UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 2018

TRANSITION REPORT PURSUANT TO SECTION 13 2021

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 No.file number 001-38633

BM Technologies, Inc.
(Exact name of registrant as specified in its charter)
MEGALITH FINANCIAL ACQUISITION CORP.
(Exact name of registrant as specified in its charter)

Delaware82-3410369

(State or other jurisdiction of

incorporation or organization)

(I.R.S.I.R.S Employer

Identification No.)

1345 Avenue of the Americas

New York, NY

10105
201 King of Prussia Road, Suite 350
Wayne, Pennsylvania19087
(Address of Principal Executive Offices)Executive)(Zip Code)(Zip-Code)

(877) 327-9515
Registrant's telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
(212) 235-0430
(Registrant’s telephone number, including area code)Title of each class

N/ATrading Symbol(s)Name of each exchange on which registered
(Former name, former address and former fiscal year, if changed since last report)Common StockBMTXNYSE American LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per shareBMTX-WTNYSE American LLC

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 such files).     Yes     No  


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

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

Non-accelerated filer Smaller 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act):.     Yes No  

As of November 14, 2018, there were 16,928,889 shares of the Company’s Class A common stock


The registrant had issued and outstanding and 4,232,22212,200,378 shares of the Company’s Class B common stock, issued and outstanding.

par value $0.0001 per share, as of August 16, 2021.

MEGALITH FINANCIAL ACQUISITION CORPORATION

TABLE OF CONTENTS

Page
PART I – FINANCIAL INFORMATION:



Table of Contents
Item 1.Financial Statements:1Page
Condensed
1
Condensed2
Condensed Statement3
Condensed Statement4
5
Management’s Management's Discussion and Analysis of Financial Condition and Results of Operations16
Quantitative and Qualitative Disclosures About Market Risk20
Controls and Procedures20
PART II – OTHER INFORMATION
Item 1.Legal Proceedings21
Risk Factors21
Unregistered Sales of Equity Securities and Use of Proceeds21
Defaults Upon Senior Securities21
Item 4.Mine Safety Disclosures21
Item 5.Other Information21
Item 6.Exhibits22


Megalith

1


Part I - Financial Acquisition Corp.

Information

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
BM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS

  

As of September 30,

2018

  

As of

December 31,

2017

 
  (unaudited)    
       
ASSETS      
       
CURRENT ASSETS      
Cash $1,556,065  $609 
Prepaid expenses and other assets  82,493   - 
         
Total current assets  1,638,558   609 
         
OTHER ASSETS        
Marketable securities held in trust account  171,223,302   - 
Deferred offering costs  -   81,387 
         
Total other assets  171,223,302   81,387 
         
TOTAL ASSETS $172,861,860  $81,996 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
         
CURRENT LIABILITIES        
Accounts payable $230,719  $24,037 
Income taxes payable  50,720   0 
Franchise taxes payable  200,000   0 
Note payable to Sponsor  -   2,000 
Due to affiliates  -   32,726 
         
Total current liabilities  481,439   58,763 
         
LONG TERM LIABILITIES        
Deferred underwriting fee payable  6,771,556   - 
         
Total long term liabilities  6,771,556   - 
         
Total liabilities  7,252,995   58,763 
         
COMMITMENTS AND CONTINGENCIES        
Class A common stock subject to possible redemption, $0.0001 par value, 15,901,867 and 0 shares at redemption value of $10.10 per share at September 30, 2018 and December 31, 2017, respectively.  160,608,857   - 
         
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; 1,027,022 and 0 shares issued and outstanding (excluding 15,901,867 and 0 shares subject to possible redemption) as of September 30, 2018 and December 31, 2017, respectively.  103   - 
         
Class B Common Stock; $0.0001 par value; 10,000,000 shares authorized; 4,232,222 and 4,312,500 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively.  423   431 
Additional paid-in capital  5,129,074   24,569 
Accumulated deficit  (129,592)  (1,767)
         
Total stockholders’ equity  5,000,008   23,233 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $172,861,860  $81,996 

The — UNAUDITED

(amounts in thousands, except share and per share data)
June 30,
2021
December 31,
2020
ASSETS
Cash and cash equivalents19,589 2,989 
Accounts receivable, net8,257 7,384 
Prepaid expenses and other current assets1,786 2,348 
   Total current assets29,632 12,721 
Premises and equipment, net349 401 
Developed software, net34,155 39,657 
Goodwill5,259 5,259 
Other intangibles, net4,910 5,070 
Other assets740 853 
   Total assets$75,045 $63,961 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities$13,617 $7,346 
Taxes payable1,317 
Payable to partner bank7,117 5,105 
Borrowings from partner bank21,000 
Current portion of operating lease liabilities719 701 
Deferred revenue, current4,763 2,588 
   Total current liabilities27,533 36,740 
Non-current liabilities:
Operating lease liabilities55 430 
Deferred revenue, non-current1,512 2,101 
Liability for private warrants18,893 
   Total liabilities$47,993 $39,271 
Commitments and contingencies (Note 8)00
Shareholders’ equity:
Preferred stock: Par value $0.0001 per share; 10,000,000 authorized, NaN issued or outstanding.00
Common stock: Par value $0.0001 per share; 1 billion shares authorized; 12,200,378 shares issued and outstanding at June 30, 2021; 6,123,432 shares issued and outstanding at December 31, 2020.
Additional paid in capital49,326 64,017 
Accumulated deficit(22,275)(39,328)
   Total shareholders’ equity$27,052 $24,690 
   Total liabilities and shareholders’ equity$75,045 $63,961 
See accompanying notes are an integral part of theseto the unaudited consolidated financial statements

statements.

2

Megalith Financial Acquisition Corp.



BM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

  For the three months  For the nine months 
  ended  ended 
  September 30, 2018  September 30, 2018 
  (unaudited)  (unaudited) 
       
OPERATING EXPENSES        
 General and administrative $21,614  $23,243 
 Support services - related party  95,385   95,385 
         
 Total expenses  116,999   118,628 
         
OTHER INCOME (EXPENSE)        
 Franchise tax  (200,000)  (200,000)
 Interest income on investments held in Trust Account  241,523   241,523 
         
 Total other income  41,523   41,523 
         
LOSS BEFORE PROVISION FOR INCOME TAXES  (75,476)  (77,105)
         
 Income tax expense  50,720   50,720 
         
NET LOSS $(126,196) $(127,825)
         
 Weighted average shares outstanding of Class A common stock  15,542,500   15,542,500 
 Basic and diluted net loss 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 $(0.03) $(0.03)

TheINCOME (LOSS) — UNAUDITED

(amounts in thousands, except per share data)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Operating revenues:
Interchange and card revenue$7,186 $6,069 $15,537 $12,676 
Servicing fees from partner bank10,579 5,024 19,951 9,789 
Account fees2,641 2,819 5,327 5,728 
University fees1,331 1,395 2,655 2,680 
Other revenue1,156 124 3,806 316 
   Total operating revenues22,893 15,431 47,276 31,189 
Operating expenses:
Technology, communication, and processing8,924 7,870 17,576 13,948 
Salaries and employee benefits7,170 6,640 12,593 14,105 
Professional services2,126 1,170 3,863 5,128 
Provision for operating losses1,401 1,024 2,730 1,907 
Occupancy284 386 636 805 
Customer related supplies186 472 661 523 
Advertising and promotion125 210 316 427 
Merger and acquisition related expenses25 75 
Other466 1,347 923 2,117 
   Total operating expenses20,682 19,144 39,298 39,035 
Income (loss) from operations2,211 (3,713)7,978 (7,846)
Non-operating income and expense:
(Loss) gain on fair value of private warrant liability(3,056)11,947 
Interest expense(42)(399)(96)(793)
(Loss) income before income tax expense(887)(4,112)19,829 (8,639)
Income tax expense949 2,776 14 
   Net (loss) income$(1,836)$(4,119)$17,053 $(8,653)
Basic shares outstanding11,9006,12311,9006,123
Diluted shares outstanding11,9006,12313,3146,123
Basic (loss) earnings per common share$(0.15)$(0.67)$1.43 $(1.41)
Diluted (loss) earnings per common share$(0.15)$(0.67)$0.38 $(1.41)
See accompanying notes are an integral part of theseto the unaudited consolidated financial statements

statements.

3

Megalith Financial Acquisition Corp.



BM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’SHAREHOLDERS’ EQUITY

— UNAUDITED

For the nine months ended SeptemberThree and Six Months Ended June 30, 2018 (unaudited) 

  Common stock  Additional     Total 
  Class A  Class B  paid-in  Accumulated  stockholders’ 
  Shares  Amount  Shares  Amount  capital  deficit  equity 
Balance, December 31, 2017  -  $-   4,312,500  $431  $24,569  $(1,767) $23,233 
                             
Sale of Units in Initial Public Offering  16,928,889   1,693   -   -   169,287,197   -   169,288,890 
                             
Sale of private placement warrants  -   -   -   -   6,945,778   -   6,945,778 
                             
Forfeiture of shares of Class B common stock  -   -   (80,278)  (8)  8   -   - 
                             
Underwriting fees and offering costs  -   -   -   -   (10,521,211)  -   (10,521,211)
                             
Change in shares subject to redemption  (15,901,867)  (1,590)  -   -   (160,607,267)  -   (160,608,857)
                             
Net loss  -   -   -   -   -   (127,825)  (127,825)
                             
Balance, September 30, 2018  1,027,022  $103   4,232,222  $423  $5,129,074  $(129,592) $5,000,008 

The2021 and 2020

(amounts in thousands, except share data)

Common Stock
Shares of Common Stock OutstandingCommon StockAdditional Paid in CapitalAccumulated DeficitTotal
Balance, December 31, 2020 (a)6,123,432 $$64,017 $(39,328)$24,690 
Net income— — — 18,889 18,889 
Valuation of private warrants— — (30,839)— (30,839)
Recapitalization transaction6,076,946 — 16,148 — 16,148 
Balance, March 31, 202112,200,378 $$49,326 $(20,439)$28,888 
Net loss— — — (1,836)(1,836)
Balance, June 30, 202112,200,378 $$49,326 $(22,275)$27,052 

Common Stock
Shares of Common Stock OutstandingCommon StockAdditional Paid in CapitalAccumulated DeficitTotal
Balance, December 31, 2019 (a)6,123,432 $$62,164 $(27,535)$34,630 
Net loss— — — (4,534)(4,534)
Capital contribution from Customers Bank— — 864 — 864 
Balance, March 31, 20206,123,432 $$63,028 $(32,069)$30,960 
Net loss— — — (4,119)(4,119)
Capital contribution from Customers Bank— — 401 — 401 
Balance, June 30, 20206,123,432 $$63,429 $(36,188)$27,242 
(a) Retroactively restated in connection with the merger.


