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

For the quarterly period ended ~~June~~September 30, 2023


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 001-38633

BM Technologies, Inc.

(Exact name of registrant as specified in its charter)


Delaware									82-3410369
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

201 King of Prussia Road, Suite 650
Wayne, Pennsylvania									19087
(Address of Principal Executive)									(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:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	BMTX	NYSE American LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	BMTX-WT	NYSE American LLC

Indicate by check mark whether the registrant: (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 large accelerated filer, accelerated filer, non-accelerated filer, and emerging growth company in Rule 12b-2 of the Exchange Act.

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 Act). Yes ☐ No ☒

The registrant had issued and outstanding ~~11,870,295~~11,869,925 shares of common stock, par value $0.0001 per share, as of ~~August 21,~~November 20, 2023.

Table of Contents


			Page
Part I - Financial Information			2
Item 1. Unaudited Consolidated Financial Statements			2
Consolidated Balance Sheets at ~~June~~September 30, 2023 and December 31, 2022			2
Consolidated Statements of (Loss) Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022			3
Consolidated Statements of Changes in Shareholders' Equity for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022			4
Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022			5
Notes to Unaudited Consolidated Financial Statements			6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			30
Item 4. Controls and Procedures			30

Part II - Other Information			31
Item 1A. Risk Factors			31
Item 5. Other Information			31
Item 6. Exhibits			32

Signatures			33

Part I - Financial Information

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

BM TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS — UNAUDITED

(amounts in thousands, except share and per share data)


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	11,524	$	21,108	Cash and cash equivalents	$	8,802	$	21,108
Accounts receivable, net allowance for doubtful accounts of $562 and $305		7,083		8,260
Accounts receivable, net allowance for doubtful accounts of $655 and $305						Accounts receivable, net allowance for doubtful accounts of $655 and $305	8,511		8,260
Prepaid expenses and other assets	Prepaid expenses and other assets	10,742		9,076		Prepaid expenses and other assets	6,088		9,076
Total current assets	Total current assets	29,349		38,444		Total current assets	23,401		38,444
Premises and equipment, net	Premises and equipment, net	531		508		Premises and equipment, net	534		508
Developed software, net	Developed software, net	19,759		22,324		Developed software, net	17,668		22,324
Goodwill	Goodwill	5,259		5,259		Goodwill	5,259		5,259
Other intangibles, net	Other intangibles, net	4,269		4,429		Other intangibles, net	4,189		4,429
Other assets	Other assets	—		72		Other assets	—		72
Total assets	Total assets	$	59,167	$	71,036	Total assets	$	51,051	$	71,036
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:	Liabilities:					Liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	11,624	$	12,684	Accounts payable and accrued liabilities	$	12,513	$	12,684
Deferred revenue	Deferred revenue	8,209		6,647		Deferred revenue	3,440		6,647
Total current liabilities	Total current liabilities	19,833		19,331		Total current liabilities	15,953		19,331
Non-current liabilities:	Non-current liabilities:					Non-current liabilities:

Liability for private warrants	Liability for private warrants	811		2,847		Liability for private warrants	378		2,847
Other non-current liabilities	Other non-current liabilities	480		—		Other non-current liabilities	480		—
Total liabilities	Total liabilities	$	21,124	$	22,178	Total liabilities	$	16,811	$	22,178
Commitments and contingencies (Note 7)	Commitments and contingencies (Note 7)					Commitments and contingencies (Note 7)
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred stock: Par value $0.0001 per share; 10,000,000 shares authorized, none issued or outstanding at both June 30, 2023 and December 31, 2022		$	—	$	—
Common stock: Par value $0.0001 per share; 1 billion shares authorized; 11,866,345 shares issued and outstanding at June 30, 2023; 12,240,237 shares issued and outstanding at December 31, 2022		1		1
Preferred stock: Par value $0.0001 per share; 10,000,000 shares authorized, none issued or outstanding at both September 30, 2023 and December 31, 2022						Preferred stock: Par value $0.0001 per share; 10,000,000 shares authorized, none issued or outstanding at both September 30, 2023 and December 31, 2022	$	—	$	—
Common stock: Par value $0.0001 per share; 1 billion shares authorized; 11,869,925 shares issued and outstanding at September 30, 2023; 12,240,237 shares issued and outstanding at December 31, 2022						Common stock: Par value $0.0001 per share; 1 billion shares authorized; 11,869,925 shares issued and outstanding at September 30, 2023; 12,240,237 shares issued and outstanding at December 31, 2022	1		1
Additional paid-in capital	Additional paid-in capital	70,943		72,342		Additional paid-in capital	71,092		72,342
Accumulated deficit	Accumulated deficit	(32,901)		(23,485)		Accumulated deficit	(36,853)		(23,485)
Total shareholders’ equity	Total shareholders’ equity	$	38,043	$	48,858	Total shareholders’ equity	$	34,240	$	48,858
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	59,167	$	71,036	Total liabilities and shareholders’ equity	$	51,051	$	71,036

See accompanying notes to the unaudited consolidated financial statements.

