eliminated in consolidation.

Reclassification

Use of Estimates

Certain amounts
These financial statements reflect all normal and recurring adjustments that are, in the prior period consolidated financial statements have been reclassifiedopinion of management, necessary to conform to the presentationpresent a fair statement of the current period consolidated financial statements. These reclassifications had no effect onposition and the previously reported net income.

Emerging Growth Company

The Company is an “emerging growth company” as defined in Section 102(b)(1)results of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.


This may make comparison of the Company’s consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Cashoperations and cash equivalents

The Company considers all short-term investments with an original maturityflows of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2020 and 2019.

Redeemable Common Stock

As discussed in Note 1 – Description of Organization and Business Operations, all of the 16,928,889 shares held by public stockholders outstanding contained a redemption feature which allowsBMTX for the redemption of Class A common stock under the Company’s liquidation or tender offer and stockholder approval provisions. In accordance with Financial Accounting Standard Board (“FASB”) Topic ASC 480, “Distinguishing Liabilities from Equity,” (“ASC 480”) redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. On May 26, 2020, the Company’s stockholders approved an extension of the date by which the Company must consummate an initial business combination from May 28, 2020 to August 28, 2020 (or November 30, 2020 if the Company has executed a definitive agreement for an initial business combination by August 28, 2020, which was subsequently extended for two more months before the Merger closed on January 4, 2021). In connection with this extension, on June 3, 2020, 13,733,885 shares of Class A common stock were redeemed for an approximate total value of $142.6 million from the Trust Account. During December 2020 an additional 543,390 shares of Class A common stock were redeemed for an approximate total value of $5.6 million

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security at the end of each reporting period. Increases or decreases in the carrying number of redeemable shares of Class A common stock shall be affected by charges against additional paid in capital. If additional paid in capital is reduced to zero, any additional charges are applied against accumulated deficit.

Accordingly, at December 31, 2020, 2,651,614 shares of Class A common stock included in the units at the Public Offering were classified outside of permanent equity at approximately $10.10 per share. At December 31, 2019, 15,421,314 shares of Class A common stock included in the units at the Public Offering were classified outside of permanent equity at approximately $10.10 per share.

Offering Costs

Offering costs consist principally of legal, accounting, underwriting fees and other costs directly related to the Initial Public Offering. Offering costs amounting to $9,910,981 were charged to stockholders’ equity and $610,230 allocated to the issuance of warrant liability were charged to statement of operations.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Corporation coverage limits of $250,000. At December 31, 2020 and 2019, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account.

Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying consolidated balance sheets, primarily due to their short-term nature.


Net Income (Loss) Per Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income per share is computed by dividing net income applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 23,874,667 shares of Class A common stock in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method.

The Company’s statements of operations includes a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of income per share. Net income per share, basic and diluted for Class A common stock is calculated by dividing the investment income earned on the Trust Account and Other Income of $1,617,643 and $3,950,927, net of applicable income and franchise taxes of $497,748 and $988,018 by the weighted average number of shares of Class A common stock outstanding for the years ended December 31, 2020 and December 31, 2019, respectively. Net income (loss) per share, basic and diluted for Class B common stock is calculated by dividing the net income, less income attributable to Class A common stock, by the weighted average number of shares of Class B common stock outstanding for the period.

Use of Estimates

periods presented. The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities, andthe disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.periods. Significant estimates include valuation of deferred tax assets, valuation of the private warrants, goodwill, and intangible asset impairment analysis. Actual results could differ from those estimates.

Warrants

Segment Reporting


The Company accountsconducts its operations through a single operating segment and, therefore, one reportable segment. Operating segments are revenue-generating components of a company for warrants issued in accordance withwhich separate financial information is internally produced for regular use by the guidance contained in Financial Accounting Standards BoardChief Operating Decision Maker (“FASB”CODM”) Accounting Standards Codification Topic 815, “Derivativesto allocate resources and Hedging,” under whichassess the warrantsperformance of the business. Our CODM, Luvleen Sidhu, our Chief Executive Officer (“CEO”), uses a variety of measures to assess the performance of the business; however, detailed profitability information of the nature that could be used to allocate resources and assess the performance of the business are managed and reviewed for sharesthe Company as a whole.

Customer and Vendor Concentrations

At December 31, 2022 and December 31, 2021, Customers Bank accounted for 17% and 61% of our total Accounts receivable, net, respectively. At December 31, 2022 and December 31, 2021, a BaaS partner accounted for 60% and 13% of our total Accounts receivable, net, respectively. At December 31, 2022 and December 31, 2021, MasterCard accounted for 10% and 17% of our total Accounts receivable, net, respectively.

For the twelve months ended December 31, 2022 and 2021, Customers Bank, through a Deposit Processing Services Agreement and Amendment thereof, accounted for 89% and 87% of our Total operating revenues, respectively. See Note 14 – Related Party Transactionsfor additional information. Certain of these revenues are paid directly by MasterCard or individual account holders to the Company.

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For the twelve months ended December 31, 2022 and 2021, there is one vendor that accounted for 12% and 12% of our Total operating expenses, respectively.

Prior Period Adjustments

Certain prior period amounts have been adjusted to conform to the current period presentation.

Balance Sheet Adjustments

In preparation of the Company’s common stockconsolidated financial statements as of and for the twelve months ended December 31, 2022, the Company identified that its reserve for losses resulting from fraud or theft-based transactions that have generally been disputed by BMTX serviced deposit account holders and a related receivable were previously presented on a net basis as a component of Other assets. The Company reviewed this presentation and concluded that these amounts are better presented on a gross basis including the reserve for losses as a component of Accounts payable and accrued liabilities and including the receivable for any billable reimbursements from Customers Bank as a component of Accounts receivable, net.

In addition, the MasterCard quarterly fee assessment was reclassified from Accounts payable and accrued liabilities to Accounts receivable, net to better present the fee assessment balance.

Finally, the Company identified certain prepaid taxes that were previously included as a component of Other assets. The Company reviewed this presentation and concluded that these amounts are better presented as a component of Prepaid expenses and other current assets due to their short-term nature.

The effect of these immaterial adjustments has increased Accounts receivable, net by $33 thousand, increased Prepaid expenses and other current assets by $320 thousand, decreased Other assets by $439 thousand, and decreased Accounts payable and accrued liabilities by $86 thousand at December 31, 2021.

Statement of Income (Loss) Adjustments

In preparation of the Company’s consolidated financial statements as of and for the twelve months ended December 31, 2022, the Company identified certain expenses that were previously included as a component of Customer related supplies and Occupancy that are not indexed to its own stock do not meetbetter presented as a component of Technology, communication, and processing.

In addition, the criteria for equity treatment and must be recorded as derivative liabilities. Accordingly, warrants are classified as liabilities at their fair value and adjusted at each reporting period. Any change in fair value isCompany identified card replacement fees reimbursed from a BaaS partner were recognized as a component of Account fees and Other revenue when only the margin of those fees should have been recognized as revenue and the reimbursable expense should have been recognized as a component of Customer related supplies.

The effect of these immaterial adjustments for the twelve months ended December 31, 2021:

Decreased revenue from Account fees by $125 thousand,
Decreased revenue from Other revenue by $157 thousand,
Increased expenses from Technology, communication, and processing by $365 thousand,
Decreased expenses from Occupancy by $248 thousand, and
Decreased expenses from Customer related supplies by $399 thousand.

The impact of these adjustments had no effect on Net (loss) income.

Significant Accounting Policies

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised ASUs applicable to public companies until such pronouncements are applicable to private companies. The Company has elected to use the extended transition period under the JOBS Act.

Business Combinations

Business combinations are accounted for by applying the acquisition method in accordance with FASB ASC 805, Business Combinations. Under the acquisition method, identifiable assets acquired and liabilities assumed are measured at their fair values as of the date of acquisition, and are recognized separately from goodwill. Results of operations of the acquired entity are included in the statement of income from the date of acquisition. BMTX recognizes goodwill when the acquisition price exceeds the estimated fair value of the net assets acquired.

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Cash and Cash Equivalents

Our cash is maintained at Customers Bank, with a large majority of our cash balances at December 31, 2022 exceeding the FDIC’s $250,000 insured limit per account. We have not experienced losses on cash balances exceeding the federally insured limits, but there can be no assurance that we will not experience such losses in the future.

Accounts Receivable

Accounts receivable primarily relate to billings for deposit processing services provided to Customers Bank in addition to reimbursements to be received from a BaaS partner, as described in collaborative arrangements below, MasterCard incentive income, and uncollected university subscription and disbursement services fees. These amounts are recorded at face amounts less an allowance for doubtful accounts. Management evaluates accounts receivable and establishes the allowance for doubtful accounts based on historical experience, analysis of past due accounts, and other income (expense), netcurrent available information. Accounts receivable deemed to be uncollectible are individually identified and are charged-off against the allowance for doubtful accounts.

Premises and Equipment

Premises and equipment are recorded at cost less accumulated depreciation. Depreciation is charged to operations on a straight-line basis over the estimated useful lives of the assets or, in the case of leasehold improvements, the lease period, if shorter. Upon disposal or retirement of property and equipment, cost and related accumulated depreciation are removed from the accounts. Gains and losses from dispositions are credited or charged to operations. Expenditures for ordinary maintenance and repairs are charged to expense. Additions or betterments to property and equipment are capitalized at cost.

Developed Software

Developed software includes internally developed software and developed software acquired in the Higher One Disbursement business acquisition. Internally developed software and related capitalized work-in-process costs relate to the development of digital banking platforms to connect BaaS banking customers to partner banks.

BMTX capitalizes certain internal and external costs incurred to develop internal-use software during the application development stage. BMTX also capitalizes the cost of specified upgrades and enhancements to internal-use software that result in additional functionality. Once a development project is substantially complete and the software is ready for its intended use, BMTX begins amortizing these costs on a straight-line basis over the internal-use software’s estimated useful life, which range from three to seven years.

The Higher One Disbursement business developed software is related to the disbursement business services to colleges and universities and delivering services to students. The Higher One Disbursement business developed software was recorded at the amount determined by a third-party valuation expert at acquisition date and was estimated based on expected revenue attributable to the software utilizing a discounted cash flow methodology, giving consideration to potential obsolescence. The estimated useful life of the Higher One Disbursement business developed software is 10 years.

The Company reviews the carrying value of developed software for impairment by measuring the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. If the Company determines that the carrying amount is impaired, the asset is written down to fair value. Fair value is determined based on discounted cash flows or management’s estimates, depending on the Statementnature of Operations. Adjustmentthe assets. There was no impairment recognized for the twelve months ended December 31, 2022. There was $0.2 million of liabilityimpairment recognized for the twelve months ended December 31, 2021.

Goodwill and Other Intangibles

Goodwill represents the excess of the purchase price over the identifiable net assets of businesses acquired through business combinations accounted for under the acquisition method.


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Goodwill is reviewed for impairment annually as of October 31 and between annual tests when events and circumstances indicate that impairment may have occurred. The goodwill impairment charge represents the amount by which the reporting unit’s carrying amount exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. BMTX applies a qualitative assessment to determine if the Step 1 quantitative impairment test is necessary.

Other intangible assets represent purchased assets that lack physical substance, but can be distinguished from goodwill because of contractual or other legal rights. Intangible assets that have finite lives, such as university relationships, are subject to impairment testing. Intangible assets are amortized on a straight-line basis over a period of twenty years.

Other intangibles subject to amortization are reviewed for impairment under FASB ASC 360, Property, Plant and Equipment, which requires that a long-lived asset or asset group be tested for recoverability whenever events or changes in faircircumstances indicate that the carrying value may not be recoverable. The carrying value of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.

As part of its qualitative assessment, BMTX reviewed regional and national trends in current and expected economic conditions. BMTX also considered its own historical performance, expectations of future performance, indicative deal values, and other trends specific to its industry. Based on its qualitative assessment, BMTX determined that there was no evidence of impairment of the balance of goodwill or other intangible assets. As of December 31, 2022 and 2021, Goodwill was $5.3 million and Other intangibles, net was $4.4 million and $4.7 million, respectively.

Leases

BMTX enters into lease agreements primarily for the use of office space, all which are classified as operating leases. At lease commencement date, BMTX recognizes right-of-use (“ROU”) assets and lease liabilities measured at the present value of lease payments over the lease term. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease expense for rental payments are recognized on a straight-line basis over the lease term and are included in Occupancy. In addition to rent, BMTX pays taxes and maintenance expenses, including an annual increase in operating expenses over the initial year’s expenses under certain leases as variable lease payments.

Deferred Revenue

Deferred revenue consists of payments received from customers, most significantly from Customers Bank, prior to the performance of services. Deferred revenue is recognized over the service period on a straight-line basis or when the contractual performance obligation has been satisfied. The Company classifies deferred revenue on the Consolidated Balance Sheets in Deferred revenue, current and Deferred revenue, non-current.

Public & Private Warrants

The Company has public and private warrants outstanding as a result of the merger transaction which occurred on January 4, 2021. Each warrant entitles the registered holder to purchase one whole share of common stock at a price of $11.50 a share. The warrants expire January 4, 2026, or earlier upon redemption or liquidation and the Company has redemption rights if our common stock trades above $24.00 for 20 out of 30 days. The private warrants are identical to the public warrants except that the private warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor and certain others. The private warrants and the public warrants are treated differently for accounting purposes.

In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, theprivate warrants are accounted for as liabilities and will be continued untilmarked-to-market each reporting period with the earlier ofchange recognized in earnings. In general, under the expiration or exercise ofmark-to-market accounting model, as the commonCompany’s stock warrants. At that time, the portion ofprice increases, the warrant liability relatedincreases, and the Company recognizes additional expense in its Consolidated Statements of Income (Loss) – the opposite when the stock price declines. Accordingly, the periodic revaluation of the private warrants could result in significant volatility in our reported earnings. For the twelve months ended December 31, 2022 and 2021, respectively, the Company recognized gains of $8.1 million and $17.2 million. The amounts recognized are a mark-to-market accounting determination and are non-cash.


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In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, the public warrants are treated as equity instruments. Accordingly, the public warrants are not marked-to-market each reporting period, thus there is no impact to earnings. Any future exercises of the common stockpublic warrants will be reclassifiedrecorded as cash received and recorded in Cash and cash equivalents, with a corresponding offset to additionalAdditional paid-in capital.capital

in equity.


Income Taxes


The Company follows

BMTX accounts for income taxes under the asset and liability method of accounting for income taxes. The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognizedto be paid or refunded for the estimated futurecurrent period by applying the provisions of the enacted tax consequences attributablelaw to the taxable income or excess of deductions over revenues. BMTX determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the balance sheet carrying amountsbook and tax bases of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a changechanges in tax rates isand laws are recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. For the years ended December 31, 2020 and 2019, the change in the valuation allowance was $422,225, and $125,871, respectively.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts were accrued for the payment of interest and as of December 31, 2020 or 2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the year’s income taxable for federal and state income tax reporting purposes. Total tax provision may differ from the statutory tax rates applied to income before provision for income taxes due principally to expenses charged which are not tax deductible.

they occur.



The total provision for income taxes is comprised of the following for the years ended:

  December 31,  December 31, 
  2020  2019 
Current Expense  297,748   788,018 
Deferred Expense  (422,225)  (125,871)
Change in Valuation Allowance  422,225   125,871 
Total Income Tax Expense  297,748   788,018 

The net deferred tax assets and liabilities in the accompanying balance sheets included the following components:

  December 31,
2020
  December 31,
2019
 
Deferred tax assets $657,341  $235,116 
Deferred tax liabilities  -   - 
Valuation allowance for deferred tax assets  (657,341)  (235,116)
Net deferred tax assets $-  $- 

The deferred tax assets as of December 31, 2020 and 2019 were comprised of the tax effect of cumulative temporary differences as follows:

  December 31,
2020
  December 31,
2019
 
Capitalized expenses before business combination $657,341  $235,116 
Valuation allowance for deferred tax assets  (657,341)  (235,116)
Total $-  $- 

In assessing the realizationrealizability of federal or state deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets,liabilities, projected future taxable income and prudent, feasible and permissible as well as available tax planning strategies in making this assessment. After consideration


A tax position is recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the term upon examination includes resolution of the related appeals or litigation process. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’s judgment.