See accompanying notes are an integral part of theseto the unaudited consolidated financial statements

statements.

4

Megalith Financial Acquisition Corp.



BM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

  

For the nine

months

 
  ended 
  

September 30,

2018

 
  (unaudited) 
    
CASH FLOWS FROM OPERATING ACTIVITIES   
Net loss $(127,825)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Interest earned in Trust Account  (241,523)
Changes in operating assets and liabilities:    
Prepaid expenses and other assets  (82,490)
Income taxes payable  50,720 
Franchise taxes payable  200,000 
Accounts payable  206,682 
     
Net cash flows provided by operating activities  5,564 
     
CASH FLOWS FROM INVESTING ACTIVITIES    
Cash remitted to Trust Account  (170,981,779)
     
Net cash flows used in investing activities  (170,981,779)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from sale of private placement warrants  6,945,778 
Proceeds from Initial Public Offering  169,288,890 
Payment of underwriter compensation  (3,192,889)
Payment of offering costs  (475,382)
Repayment of amounts due to affiliates  (32,726)
Proceeds from Sponsor note  105,500 
Repayment of Sponsor note  (107,500)
     
Net cash flows provided by financing activities  172,531,671 
     
NET INCREASE IN CASH  1,555,456 
     
CASH, BEGINNING OF PERIOD  609 
     
CASH, END OF PERIOD $1,556,065 
     
Supplemental disclosure of noncash activities:    
Change in value of Class A common stock subject to possible redemption $160,608,857 
Deferred underwriters’ commissions payable charged to additional paid-in capital in connection with the public offering $6,771,556 
Forfeiture of shares of Class B Common Stock $8 

The — UNAUDITED

(amounts in thousands)
Six Months Ended June 30,
20212020
Cash Flows from Operating Activities:
Net income (loss)$17,053 $(8,653)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of premises and equipment103 186 
Amortization of developed software5,645 5,494 
Amortization of other intangible assets160 504 
Amortization of leased assets368 549 
Share-based compensation expense13 277 
Gain on fair value of private warrant liability(11,947)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(873)4,221 
Decrease in prepaid expenses & other current assets562 7,939 
Decrease in receivable from partner bank849 
(Increase) in other assets(354)(229)
Increase in accounts payable and accrued liabilities5,618 1,983 
Increase in taxes payable1,317 
(Decrease) in operating lease liabilities(357)(510)
Increase (decrease) in deferred revenue1,586 (808)
Increase in payable to partner bank2,012 779 
  (Decrease) in other liabilities(2,884)
Net Cash Provided by Operating Activities20,906 9,697 
Cash Flows from Investing Activities:
Purchases and development of software(143)(2,024)
Purchases of premises and equipment(51)(49)
Net Cash Used in Investing Activities(194)(2,073)
Cash Flows from Financing Activities:
Repayment of borrowings from partner bank(21,000)
Cash from recapitalization transaction, net16,888 
Capital contribution from partner bank988 
Net Cash (Used in) Provided by Financing Activities(4,112)988 
Net Increase in Cash and Cash Equivalents16,600 8,612 
Cash and Cash Equivalents – Beginning2,989 8,586 
Cash and Cash Equivalents – Ending$19,589 $17,198 
Supplementary Cash Flow Information:
Income taxes paid, net of refunds$1,424 $426 
Interest paid$178 $
Noncash Operating, Investing and Financing Activities:
Share-based compensation expense recorded as capital contribution from partner bank$$277 
See accompanying notes are an integral part of theseto the unaudited consolidated financial statements

statements.

5

MEGALITH FINANCIAL ACQUISITION CORP.



BM TECHNOLOGIES, INC.
NOTES TO THEUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note

NOTE 1 — DESCRIPTION OF THE BUSINESS AND MERGER TRANSACTION
Description of Organizationthe Business

BM Technologies, Inc. (“BMT” or “the Company”) provides state-of-the-art high-tech digital banking and Business Operations

disbursement services to consumers and students nationwide through a full service fintech banking platform, accessible to customers anywhere and anytime through digital channels.

BMT facilitates deposits and banking services between a customer and an FDIC insured partner bank. BMT’s Banking-as-a-Service (“BaaS”) business model leverages partners’ existing customer bases to achieve high volume, low-cost customer acquisition in its Disbursement, White Label, and Workplace Banking businesses. BMT has 4 primary revenue sources: interchange and card revenue, servicing fees from the Bank, account fees, and university fees. The majority of revenues are driven by customer activity (deposits, spend, transactions, etc.) but may be paid or passed through by our partner bank, universities, or paid directly by customers.
BMT is a Pennsylvania corporation, incorporated in May 2016, and until January 4, 2021, was a wholly-owned subsidiary of Customers Bank (“Customers Bank”). Customers Bank is a Pennsylvania state-chartered bank and a wholly-owned subsidiary of Customers Bancorp, Inc. (the “Bancorp” or “Customers Bancorp”), a bank holding company. Customers Bank is our current partner bank.

Our partner bank holds the FDIC insured deposits that we source and service and is the issuing bank on our debit cards. Our
partner bank pays us a deposit servicing fee for the deposits generated and passes through interchange income earned from
debit transactions.

BMT is not a bank, does not hold a bank charter, and it does not provide banking services, and as a result we are not subject to direct banking regulation, except as a service provider to our partner bank. We are also subject to the regulations of the Department of Education, due to our student Disbursements business, and are periodically examined by them. Our contracts with most of our higher education institutional clients require us to comply with numerous laws and regulations, including, where applicable, regulations promulgated by the Department of Education (“ED”) regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV; FERPA; 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 GLBA. Other products and services offered by us may also be subject to other federal and state laws and regulations.
Seasonality

BMT’s higher education serviced deposits fluctuate throughout the year due primarily to the relationship between the deposits level and the typical cycles of student enrollment in higher education institutions. Serviced deposit balances typically experience seasonal lows in December and July when student enrollment is lower and experience seasonal highs in September and January when student enrollment is high and individual account balances are generally at their peak. Debit spend follows a similar seasonal trend, but may slightly lag increases in balances.

Impact of COVID-19 & CARES Act

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. The spread of COVID-19 created a global public health crisis that resulted in unprecedented uncertainty, economic volatility and disruption in financial markets and in governmental, commercial and consumer activity in the United States and globally, including the markets that BMT serves. With the initial outbreak of COVID-19 in 2020, the Company experienced an initial decline in revenues as compared to the pre-COVID-19 period.

On March 27, 2020, the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” was signed into law and contained substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic and stimulate the economy, including one-time cash payments to taxpayers, increased unemployment benefits, and to support higher education through the Higher Education Emergency Relief Fund (HEERF). This stimulus resulted in increased serviced deposit balances, debit card spend, and revenues, a trend that has continued through the second quarter of 2021; however, we are unable to determine the
6


ultimate impact that the CARES Act, and/or COVID-19 pandemic will have on our future financial condition, results of operations, or liquidity; we will continue to monitor the impact closely.

Merger with Megalith Financial Acquisition Corporation

On January 4, 2021, BankMobile Technologies, Inc. (“BankMobile”), Megalith Financial Acquisition Corp. (the “Company”(“Megalith”) was incorporated in Delaware on November 13, 2017. The Company was formed for, and MFAC Merger Sub Inc., consummated the purpose of effecting atransaction contemplated by the merger capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on the financial technology and the financial services sectors. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of September 30, 2018, the Company had not commenced any operations. All activity through September 30, 2018 relates to the Company’s formation and Initial Public Offering, which is described below, and since the offering, the search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income earned on investments from the proceeds derived from the Initial Public Offering. The registration statement for the Company’s initial public offering (“Initial Public Offering”) was declared effectiveagreement 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. 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)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 (“Chardan”U.S. GAAP”), generating gross proceeds. Under this method of $6,560,000, which is described in Note 4.

Offering costsaccounting, 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 $9,556,766, consistingnet assets of $3,000,000 of underwriting fees, $6,000,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below)) and $556,766 of other costs. In addition, $1,785,062 of cash was held outsideMegalith, accompanied by a recapitalization. The excess of the Trust Account and is available for working capital purposes. As described in Note 5, the $6,000,000 deferred underwriting fee payable is contingent upon the consummation of a Business Combination by May 28, 2020, subject to the termsfair value of the underwriting agreement.

Followingshares issued over the closing of the Initial Public Offering on August 28, 2018, an amount of $151,500,000 ($10.10 per Unit) from 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 may be 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.

The Company’s management has broad discretion with respect to the specific applicationvalue of the net proceedsmonetary assets of Megalith was recognized as an adjustment to shareholders’ equity. There was no goodwill or other intangible assets recorded in the merger.


BankMobile was determined to be the accounting acquirer based on the following 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 Initial Public Offeringpost-combination company are primarily composed of individuals associated with BankMobile;

BankMobile was the larger entity based on historical operating activity, assets, revenues and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account)employees at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or moreclosing of the outstanding voting securitiesmerger;
The ongoing operating activities of the target or otherwise acquirespost-combination company comprise those of BankMobile.
The following table provides a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.