BM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF (LOSS) INCOME — UNAUDITED

(amounts in thousands, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Operating revenues:	Operating revenues:									Operating revenues:
Interchange and card revenue	Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958	Interchange and card revenue	$	2,652	$	5,325	$	7,535	$	17,283
Servicing fees	Servicing fees	7,700		13,295		14,332		27,487		Servicing fees	8,658		10,163		22,990		37,650
Account fees	Account fees	1,910		2,207		4,050		4,762		Account fees	1,931		2,110		5,981		6,872
University fees	University fees	1,373		1,446		2,879		3,049		University fees	1,412		1,357		4,291		4,406
Other revenue	Other revenue	200		745		327		799		Other revenue	88		903		415		1,702
Total operating revenues	Total operating revenues	12,987		23,008		26,471		48,055		Total operating revenues	14,741		19,858		41,212		67,913
Operating expenses:	Operating expenses:									Operating expenses:
Technology, communication, and processing	Technology, communication, and processing	6,364		7,297		13,582		14,215		Technology, communication, and processing	8,186		7,731		21,768		21,944
Salaries and employee benefits	Salaries and employee benefits	6,139		10,440		12,564		19,922		Salaries and employee benefits	4,773		10,773		17,337		30,656
Professional services	Professional services	2,338		2,420		4,978		4,792		Professional services	2,948		2,454		7,926		7,225
Provision for operating losses	Provision for operating losses	1,813		1,839		3,490		3,441		Provision for operating losses	2,138		1,564		5,628		5,006
Occupancy	Occupancy	10		368		24		675		Occupancy	9		160		33		875
Customer related supplies	Customer related supplies	222		221		450		451		Customer related supplies	227		225		677		676
Advertising and promotion	Advertising and promotion	125		84		243		197		Advertising and promotion	128		242		371		461
Restructuring, merger, and acquisition related expenses	Restructuring, merger, and acquisition related expenses	274		1		993		290		Restructuring, merger, and acquisition related expenses	—		—		993		290
Other expense	Other expense	743		707		1,563		1,478		Other expense	717		989		2,280		2,467
Total operating expenses	Total operating expenses	18,028		23,377		37,887		45,461		Total operating expenses	19,126		24,138		57,013		69,600
(Loss) income from operations		(5,041)		(369)		(11,416)		2,594
Loss from operations										Loss from operations	(4,385)		(4,280)		(15,801)		(1,687)
Non-operating income and expense:	Non-operating income and expense:									Non-operating income and expense:
Gain on fair value of private warrant liability		595		5,640		2,016		8,284
Gain (loss) on fair value of private warrant liability										Gain (loss) on fair value of private warrant liability	433		(1,369)		2,449		6,916
(Loss) income before income tax expense	(Loss) income before income tax expense	(4,446)		5,271		(9,400)		10,878		(Loss) income before income tax expense	(3,952)		(5,649)		(13,352)		5,229
Income tax expense		10		909		16		2,552
Income tax (benefit) expense										Income tax (benefit) expense	—		(729)		16		1,823
Net (loss) income	Net (loss) income	$	(4,456)	$	4,362	$	(9,416)	$	8,326	Net (loss) income	$	(3,952)	$	(4,920)	$	(13,368)	$	3,406

Weighted average number of shares outstanding - basic	Weighted average number of shares outstanding - basic	11,563		11,944		11,566		11,947		Weighted average number of shares outstanding - basic	11,570		11,940		11,567		11,944
Weighted average number of shares outstanding - diluted	Weighted average number of shares outstanding - diluted	11,563		12,600		11,566		12,585		Weighted average number of shares outstanding - diluted	11,570		11,940		11,567		12,215

Basic (loss) earnings per common share	Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70	Basic (loss) earnings per common share	$	(0.34)	$	(0.41)	$	(1.16)	$	0.29
Diluted (loss) earnings per common share	Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66	Diluted (loss) earnings per common share	$	(0.34)	$	(0.41)	$	(1.16)	$	0.28

See accompanying notes to the unaudited consolidated financial statements.

BM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED

For the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2023 and 2022

(amounts in thousands, except share data)


		Common Stock										Common Stock
		Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Accumulated Deficit		Total			Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Accumulated Deficit		Total
Balance at December 31, 2022	Balance at December 31, 2022	12,240,237	$	1	$	72,342	$	(23,485)	$	48,858	Balance at December 31, 2022	12,240,237	$	1	$	72,342	$	(23,485)	$	48,858
Net loss	Net loss	—	—		—		(4,960)		(4,960)		Net loss	—	—		—		(4,960)		(4,960)
Conversion of private warrants to public warrants	Conversion of private warrants to public warrants	—	—		20		—		20		Conversion of private warrants to public warrants	—	—		20		—		20
Tax paid on behalf of employees related to net settlement of share-based awards	Tax paid on behalf of employees related to net settlement of share-based awards	(473,874)	—		(2,429)		—		(2,429)		Tax paid on behalf of employees related to net settlement of share-based awards	(473,874)	—		(2,429)		—		(2,429)
Share-based compensation expense	Share-based compensation expense	95,147	—		447		—		447		Share-based compensation expense	95,147	—		447		—		447
Balance at March 31, 2023	Balance at March 31, 2023	11,861,510	$	1	$	70,380	$	(28,445)	$	41,936	Balance at March 31, 2023	11,861,510	$	1	$	70,380	$	(28,445)	$	41,936
Net loss	Net loss	—	—		—		(4,456)		(4,456)		Net loss	—	—		—		(4,456)		(4,456)