Loss Contingencies

In the ordinary course of business, the Company is regularly subject to various claims, suits, regulatory inquiries, and investigations. The Company records a liability for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable, and the loss can be reasonably estimated. Management has also identified certain other legal matters where they believe an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations, or cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future. The Company also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations, or financial condition of the information available, Management believesCompany.

Revenue Recognition

BMTX’s revenues from interchange and card revenue, servicing fees, account fees, and university fees are within the scope of FASB ASC 606, Revenue from Contracts with Customers. The Company recognizes revenue in accordance with ASC 606 when the performance obligations related to the transfer of services under the terms of a contract are satisfied. Some obligations are satisfied at a point in time while others are satisfied over a period of time. Revenue is recognized as the amount of consideration to which the Company expects to be entitled to in exchange for transferring services to a customer. The Company’s customer contracts do not contain terms that require significant uncertainty exists with respectjudgment to future realizationdetermine the variability impacting the transaction price. A performance obligation is deemed satisfied when the control over services is transferred to the customer. Control is transferred to a customer either at a point in time or over time. To determine when control is transferred at a point in time, the Company considers indicators, including but not limited to the right to payment, transfer of significant risk and rewards of ownership, and acceptance by the customer. When control is transferred over a period of time, the output method is used to measure progress for the transfer. The measure of progress used to assess completion of the performance obligation is based on time over the period of service. We assess our revenue arrangements against specific criteria in order to determine if we are acting as principal or agent. The Company determined that it is the agent in contracts for interchange and card revenue, and presents these revenues net of related expenses under ASC 606.
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Interchange and card revenue

Interchange fees are earned whenever debit cards serviced by BMTX are processed through card payment networks. Interchange fees are recognized concurrent with the processing of the card transaction. Card revenue includes foreign ATM fees and MasterCard incentive income. ATM fees are recognized when the fee is deducted from the serviced account; MasterCard incentive income is primarily tied to debit spend volume and is recognized concurrent with spend.

Servicing fees

BMTX sources and services deposit accounts for Customers Bank and in exchange is paid servicing fees. Servicing fees and terms are established by individually negotiated contractual agreements. A fixed rate is applied to the daily average deposit balances. In all periods, servicing fees are recognized monthly based on average daily balances.

Account fees

BMTX earns account fees on BMTX serviced deposit accounts for transaction-based, account maintenance services. Account maintenance fees, which relate primarily to monthly maintenance fees for BMTX serviced accounts that do not meet minimum deposit balance requirements, are earned on a monthly basis representing the period over which BMTX satisfies its performance obligation. Transaction-based fees, which include services such as wire transfer fees, card replacement, and cash deposit via Green Dot network fees, are recognized at the time the transaction is executed. Service charges on deposit accounts are withdrawn from the depositor’s account balance.

University fees

BMTX earns university fees from Higher Education clients in exchange for financial aid and other student refund disbursement services provided. BMTX facilitates the distribution of financial aid and other refunds to students, while simultaneously enhancing the ability of the higher education institutions to comply with the federal regulations applicable to financial aid transactions. For these services, Higher Education institution clients are charged an annual subscription fee and/or per-transaction fee (e.g., check issuance, new card, card replacement fees) for certain transactions. The annual subscription fee is recognized ratably over the period of service using the output method and the transaction fees are recognized when the transaction is completed. BMTX typically enters into long-term (generally three or five-year initial term) contracts with Higher Education institutions to provide these refund management disbursement services.

Advertising and Promotion

Advertising and promotion costs are expensed as incurred.

Collaborative Arrangements

In the normal course of business, BMTX may enter into collaborative arrangements primarily to develop and commercialize banking products to its partners’ customers. Collaborative arrangements are contractual agreements with third-parties that involve a joint operating activity where both BMTX and the collaborating BaaS partner are active participants in the activity and are exposed to the significant risks and rewards of the activity. Collaborative activities typically include research and development, technology, product development, marketing, and day-to-day operations of the banking product. These agreements create contractual rights and do not represent an entity in which we have an equity interest. BMTX accounts for its rights and obligations under the specific requirements of the contracts. These arrangements often require the sharing of revenue and expense. BMTX’s expenses incurred pursuant to these arrangements are reported net of any payments due to or amounts due from BMTX’s BaaS partners, which are recognized at the time the BaaS partner becomes obligated to pay.

For the twelve months ended December 31, 2022 and 2021, respectively, BMTX recognized proceeds of $7.5 million and $15.7 million, respectively, from collaborative arrangements. These proceeds include $1.4 million, and $5.3 million, respectively, in revenues, primarily recorded in Other revenue and Interchange and card revenue on the Consolidated Statements of Income (Loss) and $6.1 million and $10.4 million, respectively, in expense reimbursements, primarily recorded in Salaries and employee benefits and Professional services on the Consolidated Statements of Income (Loss).


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Share-Based Compensation Expense

The Company uses share-based compensation, including stock, restricted stock units and performance stock units, to provide long-term performance incentives for its employees and directors. Share-based compensation is recognized on a straight-line basis over the requisite service period of the award based on their grant-date fair value for time-based awards. Compensation related to performance-based awards are recognized over the period the performance obligation is expected to be satisfied. Forfeitures are recognized as they occur. Share-based compensation expense is included in Salaries and employee benefits. In addition, the holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligations.

Provision for Operating Losses

The provision for operating losses represents BMTX’s payments for losses resulting from fraud or theft-based transactions that have generally been disputed by BMTX serviced deposit account holders, as well as an estimated cost for disputes that have not been resolved as of the end of the reporting period. The estimate is based on historical rates of loss on such transactions. The estimated exposure was $0.4 million and $0.2 million at December 31, 2022 and 2021 respectively; the changes period over period are presented within Provision for Operating Losses on the Consolidated Statements of Income (Loss).

Merger and Acquisition Related Expenses

In connection with previous unconsummated mergers, BMTX incurred $0.3 million and $0.1 million in merger and acquisition expenses for the twelve months ended December 31, 2022 and 2021 respectively. All merger related costs are included within Merger and acquisition related expenses on the Consolidated Statements of Income (Loss).

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes.” The ASU reduces cost and complexity related to the accounting for income taxes by eliminating the need for an organization to analyze whether certain exceptions apply in a given period and improving financial statement preparers’ application of certain income tax-related guidance. This ASU is part of the FASB’s simplification initiative to make narrow-scope simplifications and improvements to accounting standards through a series of short-term projects. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company adopted the standard on January 1, 2021. The adoption did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting Standards Issued but Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB that are adopted by BMTX as of the required effective dates. ASUs not listed below were assessed and determined to be either not applicable or to not have a material impact on BMTX’s financial statements taken as a whole.

ASU 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting and 2022-06 – Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. In March 2020, the FASB issued ASU 2020-04 which provided optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met contained in topic 848. In December 2022, the FASB issued ASU 2022-06 which deferred taxthe sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company has determined that ASU 2020-04 and ASU 2022-06 will not have a material impact on its consolidated financial statements and related disclosure.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity.


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This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted earnings per share when an instrument may be settled in cash or shares.

As a smaller reporting company, ASU 2020-06 is effective for BMTX for fiscal years beginning after December 15, 2023. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

NOTE 3 — ACCOUNTS RECEIVABLE
Accounts receivable, net primarily relate to billings for deposit processing services to Customers Bank, MasterCard incentive income, uncollected university subscription and disbursement services fees, and receivables from our BaaS partners, and are recorded at face amounts less an allowance for doubtful accounts. Management evaluates accounts receivable and establishes the allowance for doubtful accounts based on historical experience, analysis of past due accounts, and other current available information.

Accounts receivable deemed to be uncollectible are individually identified and are charged-off against the allowance for doubtful accounts. The allowance for doubtful accounts was $0.3 million at December 31, 2022 and $0.1 million at December 31, 2021.

(amounts in thousands)Beginning BalanceAdditionsReductionsEnding Balance
Allowance for doubtful accounts
Twelve months ended December 31, 2021$— $171 $(92)$79 
Twelve months ended December 31, 2022$79 $381 $(155)$305 


NOTE 4 — PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

Premises and equipment

The components of premises and equipment were as follows:
(amounts in thousands)Expected Useful LifeDecember 31,
2022
December 31,
2021
Leasehold improvements5 years$— $28 
Furniture, fixtures, and equipment10 years135 243 
IT equipment3 to 5 years1,377 1,813 
1,512 2,084 
Accumulated depreciation(1,004)(1,738)
Total$508 $346 
Depreciation is recorded in Occupancy expense on the Consolidated Statements of Income (Loss). BMTX recorded depreciation expense of $0.3 million and $0.2 million, for the twelve months ended December 31, 2022 and 2021, respectively.


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Developed software
The components of developed software were as follows:
(amounts in thousands)Expected Useful LifeDecember 31,
2022
December 31,
2021
Higher One Disbursement business developed software10 years$27,400 $27,400 
Internally developed software3 to 7 years42,504 41,683 
Work-in-process3,077 421 
72,981 69,504 
Accumulated amortization(50,657)(40,911)
Total$22,324 $28,593 

Amortization is recorded in Technology, communication and processing expense on the Consolidated Statements of Income (Loss). BMTX recorded amortization expense of $11.4 million for the twelve months ended December 31, 2022 and 2021, respectively.

Impairment is reported in Technology, communication and processing expense on the Consolidated Statements of Income (Loss). BMTX recorded impairment expense of zero and $0.2 million for the twelve months ended December 31, 2022 and 2021, respectively.
NOTE 5 — GOODWILL AND OTHER INTANGIBLES
Goodwill represents the excess of the purchase price over the identifiable net assets of the businesses acquired through business combinations accounted for under the acquisition method. Other intangibles, net represent purchased assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights. We have one intangible asset which is being amortized on a straight-line basis over twenty years.

Goodwill is reviewed for impairment annually as of October 31 and has therefore established a full valuation allowance. Asbetween annual tests when events and circumstances indicate that impairment may have occurred. There was no goodwill impairment for the twelve months ended December 31, 2022 and 2021.

Other intangibles, net includes assets subject to amortization that are reviewed for impairment under FASB ASC 360, Property, Plant and Equipment. There was no impairment for Other intangibles, net for the twelve months ended December 31, 2022 and 2021.

The components of Other intangibles, net as of December 31, 20202022 and 2019,2021 were as follows:
(amounts in thousands)Expected Useful LifeDecember 31,
2022
December 31,
2021
Customer relationships – universities20 years$6,402 $6,402 
Accumulated amortization(1,973)(1,653)
Total$4,429 $4,749 

Amortization is recorded in Other expense on the valuation allowance was $657,341Consolidated Statements of Income (Loss). BMTX recorded amortization expense of $0.3 million for the twelve months ended December 31, 2022 and $235,116,2021, respectively.

The customer relationships - universities will be amortized in future periods as follows:

2023$320 
2024320 
2025320 
2026320 
After 20263,149 
Total$4,429 
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NOTE 6 — LEASES
At December 31, 2021, BMTX leased two offices under operating leases. On March 31, 2022, one of the statutory federal income tax rate (benefit) totwo office leases matured and we exited our New Haven, CT office facility. On September 30, 2022, the second office lease matured at our Wayne, PA office. On October 1, 2022, the Company entered into a 3-month short-term lease extension for this office under substantially identical terms and conditions as the original lease. At December 31, 2022, the 3-month short-term lease extension expired and was not renewed.

The following table summarizes operating lease ROU assets and operating lease liabilities and their corresponding classification on the Company’s effective taxConsolidated Balance Sheets:
(amounts in thousands)ClassificationDecember 31,
2022
December 31,
2021
Assets:
Operating lease ROU assetsOther assets$— $398 
Liabilities:
Operating lease liabilitiesOperating lease liabilities$— $416 

Operating lease expenses are recorded in Occupancy on the Consolidated Statements of Income (Loss). BMTX recorded lease expense of $0.5 million and $1.0 million, for the twelve months ended December 31, 2022 and 2021, respectively.
Cash paid pursuant to operating lease liabilities totaled $0.4 million and $0.7 million for the twelve months ended December 31, 2022 and 2021. These cash payments are reported as a component of cash flows provided by operating activities in the Consolidated Statements of Cash Flows.
The following table summarizes the weighted average remaining lease term and discount rate is as follows:

for BMTX’s operating leases at December 31, 2022 and 2021:
December 31,
2022
December 31,
2021
Weighted average remaining lease term (years)
Operating leases0.0 years0.6 years
Weighted average discount rate
Operating leases— %1.0 %

NOTE 7 — BORROWINGS FROM CUSTOMERS BANK
  December 31,  December 31, 
  2020  2019 
Statutory federal income tax rate  21.0%  21%
Change in fair value of derivative warrant liabilities  -20.8%  -7.92%
State taxes, net of federal tax benefit  0%  0%
Valuation allowance  -0.6%  2.5%
Income tax (benefit) expense  -0.4%  15.6%

In 2021, BMTX had a $10.0 million line of credit with Customers Bank, which is a related party of the Company. The amount that may be borrowed was subject to a borrowing base limit based on a percentage of BMTX’s accounts receivable balance. The $10.0 million line of credit carried an interest rate equal to one-month LIBOR plus 375 bps. LIBOR means the One Month London Inter-Bank Offered Rate as published in the Money Section of the Wall Street Journal on the last U.S. business day of the month, but in no event shall the LIBOR rate used for the line of credit be less than 50 basis points. Interest was paid monthly in arrears with the principal due in its entirety at the maturity date per the original arrangement. Borrowed funds could have been repaid at any time without penalty. The line of credit was originally scheduled to mature on January 4, 2022. On November 30, 2021, BMTX and Customers Bank agreed to terminate the line of credit. There was zero balance outstanding under the line of credit as of December 31, 2022 and 2021.

Recent Accounting Pronouncements

NOTE 8 — COMMITMENTS AND CONTINGENCIES

The Company’s managementLoss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, wouldwill have a material effect on the Company’s consolidated financial statements.

Trust Account

The Trust Account can be investedstatements that are not currently accrued for. However, in U.S. government securities, within the meaning set forth in the Investment Company Act, having a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7light of the Investment Company Act.uncertainties inherent in these matters, it is possible that the ultimate resolution may have a material adverse effect on BMTX’s results of operations for a particular period, and future changes in circumstances or additional information could result in accruals or resolution in excess of established accruals, which could adversely affect BMTX’s results of operations, potentially materially.


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NOTE 9 — SHAREHOLDERS’ EQUITY AND PRIVATE WARRANT LIABILITY

The Company’s amendedConsolidated Statements of Changes in Shareholders’ Equity reflect the reverse recapitalization and restated certificatemerger with Megalith as of incorporation provide that, other than the withdrawal of interest to pay income and franchise taxes and up to $100,000 of interest to pay dissolution expenses if any, none of the funds heldJanuary 4, 2021, as discussed in the Trust Account will be released until the earlier of: (i) the completionNote 1 - Description of the Business Combination; (ii)and Merger Transaction. Since BMTX was determined to be the redemption of Public Shares properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete the Business Combination within the Combination Period or (iii) the redemption of 100% of the Public Shares if the Company is unable to complete a Business Combination within the Combination Period.


Note 3 — Initial Public Offering and Private Placement

Pursuant to the Initial Public Offering, the Company sold 16,928,889 units at a price of $10.00 per Unit. Each Unit consists of one share of Class A Common Stock (such shares of Class A Common Stock includedaccounting acquirer in the Units being offered,transaction, all periods prior to the “Public Shares”), and one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment (see Note 6).

Note 4 — Related Party Transactions

Founder Shares

On November 13, 2017, the Sponsor purchased 4,312,500 shares (the “Founder Shares”) of the Company’s Class B Common Stock, par value $0.0001 (“Class B Common Stock”) for an aggregate price of $25,000. The Founder Shares converted into Class A common stock upon consummation of the Merger on a one-for-one basis.

The Founder Shares included up to 562,500transaction reflect the balances and activity of BMTX (other than shares subject to forfeiture to the extent that the 45-day over-allotment option was not exercised in full by the underwriters. Since the underwriters exercised the over-allotment option in part, the Sponsor forfeited 80,278 Founder Shares on September 21, 2018. The Founder Shares forfeited by the Sponsorwhich were cancelled by the Company.