The Company will provide its holderssummary of the outstanding sharessignificant sources and uses of its Class A Common Stock, par value $0.0001 (“Class A Common Stock”), sold in the Initial Public Offering (the “Public Stockholders”) with the opportunitycash related to redeem all or a portion of their Public Shares (as defined above) upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.10 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the Initial Stockholders (as defined below) have agreed to vote its Founder Shares (as defined in Note 4) and any Public Shares held by them in favor of approving a Business Combination. In addition, the Initial Stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Class A Common Stock sold in the Initial Public Offering, without the prior consent of the Company.

The Company’s Sponsor, officers and directors (the “Initial Stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the Public Stockholders with the opportunity to redeem their shares of Class A Common Stock in conjunction with any such amendment.

If the Company is unable to complete a Business Combination by May 28, 2020, 21 months from the closing of the Initial Public Offering (“Combination Period”),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 BMT debt(8,834)
Cash received by BMT and used to pay down debt(6,738)
Total cash used to pay down outstanding debt (B)(15,572)
Net cash received by BMT from the reverse recapitalization transaction - as of March 31, 2021 (=A+B)4,988 
90 day merger true-up, cash paid by BMT in May 2021(3,672)
Final cash amount received by BMT from the reverse recapitalization transaction - June 30, 2021$1,316 

The following table provides a reconciliation of the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equalcommon shares related to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

merger:


The Initial Stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Initial Stockholders should acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to its deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.10 per shares held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

Note

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, June 30, 202112,200,378 

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NOTE 2 — Summary of Significant Accounting Policies

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying


These interim unaudited financial statements have been prepared in accordanceconformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for. These interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included inunaudited financial statements preparedreflect all normal and recurring adjustments that are, in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not included all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying financial statements include all adjustments, consisting of a normal and recurring nature, which are necessary forto present a fair presentationstatement of the financial position operatingand the results of operations and cash flows of BMT for the interim periods presented.

The accompanying Material estimates that are particularly susceptible to significant change in the near-term relate to the valuation of deferred tax assets, the valuation of the private warrants, and the annual goodwill and intangible asset impairment analysis. Prior periods presented for comparative purposes represent the balances and activity of BankMobile Technologies, Inc. (other than shares which were retroactively restated in connection with the merger).


Significant Accounting Policies

These interim unaudited financial statements should be read in conjunction with the Company’s final prospectus as filed with2020 audited financial statements of BMT, which describe BMT’s significant accounting policies. There have been no material changes to BMT’s significant accounting policies during the SEC on August 10, 2018, as well as the Company’s Form 8-K, as filed with the SEC filed on September 4, 2018 and the Company’s Form 8-K, as filed with the SEC filed on September 27, 2018. The interim results for the three and ninesix months ended SeptemberJune 30, 2018 are not necessarily indicative2021. Certain information and footnote disclosures normally included in the annual financial statements have been omitted from these interim unaudited financial statements as permitted by U.S. GAAP and pursuant to the rules and regulations of the results expected for the year ended December 31, 2018 or for any future interim period.

Emerging Growth Company

Section 102(b)(1) ofSecurities and Exchange Commission (the “SEC”).


As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act of 2012 (the “JOBS(“JOBS Act”) exempts emerging growth companies from being requiredallows the Company to comply withdelay adoption of new or revised financial accounting standardspronouncements applicable to public companies until such pronouncements are applicable to 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.companies. 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 financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of usinguse the extended transition period difficult or impossible because ofunder the potential differences in accounting standards used.

Cash and cash equivalents

JOBS Act.


The Company considers all short-term investments with an original maturityhas both Private and Public Warrants outstanding which are being treated differently for accounting purposes. Note 9 - Shareholders’ Equity and Private Warrant Liability provides additional information.
Recently Adopted Accounting Standards

On January 1, 2021, the Company adopted Financial Accounting Standards Board (“FASB”) ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves the application of three months or less when purchased to be cash equivalents.and simplifies guidance for other areas of Topic 740. The Companyadoption did not have any cash equivalentsa material impact on the Company’s unaudited consolidated financial statements and related disclosures.

Accounting Pronouncements Issued But Not Yet Adopted

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies that are adopted by BM Technologies as of September 30, 2018.

Cash heldthe required effective dates. The following paragraphs related to new pronouncements should be read in Trust Account

At September 30, 2018, the assets held in the Trust Account were held in U.S Treasury Bills.

Class A common stock subject to possible redemption

The Company accounts for its Class A common stock subject to possible redemption in accordanceconjunction with the guidance in"Significant Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the controlPolicies" of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2018, 15,901,867 shares of Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

Offering Costs

Offering costs consist principally of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly relatedNotes to the Initial Public Offering. Offering costs amounting to $9,556,766 were charged to stockholders’ equity upon the completion of the Initial Public Offering and an additional $964,445 were charged to stockholders’ equity upon the underwriter’s partial exercise of the over-allotment.

Concentration of Credit Risk

Audited Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accountsStatements included in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. At September 30, 2018 and December 31, 2017, the Company has not experienced losses on this accounts andour 2020 Form 10-K. Unless otherwise discussed, management believes the Company isimpact of any recently issued standards, including those issued but not exposed to significant risksyet effective, will not have a material impact on such account.

Financial Instruments

The fair valueits financial statements taken as a whole.


ASU 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Company’s assetsEffects of Reference Rate Reform on Financial Reporting. This guidance provides optional expedients and liabilities, which qualifyexceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This ASU is effective as of March 12, 2020 through December 31, 2022. Per the guidance, we are currently evaluating the impact of the transition from LIBOR to alternative reference rates on our financial instruments understatements, the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.

Net Income Per Share

The Company complies with accountingtransition 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 periods. The Company hasthis guidance but do not considered the effect of the warrants sold in the Initial Public Offering, the Private Placement sold simultaneous with the Initial Public Offering to purchase an aggregate of 6,560,000 shares of Class A common stock, or the additional 385,778 Private Placement Warrants sold in connection with the underwriter’s partial exercise of the over-allotment option in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. Asexpect a result, diluted earnings per share is the same as basic earnings per share for the periods.


The Company’s condensed statement 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 earnedsignificant impact on the Trust Account, net of applicable taxes, by the weighted average number of shares of Class A common stock outstanding since the initial issuance. Net 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 periods.

Use of Estimates

The preparation ofour 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the balance sheet carrying amounts 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 change in tax rates is 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.

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 September 30, 2018 or December 31, 2017. 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.

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

  Three months ended September 30, 2018  Nine months ended September 30, 2018  December 31, 2017 
Current expense $50,720  $50,720  $- 
Deferred expense  (66,570)  (66,912)  371 
Change in valuation allowance  66,570   66,912   (371)
             
Total income tax expense $50,720  $50,720  $- 

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

  Three months ended September 30, 2018  Nine months ended September 30, 2018  December 31, 2017 
Deferred tax assets $66,570  $66,912  $371 
Deferred tax liabilities  -   -   - 
Valuation allowance for deferred tax assets  (66,570)  (66,912)  (371)
             
Net deferred tax assets $-  $-  $- 

statements.


The deferred tax assets as of September 30, 2018 and December 31, 2017 were comprised of the tax effect of cumulative temporary differences as follows:

  Three months ended September 30, 2018  Nine months ended September 30, 2018  December 31, 2017 
Capitalized expenses before business combination $66,570  $66,912  $371 
Valuation allowance for deferred tax assets  (66,570)  (66,912)  (371)
             
Total $-  $-  $- 

As of September 30, 2018 and December 31, 2017, a valuation allowance was established related to the net deferred tax assets because management was unable to determine it was more likely than not, that these deferred tax assets may not be realized based upon recent periods of accumulated losses and future income tax projections.

Recent Accounting Pronouncements

In July 2017,August 2020, the FASB issued Accounting Standards Update (“ASU”ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) 2017-11,Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815)- Contracts in Entity’s Own Equity (Subtopic 815-40): Part I. Accounting for Certain FinancialConvertible Instruments with Down Round Features; Part II. Replacement ofand Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down roundcharacteristics of liabilities and equity.

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
8


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 features ofboth indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain equity-linked instruments (or embedded features) that resultcriteria required for equity classification; and (3) revises the guidance in the strike price being reduced on the basis of the pricing of future equity offerings. Also, entities must adjust their basicASC 260, Earnings Per Share, (“EPS”) calculationto require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the effectif-converted method. In addition, entities must presume share settlement for purposes of the down round provisioncalculating diluted EPS when triggered (that is, when the exercise price of the related equity-linked financialan instrument is adjusted downward because of the down round feature). That effect is treated asmay be settled in cash or shares.

As a dividend and as a reduction of income available to common stockholders in basic EPS. An entity will also recognize the effect of the trigger within equity. The guidancesmaller reporting company, ASU 2020-06 is effective for fiscal years, and interim periods within thoseBMT for fiscal years beginning after December 15, 2018.2023. 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 primarily relate to MasterCard incentive income, uncollected university subscription and disbursement services fees, and reimbursements to be received from a white label partner, and are recorded at face amounts less an allowance for all entities, including adoptiondoubtful 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. Charge-offs of uncollectible accounts have historically been immaterial. The allowance for doubtful accounts was 0 at December 31, 2020 and $0.1 million at June 30, 2021.
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 LifeJune 30,
2021
December 31,
2020
Leasehold improvements5 years$28 $28 
Furniture, fixtures and equipment10 years243 243 
IT equipment3 to 5 years1,726 1,675 
1,997 1,946 
Accumulated depreciation(1,648)(1,545)
Total$349 $401 
Depreciation is recorded in an interim period. Part IIOccupancy” on the unaudited consolidated statements of this update addressesincome (loss). BMT recorded depreciation expense of less than $0.1 million and $0.1 million for the difficultythree and six months ended June 30, 2021 respectively. For the three and six months ended June 30, 2020, BMT recorded depreciation expense of navigating Topic 480, Distinguishing Liabilities$0.1 million and $0.2 million, respectively.

Developed Software
The components of developed software were as follows:
(amounts in thousands)Expected Useful LifeJune 30,
2021
December 31,
2020
Higher One Disbursement business developed software10 years$27,400 $27,400 
Internally developed software3 to 5 years40,104 40,104 
Work-in-process1,763 1,620 
69,267 69,124 
Accumulated amortization(35,112)(29,467)
Total$34,155 $39,657 
Amortization expense is reported in Technology, communication and processing on the unaudited consolidated statement of income (loss). BMT recorded amortization expense of $2.8 million and $5.6 million for the three and six months ended
9


June 30, 2021, respectively. For the three and six months ended June 30, 2020, BMT recorded amortization expense of $2.7 million and $5.5 million, respectively.
NOTE 5 — GOODWILL AND 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 Equity,goodwill because of contractual or other legal rights. We currently have one intangible asset which is being amortized on a straight-line basis over twenty years.
Goodwill and other intangible assets are 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 existenceamount by which the reporting unit’s carrying amount exceeds its fair value; however, the loss recognized should not exceed the total amount of extensive pending contentgoodwill allocated to that reporting unit. The Company had $5.3 million of goodwill as of June 30, 2021 and December 31, 2020.

The components of other intangibles as of June 30, 2021 and December 31, 2020 were as follows:
(amounts in thousands)Expected Useful LifeJune 30,
2021
December 31,
2020
Customer relationships – universities20 years$6,402 $6,402 
Accumulated amortization(1,492)(1,332)
Total$4,910 $5,070 
Intangibles amortization expense is reported in Other expenses on the unaudited consolidated statement of income (loss). BMT recorded amortization expense of $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively. For the three and six months ended June 30, 2020, BMT recorded amortization expense of $0.2 million and $0.5 million, respectively.
The university customer relationships will be amortized in future periods as follows:
Remainder of 2021$160 
2022320 
2023320 
2024320 
2025320 
After 20253,470 
Total$4,910 
NOTE 6 — LEASES
At June 30, 2021, BMT leased 2 offices under operating leases. The leases consist of 5-year lease terms with options to renew the leases or extend the term annually or with mutual agreement. Leases include variable lease payments that are based on an index or rate, such as an annual increase in operating expenses over the initial lease year’s expenses. Variable lease payments are not included in the FASB Accounting Standards Codification. This pending contentliability or right-of-use (“ROU”) asset and are recognized in the period in which the obligations for those payments are incurred. BMT’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. As BMT’s operating leases do not provide an implicit rate, BMT utilized the incremental borrowing rate of our former parent when determining the present value of lease payments.

10


The following table summarizes operating lease ROU assets and operating lease liabilities and their corresponding balance sheet classification:
(amounts in thousands)ClassificationJune 30,
2021
December 31,
2020
Assets:
Operating lease ROU assetsOther assets$751 $1,218 
Liabilities:
Operating lease liabilitiesOperating lease liabilities$774 $1,131 
The following table summarizes operating lease cost and its corresponding income statement location for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(amounts in thousands)Classification2021202020212020
Operating lease costOccupancy$242 $275 $517 $551 
The maturities of non-cancelable operating lease liabilities were as follows at June 30, 2021:
(amounts in thousands)June 30,
2021
2021$362 
2022419 
Total minimum payments781 
Less: interest(7)
Present value of lease liabilities$774 
The following table summarizes the weighted average remaining lease term and discount rate for BMT’s operating leases at June 30, 2021 and December 31, 2020:
June 30,
2021
December 31,
2020
Weighted average remaining lease term (years)
Operating leases1.1 years1.6 years
Weighted average discount rate
Operating leases1.0 %1.4 %
NOTE 7 — DEBT
Borrowings from partner bank
BMT has a $10.0 million line of credit with its partner bank. The amount that may be borrowed is subject to a borrowing base limit that is based on a percentage of BMT’s accounts receivable balance. The borrowing base limit was $3.8 million as of June 30, 2021. The $10.0 million line of credit carries an interest rate equal to one-month LIBOR plus 375 bps and matures on January 4, 2022. LIBOR means the resultOne Month London Inter-Bank Offered Rate as published in the Money Section of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirementsWall Street Journal on the analysislast U.S. business day of stockholders’ equity for interim financial statements. Under the amendments, an analysismonth, but in no event shall LIBOR be less than 50 basis points. Interest is paid monthly in arrears with the principal due in its entirety at the maturity date on January 4, 2022. Borrowed funds may be repaid at any time without penalty. There was 0 balance outstanding under the line of changes in each captioncredit as of stockholders’ equity presentedJune 30, 2021. As of December 31, 2020, there was $21.0 million outstanding under a previous $50.0 million line of credit from the Company’s former parent, which has since been terminated.

NOTE 8 — COMMITMENTS AND CONTINGENCIES
Loss contingencies, including claims and legal actions arising in the balance sheet mustordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. The Company anticipates its first presentation of changes in stockholders’ equity, in accordance with the new guidance, will be included in its Form 10-Q for the quarter ended March 31, 2019.

The Company’s managementreasonably estimated. Management does not believe there are any such matters that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, wouldwill have a material effect on the Company’s financial statements.

statements that are not currently accrued for. However, in light of the uncertainties inherent in these matters, it is possible that the ultimate resolution may have a material adverse effect on BMT’s results of operations for a particular period, and future changes in circumstances or additional

11


information could result in accruals or resolution in excess of established accruals, which could adversely affect BMT’s results of operations, potentially materially.

NOTE 9 — SHAREHOLDERS’ EQUITY AND PRIVATE WARRANT LIABILITY

The consolidated statements of changes in equity reflect the reverse recapitalization as of January 4, 2021, as discussed in Note 3 — Initial Public Offering and Private Placement

Pursuant1. Since BankMobile was determined to be the accounting acquirer in the transaction, all periods prior to the Initial Public Offering, the Company sold 15,000,000 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 included in the Units being offered, 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”)consummation of the Company’s Class B Common Stock, par value $0.0001 (“Class B Common Stock”) for an aggregate pricetransaction reflect the balances and activity of $25,000. The Founder Shares will automatically convert intoBankMobile (other than shares of Class A Common Stock at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions, as described in Note 6. Holders of Founder Shares may also elect to convert their shares of Class B Common Stock into an equal number of shares of Class A Common Stock, subject to adjustment, at any time. The Sponsor agreed to forfeit up to 562,500 Founder Shares 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 Sponsor agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination or (B) subsequent to the initial 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 the initial 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 was 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. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants are non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees. In addition, for as long as the Private Placement Warrants are held by Chardan or its designees or affiliates, they may not be exercised after five years from the effective date of the registration statement for the Initial Public Offering.

The Sponsor and Chardan and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.

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 will not be able to sell these securities 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.

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”)transaction). 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 fully repaid these amounts to the Sponsor in September 2018.

Due to affiliates

In conjunction with the formation of the Company, affiliates of the Sponsor paid $32,726 of organizational and deferred offering costs on behalf of the Company. The Company fully repaid these amounts to the affiliates in September 2018.

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Support Services

The Company will 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, as well as a bonus of $78,000 which was paid out after the successful completion of the Initial Public Offering.

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 expensed a total of $2,000 during the three and nine months ended September 30, 2018.

Note 5 — Commitments and Contingencies

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 incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Company 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, 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 $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 $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 — 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 SeptemberJune 30, 2018,2021, there were 1,027,022 (excluding 15,901,86712,200,378 shares of Class A Common Stockcommon stock issued and outstanding, which includes the 300,000 performance shares discussed below. At December 31, 2020 there were 6,123,432 shares of common stock issued and outstanding as retroactively restated in conjunction with the merger. Each holder of common stock is entitled to 1 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.

Performance Shares

The Company has 300,000 common shares, par value $0.0001 per share, issued and outstanding that contain a restrictive legend, subject to possible redemption)release only if the vesting criteria occurs before the seventh anniversary of the closing date of the merger. If the vesting criteria has not occurred prior to the seventh anniversary of the closing date of the merger, the shares will be forfeited and cancelled. The vesting criteria means 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 Class A Common Stock issuedits 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 outstanding. As of December 31, 2017, there were 0similar transactions affecting the shares of Class A Commonthe 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.

Preferred Stock issued and outstanding.

Class B Common Stock


The 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 September 30, 2018, 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. As of December 31, 2017, there were 4,312,500 shares of Class B Common Stock outstanding.

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 will automatically convert into shares of Class A Common Stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A Common Stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B Common Stock shall convert into shares of Class A Common Stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B Common Stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A Common Stock issuable upon conversion of all shares of Class B Common Stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of Common Stock outstanding upon the completion of the Initial Public Offering plus all shares of Class A Common Stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent warrants issued to the Sponsor or its affiliates upon conversion of loans made to the Company).

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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 board of directors. As SeptemberAt June 30, 20182021 and December 31, 2017,2020, there were no0 shares of preferred stock issued or outstanding.


Warrants -The Public Warrants will become exercisable on the later of (a)

At June 30, days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A2021, there were 23,874,667 warrants to purchase our common stock issuable upon exerciseoutstanding, consisting of 16,928,889 public warrants and 6,945,778 private warrants. Each whole warrant entitles the Public Warrants and a current prospectus relatingregistered holder to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closingpurchase 1 whole share of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the Class A common stock issuable upon exerciseat a price of the Public Warrants.$11.50 per share. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Public Warrants will expire five years after the completion of a Business Combinationthe merger (January 4, 2026) or earlier upon redemption or liquidation.

liquidation and the Company has redemption rights if our common stock trades above $24.00 for 20 out of 30 days. The Private Placement Warrantsprivate warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering,public warrants except that the Private Placement Warrantsprivate warrants are non-redeemable 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 ofexercisable on a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemablecashless basis so long as they are held by the initial purchaserssponsor and certain others. As of June 30, 2021, NaN of the Company’s outstanding Private or such purchasers’ permitted transferees. If thePublic Warrants have been exercised.