The Initial Stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Private Placement Warrants

Concurrently with the closing of the Initial Public Offering, the Sponsor and Chardan purchased an aggregate of 6,560,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant (5,810,000 by the Sponsor and 750,000 by Chardan) for an aggregate purchase price of $6,560,000. Each whole Private Placement Warrant is exercisable for one whole share of Class A Common Stock at a price of $11.50 per share (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of equity or equity-linked securities). Concurrently with the underwriter’s partial exercise of the over-allotment, the Company consummated a private sale of an additional 385,778 Private Placement Warrants to the Sponsor at a price of $1.00 per Private Placement Unit generating gross proceeds of $385,778. The proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering and the underwriter’s partial exercise of the over-allotment are held in the Trust Account.

Registration Rights

The holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A Common Stock) pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights.

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of working capital loans, if any, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A Common Stock) pursuant to a registration rights agreement dated August 23, 2018. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurredretroactively restated in connection with the filing of any such registration statements.transaction).



Related Party Loans

On November 27, 2017, the Sponsor had agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note, amended and restated on June 30, 2018 (the “Note”). This loan was non-interest bearing and payable on the earlier of December 31, 2018 or as soon as practical after the Initial Public Offering. The Company had drawn $2,000 on the Note as of December 31, 2017 and had borrowed an additional $105,500 in 2018. The Company fully repaid these amounts to the Sponsor in September 2018. 

Support Services

The Company presently occupies office space provided by an affiliate of the Sponsor. The affiliate has agreed that, until the Company consummates a Business Combination, it will make such office space, as well as certain administrative and support services, available to the Company, as may be required by the Company from time to time. The Company will pay the affiliate an aggregate of $2,000 per month for such office space, administrative and support services. The Company ceased paying for the office space in October 2020. For the years ending December 31, 2020 and 2019, the total support services costs were $20,000 and $24,000, respectively.

The Company agreed to pay an entity affiliated with the President a fee of approximately $16,667 per month until the earlier of the consummation of the Business Combination or liquidation. A bonus of $78,000 was paid out after the successful completion of the Initial Public Offering. The Company ceased paying the President on approximately November 15, 2020. The total amount paid to this entity was $165,384 and $200,000 for the two years in the period ended December 31, 2020, respectively.

Note 5 – Commitments and Contingencies

Underwriting Agreement

The Company had granted the underwriters a 45-day option to purchase up to 2,250,000 additional Units to cover over-allotments at the Initial Public Offering price less the underwriting discounts and commissions. On September 21, 2018, the underwriters exercised a partial exercise of their overallotment option and purchased 1,928,889 units at a purchase price of $10.00 per unit.

The underwriters were paid a cash underwriting discount of $0.20 per unit, or approximately $3 million in the aggregate at the closing of the Initial Public Offering and $192,889 in conjunction with the underwriters’ partial exercise of its overallotment option. In addition, the underwriters are entitled to a deferred underwriting commissions of $0.40 per unit, or approximately $6 million in the aggregate from the closing of the Initial Public Offering and $771,556 from the underwriters’ partial exercise of its overallotment option will be payable to the underwriters. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.

Note 6 – Warrants

Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will expire on January 4, 2026 or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

The Company agreed to as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, use its reasonable best efforts to file with the SEC, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its reasonable best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.

The Company may call the Public Warrants for redemption (except with respect to the Private Placement Warrants):

in whole and not in part;

at a price of $0.01 per warrant;

upon a minimum of 30 days’ prior written notice of redemption to each warrant holder; and

if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.


If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

In addition, except in the case of the Private Placement Warrants purchased by Chardan, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial Business Combination at an issue price or effective issue price of less than $9.50 per share of Class A Common Stock (with such issue price or effective issue price to be determined in good faith by our board of directors), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial Business Combination, and (z) the volume weighted average trading price of our Class A Common Stock during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial Business Combination (such price, the “Market Value”) is below $9.50 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $24.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 240% of the Market Value. 

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

Accounting for Warrants – The Company accounts for the Public Warrants and Private Placement Warrants as liabilities in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging — Contracts in Entity’s Own Equity. Because the Company does not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the shareholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as derivative liability.

Additionally, certain adjustments to the settlement amount of the Private Placement Warrants are based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815-40, and thus the Private Placement Warrants are not considered indexed to the Company’s own stock and not eligible for an exception from derivative accounting.

The accounting treatment of derivative financial instruments requires that the Company record a derivative liability upon the issuance of the warrants at the closing of this offering. Accordingly, the Company expects to classify each warrant as a liability at its fair value. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. The warrant liability is subject to remeasurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s Statements of Operations. The Company will reassess the classification of the warrants at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

Note 7 — Stockholders’ Equity

Common Stock

Class A Common Stock — The Company is authorized to issue 100,000,0001,000,000,000 shares of Class A Common Stock with acommon stock, par value of $0.0001 per share. At December 31, 2020 and 2019,2022, there were 0 and 1,507,575 (excluding 1,415,287 and 16,177,73912,240,237 shares of Class A Common Stock subject to possible redemption) shares of Class A Common Stockcommon stock issued and outstanding, respectively.

which includes the 300,000 performance shares discussed below. At December 31, 2021, there were 12,193,378 shares of common stock issued and outstanding, which includes the 300,000 performance shares discussed below.



Each holder of common stock is entitled to one vote for each share of common stock held of record by such holder on all matters on which stockholders generally are entitled to vote. The holders of common stock do not have cumulative voting rights in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all stockholders present in person or represented by proxy, voting together as a single class.


Preferred Stock

Class B Common StockThe Company is authorized to issue 10,000,000 shares of Class B Common Stock with apreferred stock, par value of $0.0001 per share. Holders of Class B Common Stock are entitled to one vote for each share. As of December 31, 2020 and 2019, there were 4,232,222 shares of Class B Common Stock outstanding after giving effect to the forfeiture of 80,278 shares to the Company by the Sponsor for no consideration since the underwriters’ 45-day over-allotment option was not exercised in full, so that the Initial Stockholders collectively own 20% of the Company’s issued and outstanding Common Stock after the Initial Public Offering.

Holders of Class A Common Stock and Class B Common Stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.

The shares of Class B Common Stock were automatically converted into Class A common stock at the time of a Merger on a one-for-one basis.

Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stockshare, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s boardBoard of directors. AsDirectors. At December 31, 20202022 and 2019,2021, there were no shares of preferred stock issued or outstanding.


Performance Shares
Private Placement
The Company has 300,000 common shares, par value $0.0001 per share, issued and outstanding, that contain a restrictive legend, subject to release only if the vesting criteria are met before the seventh anniversary of the closing date of the merger with Megalith. If the vesting criteria are not met prior to the seventh anniversary of the closing date of the merger, the shares will be forfeited and cancelled. The vesting criteria are met when either (1) the volume weighted average price of the Company’s common stock on the principal exchange on which such securities are then listed or quoted shall have been at or above $15.00 for twenty (20) trading days (which need not be consecutive) over a thirty (30) trading day period; or (ii) the Company sells shares of its capital stock in a secondary offering for at least $15.00 per share, in each case subject to equitable adjustment for share splits, share dividends, reorganizations, combinations, recapitalizations, and similar transactions affecting the shares of the Company’s common stock after the merger, and possible reduction for certain dividends granted to the Company’s common stock, or (2) the Company undergoes certain change in control or sales transactions. None of the vesting criteria for the performance shares were met during the twelve months ended December 31, 2022 or 2021 and no expense has been recognized.

Dividend Policy

We have not paid any cash dividends on our common stock to date, and have no present intention to pay cash dividends in the future. The payment of cash dividends by the Company in the future will be dependent upon the Company’s revenues and earnings, capital requirements, and general financial condition. The payment of any dividends will be within the discretion of the Board of Directors of the Company.


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January 4, 2021 Share-Based Compensation Award

In connection with the proposed merger between Megalith and BankMobile (the “Merger”), Megalith entered into subscription agreements (the “Subscription Agreements”) with the investors named therein (the “PIPE Investors”), pursuant to whichits January 4, 2021 divestiture of the Company, agreed to issue and sell toCustomers Bank, the PIPE Investors approximately $20,000,000 of Class A common stock immediately prior to closing of the Merger (the “PIPE Investment”). The PIPE Investment is conditioned on the concurrent closingCompany’s former parent, granted 1,317,035 of the merger consideration shares of the Company it received to certain employees and executives of the Company. The share-based compensation award is subject to vesting conditions, including a required service condition from award recipients through January 3, 2023. The grant date fair value of the award, totaling $19.6 million, is recorded as share-based compensation expense in the Company’s Consolidated Statements of Income (Loss) on a straight-line basis over the two year post-grant vesting period, net of any actual forfeitures. The shares awarded are restricted until fully vested. The holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligations. During the twelve months ended December 31, 2022 and 2021, 88,889 and 0 of the shares awarded were fully vested as a result of the occurrence of certain conditions other customary closing conditions, as suchthan required service, respectively. During the twelve months ended December 31, 2022 and 2021, 26,500 and 33,500 shares were forfeited, respectively.

The change in unvested shares under the January 4, 2021 Share-Based Compensation Award is shown below:
Number of AwardsWeighted-Average Grant-Date Fair Value Per Award
Balance as of December 31, 2020$— $— 
Granted1,317,035 $14.87 
Vested— $— 
Forfeited(33,500)$14.87 
Balance as of December 31, 20211,283,535 $14.87 
Granted0$— 
Vested(88,889)$14.87 
Forfeited(26,500)$14.87 
Balance as of December 31, 20221,168,146 $14.87 

BMTX recorded share-based compensation expense related to these awards of $9.2 million and $9.5 million for the twelve months ended December 31, 2022 and 2021. As of December 31, 2022, unrecognized compensation expense related to the unvested portion related of these awards was approximately $0.1 million which is expected to be recognized in January 2023 when the awards fully vest.

In addition, and in connection with the January 4, 2021 divestiture of the Company, Customers Bank accelerated the vesting for existing restricted stock units and stock options previously granted to certain employees of the Company. The share-based compensation expense, net of forfeitures, associated with the accelerated vesting totaled $0.8 million for the twelve months ended December 31, 2021, and was recorded as a liability at December 31, 2020. The proceeds fromcomponent of Salaries and employee benefits on the PIPE Investment were placed in an escrow account and were used to fund a portionConsolidated Statements of the cash considerationIncome (Loss).

Equity Incentive Plan

Our 2020 Equity Incentive Plan (the “Equity Incentive Plan”) provides for the Merger on January 4, 2021.

In connection with the Private Placement, the Sponsor,grant of incentive stock options, or ISOs, nonstatutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation, or collectively, stock awards, all which may be granted to employees, including officers, non-employee directors, and consultants of both the Company and a PIPE Investor entered into an agreement (“Agreementits affiliates. Additionally, the Equity Incentive Plan provides for the grant of performance cash awards. ISOs may be granted only to Transfer Sponsor Securities”),employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants.


The aggregate number of shares of common stock that may be issued pursuant to which the Sponsor will transfer 178,495 founder shares and 1,311,501 private placement warrants to the PIPE Investor, unless such transfer would trigger a warrant price adjustmentstock awards under the warrant agreement. After the Closing until the PIPE Investor, its affiliates or managed funds collectively hold less than 15%Equity Incentive Plan will not, and currently does not, exceed 10% of the issued and outstanding shares of our common stock. Grants were made under the Equity Incentive Plan for the twelve months ended December 31, 2022 and 2021 as described within Restricted Stock Units and Performance - Based Restricted Stock Units below as well as the grants of unrestricted shares to directors which vest immediately.


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Restricted Stock Units

Restricted Stock Units (“RSUs”) granted under the Equity Incentive Plan generally vest in three equal installments on each anniversary of the grant date. The RSUs that have been granted are all paid in stock upon vesting, and are thus classified as equity awards which are measured using the grant date fair value of BMTX common stock and are not remeasured at the end of each reporting period. We recognize compensation cost starting from the grant date on a straight-line basis over the required vesting period in accordance with ASC 718-10-55-108. We account for forfeitures as they occur and reverse any previously recognized compensation expense related to forfeited awards.

Performance - Based Restricted Stock Units

Performance - Based Restricted Stock Units (“PBRSUs”)granted under the Equity Incentive Plan currently vest upon the later of: a) the third year of employment following the grant date or b) the achievement of the specified performance goals within the fifth year of the grant date. As defined by the Equity Incentive Plan, the Compensation Committee of the Board of Directors determines the number of PBRSUs a participant earns based on the extent to which the corresponding performance goals have been achieved over the five-year performance cycle. The PBRSUs that have been granted are paid in stock upon vesting, and are thus classified as equity awards which are measured using the grant date fair value of BMTX common stock and are not remeasured at the end of each reporting period. We account for forfeitures as they occur and reverse any previously recognized compensation expense related to forfeited awards.

For performance-based RSUs with milestones, upon the grant date, and at each subsequent reporting period, we reassess whether it is probable that we will achieve each operational milestone, and if so, the period when we expect to achieve that operational milestone. If upon the grant date, we determine that achievement of an operational milestone is probable, we allocate the full share-based compensation expense over the period between the grant date and the expected vesting condition achievement date. If upon the grant date, achievement of the operational milestone is not probable, we do not recognize compensation expense. If after the grant date, we determine achievement of an operational milestone becomes probable, we will allocate the full share-based compensation expense over the period between the grant date and the expected vesting condition achievement date, and we will recognize a catch-up expense equal to the value of previously unrecognized expense from the grant date to the vesting condition achievement date.

For performance-based RSUs with a market condition, we used a Monte Carlo simulation to determine the fair value of the PBRSUs on the grant date, and recognize the share-based compensation expense over the derived service period.

The change in unvested RSUs and PBRSUs awarded is shown below:
Restricted Stock UnitsPerformance-Based Restricted Stock Units
Number of RSUsWeighted-Average Grant-Date Fair Value Per RSUNumber of RSUsWeighted-Average Grant-Date Fair Value Per RSU
Balance as of December 31, 20200$— 0$— 
Granted360,100 $8.99 347,500 $7.09 
Vested— $— — $— 
Forfeited(3,000)$9.44 — $— 
Balance as of December 31, 2021357,100 $8.99 347,500 $7.09 
Granted85,540 $7.87 — $— 
Vested(93,275)$9.10 — $— 
Forfeited(24,575)$9.79 (12,500)$7.09 
Balance as of December 31, 2022324,790 $8.84 335,000 $7.09 

For the twelve months ended December 31, 2022 and 2021, the share-based compensation expense related to the RSU awards totaled $1.0 millionand$0.8 million, respectively. At December 31, 2022, unrecognized compensation expense related to the unvested portion of the RSUs was approximately $1.9 million and is expected to be recognized over a term of 2.1 years.

For the twelve months ended December 31, 2022 and 2021, the share-based compensation expense related to the PBRSU awards totaled $1.0 millionand$0.2 million, respectively. At December 31, 2022, unrecognized compensation expense related to the unvested portion of the PBRSUs was approximately $1.1 million and is expected to be recognized over a term of 1.5 years.
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Directors Grants

The Company grants common shares to its Board of Directors on an annual basis. These shares vest immediately upon grant. During the twelve months ended December 31, 2022 and December 31, 2021 the Company granted 1,000 shares of common stock to each of its directors, for a total of 6,000 shares with share-based compensation expense of less than $0.1 million, respectively.

Employee Stock Purchase Plan (“ESPP”)

The Company has an ESPP (the “BM Technologies Inc. 2021 Employee Stock Purchase Plan”) which has an effective date of May 1, 2021. The purpose of the ESPP is to provide eligible employees with an incentive to advance the interests of the Company and its Subsidiaries, by affording them an opportunity to purchase stock of the Company.

Company at a favorable price. As of December 31, 2022, there have been no shares purchased on behalf of employees under the ESPP, as the program has not yet been made available for employee participation.


Warrants

At December 31, 2022 and 2021, respectively, there were 22,703,004 and 23,873,167 warrants to purchase our common stock outstanding. The warrant totals for each period-end consist of 17,227,189 and 16,927,389 public warrants and 5,475,815 and 6,945,778 private warrants, as of December 31, 2022 and 2021, respectively.

Each whole warrant entitles the registered holder to purchase one whole share of common stock at a price of $11.50 per share. The warrants will expire five years after the completion of the merger with Megalith (January 4, 2026) or earlier upon redemption or liquidation; the Company has redemption rights if our common stock trades above $24.00 for 20 out of 30 days. The private warrants are identical to the public warrants except that the private warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the sponsor and certain other original holders.

As of December 31, 2022, 1,600 of the Company’s outstanding public warrants have been exercised and 1,169,963 of the private warrants have been repurchased by the Company from related parties at $1.69 per warrant. During the twelve months ended December 31, 2022, 300,000 of the private warrants have been reclassified to public warrants based upon a sale of the private warrants by the original holders which resulted in a modification of terms that effect classification as public warrants. During the twelve months ended December 31, 2022, there were 100 public warrants exercised. During the twelve months ended December 31, 2021, there were no repurchases, exercises, or reclassifications related to the private warrants and there were 1,500 public warrants exercised.

The private warrants and the public warrants are treated differently for accounting purposes, as follows:
Private Warrants


In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, the

Note 8 —Fair Value Measurement

The Company follows the guidance in ASC 820private warrants are accounted for its financial assetsas liabilities and liabilities that are re-measured and reported at fair value atmarked-to-market each reporting period and non-financial assets and liabilities that are re-measured and reported atwith the change in fair value at least annually.recognized in earnings. In general, under the mark-to-market accounting model, as our stock price increases, the private warrant liability increases, and we recognize additional expense in our

Consolidated Statements of Income (Loss) – with the opposite when our stock price declines. Accordingly, the periodic revaluation of the private warrants could result in significant volatility in our reported earnings.


Opening Balance Sheet Impact: As of the date of our merger with Megalith on January 4, 2021, the $30.8 million fair value of the private warrants was recorded as a warrant liability on our Consolidated Balance Sheets in Liability for private warrants with a corresponding offset to Additional paid-in capital within equity. The fair value of the Company’sprivate warrants was estimated using a modified version of the Black-Scholes option pricing formula. We assumed a term for the private warrants equal to the contractual term from the merger date and then discounted the resulting value to the valuation date. Among the key inputs and assumptions used in the pricing formula at January 4, 2021: a term of 5.0 years; volatility of 20%; a dividend yield of zero; an underlying stock price of $14.76; a risk free interest rate of 0.38%; and a closing price of the public warrants of $2.50 per share.


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Income Statement Impact: Subsequent to the close of the merger, any change in fair value of the private warrants is recognized in our Consolidated Statements of Income (Loss) below operating profit as Gain onfair value of private warrant liability with a corresponding amount recognized in the Liability for private warrants on our Consolidated Balance Sheets. For the twelve months ended December 31, 2022 and 2021, we recorded a gain of $8.1 million and $17.2 million resulting from the revaluation of the private warrants.

Balance Sheet Impact: The private warrant liability is presented in the account Liability for private warrants in the long-term liabilities section of our Consolidated Balance Sheets. As noted above, the change in fair value of the underlying private warrants results in a corresponding change in the balance of the warrant liability on our Consolidated Balance Sheets. When warrants are exercised, the fair value of the liability is reclassified to Additional paid-in capital within equity. Cash received for the exercise of warrants is reflected in Cash and cash equivalents with a corresponding offset recorded in Common Stock and Additional paid-in capital within equity.

Cash Flow Impact: The impact of the change in fair value of the private warrants has no impact on our cash flows as it is a noncash adjustment. Cash received for the exercise of warrants is recorded in cash flows from financing activities. Cash paid for the repurchase of warrants is recorded in cash flows from financing activities. During the twelve months ended December 31, 2022, the Company repurchased private warrants from related parties for cash consideration totaling $2.0 million. No such transactions occurred for the twelve months ended December 31, 2021.

Shareholders’ Equity Impact: The impact to Additional paid-in capital as of the opening balance sheet is described above. Exercises of private warrants results in a reduction of the Liability for private warrants on the Consolidated Balance Sheets with a corresponding increase to Common Stock and Additional paid-in capital.

Public Warrants

In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, the public warrants are treated as equity instruments under U.S. GAAP. The public warrants are not marked-to-market each reporting period, thus there is no impact to earnings. Exercises of the public warrants are recorded as cash is received and are recorded in Cash and cash equivalents, with a corresponding offset recorded in Common stock and Additional paid-in capital within equity. Cash proceeds from public warrant exercises totaled less than $0.1 million during the twelve months ended December 31, 2022 and 2021.

NOTE 10 — REVENUES

Revenues

BMTX recognizes operating revenue in accordance with FASB ASC 606, Revenue from Contracts with Customers.

The following tables present BMTX’s revenues disaggregated by nature of the revenue stream and the pattern or timing of revenue recognition for the twelve months ended December 31, 2022 and 2021. The Company has one reportable segment and all revenues are earned in the U.S.
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Twelve Months Ended
December 31,
(amounts in thousands)20222021
Revenues:
Revenue recognized at point in time:
Interchange and card revenue$22,318 $28,078 
Servicing fees44,581 45,105 
Account fees8,992 10,543 
University fees - disbursement activity1,108 1,401 
Other revenue1,720 5,286 
   Total revenue recognized at point in time78,719 90,413 
Revenue recognized over time:
University fees - subscriptions4,626 4,292 
Other revenue - maintenance and support252 — 
   Total revenue recognized over time4,878 4,292 
Total revenues$83,597 $94,705 

Deferred Revenue

Deferred revenue consists of payments received from customers, most significantly from Customers Bank, prior to the performance of services. Deferred revenue is recognized over the service period on a straight-line basis or when the contractual performance obligation has been satisfied. The Company classifies deferred revenue on the Consolidated Balance Sheets in Deferred revenue, current and Deferred revenue, non-current based upon the expected timing of revenue recognition.

The deferred revenue balances were as follows:
December 31,
(amounts in thousands)20222021
Deferred revenue, (current and non-current)$6,647 $15,577 

During the twelve months ended December 31, 2022, the Company recognized revenue of approximately $15.4 million included in deferred revenue at the beginning of the period. During the twelve months ended December 31, 2021, the Company recognized revenue of approximately $12.5 million included in deferred revenue at the beginning of the period.

Unbilled receivables

The Company had $2.6 million of unbilled receivables, or amounts recognized as revenue for which invoices have not yet been issued, as of December 31, 2022, and $2.1 million as of December 31, 2021. Unbilled receivables are reported in Accounts receivable, net on the Consolidated Balance Sheets.


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NOTE 11 — INCOME TAXES

The components of income tax expense (benefit) were as follows:
Twelve Months Ended
December 31,
(amounts in thousands)20222021
Current (benefit) expense
      Federal$(423)$3,945 
      State12 1,807 
Total current (benefit) expense$(411)$5,752 
Deferred (benefit) expense
      Federal$(296)$(1,676)
      State(1,130)
      Change in valuation allowance288 2,806 
Total deferred (benefit) expense$ $ 
Total income tax (benefit) expense$(411)$5,752 

Effective tax rates differ from the federal statutory rate of 21% due to the following:
Twelve months ended December 31,
20222021
(amounts in thousands)Amount% of pretax lossAmount% of pretax income
 Federal income tax at statutory rate$(250)21.00 %$4,788 21.00 %
 State taxes, net of federal benefit(457)38.48 %216 0.95 %
 Change in fair value of warrant liabilities(1,694)142.51 %(3,617)(15.87)%
 Change in valuation allowance288 (24.23)%2,806 12.31 %
  Nondeductible compensation2,183 (183.64)%1,532 6.72 %
 Tax credits(545)45.86 %— — %
 Other64 (5.39)%27 0.13 %
Total$(411)34.59 %$5,752 25.24 %

At December 31, 2022 and 2021, the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Company recognizes interest and penalties on unrecognized tax benefits in Other expense. The nondeductible compensation is related to compensation deductions for certain executives that is limited under IRC Section 162(m).

As of December 31, 2022, the Company had $0.3 million of federal net operating loss carryforward and $0.3 million of state net operating loss carryforwards. The federal net operating loss carryforward does not have an expiration date. The state operating loss carryforwards have differing expiration dates depending on the jurisdiction. As of December 31, 2021 there were zero loss or credit carryforwards.

Deferred income taxes reflect temporary differences in the recognition of revenue and expenses for tax reporting and financial statement purposes, principally because certain items are recognized in different periods for financial reporting and tax return purposes.


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The following represents the Company's deferred tax assets and liabilities reflects management’s estimateas of amountsDecember 31, 2022 and 2021:

(amounts in thousands)December 31, 2022December 31, 2021
Deferred tax assets:
 Deferred income$— $788 
 Section 197 Intangibles27,794 27,581 
    Nondeductible compensation2,005 1,521 
 Accrued bonuses162 125 
 Other385 24 
 Less: Valuation Allowance(29,950)(29,662)
 Total deferred tax assets$396 $377 
 Deferred tax liabilities
 Depreciation(340)(377)
Capitalized costs(56)— 
 Total deferred tax liabilities$(396)$(377)
 Net deferred tax asset (liability)$ $ 

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the carry back period. A valuation allowance is provided when it is more likely than not that the Company would have received in connection with the salesome portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management considered the scheduled reversal of the deferred tax liabilities, the level of historical income, and the projected future taxable income over the periods in which the temporary difference comprising the deferred tax assets will be deductible. Based on its assessment, management determined that a full valuation allowance is necessary at December 31, 2022 and 2021. The deferred tax asset for the basis difference in the acquired assets and corresponding valuation allowance was recorded through equity.

The Company is subject to income tax examinations by federal, state, and local taxing authorities for tax periods ended after December 31, 2018.
NOTE 12 — EARNINGS (LOSS) PER SHARE
The following are the components and results of operations and earnings (loss) per common share calculations for the periods presented:
Twelve Months Ended
December 31,
(amounts in thousands, except share and per share data)20222021
Net (loss) income available to common shareholders$(779)$17,043 
Net (loss) income used for EPS$(779)$17,043 
Weighted-average number of common shares outstanding – basic11,94211,851
Weighted-average number of common shares outstanding – diluted11,94211,939
Basic (loss) earnings per common share$(0.07)$1.44 
Diluted (loss) earnings per common share$(0.07)$1.43 


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The following table presents the reconciliation from basic to diluted weighted average shares outstanding used in the calculation of basic and diluted earnings per share:
Twelve Months Ended
December 31,
(amounts in thousands)20222021
Weighted-average number of common shares outstanding – basic11,942 11,851 
Add:
Service-based RSUs— 88 
Weighted-average number of common shares outstanding – diluted11,942 11,939 

For basic earnings per share, the performance shares are subject to forfeiture and they are considered share-indexed instruments and not outstanding shares until they are vested. During the twelve months ended December 31, 2022 and 2021, the vesting criteria has not been met and they are not included.

For the twelve months ended December 31, 2022, our performance shares, public warrants, and private warrants were excluded from the computation of diluted weighted average shares outstanding as the necessary conditions had not been achieved for the performance shares and the average stock price for the period was below the strike price for the warrants. The performance shares are only considered in the calculation for diluted earnings per share if they are dilutive in nature. The performance shares are only dilutive when the average share price is greater than the strike price and when positive net income is reported. During the twelve months ended December 31, 2022, the average share price was below the strike price and these shares were not included in the diluted earnings per share calculations. For the twelve months ended December 31, 2022, our performance based and market condition RSUs were also excluded because the vesting is contingent upon the satisfaction of certain conditions which had not been achieved as of December 31, 2022. For the twelve months ended December 31, 2022, 309 of our service-based RSUs were also excluded as the effect would be antidilutive.

For the twelve months ended December 31, 2021, our performance shares, public warrants, and private warrants were excluded from the computation of diluted weighted average shares outstanding as the necessary conditions had not been achieved for the performance shares and the average stock price for the period was below the strike price for the warrants. The performance shares are only considered in the calculation for diluted earnings per share if they are dilutive in nature. The performance shares are only dilutive when the average share price is greater than the strike price and when positive net income is reported. During the twelve months ended December 31, 2021, the average share price was below the strike price and these shares were not included in the diluted earnings per share calculations. For the twelve months ended December 31, 2021, our performance based and market condition RSUs were also excluded because the vesting is contingent upon the satisfaction of certain conditions which had not been achieved as of December 31, 2021.

The following table presents the potentially dilutive shares that were excluded from the computation of diluted net income (loss) per share of common stock:
Twelve Months Ended
December 31,
(amounts in thousands)20222021
Performance based shares300 300 
Public warrants17,227 16,927 
Private warrants5,476 6,946 
Performance based and market-condition RSUs335 348 
Service-based RSUs309 — 
Total23,647 24,521 

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NOTE 13 — DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
BMTX uses fair value measurements to determine and disclose the fair value of its financial instruments. FASB’s ASC 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For fair value disclosure purposes, BMTX utilized the fair value measurement criteria under FASB ASC 820, Fair Value Measurements (“ASC 820”).

In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid in connection with theto transfer of the liabilitiesa liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for BMTX’s financial instruments. In connection with measuringcases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of its assets and liabilities, the Company seeks to maximize the useinstrument.
The fair value guidance provides a consistent definition of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about howfair value, focusing on an exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants would price assetsat the measurement date under current market conditions. If there has been a significant decrease in the volume and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactionslevel of activity for the asset or liability, occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2020 and 2019, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description Level  December 31,
2020
  December 31,
2019
 
Assets:           
Marketable securities in Trust Account 1  $27,713,815  $175,410,617 
Liabilities:           
Public Warrants 1  $49,093,778  $5,417,244 
Private Placement Warrants 2  $26,880,161  $2,222,649 

There were no transfers between different levels of the valuation hierarchy during the years ended December 31, 2020 or 2019. Transfer to/from Levels 1, 2, and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs.

Public prices are used asthe use of multiple valuation inputs for bothtechniques may be appropriate. In such instances, determining the publicprice at which willing market participants would transact at the measurement date under current market conditions depends on the facts and private warrants.

Note 9 — Restatementcircumstances and requires the use of Previously Issued Financial Statements

On April 12, 2021,significant judgment. The fair value is a reasonable point within the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the Securities and Exchange Commission together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Specifically, the SEC Statement focused in part on provisions in warrant agreements that provide for settlement of cash in a tender offerrange that is different than the underlying stock and the potential changes to the settlement amounts dependent upon the characteristicsmost representative of the warrant holder and because the holder of a warrant is not an input into the pricing of a fixed-for-fixed option on equity shares, such provisions would preclude the warrant from being classified in equity and thus the warrant should be classified as a liability.

As a result of the SEC Statement, the Company reevaluated the accounting treatment of the public warrants and the private placement warrants issued in connection with the Company’s initial public offering that were originally recorded as equity. Because these warrants contain provisions whereby the settlement amount varies depending upon the characteristics of the warrant holder, and have the tender offer provisions that could preference one of our two classes of stock in the event of such tender offer, these warrants should have been recorded at fair value as a liability in the Company’s consolidated balance sheet.

under current market conditions.



Accordingly, due to this restatement, the public warrants and the private placement warrants are now classified as a liability on the Company’s balance sheet at December 31, 2020 and December 31, 2019 and related interim periods. These warrants are measured atThe fair value initiallyguidance also establishes a fair value hierarchy and subsequently at each reporting date with changesdescribes the following three levels used to classify fair value measurements:

Level 1:Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.
Level 3:Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).
A financial instrument’s level within the fair value recognized as a gain or loss inhierarchy is based on the Company’s statementslowest level of operations. These warrants are deemed equity instruments for income tax purposes,input that is significant to the fair value measurement.
The following methods and accordingly, there is no tax accounting impact relatingassumptions were used to changes inestimate the fair value of these warrants.

The Company’s management has concluded it is appropriate to restate (i) the Company’s previously issued auditedBMTX’s financial statementsinstruments as of December 31, 20202022 and December 31, 2019, as previously2021:

Cash and cash equivalents
Cash and cash equivalents reported in its Form 10-K and (ii) quarterly unaudited financial statementson the Consolidated Balance Sheets consists of non-interest bearing demand deposits, for the quarterly periods ended March 31, 2019, June 30, 2019, September 30, 2019, March 31, 2020, June 30, 2020 and September 30, 2020. which carrying value approximates fair value.
Accounts receivable, net
The restated classification and reported valuescarrying amount of accounts receivable approximates fair value because of the Warrants as accountedshort-term nature of these items.