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.

The Company may call the Public Warrants are treated differently for redemption (exceptaccounting purposes, as follows:


Private Warrants

In accordance with respect to FASB ASC Topic 480, Distinguishing Liabilities from Equity, thePrivate Placement Warrants):

in wholeWarrants are accounted for as liabilities and not in part;

at a price of $0.01 per warrant;

upon a minimum of 30 days’ prior written notice of redemption; and

if, and only if, the last reported closing price of the shares 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.

Note 7 — Trust Account and Fair Value Measurement

The Trust Account can be invested 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-7 of the Investment Company Act.

The Company’s amended and restated certificate of incorporation provide that, other than the withdrawal of interest to pay income taxes and up to $100,000 of interest to pay dissolution expenses if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Business Combination; (ii) 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.

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value atmarked-to-market each reporting period with the change recognized in earnings. In general, under the mark-to-market accounting model, as our stock price increases, the warrant liability increases, and non-financial assetswe recognize additional expense in our income statement – with the opposite when our stock price declines. Accordingly, the periodic revaluation of the

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Private Warrants could result in significant volatility in our reported earnings. For the three months ended June 30, 2021, we recognized $3.1 million of loss in our income statement due to the revaluation, and liabilities thatfor the six months ended June 30, 2021, we recognized a gain of $11.9 million. The amounts recognized are re-measureda mark-to-market accounting determination and reported atare noncash. Additional information regarding the Private Warrants and their impact on our financial statements is provided below:

Opening Balance Sheet Impact: As of the date of our merger on January 4, 2021, the $30.8 million fair value at least annually.

of the private warrants was recorded as a warrant liability on our balance sheet in Liability for Private Warrants with a corresponding offset to Additional paid-in-capital within equity. The fair value of the Private 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 we used in the pricing formula at the time of our merger were: a term of 5 years; volatility of 20%; a dividend yield of 0; 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.


Income Statement Impact: Subsequent to the close of the merger, any change in the fair value of the Private Warrants is recognized in our income statement below operating profit as “(Loss) gain onfair value of private warrant liability” with a corresponding amount recognized in the liability account on our balance sheet. The Private Warrant liability is presented in the account Liability for Private Warrants in the long-term liabilities section of our balance sheet. During the three and six months ended June 30, 2021, we recorded a loss of $3.1 million and net gain of $11.9 million, respectively, on the revaluation of the Private Warrants.

Balance Sheet Impact: As noted above, the change in the balance of the warrant liability on our balance sheet is due to the fair value change of the underlying warrants. When warrants are exercised, the fair value of the liability will be reclassified to Additional paid-in capital within equity. The cash received for the exercise of warrants is reflected in cash and cash equivalents, and the corresponding offset is also in Additional paid-in-capital in 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. The cash received for any future exercise of warrants will be recorded in cash flows from financing activities.

Shareholders’ Equity Impact: The impact to Additional paid-in-capital as of the opening balance sheet is highlighted above. Any future exercises of the Private Warrant warrants will result in a reduction of the Private Warrant liability on the balance sheet with a corresponding increase to Additional paid-in-capital.

Public Warrants

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 quarterly 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.

Dividend Policy
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of its initial business combination. The payment of cash dividends by the Company in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of the board of directors of the Company. Further, the Company’s line of credit agreement with our lender prohibits the Company from issuing any dividends or making any distributions to shareholders.

Equity Incentive Plan
Our 2020 Equity Incentive Plan (the “Equity Incentive Plan”) provides for the 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 of which may be granted to employees, including officers, non-employee directors and consultants of us and its affiliates. Additionally, the Equity Incentive Plan provides for the grant of performance cash awards. ISOs may be granted only to employees. All other awards may be granted to employees, including officers, and to non-employee directors and consultants. Initially, the aggregate number of shares of Common Stock that may be issued pursuant to stock awards under the Equity Incentive Plan will not
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exceed 10% of the issued and outstanding shares of our common stock. Grants made under the Equity Incentive Plan for the three and six month periods ended June 30, 2021 and the year ended December 31, 2020 were immaterial.
NOTE 10 — REVENUES

Revenues

The table below presents the Company’s revenues disaggregated by nature of the revenue stream and the pattern or timing of revenue recognition for the periods indicated. The Company has 1 reportable segment and all revenues are earned in the U.S.

Three Months Ended June 30,Six Months Ended June 30,
(amounts in thousands)2021202020212020
Revenues from contracts with customers:
Revenue recognized at point in time:
Interchange and card revenue$7,186 $6,069 $15,537 $12,676 
Servicing fees from partner bank10,579 5,024 19,951 9,789 
Account fees2,641 2,819 5,327 5,728 
University fees - disbursement activity268 390 539 685 
Other1,156 124 3,806 316 
   Total revenue recognized at point in time21,830 14,426 45,160 29,194 
Revenue recognized over time:
University fees - subscriptions1,063 1,005 2,116 1,995 
   Total revenue recognized over time1,063 1,005 2,116 1,995 
Total revenue recognized from contracts with customers$22,893 $15,431 $47,276 $31,189 

Deferred revenues

Deferred revenue consists of amounts received from clients 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 balance sheet in Deferred revenue, current and Deferred revenue, non-current.

The deferred revenue balances were as follows:
 June 30,
(amounts in thousands)20212020
Deferred revenue, beginning of period$4,689 $1,938 
Deferred revenue, end of period$6,275 $1,130 

During the six months ended June 30, 2021 and 2020, the Company recognized revenue of approximately $2.5 million and $2.3 million, respectively, in the period from amounts included in deferred revenue at the beginning of the period.

Unbilled receivables

The Company had $1.1 million of unbilled receivables as of June 30, 2021, and 0 as of December 31, 2020. Unbilled receivables are reported in Accounts receivable on the Consolidated Balance Sheets.
NOTE 11 — INCOME TAXES

The Company records tax expense during interim periods using an estimated annual effective tax rate approach. The Company’s effective tax rate was 14.0% for the six months ended June 30, 2021. The effective tax rate differs from the Company’s marginal tax rate of 27.0% due to the non-taxable fair value adjustments related to the non-compensatory private
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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.

Deferred tax assets as of June 30, 2021 was $26.4 million and consisted mainly of Section 197 intangibles. These Section 197 intangibles resulted from a step up in tax basis of the assets acquired from BankMobile Technologies, Inc., which for GAAP purposes were not recorded at fair value. The Company has no net operating loss or other carryforward deferred tax assets. A valuation allowance is recognized when it is more likely than not that all or a portion of the deferred tax asset will be realized based on the weight of the available positive and negative evidence. Management determined the verifiable negative evidence from the cumulative losses of the trade or business of BankMobile Technologies, Inc. outweighed any available positive evidence as of June 30, 2021, but will continue to evaluate this determination each quarterly period going forward.
NOTE 12 — EARNINGS (LOSS) PER SHARE
The following are the components and results of operations and earnings (loss) per common share calculations for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
(amounts in thousands, except per share data)2021202020212020
Net (loss) income available to common shareholders - used in calculating basic EPS$(1,836)$(4,119)$17,053 $(8,653)
Adjustment for private warrant liability (1)
(11,947)
Net (loss) income - used in calculating diluted EPS$(1,836)$(4,119)$5,106 $(8,653)
Weighted-average common shares outstanding – basic11,9006,12311,9006,123
Weighted-average common shares outstanding – diluted11,9006,12313,3146,123
Basic (loss) income per common share
$(0.15)$(0.67)$1.43 $(1.41)
Diluted (loss) income per common share$(0.15)$(0.67)$0.38 $(1.41)
(1) Diluted earnings per share for the six months ended June 30, 2021, is calculated based on adjusted net income of $5.1 million due to the elimination of the revaluation gain on the private warrant liability; for the three months ended June 30, 2021 the loss on the revaluation of the private warrant liability is not eliminated in the calculation of diluted earnings per share as the warrants are considered anti-dilutive.

Certain outstanding securities have been excluded from the computation of diluted weighted average shares outstanding for the periods noted below as their effect would be anti-dilutive.
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Private warrants outstanding6,945,778 6,945,778 
Public warrants outstanding16,928,889 
Performance based shares outstanding300,000 300,000 
Total24,174,667 7,245,778 
NOTE 13 — DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
BMT uses fair value measurements to 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 reflects management’s estimateconsidered to be financial instruments. For fair value disclosure purposes, BMT utilized certain fair value measurement criteria under ASC 820, Fair Value Measurements (“ASC 820”), as explained below.
In accordance with ASC 820, the fair value of amountsa financial instrument is the price that the Company would havebe received in connection with the sale of the assetsto 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 BMT’s
15


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. Examplesa change in valuation technique or the use 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 ofmultiple valuation techniques may be appropriate.  In such instances, determining the assumptions thatprice at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use in pricing the asset or liability.


of significant judgment. The following table presents information about the Company’s assets that are measured at fair value onis a recurring basis at September 30, 2018reasonable point within the range that is most representative of fair value under current market conditions.

The fair value guidance also establishes a fair value hierarchy and December 31, 2017, and indicatesdescribes 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 hierarchy is based on the lowest level of input that is significant to the valuation inputsfair value measurement.
The following methods and assumptions were used to estimate the Company utilized to determine such fair value:

Description Level  September 30,
2018
  December 31,
2017
 
Assets:         
Marketable securities in Trust Account 1  $171,223,302  $               0 

Note 8 — Subsequent Events

values of BMT’s financial instruments as of June 30, 2021 and December 31, 2020:

Cash and cash equivalents:
The Company evaluated subsequent events and transactions that occurred aftercarrying amount reported on the balance sheet for cash and cash equivalents consists of a non-interest bearing deposit, which approximate its fair value. The deposit is classified as a Level 1 fair value, based upon the lowest level of input that is significant to its fair value measurement.
Accounts receivable:
The carrying amount of accounts receivable approximates fair value because of the short term nature of these items.

Payable to partner bank:
The payables to our partner bank represent the amount due resulting from normal operating activities between our partner bank and BMT. The carrying amount approximates its fair value due to the short term nature of the item.
Borrowings from partner bank:
BMT has a $10.0 million line of credit with our partner bank, with 0 outstanding as of June 30, 2021. The carrying amount of the borrowings from our partner bank approximates its fair value due to its floating interest rate and short-term nature. The liability is classified as a Level 2 fair value based upon the lowest level of input that is significant to the fair value measurement. As of December 31, 2020, there was $21.0 million outstanding under a previous $50.0 million line of credit from the Company’s former parent, which has since been terminated.

Liability for Private Warrants:

The fair value of the Private Warrants was estimated using a modified version of the Black-Scholes option pricing formula for European calls. We assumed a term for the Private Warrants equal to the contractual term from the merger date and then
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discounted the resulting value to the valuation date. Among the key inputs and assumptions we used in the pricing formula at June 30, 2021 were the following: a term of 5 years; volatility of 20%; a dividend yield of 0; an underlying stock price of $12.44; a risk free interest rate of 0.77%; and a closing price of the Public Warrants of $2.57 per share. 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 values of BMT’s financial instruments at June 30, 2021 and December 31, 2020 were as follows:
Fair Value Measurements at June 30, 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$19,589 $19,589 $19,589 $$
Liabilities:
Liability for private warrants (a)
$18,893 $18,893 $$$18,893 
(a) The initial fair value of the warrants was $30.8 million on January 4, 2021, the merger date. The $11.9 million change in fair value during the six months ended June 30, 2021 was reported in (Loss) gain on fair value of private warrant liability on the statements of income (loss).
Fair Value Measurements at December 31, 2020
(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$2,989 $2,989 $2,989 $$
Liabilities:
Borrowings from partner bank$21,000 $21,000 $0$21,000 $
NOTE 14 — RELATIONSHIP WITH OUR PARTNER BANK

Our partner bank holds the FDIC insured deposits that we source and service and is the issuing bank on our debit cards. Our
partner bank pays us a deposit servicing fee for the deposits generated and passes through interchange income earned from
debit transactions. The CEO of our partner bank is an immediate family member of our CEO.

Servicing fees and interchange income from partner bank

On January 4, 2021, we entered into a Deposit Processing Services Agreement (the “Deposit Servicing Agreement”) with our partner bank, providing that it 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 accounts. The initial term continues until December 31, 2022, which shall automatically renew for additional three year terms unless either party gives written notice of non-renewal within 180 days prior to the expiration of the term. As compensation, our partner bank retains any and all revenue generated from the funds held in the deposit accounts, and pays us a monthly servicing fee largely based on deposits, and a monthly interchange fee equal to all debit card interchange revenues on demand deposit accounts generated by us for our partner bank plus the difference between Durbin Exempt and Durbin regulated interchange revenue.
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Payable to partner bank

At the end of each month, BMT and its partner bank typically have a cash settlement payment related to on-going operating activities between the entities. At June 30, 2021, BMT had $7.1 million payable to its partner bank, primarily consisting of prepaid fees and for certain services received, compared to $5.1 million at December 31, 2020.
Bank Borrowings

BMT has a $10.0 million line of credit with our partner bank, with 0 outstanding at June 30, 2021. We had $21.0 million of debt outstanding at December 31, 2020 under the prior credit arrangement.
Transition Services Agreement

On January 4, 2021, we entered into a Transition Services Agreement with our partner bank, pursuant to which each party agrees for a period of up to twelve months to provide certain transition services listed therein to the date thatother party. In consideration for the financial statements available to be issued.

services, we pay our partner bank a service fee of $12,500 per month, plus any expenses associated with the services. We may terminate the Transition Services Agreement without penalty with at least 30 days advance written notice if we determine there is no longer a business need for the services.

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ITEM 22. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References


The purpose of this Management’s Discussion and Analysis (“MD&A”) is to facilitate an understanding of significant factors influencing the quarterly operating results, financial condition and cash flows of BM Technologies, Inc. (“BMT”). Additionally, this MD&A conveys our expectations of the potential impact of known trends, events or uncertainties that may impact future results. You should read this discussion in conjunction with our financial statements and related notes included in this report (the “Quarterly Report”)Quarterly Report on Form 10-Q and our Annual Report for the year ended December 31, 2020. Historical results and percentage relationships are not necessarily indicative of operating results for future periods. Unless the context otherwise requires, for purposes of this Management’s Discussion and Analysis, references to the “Company,” “we,” “us” or the “Company”and “our” refer to the business and operations of BM Technologies, Inc. (“BMT”) and its subsidiaries.

In March 2020, the outbreak of COVID-19 was recognized as a pandemic by the World Health Organization. The spread of COVID-19 created a global public health crisis that resulted in unprecedented uncertainty, economic volatility and disruption in financial markets and in governmental, commercial and consumer activity in the United States and globally, including the markets that BMT serves. With the initial outbreak of COVID-19 in 2020, the Company experienced an initial decline in revenues as compared to the pre-COVID-19 period, which was followed by an increase in revenues resulting from the benefit of federal stimulus on account balances and activity levels, a trend that has continued into the first quarter of 2021. The extent to which the COVID-19 pandemic will impact the operations and financial results of BMT during the remainder of 2021 and beyond remains uncertain, and we will continue to monitor the impact closely.
FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. These forward-looking statements include, but are not limited to, statements regarding the Company’s industry and market sizes, future opportunities for the Company and the Company’s estimated future results. Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
BUSINESS OVERVIEW
BM Technologies, Inc. (“BMT” or “the Company”) 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. BMT facilitates deposits and banking services between a customer and an FDIC insured partner bank. BMT’s Banking-as-a-Service (“BaaS”) business model leverages partners’ existing customer bases to achieve high volume, low-cost customer acquisition in its Disbursement, White Label, and Workplace Banking businesses. BMT has four primary revenue sources: interchange and card revenue, servicing fees from the Bank, account fees, and university fees. The majority of revenues are driven by customer activity (deposits, spend, transactions, etc.) but may be paid or passed through by the Bank, universities, or paid directly by customers.
BMT is a Pennsylvania corporation, incorporated in May 2016, and until January 4, 2021, was a wholly-owned subsidiary of Customers Bank (“Customers Bank”). Customers Bank is a Pennsylvania state-chartered bank and a wholly-owned subsidiary of Customers Bancorp, Inc. (the “Bancorp” or “Customers Bancorp”), a bank holding company. Customers Bank is our current partner bank. Our partner bank holds the FDIC insured deposits that we source and service and is the issuing bank on our debit cards. Our partner bank pays us a deposit servicing fee for the deposits generated and passes through interchange income earned from debit transactions. Deposit servicing fees and interchange income are our largest revenue sources.

BMT is not a bank, does not hold a bank charter, and it does not provide banking services, and as a result we are not subject to direct banking regulation, except as a service provider to our partner bank. We are also subject to the regulations of the Department of Education, due to our student Disbursements business, and are periodically examined by them. Our contracts with most of our higher education institutional clients requires us to comply with numerous laws and regulations, including, where applicable, regulations promulgated by the Department of Education (“ED”) regarding the handling of student financial aid funds received by institutions on behalf of their students under Title IV; FERPA; the Electronic Fund Transfer Act and
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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 GLBA. Other products and services offered by us may also be subject to other federal and state laws and regulations.

BMT’s higher education serviced deposits fluctuate throughout the year due primarily to the relationship between the deposits level and the typical cycles of student enrollment in higher education institutions. Serviced deposit balances typically experience seasonal lows in December and July when student enrollment is lower and experience seasonal highs in September and January when student enrollment is high and 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 Corporation

On January 4, 2021, BankMobile Technologies, Inc. (“BankMobile”), Megalith Financial Acquisition Corp. References(“Megalith”), and MFAC Merger Sub Inc., consummated the transaction contemplated by the merger agreement entered into on August 6, 2020. In connection with the closing of the merger, Megalith Financial Acquisition Corp. changed its name to BM Technologies, Inc. (the “Company”). 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 this method of accounting, Megalith was treated as the “acquired” 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. Prior periods presented for comparative purposes represent the balances and activity of BankMobile Technologies, Inc. (other than shares which were retroactively restated in connection with the merger).
BUSINESS MEASUREMENTS

We believe that the following business measurements are important performance indicators for our “management”business segments:

Debit card POS spend (higher education and new business). Spend represents the dollar amount that our customers spend on their debit cards through a signature or PIN network. Spend is a key performance indicator, as the company earns a small percentage of every dollar spent as interchange income, and spend is the primary driver of our “management team”card revenues.

Serviced deposits (ending and average; higher education and new business). Serviced deposits represent the dollar amount of deposits that are in customer accounts serviced by our Company. Our deposit servicing fee is based on a contractual arrangement with our partner bank and the average balance of serviced deposits is the primary driver of our deposit servicing fees. Average deposits have the strongest correlation to current period serviced deposits, but ending deposits provide information at a point in time and serve as the starting point for the following period.

Higher education retention. Retention is a key measure of our value proposition with higher education customers. We measure retention in terms of Signed Student Enrollments (SSEs), which represents the number of students enrolled at higher education institutions. Retention is calculated by subtracting lost SSEs from starting SSEs and taking that amount as a percentage of the starting SSEs.

Higher education financial aid refund disbursement. Represents the dollar amount of all funds that we process for a college or university partner, whether it is distributed by ACH, check, or into a BankMobile Vibe account. This is a measure of the business we process for our higher education partners in exchange for their subscription and other fees, as well as a measure of the potential that we have the opportunity to capture into our serviced accounts.