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Liability for under ASC 815-40 are included in the financial statements herein.

The impact of this correction to the applicable reporting periods for the financial statement line items impacted are presented as of and for the years ended December 31, 2020 and 2019.


The following presents a reconciliation of the Balance Sheets, Statements of Operations, and Statements of Cash Flows from the prior periods as previously reported to the restated amounts.

The Restatement Adjustments below reflect the entries to record the liability for the Public and Private Warrants issued as part of Megalith Financial Acquisition Corp.’s initial public offering and private placement, respectively, and to account for the adjustment to fair value of this liability at the end of each period presented.


The fair value of the Publicprivate warrants was estimated using a modified version of the binomial lattice model incorporating the Cox-Ross-Rubenstein methodology at December 31, 2022 and Private Warrants was $13.8 milliona modified version of the Black-Scholes option pricing model for European calls at December 31, 2021. We assumed a term for the private warrants equal to the contractual term from the date of the merger with Megalith and $9.5 millionthen discounted the resulting value to the valuation date. Among the key inputs and assumptions used in the pricing formula at December 31, 2022 were the initial offeringfollowing: a term of 3.01 years; volatility of 43%; a dividend yield of zero; an underlying stock price of $5.21; a risk free interest rate of 4.17%; and a closing price of the public warrants of $0.52 per share. Among the key inputs and assumptions used in the pricing model at December 31, 2021 were the following: a term of 4 years; volatility of 35%; a dividend yield of zero; an underlying stock price of $9.21; a risk free interest rate of 1.11%; and a closing price of the public warrants of $1.87 per share. As of December 31, 2022 and 2021, the warrant liability is classified as a Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

The estimated fair value of BMTX’s financial instruments at December 31, 2022 and December 31, 2018, respectively. In addition, it was determined an expense2021 were as follows:
Fair Value Measurements at December 31, 2022
(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents$21,108 $21,108 $21,108 $— $— 
Accounts receivable, net8,260 8,260 8,260 — — 
Liabilities:
Liability for private warrants$2,847 $2,847 $— $— $2,847 
Fair Value Measurements at December 31, 2021
(amounts in thousands)Carrying AmountEstimated Fair ValueQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents$25,704 $25,704 $25,704 $— $— 
Accounts receivable, net9,194 9,194 9,194 — — 
Liabilities:
Liability for private warrants$13,614 $13,614 $— $— $13,614 

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Table of approximately $0.6 million was incurredContents
NOTE 14 — RELATED PARTY TRANSACTIONS

The Company has several relationships with Customers Bank, which is a related to costs directly associatedparty of the Company. These relationships are described below.

Cash management

All the Company’s cash and cash equivalents are on deposit with Customers Bank.

Debt financing

As disclosed in Note 7- Borrowings from Customers Bank, Customers Bank previously provided the Company with lines of credit, all which were terminated as of December 31, 2021.

Servicing fees and interchange income

On January 4, 2021, we entered into a Deposit Processing Services Agreement with Customers Bank, which provided that Customers Bank would establish and maintain deposit accounts and other banking services in connection with customized products and services offered by us, and we would provide certain other related services in connection with the issuanceaccounts. Customers Bank retains any and all revenue generated from the funds held in the deposit accounts, and in exchange, pays us a 3% servicing fee based on average monthly deposit balances, subject to certain contractual adjustments, and a monthly interchange fee equal to all debit card interchange revenues on the demand deposit accounts, plus the difference between Durbin exempt and Durbin regulated interchange revenue.

On June 29, 2022, the Company received written notice from Customers Bank that it did not intend to renew the Deposit Servicing Agreement with the Company. The 180-day notice was given in accordance with the terms of the Public Warrants. These effectsDeposit Servicing Agreement, as a result of which, the Deposit Servicing Agreement would terminate effective December 31, 2022.

On November 7, 2022, the Company and Customers Bank entered into the DPSA Amendment to extend the Deposit Servicing Agreement termination date to the earlier of the Company’s successful completion of the transfer of the Company’s serviced deposits to a new partner bank or June 30, 2023. The DPSA Amendment also removes Customers Bank’s obligation to pay the Company the difference between the Durbin exempt and Durbin regulated interchange revenues. The other terms of the Deposit Servicing Agreement remain in effect through the new termination date.

On March 22, 2023, we signed the DPSA Second Amendment. The DPSA Second Amendment, among other things, extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s serviced deposits to a Durbin exempt sponsor bank; or (ii) June 30, 2024; and revises the fee structure of the Deposit Processing Services Agreement. The other terms of the Deposit Processing Services Agreement, as amended by the DPSA Amendment, remain in effect through the new termination date.
On March 22, 2023, the Company and Customers Bank entered into the 2023 Deposit Servicing Agreement, under which, effective March 31, 2023, the Company will perform, on behalf of Customers Bank, Customer Bank’s services, duties, and obligations under the PLBPA by and between Customers Bank and T-Mobile USA, Inc. that are reflectednot required by Applicable Law (as defined in the restated equity balances at January 1, 2019. For each subsequent quarter and year end, the liability was revalued and the change in fair value reflected in “Change in fair value of warrant liability” in the Statement of Operations.

  December 31, 2020 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $43,178  $-  $43,178 
Prepaid expenses and other assets  40,672   -   40,672 
             
Total current assets  83,850   -   83,850 
             
OTHER ASSETS            
Marketable securities held in trust account  27,713,815   -   27,713,815 
Escrow for private placement  20,002,872   -   20,002,872 
             
Total other assets  47,716,687   -   47,716,687 
             
TOTAL ASSETS  47,800,537   -   47,800,537 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  1,656,199   -   1,656,199 
Private placement received in advance  20,002,872   -   20,002,872 
Income taxes payable  -   -   - 
Franchise taxes payable  30,000   -   30,000 
Due to affiliates  45,000   -   45,000 
             
Total current liabilities  21,734,071   -   21,734,071 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   75,973,939  75,973,939 
             
Total long term liabilities  6,771,556   75,973,939   82,745,495 
             
Total liabilities  28,505,627   75,973,939   104,479,566 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 2,651,614 shares at redemption value of $10.10 per share at December 31, 2020  14,294,907   12,486,394  26,781,301 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding (excluding 2,651,614 shares subject to possible redemption), as of December 31, 2020  124   (124)  - 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of December 31, 2020  423   -   423 
Additional paid-in capital  3,233,443   (3,233,443)  - 
Retained earnings (accumulated deficit)  1,766,013   (85,226,766)  (83,460,753)
             
Total stockholders’ equity  5,000,003   (88,460,333)  (83,460,330)
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $47,800,537  $0  $47,800,537 


  December 31, 2019 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $482,665  $-  $482,665 
Prepaid expenses and other assets  37,571   -   37,571 
             
Total current assets  520,236   -   520,236 
             
OTHER ASSETS            
Marketable securities held in trust account  175,410,617   -   175,410,617 
Escrow for private placement  -   -   - 
             
Total other assets  175,410,617   -   175,410,617 
             
TOTAL ASSETS  175,930,853   -   175,930,853 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  111,968   -   111,968 
Private placement received in advance  -   -   - 
Income taxes payable  572,160   -   572,160 
Franchise taxes payable  80,000   -   80,000 
Due to affiliates  -   -   - 
             
Total current liabilities  764,128   -   764,128 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   7,639,893  7,639,893 
             
Total long term liabilities  6,771,556   7,639,893   14,411,449 
             
Total liabilities  7,535,684   7,639,893   15,175,577 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 15,421,314 shares at redemption value of $10.10 per share at December 31, 2019  163,395,164   (7,639,888)  155,755,276 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 1,507,575 shares issued and outstanding (excluding 15,421,314 shares subject to possible redemption), as of December 31, 2019  76   75  151 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of December 31, 2019  423   -   423 
Additional paid-in capital  2,342,794   (2,342,794)  - 
Retained earnings (accumulated deficit)  2,656,712   2,342,714  4,999,426 
             
Total stockholders’ equity  5,000,005   (5)  5,000,000 
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $175,930,853  $0  $175,930,853 


  For the year ended December 31, 2020 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $292,252  $-  $292,252 
Legal and professional fees  1,532,958   -   1,532,958 
Franchise tax  200,000   -   200,000 
Support services - related party  185,384   -   185,384 
             
Total expenses  2,210,594   -   2,210,594 
             
OTHER INCOME            
Other income  212,129   -   212,129 
Change in fair value of warrant liability      (68,334,046)  (68,334,046)
Interest income on investments held in Trust Account  1,405,514   -   1,405,514 
             
Total other income  1,617,643   (68,334,046)  (66,716,403)
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  (592,951)  (68,334,046)  (68,926,997)
             
Income tax expense  297,748   -   297,748 
             
NET LOSS $(890,699) $(68,334,046) $(69,224,745)
             
Weighted average shares outstanding of Class A common stock  8,655,806   -   8,655,806 
Basic and diluted net income per share, Class A $0.13  $(0.00) $0.13 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.48) $(16.14) $(16.62)

  For the year ended December 31, 2019 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $155,854  $-  $155,854 
Legal and professional fees  219,533   -   219,533 
Franchise tax  200,000   -   200,000 
Support services - related party  224,000   -   224,000 
             
Total expenses  799,387   -   799,387 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability      1,909,973  1,909,973 
Interest income on investments held in Trust Account  3,950,927   -   3,950,927 
             
Total other income  3,950,927   1,909,973   5,860,900 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  3,151,540   1,909,973   5,061,513 
             
Income tax expense  788,018   -   788,018 
             
NET INCOME $2,363,522  $1,909,973  $4,273,495 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.18  $(0.00) $0.18 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.14) $0.45 $0.31 


  For the year ended December 31, 2020 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income (loss) $(890,699) $(68,334,046) $(69,224,745)
Adjustments to reconcile net income (loss) to net cash used in operating activities:            
Interest earned in Trust Account  (1,405,514)  -   (1,405,514)
Other income remitted directly to Trust Account  (212,129)  -   (212,129)
Change in fair value of warrant liability  -   68,334,046  68,334,046 
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  (3,101)  -   (3,101)
Accounts payable  1,544,231   -   1,544,231 
Income taxes payable  (572,160)  -   (572,160)
Franchise taxes payable  (50,000)  -   (50,000)
             
Net cash flows used in operating activities  (1,589,372)  -   (1,589,372)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash released from Trust Account for Class A common stock redemptions  148,155,560   -   148,155,560 
Cash moved to escrow from private placement received in advance  (20,002,872)  -   (20,002,872)
Investment income released from Trust Account to pay taxes  1,104,885   -   1,104,885 
             
Net cash flows provided by financing activities  129,257,573   -   129,257,573 
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Cash used for Class A common stock redemptions  (148,155,560)  -   (148,155,560)
Proceeds from private placement received in advance  20,002,872   -   20,002,872 
Proceeds from due to affiliates  45,000   -   45,000 
             
Net cash flows used in financing activities  (128,107,688)  -   (128,107,688)
             
NET CHANGE IN CASH  (439,487)  -   (439,487)
             
CASH, BEGINNING OF YEAR  482,665   -   482,665 
             
CASH, END OF YEAR $43,178  $-  $43,178 
             
Supplemental disclosure of noncash activities:            
Change in value of Class A common stock subject to possible redemption $(149,100,257) $20,126,283 $(128,973,974)
Supplemental cash flow disclosure:            
Income taxes paid $904,885  $-  $904,885 


  For the year ended December 31, 2019 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income (loss) $2,363,522  $1,909,973 $4,273,495 
Adjustments to reconcile net income (loss) to net cash used in operating activities:            
Interest earned in Trust Account  (3,950,927)  -   (3,950,927)
Other income remitted directly to Trust Account  -   -   - 
Change in fair value of warrant liability  -   (1,909,973)  (1,909,973)
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  34,298   -   34,298 
Accounts payable  (146,591)  -   (146,591)
Income taxes payable  355,314   -   355,314 
Franchise taxes payable  (120,000)  -   (120,000)
             
Net cash flows used in operating activities  (1,464,384)  -   (1,464,384)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash released from Trust Account for Class A common stock redemptions  -   -   - 
Cash moved to escrow from private placement received in advance  -   -   - 
Investment income released from Trust Account to pay taxes  754,104   -   754,104 
             
Net cash flows provided by financing activities  754,104   -   754,104 
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Cash used for Class A common stock redemptions  -   -   - 
Proceeds from private placement received in advance  -   -   - 
Proceeds from due to affiliates  -   -   - 
             
Net cash flows used in financing activities  -   -   - 
             
NET CHANGE IN CASH  (710,280)  -   (710,280)
             
CASH, BEGINNING OF YEAR  1,192,945   -   1,192,945 
             
CASH, END OF YEAR $482,665  $-  $482,665 
             
Supplemental disclosure of noncash activities:            
Change in value of Class A common stock subject to possible redemption $2,363,521  $1,909,974 $4,273,495 
Supplemental cash flow disclosure:            
Income taxes paid $432,704  $-  $432,704 


2023 Deposit Servicing Agreement) to be provided by an FDIC insured financial institution. The following presents a reconciliationobligations of the unaudited Balance Sheets fromCompany and Customers Bank under the balances previously reported2023 Deposit Servicing Agreement are similar to those under the restated balancesDeposit Processing Services Agreement; provided, however, that (i) as of March 31, 2020, June 30,2020, September 30, 2020,2023, the 2023 Deposit Servicing Agreement and not the Deposit Processing Services Agreement shall govern the terms, conditions, roles, responsibilities, duties, and obligations of the Company and Customers Bank with respect to the PLBPA and the Depositor Accounts (as defined in the 2023 Deposit Servicing Agreement); (ii) the Deposit Processing Services Agreement is amended to the extent necessary or advisable to effect the same, including, without limitation, such that “Depositor” under the Deposit Processing Services Agreement shall not include any T-Mobile Customer (as defined in the PLBPA); and (iii) there is a different fee structure under the 2023 Deposit Servicing Agreement from that set forth in the Deposit Processing Services Agreement. The initial term of the 2023 Deposit Servicing Agreement continues until February 24, 2025, and will automatically renew for additional one year terms unless either party gives written notice of non-renewal at least 180 days prior to the expiration of the then-current term. The 2023 Deposit Servicing Agreement may be terminated early by either party upon material breach, upon notice of an uncured objection from a regulatory authority, or by the Company upon 120 days’ written notice upon the satisfaction of certain conditions.

59

Table of Contents
As compensation under the 2023 Deposit Servicing Agreement, Customers Bank will retain any and all revenue generated from the funds held in the deposit accounts, and Customers Bank will pay the Company monthly servicing fees as set forth in the 2023 Deposit Servicing Agreement. In addition, the Company will have the right to retain all revenue generated by or from the Depositor Accounts (as defined in the 2023 Deposit Servicing Agreement), including, but not limited to, fees and all other miscellaneous revenues. The Company also shall retain all fees (including without limitation interchange fees), and charges generated by its ATMs and from its payment processing services. The Company will be solely liable for any and all fees, expenses, costs, reimbursements, and other amounts that are or may become due and payable under the PLBPA, including, without limitation, any Durbin-Exempt Interchange (as defined in the 2023 Deposit Servicing Agreement) fees payable to T-Mobile under the PLBPA. Customers Bank may set off any and all PLBPA Amounts against any compensation payable to the Company under the 2023 Deposit Servicing Agreement.

Transition Services Agreement

On January 4, 2021, we entered into a Transition Services Agreement with Customers Bank, pursuant to which each party agreed for a period of up to twelve months to provide certain transition services listed therein to the other party. A limited number of these transition services were subsequently extended through March 31, 2019, June 30, 20192022. In consideration for the services, we paid Customers Bank a service fee of $12,500 per month, plus any expenses associated with the services.

The Transition Services Agreement included a provision for providing the Company with assistance in the establishment and September 30, 2019.