Higher education organic deposits. Organic deposits represent the dollar total of all deposits made into a higher education BankMobile Vibe account except for funds processed through a college or university partner. Because this includes funds that the account holder adds to the account and excludes the funds processed through the higher ed institution, it is viewed as a strong indicator of traction with the customer.



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CRITICAL ACCOUNTING POLICIES
For information regarding our critical accounting policies and estimates, please refer to our officers and directors, and referencesAnnual Report on 10-K for the fiscal year ended December 31, 2020. There have been no material changes to the “sponsor” refercritical accounting policies previously disclosed in that report.

The Company has both Private and Public Warrants outstanding which are being treated differently for accounting purposes. Note 9 - Shareholders’ Equity and Private Warrant Liability in the Notes to MFA Investor Holdings LLC. the Unaudited Financial Statements herein provides additional information.

NEW ACCOUNTING PRONOUNCEMENTS
The FASB has issued accounting standards that have not yet become effective and that may impact BMT’s consolidated financial statements or its disclosures in future periods. Note 2 — Basis of Presentation and Significant Accounting Policies in the Notes to Unaudited Financial Statements provides information regarding those accounting standards.
RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition andour results of operations should be read in conjunction with theour unaudited consolidated financial statements, including the accompanying notes.
The following summarized tables set forth our operating results for the three and six months ended June 30, 2021 and 2020:
Three Months Ended June 30,Change%
Change
(dollars in thousands, except per share data)20212020
Operating revenues$22,893 $15,431 $7,462 48 %
Operating expenses20,682 19,144 1,538 %
Income (loss) from operations2,211 (3,713)5,924 NM
Loss on fair value of private warrant liability(3,056)— (3,056)NM
Interest expense(42)(399)357 (89)%
Loss before income tax expense    (887)(4,112)3,225 78 %
Income tax expense949 942 NM
Net loss$(1,836)$(4,119)$2,283 55 %
Basic (loss) per share$(0.15)$(0.67)$0.52 78 %
Diluted (loss) per share
$(0.15)$(0.67)$0.52 78 %
NM refers to changes greater than 150%.
We had substantially higher operating profitability in the three months ended June 30, 2021 compared to the three months ended June 30, 2020, which was primarily driven by additional revenues, which increased 48%, while operating expenses increased 8%. Diluted loss per share was $(0.15) in the three months ended June 30, 2021 compared to a loss of $(0.67) per share in the same period in 2020.
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Six Months Ended June 30,Change%
Change
(dollars in thousands except per share data)20212020
Operating revenues$47,276 $31,189 $16,087 52 %
Operating expenses39,298 39,035 263 %
Income (loss) from operations7,978 (7,846)15,824 NM
Gain on fair value of private warrant liability11,947 — 11,947 100 %
Interest expense(96)(793)697 (88)%
Income (loss) before income tax expense    19,829 (8,639)28,468 NM
Income tax expense2,776 14 2,762 NM
Net income (loss)$17,053 $(8,653)$25,706 NM
Basic earnings (loss) per share$1.43 $(1.41)$2.84 NM
Diluted earnings (loss) per share$0.38 $(1.41)$1.79 NM
NM refers to changes greater than 150%.
For the six months ended June 30, 2021, we had substantially higher operating profitability consistent with the second quarter of 2021. The increase was almost entirely due to additional revenues, while operating expenses were up slightly. Reflecting the improved operating profitability, as well as the recognition of the noncash gain on the revaluation of the fair value of the private warrants, net income was substantially higher in the first half of 2021. Diluted earnings per share was $0.38 per share in the six months ended June 30, 2021 compared to a loss of $(1.41) per share in the same period in 2020.
Our quarterly operating revenues and expenses are discussed further below.
Income Tax Expense
The Company records tax expense during interim periods using an estimated annual effective tax rate approach. The Company’s effective tax rate was 14.0% for the six months ended June 30, 2021. The effective tax rate differs from the Company’s marginal tax rate of 27% 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.
Operating Revenues
For the Three Months Ended June 30,
(dollars in thousands)20212020Change%
Change
Revenues:
Interchange and card revenue$7,186 $6,069 $1,117 18 %
Servicing fees from partner bank10,579 5,024 5,555 111 %
Account fees2,641 2,819 (178)(6)%
University fees1,331 1,395 (64)(5)%
Other revenue1,156 124 1,032 NM
     Total operating revenues$22,893 $15,431 $7,462 48 %
Total revenues increased $7.5 million, or 48%, in the three months ended June 30, 2021 compared to the three months ended June 30, 2020. The higher revenue was due to a $5.6 million increase in Servicing fees from our partner bank, a $1.1 million increase in Interchange and card revenue, and a $1.0 million increase in Other revenue. Account fees decreased by $0.2 million and University fees decreased slightly. The $5.6 million, or 111%, increase in Servicing fees was driven by a 126% increase in average deposits in the three months ended June 30, 2021, to $1.6 billion, compared to the three months ended June 30, 2020. Interchange and card revenue was up $1.1 million, or 18%, driven by a 19% increase in total spend, which increased to $828.0 million in the second quarter of 2021 period compared to $693.4 million in the second quarter of 2020. Other revenues
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increased $1.0 million, primarily due to additional project revenues from our white label partner, which can vary from quarter-to-quarter based on project status, new contracts, and milestones. Account fees declined $0.2 million, or 6% and University fees decreased 5%.
For the Six Months Ended June 30,
(dollars in thousands)20212020Change%
Change
Revenues:
Interchange and card revenue$15,537 $12,676 $2,861 23 %
Servicing fees from partner bank19,951 9,789 10,162 104 %
Account fees5,327 5,728 (401)(8)%
University fees2,655 2,680 (25)(1)%
Other revenue3,806 316 3,490 NM
     Total operating revenues$47,276 $31,189 $16,087 52 %
NM refers to changes greater than 150%.
For the six months ended June 30, 2021, total revenues increased $16.1 million, or 52%, compared to the six months ended June 30, 2020. The higher revenue was due to a $10.2 million increase in Servicing fees from our partner bank, primarily driven by an increase in average deposits. In addition, we had a $3.5 million increase in Other revenue, again due to higher white label project revenues, and a $2.9 million increase in Interchange and card revenue due to increased total spend. Account fees decreased by $0.4 million while University fees decreased slightly.
Operating Expenses
For the Three Months Ended June 30,
(dollars in thousands)20212020Change%
Change
Technology, communication, and processing$8,924 $7,870 $1,054 13 %
Salaries and employee benefits7,170 6,640 530 %
Professional services2,126 1,170 956 82 %
Provision for operating losses1,401 1,024 377 37 %
Occupancy284 386 (102)(26)%
Customer related supplies186 472 (286)(61)%
Advertising and promotion125 210 (85)(40)%
Merger and acquisition related expenses— 25 (25)(100)%
Other466 1,347 (881)(65)%
   Total operating expenses$20,682 $19,144 $1,538 %
For the three months ended June 30, 2021, operating expenses increased $1.5 million, or 8%, compared to the three months ended June 30, 2020 primarily due to higher technology, professional service fees, and salaries and benefits. Technology spend increased $1.1 million due to higher spending on core processing. Professional service fees increased $1.0 million, or 82%, due largely to additional legal, audit, and insurance costs associated with becoming a public company. Salaries and employee benefits increased $0.5 million, or 8%.
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For the Six Months Ended June 30,
(dollars in thousands)20212020Change%
Change
Technology, communication, and processing$17,576 $13,948 $3,628 26 %
Salaries and employee benefits12,593 14,105 (1,512)(11)%
Professional services3,863 5,128 (1,265)(25)%
Provision for operating losses2,730 1,907 823 43 %
Occupancy636 805 (169)(21)%
Customer related supplies661 523 138 26 %
Advertising and promotion316 427 (111)(26)%
Merger and acquisition related expenses— 75 (75)(100)%
Other923 2,117 (1,194)(56)%
   Total operating expenses$39,298 $39,035 $263 %
NM refers to changes greater than 150%.
For the six months ended June 30, 2021, operating expenses increased $0.3 million, or 1%, compared to the six months ended June 30, 2020. Although we incurred higher technology costs, as well as a higher provision for operating losses, these were almost entirely offset by lower expenses in other categories. Technology expenses increased $3.6 million, or 26%, year-over-year due to higher spending on core processing and the notes thereto contained elsewhere in this Quarterly Report. Certain information containedimpact of a vendor credit in the discussionfirst quarter of 2020. The provision for operating losses increased $0.8 million due to increased Reg-E dispute losses given increases in debit card spend. These higher costs were offset by (i) lower salaries and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” withinemployee benefits costs, which declined $1.5 million, or 11%, primarily due to the meaningimpact of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discusseda headcount reduction in the forward-looking statements. For information identifying important factorsthird quarter of 2020; (ii) lower professional services fees, which declined $1.3 million, or 25%, primarily due to the successful implementation of management’s plan to reduce dependence on use of higher costing outside contractors through replacement by or conversion to full time employees; and (iii) lower other expenses, which declined $1.2 million, or 56%, due largely to lower intangible amortization and travel related costs.

LIQUIDITY AND CAPITAL RESOURCES
We currently finance our operations through cash flows provided by operating activities and also have a line of credit with our partner bank that we could cause actual results to differ materiallydraw upon. We had a substantial increase in cash from those anticipatedoperating activities in the forward-looking statements, please refersix months ended June 30, 2021 compared to the Risk Factors section of the Company’s final prospectussix months ended June 30, 2020, and we continue to project positive operating cash flows for the Initial Public Offering filed with2021 fiscal year. We had $19.6 million of cash and cash equivalents as of June 30, 2021, and our line of credit provides up to $10.0 million of borrowings. As of June 30, 2021, we had zero principal outstanding under the SEC. The Company’s securities filings can be accessed on the EDGAR sectionline of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a resultcredit.
Our cash and cash equivalents consists of new information, future events or otherwise.