  

March 31, 2020

(unaudited)

 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $311,303  $-  $311,303 
Prepaid expenses and other assets  26,946   -   26,946 
             
Total current assets  338,249   -   338,249 
             
OTHER ASSETS            
Marketable securities held in trust account  176,763,122   -   176,763,122 
Escrow for private placement      -   - 
             
Total other assets  176,763,122   -   176,763,122 
             
TOTAL ASSETS  177,101,371   -   177,101,371 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  122,977   -   122,977 
Private placement received in advance  -   -   - 
Income taxes payable  845,702   -   845,702 
Franchise taxes payable  50,000   -   50,000 
Due to affiliates      -   - 
             
Total current liabilities  1,018,679   -   1,018,679 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   5,252,427  5,252,427 
             
Total long term liabilities  6,771,556   5,252,427   12,023,983 
             
Total liabilities  7,790,235   5,252,427   13,042,662 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 15,748,387 shares at redemption value of $10.10 per share at March 31, 2020  164,311,133   (5,252,424)  159,058,709 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 1,180,502 shares issued and outstanding (excluding 15,748,387 shares subject to possible redemption), as of March 31, 2020  67   51  118 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of March 31, 2020  423   -   423 
Additional paid-in capital  1,426,834   (1,426,834)  - 
Retained earnings  3,572,679   1,426,780  4,999,459 
             
Total stockholders’ equity  5,000,003   (3)  5,000,000 
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $177,101,371  $0  $177,101,371 


  June 30, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS            
Cash $599,156  $-  $599,156 
Prepaid expenses and other assets  16,321   -   16,321 
             
Total current assets  615,477   -   615,477 
             
OTHER ASSETS            
Marketable securities held in trust account  33,164,861   -   33,164,861 
Escrow for private placement      -   - 
             
Total other assets  33,164,861   -   33,164,861 
             
TOTAL ASSETS  33,780,338   -   33,780,338 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  221,898   -   221,898 
Private placement received in advance  -   -   - 
Income taxes payable  271,937   -   271,937 
Franchise taxes payable  20,000   -   20,000 
Due to affiliates      -   - 
             
Total current liabilities  513,835   -   513,835 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   20,054,720  20,054,720 
             
Total long term liabilities  6,771,556   20,054,720   26,826,276 
             
Total liabilities  7,285,391   20,054,720   27,340,111 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 3,195,004 shares at redemption value of $10.10 per share at June 30, 2020  21,494,941   10,774,599  32,269,540 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding (excluding 3,195,004 shares subject to possible redemption), as of June 30, 2020  108   (108)  - 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of June 30, 2020  423   -   423 
Additional paid-in capital  1,671,219   (1,671,219)  - 
Retained earnings (accumulated deficit)  3,328,256   (29,157,993)  (25,829,737)
             
Total stockholders’ equity  5,000,006   (30,829,320)  (25,829,314)
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $33,780,338  $0  $33,780,338 


  September 30, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $11,009   
-
  $11,009 
Prepaid expenses and other assets  74,997   -   74,997 
             
Total current assets  86,006   -   86,006 
             
OTHER ASSETS            
Marketable securities held in trust account  33,178,146   -   33,178,146 
Escrow for private placement      -   - 
             
Total other assets  33,178,146   -   33,178,146 
             
TOTAL ASSETS  33,264,152   -   33,264,152 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  951,622   -   951,622 
Private placement received in advance  -   -   - 
Income taxes payable  -   -   - 
Franchise taxes payable  30,000   -   30,000 
Due to affiliates      -   - 
             
Total current liabilities  981,622   -   981,622 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   18,049,387  18,049,387 
             
Total long term liabilities  6,771,556   18,049,387   24,820,943 
             
Total liabilities  7,753,178   18,049,387   25,802,565 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 3,195,004 shares at redemption value of $10.10 per share at September 30, 2020  20,510,971   11,758,569  32,269,540 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 0 shares issued and outstanding (excluding 3,195,004 shares subject to possible redemption), as of September 30, 2020  117   (117)  - 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of September 30, 2020  423   -   423 
Additional paid-in capital  2,655,181   (2,655,181)  - 
Retained earnings (accumulated deficit)  2,344,282   (27,152,659)  (24,808,377)
             
Total stockholders’ equity  5,000,003   (29,807,957)  (24,807,954)
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $33,264,152  $(0) $33,264,152 


  March 31, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $853,425  $-  $853,425 
Prepaid expenses and other assets  69,446   -   69,446 
             
Total current assets  922,871   -   922,871 
             
OTHER ASSETS            
Marketable securities held in trust account  173,274,478   -   173,274,478 
Escrow for private placement      -   - 
             
Total other assets  173,274,478   -   173,274,478 
             
TOTAL ASSETS  174,197,349   -   174,197,349 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  343,598   -   343,598 
Private placement received in advance      -   - 
Income taxes payable  429,131   -   429,131 
Franchise taxes payable  50,000   -   50,000 
Due to affiliates      -   - 
             
Total current liabilities  822,729   -   822,729 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   6,684,907  6,684,907 
             
Total long term liabilities  6,771,556   6,684,907   13,456,463 
             
Total liabilities  7,594,285   6,684,907   14,279,192 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 15,338,432 shares at redemption value of $10.10 per share at March 31, 2019  161,603,060   (6,684,902)  154,918,158 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding  -   -   - 
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 1,590,457 shares issued and outstanding (excluding 15,338,432 shares subject to possible redemption), as of March 31, 2019  94   65  159 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of March 31, 2020  423   -   423 
Additional paid-in capital  4,134,879   (4,134,879)  - 
Retained earnings  864,608   4,134,810  4,999,418 
             
Total stockholders’ equity  5,000,004   (4)  5,000,000 
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $174,197,349  $0  $174,197,349 


  June 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $429,215  $-  $429,215 
Prepaid expenses and other assets  58,821   -   58,821 
             
Total current assets  488,036   -   488,036 
             
OTHER ASSETS            
Marketable securities held in trust account  174,189,472   -   174,189,472 
Escrow for private placement      -   - 
             
Total other assets  174,189,472   -   174,189,472 
             
TOTAL ASSETS  174,677,508   -   174,677,508 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  247,967   -   247,967 
Private placement received in advance      -   - 
Income taxes payable  324,096   -   324,096 
Franchise taxes payable  40,000   -   40,000 
Due to affiliates      -   - 
             
Total current liabilities  612,063   -   612,063 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   7,162,400  7,162,400 
             
Total long term liabilities  6,771,556   7,162,400   13,933,956 
             
Total liabilities  7,383,619   7,162,400   14,546,019 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 15,359,553 shares at redemption value of $10.10 per share at June 30, 2019.  162,293,880   (7,162,391)  155,131,489 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding            
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 1,569,336 shares issued and outstanding (excluding 15,359,553 shares subject to possible redemption), as of June 30, 2019  87   70  157 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of June 30, 2019  423   -   423 
Additional paid-in capital  3,444,067   (3,444,067)  - 
Retained earnings  1,555,432   3,443,988  4,999,420 
             
Total stockholders’ equity  5,000,009   (9)  5,000,000 
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $174,677,508  $0  $174,677,508 


  September 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
ASSETS         
CURRENT ASSETS         
Cash $685,621  $-  $685,621 
Prepaid expenses and other assets  48,196   -   48,196 
             
Total current assets  733,817   -   733,817 
             
OTHER ASSETS            
Marketable securities held in trust account  174,618,157   -   174,618,157 
Escrow for private placement      -   - 
             
Total other assets  174,618,157   -   174,618,157 
             
TOTAL ASSETS  175,351,974   -   175,351,974 
             
LIABILITIES AND STOCKHOLDERS’ EQUITY            
             
CURRENT LIABILITIES            
Accounts payable  236,169   -   236,169 
Private placement received in advance      -   - 
Income taxes payable  448,145   -   448,145 
Franchise taxes payable  40,000   -   40,000 
Due to affiliates      -   - 
             
Total current liabilities  724,314   -   724,314 
             
LONG TERM LIABILITIES            
Deferred underwriting fee payable  6,771,556   -   6,771,556 
Warrant Liability  -   9,072,373  9,072,373 
             
Total long term liabilities  6,771,556   9,072,373   15,843,929 
             
Total liabilities  7,495,870   9,072,373   16,568,243 
             
COMMITMENTS AND CONTINGENCIES            
Class A common stock subject to possible redemption, $0.0001 par value, 15,226,112 shares at redemption value of $10.10 per share at September 30, 2019  162,856,097   (9,072,366)  153,783,731 
             
STOCKHOLDERS’ EQUITY            
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding            
Class A Common Stock; $0.0001 par value; 100,000,000 shares authorized; 1,702,777 shares issued and outstanding (excluding 15,226,112 shares subject to possible redemption), as of September 30, 2019  81   90  171 
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 shares issued and outstanding as of September 30, 2019  423   -   423 
Additional paid-in capital  2,881,856   (1,534,111)  1,347,745 
Retained earnings  2,117,647   1,534,015  3,651,662 
             
Total stockholders’ equity  5,000,007   (7)  5,000,000 
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $175,351,974  $0  $175,351,974 


administration of a 401(k) plan for the benefit of Company employees. Effective April 9, 2021, the Customers Bank 401(k) plan became a multi-employer plan, as defined by the U.S. Department of Labor in accordance with the Employee Retirement Income Security Act of 1974, covering both the full-time employees of Customers Bank and the Company. The following presentsCompany provides a reconciliationmatching contribution equal to 50% of the unauditedfirst 6% of the contributions made by its eligible participating employees. The Company’s employer contributions to the 401(k) plan for the benefit of its employees for the twelve months ended December 31, 2022 and 2021 were $0.8 million and $0.7 million, respectively. These contributions are recorded in Salaries and employee benefits in the Consolidated Statements of Operations from the amounts previously reported to the restated amounts for the three month period ended March 31, 2020, the three and six month periods ended June 30, 2020, the three and nine month periods ended September 30, 2020, the three month period ended March 31, 2019, the three and six month periods ended June 30, 2019 and the three and nine month periods ended September 30, 2019.Income (Loss)

.

  For the three months ended March 31, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $19,074  $-  $19,074 
Legal and professional fees  41,768   -   41,768 
Franchise tax  50,000   -   50,000 
Support services - related party  52,154   -   52,154 
             
Total expenses  162,996   -   162,996 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   2,387,467  2,387,467 
Interest income on investments held in Trust Account  1,352,505   -   1,352,505 
             
Total other income  1,352,505   2,387,467   3,739,972 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  1,189,509   2,387,467   3,576,976 
             
Income tax expense  273,542   -   273,542 
             
NET INCOME $915,967  $2,387,467  $3,303,434 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.06  $0.00 $0.06 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.03) $0.57 $0.54 


Other


  For the three months ended June 30, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $13,820  $-  $13,820 
Legal and professional fees  161,571   -   161,571 
Franchise tax  50,000   -   50,000 
Support services - related party  59,846   -   59,846 
             
Total expenses  285,237   -   285,237 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   (14,802,294)  (14,802,294)
Interest income on investments held in Trust Account  38,392   -   38,392 
             
Total other income  38,392   (14,802,294)  (14,763,902)
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  (246,845)  (14,802,294)  (15,049,139)
             
Income tax expense  (2,422)  -   (2,422)
             
NET LOSS $(244,423) $(14,802,294) $(15,046,717)
             
Weighted average shares outstanding of Class A common stock  11,740,532   -   11,740,532 
Basic and diluted net income per share, Class A $-  $(0.00) $(0.00)
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.06) $(3.49) $(3.55)

  For the three months ended September 30, 2020
(unaudited)
 
  

As

Reported

  

Restatement

Adjustments

  

As

Restated

 
OPERATING EXPENSES         
General and administrative $49,172  $-  $49,172 
Legal and professional fees  853,628   -   853,628 
Franchise tax  50,000   -   50,000 
Support services - related party  52,154   -   52,154 
             
Total expenses  1,004,954   -   1,004,954 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   2,005,333  2,005,333 
Interest income on investments held in Trust Account  13,285   -   13,285 
             
Total other income  13,285   2,005,333   2,018,618 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  (991,669)  2,005,333   1,013,664 
             
Income tax expense  (7,695)  -   (7,695)
             
NET INCOME $(983,974) $2,005,333  $1,021,359 
             
Weighted average shares outstanding of Class A common stock  3,195,004   -   3,195,004 
Basic and diluted net income per share, Class A $-  $(0.01) $(0.01)
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net (loss) income per share, Class B $(0.23) $0.48 $0.25 


  For the six months ended June 30, 2020
(unaudited)
 
  

As

Reported

  

Restatement

Adjustments

  

As

Restated

 
OPERATING EXPENSES         
General and administrative $32,895  $-  $32,895 
Legal and professional fees  203,338   -   203,338 
Franchise tax  100,000   -   100,000 
Support services - related party  112,000   -   112,000 
             
Total expenses  448,233   -   448,233 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   (12,414,827)  (12,414,827)
Interest income on investments held in Trust Account  1,390,897   -   1,390,897 
             
Total other income  1,390,897   (12,414,827)  (11,023,930)
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  942,664   (12,414,827)  (11,472,163)
             
Income tax expense  271,120   -   271,120 
             
NET LOSS $671,544  $(12,414,827) $(11,743,283)
             
Weighted average shares outstanding of Class A common stock  14,334,711   -   14,334,711 
Basic and diluted net income per share, Class A $0.07  $0.00 $0.07 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.08) $(2.94) $(3.02)


  For the nine months ended September 30, 2020
(unaudited)
 
  

As

Reported

  

Restatement

Adjustments

  

As

Restated

 
OPERATING EXPENSES         
General and administrative $82,067  $-  $82,067 
Legal and professional fees  1,056,966   -   1,056,966 
Franchise tax  150,000   -   150,000 
Support services - related party  164,154   -   164,154 
             
Total expenses  1,453,187   -   1,453,187 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   (10,409,494)  (10,409,494)
Interest income on investments held in Trust Account  1,404,182   -   1,404,182 
             
Total other income      (10,409,494)  (9,005,312)
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  (49,005)  (10,409,494)  (10,458,499)
             
Income tax expense  263,425   -   263,425 
             
NET LOSS $(312,430) $(10,409,494) $(10,721,924)
             
Weighted average shares outstanding of Class A common stock  10,566,869   -   10,566,869 
Basic and diluted net income per share, Class A $0.09  $0.00 $0.09 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.31) $(2.46) $(2.77)

  For the three months ended March 31, 2019
(unaudited)
 
  

As

Reported

  

Restatement

Adjustments

  

As

Restated

 
OPERATING EXPENSES         
General and administrative $123,248  $-  $123,248 
Legal and professional fees  51,579   -   51,579 
Franchise tax  50,000   -   50,000 
Support services - related party  52,154   -   52,154 
             
Total expenses  276,981   -   276,981 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   2,864,960  2,864,960 
Interest income on investments held in Trust Account  1,060,684   -   1,060,684 
             
Total other income  1,060,684   2,864,960   3,925,644 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  783,703   2,864,960   3,648,663 
             
Income tax expense  212,285   -   212,285 
             
NET INCOME $571,418  $2,864,960  $3,436,378 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.05  $(0.00) $0.05 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net (loss) income per share, Class B $(0.05) $0.67 $0.62 


  For the three months ended June 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $17,263  $-  $17,263 
Legal and professional fees  57,769   -   57,769 
Franchise tax  70,000   -   70,000 
Support services - related party  59,846   -   59,846 
             
Total expenses  204,878   -   204,878 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   (477,493)  (477,493)
Interest income on investments held in Trust Account  1,115,194   -   1,115,194 
             
Total other income  1,115,194   (477,493)  637,701 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  910,316   (477,493)  432,823 
             
Income tax expense  219,492   -   219,492 
             
NET INCOME $690,824  $(477,493) $213,331 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.05  $(0.00) $0.05 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.03) $(0.11) $(0.14)

  For the three months ended September 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $24,411  $-  $24,411 
Legal and professional fees  30,383   -   30,383 
Franchise tax  40,000   -   40,000 
Support services - related party  52,154   -   52,154 
             
Total expenses  146,948   -   146,948 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   (1,909,973)  (1,909,973)
Interest income on investments held in Trust Account  887,300   -   887,300 
             
Total other income  887,300   (1,909,973)  (1,022,673)
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  740,352   (1,909,973)  (1,169,621)
             
Income tax expense  178,137   -   178,137 
             
NET LOSS $562,215  $(1,909,973) $(1,347,758)
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.04  $(0.00) $0.04 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net loss per share, Class B $(0.03) $(0.45) $(0.48)


  For the six months ended June 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $119,619  $-  $119,619 
Legal and professional fees  130,239   -   130,239 
Franchise tax  120,000   -   120,000 
Support services - related party  112,000   -   112,000 
             
Total expenses  481,858   -   481,858 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   2,387,467  2,387,467 
Interest income on investments held in Trust Account  2,175,878   -   2,175,878 
             
Total other income  2,175,878   2,387,467   4,563,345 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  1,694,020   2,387,467   4,081,487 
             
Income tax expense  431,778   -   431,778 
             
NET INCOME $1,262,242  $2,387,467  $3,649,709 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.10  $(0.00) $0.10 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net income per share, Class B $-  $0.48 $0.48 

  For the nine months ended September 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
OPERATING EXPENSES         
General and administrative $144,030  $-  $144,030 
Legal and professional fees  160,622   -   160,622 
Franchise tax  160,000   -   160,000 
Support services - related party  164,154   -   164,154 
             
Total expenses  628,806   -   628,806 
             
OTHER INCOME            
Other income  -   -   - 
Change in fair value of warrant liability  -   477,493  477,493 
Interest income on investments held in Trust Account  3,063,178   -   3,063,178 
             
Total other income  3,063,178   477,493   3,540,671 
             
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES  2,434,372   477,493   2,911,865 
             
Income tax expense  609,915   -   609,915 
             
NET INCOME $1,824,457  $477,493  $2,301,950 
             
Weighted average shares outstanding of Class A common stock  16,928,889   -   16,928,889 
Basic and diluted net income per share, Class A $0.14  $(0.00) $0.14 
             
Weighted average shares outstanding of Class B common stock  4,232,222   -   4,232,222 
Basic and diluted net (loss) income per share, Class B $(0.11) $0.11 $0.54 


The following tables contain the restatement of previously reported unaudited Statements of Cash Flows for the three month period ended March 31, 2020, the six month period ended June 30, 2020, the nine month period ended September 30, 2020, the three month period ended March 31, 2019, the six month period ended June 30, 2019 and the nine month period ended September 30, 2019.

  For the three months ended March 31, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income $915,967  $2,387,467 $3,303,434 
Adjustments to reconcile net income to net cash used in operating activities:            
Interest earned in Trust Account  (1,352,505)  -   (1,352,505)
Change in fair value of warrant liability  -   (2,387,467)  (2,387,467)
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  10,625   -   10,625 
Accounts payable  11,009   -   11,009 
Income taxes payable  273,542   -   273,542 
Franchise taxes payable  (30,000)  -   (30,000)
             
Net cash flows used in operating activities  (171,362)  -   (171,362)
             
NET DECREASE IN CASH  (171,362)  -   (171,362)
             
CASH, BEGINNING OF PERIOD  482,665   -   482,665 
             
CASH, END OF PERIOD $311,303   -  $311,303 
             
Supplemental disclosure of noncash activities:            
Change in value of Class A common stock subject to possible redemption $915,969   (4,219,403) $(3,303,434)


  For the six months ended June 30, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income $671,544  $(12,414,827) $(11,743,283)
Adjustments to reconcile net income to net cash used in operating activities:            
Interest earned in Trust Account  (1,390,897)  -   (1,390,897)
Change in fair value of warrant liability  -   12,414,827  12,414,827 
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  21,250   -   21,250 
Accounts payable  109,930   -   109,930 
Income taxes payable  (300,223)  -   (300,223)
Franchise taxes payable  (60,000)  -   (60,000)
             
Net cash flows used in operating activities  (948,396)  -   (948,396)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash released from Trust Account for Class A common stock redemptions  142,571,767   -   142,571,767 
Investment income released from Trust Account to pay taxes  1,064,887   -   1,064,887 
             
Net cash flows used in financing activities  143,636,654   -   143,636,654 
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Cash used for Class A common stock redemption  (142,571,767)  -   (142,571,767)
             
Net cash flows provided by financing activities  (142,571,767)  -   (142,571,767)
             
NET INCREASE (DECREASE) IN CASH  116,491   -   116,491 
             
CASH, BEGINNING OF PERIOD  482,665   -   482,665 
             
CASH, END OF PERIOD $599,156  $-  $599,156 
             
Supplemental disclosure of noncash activities:            
Federal income taxes paid from operating account  571,343   -   571,343 
Change in value of Class A common stock subject to possible redemption $(141,900,223) $18,414,488 $(123,485,735)


  For the nine months ended September 30, 2020
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income (loss) $(312,430) $(10,409,494) $(10,721,924)
Adjustments to reconcile net income (loss) to net cash used in operating activities:            
Interest earned in Trust Account  (1,404,182)  -   (1,404,182)
Change in fair value of warrant liability  -   10,409,494  10,409,494 
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  (37,426)  -   (37,426)
Accounts payable  839,654   -   839,654 
Income taxes payable  (572,160)  -   (572,160)
Franchise taxes payable  (50,000)  -   (50,000)
             
Net cash flows used in operating activities  (1,536,544)  -   (1,536,544)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash released from Trust Account for Class A common stock redemptions  142,571,768   -   142,571,768 
Investment income released from Trust Account to pay taxes  1,064,888   -   1,064,888 
             
Net cash flows provided by investing activities  143,636,656   -   143,636,656 
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Cash used for Class A common stock redemptions  (142,571,768)  -   (142,571,768)
             
Net cash flows used in financing activities  (142,571,768)  -   (142,571,768)
             
NET DECREASE IN CASH  (471,656)  -   (471,656)
             
CASH, BEGINNING OF PERIOD  482,665   -   482,665 
             
CASH, END OF PERIOD $11,009  $-  $11,009 
             
Supplemental disclosure of noncash activities:            
Federal income taxes paid from operating account $904,885  $-  $904,885 
Change in value of Class A common stock subject to possible redemption $(142,884,193) $19,398,458 $(123,485,735)

  For the three months ended March 31, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income $571,418  $2,864,960 $3,436,378 
Adjustments to reconcile net income to net cash used in operating activities:            
Interest earned in Trust Account  (1,060,684)  -   (1,060,684)
Change in fair value of warrant liability  -   (2,864,960)  (2,864,960)
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  2,423   -   2,423 
Accounts payable  85,039   -   85,039 
Income taxes payable  212,285   -   212,285 
Franchise taxes payable  (150,000)  -   (150,000)
             
Net cash flows used in operating activities  (339,519)  -   (339,519)
             
NET DECREASE IN CASH  (339,520)  -   (339,520)
             
CASH, BEGINNING OF PERIOD  1,192,945   -   1,192,945 
             
CASH, END OF PERIOD $853,425   -   853,425 
             
Supplemental disclosure of noncash activities:            
Change in value of Class A common stock subject to possible redemption $571,417   2,864,961  3,436,378 


  For the six months ended June 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income $1,262,242  $2,387,467 $3,649,709 
Adjustments to reconcile net income to net cash used in operating activities:            
Interest earned in Trust Account  (2,175,878)  -   (2,175,878)
Change in fair value of warrant liability  -   (2,387,467)  (2,387,467)
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  13,048   -   13,048 
Accounts payable  (10,592)  -   (10,592)
Income taxes payable  107,250   -   107,250 
Franchise taxes payable  (160,000)  -   (160,000)
             
Net cash flows used in operating activities  (963,930)      (963,930)
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Cash released from Trust Account for Class A common stock redemptions  -   -   - 
Investment income released from Trust Account to pay taxes  200,200   -   200,200 
             
Net cash flows used in financing activities  200,200   -   200,200 
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Cash used for Class A common stock redemption  -   -   - 
             
Net cash flows provided by financing activities  -   -   - 
             
NET INCREASE (DECREASE) IN CASH  (763,730)  -   (763,730)
             
CASH, BEGINNING OF PERIOD  1,192,945   -   1,192,945 
             
CASH, END OF PERIOD $429,215  $-  $429,215 
             
Supplemental disclosure of noncash activities:            
Federal income taxes paid from operating account $324,528  $-  $324,528 
Change in value of Class A common stock subject to possible redemption $1,262,237  $2,387,472 $3,649,709 


  For the nine months ended September 30, 2019
(unaudited)
 
  As
Reported
  Restatement
Adjustments
  As
Restated
 
CASH FLOWS FROM OPERATING ACTIVITIES         
Net income (loss) $1,824,457  $477,493 $2,301,950 
Adjustments to reconcile net income (loss) to net cash used in operating activities:            
Interest earned in Trust Account  (3,063,178)  -   (3,063,178)
Change in fair value of warrant liability  -   (477,493)  (477,493)
Changes in operating assets and liabilities:            
Prepaid expenses and other assets  23,673   -   23,673 
Accounts payable  (22,390)  -   (22,390)
Income taxes payable  231,299   -   231,299 
Franchise taxes payable  (160,000)  -   (160,000)
       -     
Net cash flows used in operating activities  (1,166,139)  -   (1,166,139)
       -     
CASH FLOWS FROM INVESTING ACTIVITIES      -     
Cash released from Trust Account for Class A common stock redemptions  -   -   - 
Investment income released from Trust Account to pay taxes  658,815   -   658,815 
       -     
Net cash flows provided by investing activities  658,815   -   658,815 
       -     
CASH FLOWS FROM FINANCING ACTIVITIES      -     
Cash used for Class A common stock redemptions  -   -   - 
       -     
Net cash flows used in financing activities  -   -   - 
       -     
NET DECREASE IN CASH  (507,324)  -   (507,324)
       -     
CASH, BEGINNING OF PERIOD  1,192,945   -   1,192,945 
       -     
CASH, END OF PERIOD $685,621  $-  $685,621 
       -     
Supplemental disclosure of noncash activities:      -     
Federal income taxes paid from operating account $378,616  $-  $378,616 
Change in value of Class A common stock subject to possible redemption $1,824,454  $477,496 $2,301,950 


Note 10 — Subsequent Events

On January 4, 2021, the Company consummatedentered into a Software License Agreement with Customers Bank which provides it with a non-exclusive, non-transferable, royalty-free license to utilize our mobile banking technology for a period up to 10 years. The Software License Agreement is cancellable by Customers Bank at any time, without notice, and without penalty, and for any reason or no reason at all. To date, Customers Bank has not utilized the Company’s mobile banking technology and zero consideration has been paid or recognized under the Software License Agreement.


On January 4, 2021, the Company entered into a Non-Competition and Non-Solicitation Agreement with Customers Bank providing that Customers Bank will not, for a period of 4 years after the closing of the divestiture, directly or indirectly engage in the Company’s business combination (the “Closing”) contemplatedin the territory (both as defined in the Non-Competition Agreement), except for white label digital banking services with previously identified parties and passive investments of no more than 2% of a class of equity interests of a competitor that is publicly traded. Customers Bank also agreed not to directly or indirectly hire or solicit any employees of the Company.

On November 29, 2021, the Company entered into an agreement with Customers Bank which terminated the $10.0 million letter of credit and gave the Company the right to any shares that were forfeited as part of the January 4, 2021 Share-Based Compensation Award. During the twelve months ended December 31, 2022, 26,500 forfeited shares were reacquired by the Company from Customers Bank. During the twelve months ended December 31, 2021, 14,500 forfeited shares were reacquired by the Company from Customers Bank and 19,000 forfeited shares prior to the execution of the agreement were returned to Customers Bank.

Both the President and Executive Chairman of the Board of Customers Bank are immediate family members of the Company’s CEO, and together with their spouses own less than 5.0% of the Company’s outstanding common stock at December 31, 2022.

On March 1, 2022, the Company reached an agreement, with settlement on March 11, 2022, to reacquire 1,169,963 private warrants at a price of $1.69 per warrant, or a total cost of $2.0 million, from Ms. Sherry Sidhu and Mr. Samvir Sidhu, who are immediate family members of our CEO. The transaction price was established based on the range of market prices during the repurchase conversations and was approved by the Company’s Audit Committee.


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On April 20, 2022, the Company entered into a Special Limited Agency Agreement (“SLA”) with Customers Bank that provides for marketing assistance from the Company for originating consumer installment loans funded by Customers Bank. In consideration for this marketing assistance, the Company receives certain fees specified within the SLA which are recorded as a component of Other revenue within the Consolidated Statements of Income (Loss). During the twelve ended December 31, 2022, less than $0.1 million of revenue was realized under the SLA. The SLA expired on December 31, 2022.

Positions with Customers Bank are presented on our Consolidated Balance Sheets in Accounts receivable, net, Deferred revenue, current, and Accounts payable and accrued liabilities. The Accounts receivable balances related to Customers Bank as of December 31, 2022 and 2021 were $1.4 million and $5.5 million, respectively. The Deferred revenue balances related to Customers Bank as of December 31, 2022 and 2021 were $3.8 million and $12.7 million, respectively. The Accounts payable and accrued liabilities balances related to Customers Bank as of December 31, 2022 and 2021 were $3.8 million and $0.4 million, respectively.

The Company recognized $74.7 million and $82.3 million in revenues from Customers Bank for the twelve months ended December 31, 2022 and 2021, respectively. Of these amounts, $22.5 million and $26.1 million are paid directly by MasterCard or individual account holders to the Company for the twelve months ended December 31, 2022 and 2021, respectively. These amounts are presented on our Consolidated Statements of Income (loss) in Total operating revenues.

The Company recognized less than $0.1 million and $0.3 million of expenses from Customers Bank for the twelve months ended December 31, 2022 and 2021, respectively. These amounts are presented on our Consolidated Statements of Income (loss) in Total operating expenses.
NOTE 15 — SUBSEQUENT EVENTS

Profit Enhancement Plan (“PEP”)

On January 26, 2023, and in connection with our previously announced near-term strategy to focus on being an innovative, efficient, risk oriented fintech with a partner bank model, the Company committed to a targeted PEP that is intended to reduce operating costs, improve operating margins, improve operating cash flow, and continue advancing the Company’s ongoing commitment to profitable growth and continued innovation, and direct the Company’s resources toward its best opportunities.

Included within the PEP is a targeted reduction of the Company’s employee workforce of approximately 25% as compared to its headcount at December 31, 2022. This workforce reduction is in addition to targeted spend reduction and service provider rationalization. The Company expects the actions necessary to attain these cost reductions will be substantially completed by June 30, 2023. The Company estimates that it will incur $1.5 million to $3.0 million in charges in connection with the PEP, the majority of which were incurred in the first quarter of 2023.

Changes to Executive Management and Director

On January 23, 2023, Robert Diegel provided the Company with written notice that he was terminating his Employment Agreement with the Company effective as of March 9, 2023. Mr. Diegel was employed as the Company’s Chief Operating Officer.


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On January 26, 2023, the Company appointed Jamie Donahue, the Company’s Chief Technology Officer, to the position of President. In conjunction with the appointment, Mr. Donahue’s employment agreement dated September 15, 2021 (the “Donahue Employment Agreement”) was amended to a) substitute the title of “Chief Technology Officer” with “President” and b) increase Mr. Donahue’s annual base salary from $275,000 to $300,000. No other changes were made to the Donahue Employment Agreement. In addition, and in connection with Mr. Donahue’s appointment to President, the Company awarded Mr. Donahue 150,000 RSUs pursuant to its 2020 Equity Incentive Plan with a grant date of March 31, 2023.

Also on January 26, 2023, the Company transitioned Robert Ramsey, the Company’s Chief Financial Officer, to a new corporate development role. In conjunction with the transition, and effective February 7, 2023, the Company and Mr. Ramsey entered into a Severance Agreement and Plan of Merger, dated as of August 6, 2020 (as amended, the “MergerGeneral Release (the “Separation Agreement”), by providing, in addition to certain customary terms and amongconditions, that Mr. Ramsey’s employment with the Company MFAC Merger Sub Inc.,will end on March 31, 2023 (the “Separation Date”) and that, until the Separation Date, Mr. Ramsey will serve in the role of Head of Corporate Development for the Company and will receive his current base salary pro rata for such period. The Separation Agreement provides that upon satisfactory performance of the duties outlined through the Separation Date, Mr. Ramsey will receive severance related payments (net of applicable withholdings and deductions) totaling approximately $153 thousand as well as reimbursement of four weeks COBRA and payments for all earned and unused paid time off.