Overview

We are a blank check company formed in November 2017 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.non-interest bearing, highly-liquid demand deposits. We intend to effectuatefund our business combination usingongoing operating activities with our existing cash, expected cash flows from operations, and borrowing capacity under our line of credit; we believe these sources of liquidity will be adequate for at least the proceeds ofnext 12 months. 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.

The table below summarizes our Initial Public Offering andcash flows for the Private Placement, our securities, debt issuedperiods indicated:
For the Six Months Ended June 30,
(dollars in thousands)20212020Change%
Change
Net cash provided by operating activities$20,906 $9,697 $11,209 116 %
Net cash (used in) investing activities(194)(2,073)1,879 (91)%
Net cash (used in) provided by financing activities(4,112)988 (5,100)NM
Net increase in cash and cash equivalents$16,600 $8,612 $7,988 93 %
NM refers to bank or other lenders or the owners of the target, or a combination of the foregoing.

The issuance of additional shares of common stock or preferred stock:

may significantly dilute the equity interest of our investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one to one basis upon conversion of the Class B common stock;

may subordinate the rights of holders of common stock if we issue preferred shares with rights senior to those afforded to our common stock;

could cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and

may adversely affect prevailing market prices for our securities.

changes greater than 150%.


Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:

default and foreclosure on our assets if our operating revenues after our business combination are insufficient to pay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

our inability to obtain additional financing if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding;

our inability to pay dividends on our common stock;

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

We expect to continue to incur significant costs

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Cash flows provided by operating activities
Cash provided by operating activities was $20.9 million in the pursuitsix months ended June 30, 2021 compared to cash provided of our initial business combination plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful.

Results$9.7 million in the six months ended June 30, 2020, an increase of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from November 13, 2017 (date of inception) through September 30, 2018) were organizational activities, efforts relating to the Initial Public Offering, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate non-operating$11.2 million. The increase was driven by net income in the formfirst half of interest income on cash marketable securities held in the Trust Account. We expect2021 compared to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective business combination candidates.

For the three and nine months ended September 30, 2018, we had a net loss in the first half of $(126,196) and $(127,825), respectively,2020.

Cash flows used in investing activities
Cash used in investing activities decreased $1.9 million in the first six months of 2021 compared to the first six months of 2020, primarily due to lower capital investment in 2021.
Cash flows (used in) provided by financing activities
Cash used in financing activities was $4.1 million in 2021, which consistsreflects the repayment of operating costs$21.0 million of $116,999 and $118,628, respectively, franchise taxes of $200,000 for each period, respectively, and income tax expense of $50,720 for each period, respectivelydebt substantially offset by interest income on marketable securities held in the Trust Account$16.9 million of $241,523 and $241,523, respectively.


Liquidity and Capital Resources

A total of $170,981,779, (or $10.10 per Unit) comprised of $164,036,001 of thenet cash 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. 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 Initial Public Offering costs. recapitalization transaction.

As of SeptemberJune 30, 2018, $1,556,065 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.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which shall be net of taxes payable and excluding deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay franchise and income taxes. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete an initial business combination.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise period. The terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to acquire a company with an enterprise value significantly above the net proceeds of this offering and the sale of the private placement warrants. Depending on the size of the transaction we may potentially utilize several additional financing sources, including but not limited to the issuance of additional securities to the sellers of a target business, debt issued to bank or other lenders or the owners of the target, a private placement to raise additional funds, or a combination of the foregoing. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations and working capital needs.


Off-balance sheet financing arrangements

As of September 30, 2018, we did 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 for 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.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Contractual obligations

As of September 30, 2018,2021, we did not have any long-termoff-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS
During the six months ended June 30, 2021, BMT repaid its debt capital lease obligations, operating lease obligations or long-term liabilities, other thanoutstanding. Note 7 - Debt in the deferred underwriter commission discussed above, payment to 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, 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 providedNotes to the Company. We began incurring these fees on August 24, 2018 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination or the Company’s liquidation.

Critical Accounting Policies

The preparation of financial statements and related disclosuresUnaudited Financial Statements herein provides additional information. There were no other material changes 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 of the financial statements, and income and expensesour contractual obligations during the periods reported. Actual results could materially differ from those estimates. The Company has not identified any critical accounting policies.

six months ended June 30, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The net proceeds

Credit Risk
Potential concentration of the Initial Public Offeringcredit risk consists primarily of accounts receivables from white label partners and the salehigher education institution clients. At June 30, 2021 and December 31, 2020, a white label partner accounted for approximately 28% and 63% of the Private Warrants held in the Trust Account are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

accounts receivable (including unbilled receivables), respectively.

ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures, are” as defined in Rules 13a-15 and 15d-15 under the Exchange Act refers to controls and other procedures that are designed to ensure that information required to be disclosed by a company in ourthe reports filedthat it files or submittedsubmits 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 by a company in ourthe reports filedthat it files or submittedsubmits under the Exchange Act is accumulated and communicated to ourthe company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15 and 15d-15 underevaluated the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2018.the end of the period covered by this Quarterly Report on Form 10-Q. Based upon theiron that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) underwere effective, at the Exchange Act) were effective.

reasonable assurance level, as of the end of the period covered by this Quarterly Report.





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Changes in Internal Control Overover Financial Reporting

During


On April 12, 2021, the most recently completed fiscal quarter, thereSEC 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 Megalith Financial’s initial public offering and concluded that the Company’s Warrants 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 17,250,000 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 that it was appropriate to restate Megalith Financial Acquisition Corp.’s previously issued audited financial statements as of and for the years ended December 31, 2020 and December 31, 2019 as the Warrants should have been no changeclassified as derivative liabilities prior to its business combination.

As part of the restatement process, we identified a material weakness in ourMegalith’s internal controlcontrols over financial reporting thatfor the three year period ending December 31, 2020 with respect to the classification of the Company’s Warrants and as components of equity instead of as derivative liabilities. This weakness has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

been remediated as the Company has corrected its accounting treatment for warrants and restated Megalith’s past financials.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

PROCEEDINGS

We are involved in legal and administrative proceedings and litigation arising in the ordinary course of business. We believe that the potential liability, if any, in excess of amounts already accrued from all proceedings, claims and litigation will not have a material effect on our financial position, cash flows or results of operations when resolved in a future period.

ITEM 1A. RISK FACTORS.

As of the date of this Quarterly Report on Form 10-Q, thereFACTORS

There have been no material changes to the risk factorsRisk Factors disclosed in Part I, Item 1A of our finalAnnual Report on Form 10-K, as amended, for the year ended December 31, 2020, except as noted below:

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 filedrelating to them is available. If and when the warrants become redeemable by us, it may exercise its 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 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 SECCompany’s initial public offering and concluded that the Company’s Warrant include provisions that, based on August 24, 2018 exceptthe 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
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17,250,000 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 prior to its business combination, and following the business combination the public warrants should be classified as equity and the private warrants classified as derivative liabilities. For warrants classified as derivative liabilities, 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 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 may disclose changeswill recognize non-cash gains or losses due to the quarterly fair valuation of our Warrants and that such factorsgains or disclose additional factors from time to time in our future filings with the SEC.  

losses could be material.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

PROCEEDS

In connection with the merger, on January 4, 2021, our predecessor, Megalith Financial Acquisition Corp. sold 1,927,058 shares of Class A Common Stock in a private placement for $10.38 per share, for aggregate gross proceeds of approximately $20,002,872 (the “PIPE Financing”). The sale and issuance was made to accredited investors in reliance on Rule 506 of Regulation D under the Securities Act. No separate fees or commissions were paid to the placement agents other than payments made to such institutions for other services rendered in connection with the Megalith initial public offering and/or the merger.

ITEM 6. EXHIBITS.

EXHIBITS

(a)Exhibits
The following exhibitsdocuments are filed as partexhibits to this report:.

___________________________
*Filed herewith.
Items 3, 4 and 5 of or incorporated by reference into,Part II are not applicable and have been omitted.

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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, BM Technologies, Inc. has duly caused this Quarterly Report on Form 10-Q.

No.Description of Exhibit
1.1Underwriting Agreement, dated August 23, 2018, by and between the Company and Chardan Capital Markets, LLC, as representatives of the several underwriters.(1)
4.1Warrant Agreement, dated August 23, 2018, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent.(1)
10.1Letter Agreement, dated August 23, 2018, by and among the Company, its officers, directors and MFA Investor Holdings LLC. (1)
10.2Investment Management Trust Agreement, dated August 23, 2018, by and between the Company and Continental Stock Transfer & Trust Company, as trustee.(1)
10.3Registration Rights Agreement, dated August 23, 2018, by and among the Company, MFA Investor Holdings LLC and the holders party thereto.(1)
10.4Administrative Services Agreement, dated August 23, 2018, by and between the Company and MFA Capital Management LLC.(1)
10.5Amended and Restated Private Placement Warrants Purchase Agreement, dated August 23, 2018, by and between the Company and Chardan.(1)
31.1*Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*XBRL Instance Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith.

**Furnished.

(1) Incorporated by reference to our Current Report on Form 8-K filed on August 29, 2018


SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

authorized, in the City of Wayne, State of Pennsylvania, on the 16th day of August, 2021.
MEGALITH FINANCIAL ACQUISITION CORP.
BM Technologies, Inc.
Date: November 14, 2018/s/ Sam Sidhu
SamBy:/s/ Luvleen Sidhu
Luvleen Sidhu
Chief Executive Officer
(Principal Executive Officer)

Date: November 14, 2018/s/ Philip WatkinsBM Technologies, Inc.
Philip Watkins  
By:/s/ Robert Ramsey
Robert Ramsey
Chief Financial Officer
(Principal Financial and Accounting Officer)



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