Also on January 26, 2023, the Company appointed James Dullinger, the Company’s Chief Accounting Officer, to the additional position of Chief Financial Officer. In conjunction with the appointment, the Company and Mr. Dullinger entered into an employment agreement (the “Dullinger Employment Agreement”) which provides for:

An annual base salary of not less than $275,000;
Potential for annual cash and equity incentive compensation in an amount, form, and at such time as provided in executive incentive plans as approved by the Board of Directors from time to time;
Severance compensation for up to one year’s compensation based upon then-current base salary, plus average annual performance bonus over the preceding three years, together with vesting of certain awards in the event of a Pennsylvania corporationtermination of Mr. Dullinger’s employment without cause or by Mr. Dullinger for good reason as those terms are defined in the Dullinger Employment Agreement;
Automatic vesting of all equity awards if employment is terminated by the Company without cause or by Mr. Dullinger for good reason; or if such termination occurs within 12 months of a change in control
Customary non-disclosure, non-compete, and non-disparagement provisions; and
A term of one (1) year commencing on January 26, 2023, and renewing automatically on each one (1) year anniversary for an indirect wholly-owned subsidiaryadditional term of one (1) year, unless either party delivers notice to the contrary to the other party at least sixty (60) days prior to such one (1) year anniversary.

In addition, and in connection with Mr. Dullinger’s appointment to Chief Financial Officer, the Company awarded Mr. Dullinger 60,000 RSUs pursuant to its 2020 Equity Incentive Plan with a grant date of March 31, 2023.

On January 27, 2023, the Board of Directors of the Company (“Merger Sub”), BankMobile Technologies, Inc.,appointed Rajinder Singh to serve as a Pennsylvania corporation (“BankMobile”Board member until the Company’s next annual meeting of shareholders. Mr. Singh was appointed to fill a vacancy on the Board of Directors that resulted from an increase in the size of the Board of Directors from seven to eight members. On March 24, 2023, and subsequent to Mr. Singh’s appointment to the Board of Directors, it was determined to appoint Mr. Singh the Company’s Co-CEO, and in connection with that appointment, Mr. Singh resigned his position on the Board of Directors and became a Board observer. Mr. Singh’s decision was not related to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Concurrently, on March 24, 2023, the Company and Mr. Singh entered into an employment agreement (the “Singh Employment Agreement”), which provides for:

A 500,000 unit restricted stock equity award;
An annual base salary of $325,000;
Potential for annual cash and equity incentive compensation in an amount, form, and at such time as provided in executive incentive plans as approved by the Board of Directors from time to time;
Severance compensation for up to two year’s compensation based upon then-current base salary plus average annual performance bonus over the preceding three years, together with vesting of certain awards in the event of a termination of Mr. Singh’s employment without cause or by Mr. Singh for good reason as those terms are defined in the Singh Employment Agreement;
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Automatic vesting of all equity awards if employment is terminated by the Company without cause or by Mr. Singh for good reason; provided that only 50% of such equity awards shall vest if the employment is terminated by the Company without cause before December 31, 2023, or if such termination occurs within 12 months of a change in control that has occurred on or before March 24, 2024;
Customary non-disclosure, non-compete, and non-disparagement provisions; and
A term of two (2) years commencing on March 24, 2023, and renewing automatically on each two (2) year anniversary for an additional term of two (2) years, unless either party delivers notice to the contrary to the other party at least sixty (60) days prior to such two (2) year anniversary.

Deposit Servicing Agreement with First Carolina Bank
On March 16, 2023, we entered into the FCB Deposit Servicing Agreement with FCB, which provides that FCB will establish and maintain deposit accounts and other banking services in connection with customized products and services offered by the Company to its Higher Education clients, and the Company will provide certain other related services in connection with the accounts. The initial term of the FCB Deposit Servicing Agreement is for four years, is subject to regulatory approval, and will automatically renew for additional two year terms unless either party gives written notice of non-renewal at least 120 days prior to the expiration of the then-current term. The FCB Deposit Servicing Agreement may be terminated early by either party upon material breach, by either party upon notice that the continuation of the Depositor Program violates Applicable Law or Network Rules (as defined in the FCB Deposit Servicing Agreement); by FCB if a regulatory authority determined that the performance of its obligations under the FCB Deposit Servicing Agreement was not consistent with safe and sound banking practices; by either party upon the other party commencing or being subject to certain bankruptcy proceedings; by the Company should it experience a change in control on or after March 16, 2026; and by either party should the required regulatory approvals not be obtained on or before July 15, 2023.

Deposit Servicing Agreements with Customers Bank

On March 22, 2023, we signed the DPSA Second Amendment. The DPSA Second Amendment, among other things, extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s serviced deposits to a Durbin exempt sponsor bank; or (ii) June 30, 2024; and revises the fee structure of the Deposit Processing Services Agreement. The other terms of the Deposit Processing Services Agreement, as amended by the DPSA Amendment, remain in effect through the new termination date.
On March 22, 2023, the Company and Customers Bank a Pennsylvania state chartered bankentered into the 2023 Deposit Servicing Agreement, under which, effective March 31, 2023, the Company will perform, on behalf of Customers Bank, Customer Bank’s services, duties, and obligations under the sole stockholder of BankMobile (“PLBPA by and between Customers Bank”),Bank and Customers Bancorp,T-Mobile USA, Inc., a Pennsylvania corporation and that are not required by Applicable Law (as defined in the parent bank holding company for Customers Bank.

As a result of the Closing and the transactions contemplated2023 Deposit Servicing Agreement) to be provided by the Merger Agreement, (i) BankMobile merged with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly-owned indirect subsidiaryan FDIC insured financial institution. The obligations of the Company and Customers Bank under the 2023 Deposit Servicing Agreement are similar to those under the Deposit Processing Services Agreement; provided, however, that (i) as of March 31, 2023, the 2023 Deposit Servicing Agreement and not the Deposit Processing Services Agreement shall govern the terms, conditions, roles, responsibilities, duties, and obligations of the Company and Customers Bank with respect to the PLBPA and the Depositor Accounts (as defined in the 2023 Deposit Servicing Agreement); (ii) the Company’s name was changedDeposit Processing Services Agreement is amended to the extent necessary or advisable to effect the same, including, without limitation, such that “Depositor” under the Deposit Processing Services Agreement shall not include any T-Mobile Customer (as defined in the PLBPA); and (iii) there is a different fee structure under the 2023 Deposit Servicing Agreement from Megalith Financial Acquisition Corp.that set forth in the Deposit Processing Services Agreement. The initial term of the 2023 Deposit Servicing Agreement continues until February 24, 2025, and will automatically renew for additional one year terms unless either party gives written notice of non-renewal at least 180 days prior to BM Technologies, Inc.the expiration of the then-current term. The 2023 Deposit Servicing Agreement may be terminated early by either party upon material breach, upon notice of an uncured objection from a regulatory authority, or by the Company upon 120 days’ written notice upon the satisfaction of certain conditions.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None.

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ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our Management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)) as of December 31, 2022. Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of that date.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)). The Company's internal control over financial reporting was designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the Company’s Board of Directors, Management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of December 31, 2022, Management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control-Integrated Framework,” issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission in 2013. Our evaluation included a review of the documentation of controls, evaluations of the design of the internal control system, and tests of the effectiveness of internal controls. Based on our assessment, Management determined that, as of December 31, 2022, the Company’s internal control over financial reporting was effective.

Remediation of Previously Reported Material Weaknesses

Management has completed the testing of design and operating effectiveness of the new and enhanced controls related to the previously reported material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Control Environment and Monitoring: Management developed a comprehensive plan to design and implement an effective system of internal control over financial reporting. The Company evaluated subsequent eventsremediated the material weaknesses through activities including, but not limited to, (a) more clearly defined Management and transactions that occurred afterBoard of Director oversight, structures, reporting lines, and responsibilities, (b) hiring of additional resources with requisite skills and experience, (c) ongoing evaluations to ascertain whether the balance sheet date upcomponents of internal control over financial reporting are present and functioning, and (d) enhancements to internal processes to evaluate and communicate internal control over financial reporting deficiencies in a timely manner to those parties responsible for taking corrective action.

Control Activities & Information and Communication: Management was actively engaged in the development of a comprehensive plan to address the material weaknesses in the design and documentation of the Company’s system of internal control over financial reporting including its selection and development of control activities, the documentation of what is expected, procedures to put policies in action, and maintaining relevant, quality information to support the functioning of internal control over financial reporting.

Management implemented key controls, including defining appropriate levels of precision, as remediation actions within (a) period-end financial reporting, (b) related party disclosures, (c) payroll and employee benefits, (d) share-based compensation (e) classification of contract assets, contract liabilities, receivables, and payables, and (f) trade accounts payable. The remediation actions for the ineffective information technology general controls included the periodic review of user access rights, segregation of duties, required policies and procedures, and validation of approval. The remediation actions for the ineffective complementary user entity controls included a process to evaluate the risks associated with key third-party service providers and identify any potential control gaps.


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In addition, Management added personnel to the dateaccounting function who have deeper technical accounting training and experience. Management utilized these personnel to perform a comprehensive review and enhancement of its internal accounting policies and procedures including accounting for related party disclosures, payroll and employee benefits, share-based compensation, classification of contract assets, contract liabilities, receivables, and payables, and trade accounts payable in accordance with U.S. generally accepted accounting principles.

Management believes that these actions have been fully implemented and have operated effectively for a sufficient period of time. As a result, we have concluded that our remediation efforts were successful and that the consolidated financial statementspreviously identified material weaknesses were available to be issued on July 12, 2021. remediated as of December 31, 2022.

Changes in Internal Control Over Financial Reporting

Other than the restatementschanges described above, in Note 9, the Company determined that there have been no other eventschanges in our internal control over financial reporting that occurred during the fourth quarter of the year ended December 31, 2022 that have occurredmaterially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm pursuant to applicable rules that would require adjustmentspermit us to the disclosures of the consolidated financial statements.


provide only Management's report in this annual report.

ITEM 9B. OTHER INFORMATION

Not Applicable.


ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.
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Part III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this Item will be contained in, and is hereby incorporated by reference from, the 2023 Proxy Statement.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The information required by this Item will be contained in the 2023 Proxy Statement under the heading “Executive Compensation” which is incorporated by reference herein.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNER AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this Item will be contained in the 2023 Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management” which is incorporated by reference herein.

Equity Compensation Plan Information

The following table provides information, as of December 31, 2022, with respect to shares of our common stock that may be issued, subject to certain vesting requirements, under existing and future awards under our 2020 Equity Incentive Plan. The following table also provides information, as of December 31, 2022, with respect to shares of our common stock that we may sell to our employees under our 2021 Employee Stock Purchase Plan.

ABC
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, Rights, and RSUs.Weighted-Average Exercise Price of Outstanding Options, Warrants, Rights, and RSUs.Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A))
Plan Category
Equity compensation plans approved by security holders
765,065(1)
N/A
954,972(2)
Equity compensation plans not approved by security holders— — — 
Total765,065 954,972 

(1) Represents RSU grants and annual common stock grants to our Board of Directors under our 2020 Equity Incentive Plan
(2) Represents 454,972 shares of common stock available for issuance under our 2020 Equity Incentive Plan and 500,000 shares of common stock available for issuance under our 2021 Employee Stock Purchase Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item will be contained in the 2023 Proxy Statement under the headings “Certain Relationships and Related Party Transactions” and “Corporate Governance-Director Independence” which are incorporated by reference herein.
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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this Item will be contained in the 2023 Proxy Statement under the heading “Appointment of Independent Registered Public Accounting Firm” which is incorporated by reference herein.


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Part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a.The following documents are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K:

1.Financial Statements. See Index to Financial Statements under Item 8 of this Annual Report on Form 10-K.

2.Financial Statement Schedules. All schedules have been omitted because the information required to be presented in them is not

applicable or is shown in the financial statements or related notes.

3.Exhibits. The exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the signature pages to this Annual Report on 10-K, which is incorporated herein by this reference.

ITEM 16. FORM 10-K SUMMARY

None.

EXHIBIT INDEX

Exhibit No.DescriptionDescription
2.1†
2.2†
2.3†
3.1
3.2
4.1
4.2
4.3†
10.1†
10.2†
10.3†
10.4
10.5
10.510.6
10.610.7
10.7+10.8+
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10.9+
10.8+10.10+
10.9+10.12+
10.10+10.16Employment Agreement with Andrew Crawford, dated January 4, 2021 (incorporated by reference to the Company’s Form 8-K, filed with the SEC on January 8, 2021).
10.11+Employment Agreement with Warren Taylor, dated January 4, 2021 (incorporated by reference to the Company’s Form 8-K, filed with the SEC on January 8, 2021).
10.12Form of Subscription Agreement between Megalith and the PIPE Investors named therein, dated August 5, 2020 (Incorporated by reference to Exhibit 10.5 of Megalith’s Form 8-K (File No. 001-38633), filed with the SEC on August 6, 2020).
10.13Letter Agreement, dated August 23, 2018, by and between Megalith, the initial security holders and the officers and directors of Megalith (incorporated by reference to Megalith’s Form 8-K, filed with the SEC on August 29, 2018).
10.14
10.1510.17
10.18+
10.1610.19+


10.17Amended and Restated Private Placement Warrants Purchase Agreement, dated August 23, 2018, between the Company and Chardan (incorporated by reference to Megalith’s Form 8-K, filed with the SEC on August 29, 2018).
14.110.20+
24.1Power of Attorney (included in the signature page to the registration statement).
31.1
31.2
31.3
32.1
32.2
32.3
101.INSXBRL Instance Document*
101.SCHXBRL Taxonomy Extension Schema*
101.CALXBRL Taxonomy Calculation Linkbase*
101.LABXBRL Taxonomy Label Linkbase*
101.PREXBRL Definition Linkbase Document*
101.DEFXBRL Definition Linkbase Document*

*104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
  * Filed herewith
**  † Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The registrant hereby agrees to
      furnish a copy of any omitted schedules to the Commission upon request.
Furnished herewith  + Indicates a management or compensatory plan.



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SIGNATURES

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


July 13, 2021March 31, 2023BM Technologies, Inc.
(Registrant)
By:/s/ Luvleen Sidhu
Name:Luvleen Sidhu
Title:Chief Executive Officer
(Principal Executive Officer)


March 31, 2023BM Technologies, Inc.
(Registrant)
By:/s/ Rajinder Singh
Name:Rajinder Singh
Title:Co-Chief Executive Officer
(Principal Executive Officer)

March 31, 2023BM Technologies, Inc.
(Registrant)
By:/s/ James Dullinger
Name:James Dullinger
Title:Chief Financial Officer
(Principal Financial and Accounting Officer)


























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Pursuant to the requirements of the Securities Exchange Act of 1934, this Reportreport has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURESignaturesTITLETitleDATEDate
/s/ Luvleen SidhuChief Executive Officer and DirectorJuly 13, 2021March 31, 2023
Luvleen Sidhu(principal executive officer)Principal Executive Officer)
/s/ Rajinder SinghCo-Chief Executive OfficerMarch 31, 2023
Rajinder Singh(Principal Executive Officer)
/s/ Robert RamseyJames DullingerChief Financial OfficerJuly 13, 2021March 31, 2023
Robert RamseyJames Dullinger(principal financial officer) (Principal Financial and Accounting Officer)
/s/ Stephen BaranowskiJohn DolanChief Accounting OfficerDirectorJuly 13, 2021March 31, 2023
Stephen BaranowskiJohn Dolan(principal accounting officer)
/s/ Pankaj DinodiaMike GillDirectorJuly 13, 2021March 31, 2023
Pankaj DinodiaMike Gill
/s/ Aaron HodariDirectorMarch 31, 2023
Aaron Hodari
/s/ Brent HurleyDirectorMarch 31, 2023
Brent Hurley
/s/ A.J. DunklauDirectorJuly 13, 2021March 31, 2023
A.J. Dunklau
/s/ Brent HurleyDirectorJuly 13, 2021
Brent Hurley
/s/ Marcy SchwabDirectorJuly 13, 2021March 31, 2023
Marcy Schwab
/s/ Mike GillDirectorJuly 13, 2021
Mike Gill
/s/ Aaron HodariDirectorJuly 13, 2021
Aaron Hodari


iso4217:USD xbrli:shares71