Tax paid on behalf of employees related to net settlement of share-based awards	Tax paid on behalf of employees related to net settlement of share-based awards	(1,765)	—		(5)		—		(5)		Tax paid on behalf of employees related to net settlement of share-based awards	(1,765)	—		(5)		—		(5)
Share-based compensation expense	Share-based compensation expense	6,600	—		568		—		568		Share-based compensation expense	6,600	—		568		—		568
Balance at June 30, 2023	Balance at June 30, 2023	11,866,345	$	1	$	70,943	$	(32,901)	$	38,043	Balance at June 30, 2023	11,866,345	$	1	$	70,943	$	(32,901)	$	38,043
Net loss											Net loss	—	—		—		(3,952)		(3,952)

Tax paid on behalf of employees related to net settlement of share-based awards											Tax paid on behalf of employees related to net settlement of share-based awards	(1,253)	—		(4)		—		(4)
Share-based compensation expense											Share-based compensation expense	4,833	—		153				153
Balance at September 30, 2023											Balance at September 30, 2023	11,869,925	$	1	$	71,092	$	(36,853)	$	34,240


		Common Stock										Common Stock
		Shares of Common Stock Outstanding	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Total
(amounts in thousands, except share data)											(amounts in thousands, except share data)	Shares of Common Stock Outstanding	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Total
Balance at December 31, 2021	Balance at December 31, 2021	12,193,378	$	1	$	60,686	$	(22,706)	$	37,981	Balance at December 31, 2021	12,193,378	$	1	$	60,686	$	(22,706)	$	37,981
Net income	Net income	—	—		—		3,964		3,964		Net income	—	—		—		3,964		3,964
Conversion of private warrants to public warrants	Conversion of private warrants to public warrants	—	—		725		—		725		Conversion of private warrants to public warrants	—	—		725		—		725
Tax paid on behalf of employees related to net settlement of share-based awards	Tax paid on behalf of employees related to net settlement of share-based awards	(37,506)	—		(225)		—		(225)		Tax paid on behalf of employees related to net settlement of share-based awards	(37,506)	—		(225)		—		(225)
Share-based compensation expense	Share-based compensation expense	90,075	—		2,919		—		2,919		Share-based compensation expense	90,075	—		$	2,919	—		2,919
Balance, March 31, 2022		12,245,947	$	1	$	64,105	$	(18,742)	$	45,364
Balance at March 31, 2022											Balance at March 31, 2022	12,245,947	$	1	$	64,105	$	(18,742)	$	45,364
Net income	Net income	—	—		—		4,362		4,362		Net income	—	$	—	$	—	$	4,362	4,362
Share-based compensation expense	Share-based compensation expense	(7,000)	—		3,053		—		3,053		Share-based compensation expense	(7,000)	$	—	$	3,053	$	—	3,053
Balance at June 30, 2022	Balance at June 30, 2022	12,238,947	$	1	$	67,158	$	(14,380)	$	52,779	Balance at June 30, 2022	12,238,947	$	1	$	67,158	$	(14,380)	$	52,779
Net loss											Net loss	—	$	—	$	—	$	(4,920)	(4,920)
Issuance of common stock as compensation											Issuance of common stock as compensation	6,000	$	—	$	37	$	—	37
Share-based compensation expense											Share-based compensation expense	(6,500)	$	—	$	2,706	$	—	2,706
Balance at September 30, 2022											Balance at September 30, 2022	12,238,447	$	1	$	69,901	$	(19,300)	$	50,602

See accompanying notes to the unaudited consolidated financial statements.

BM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(amounts in thousands)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net (loss) income	Net (loss) income	$	(9,416)	$	8,326	Net (loss) income	$	(13,368)	$	3,406
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:						Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation of premises and equipment	Depreciation of premises and equipment	128		123		Depreciation of premises and equipment	198		239
Loss on disposal of premises and equipment	Loss on disposal of premises and equipment	—		38		Loss on disposal of premises and equipment	—		38
Amortization of developed software	Amortization of developed software	5,980		5,781		Amortization of developed software	9,250		8,581
Amortization of other intangible assets	Amortization of other intangible assets	160		160		Amortization of other intangible assets	240		240
Amortization of leased assets	Amortization of leased assets	—		345		Amortization of leased assets	—		398
Provision for bad debt	Provision for bad debt	257		(43)		Provision for bad debt	350		70
Share-based compensation expense	Share-based compensation expense	1,358		5,972		Share-based compensation expense	1,534		8,715
Gain on fair value of private warrant liability	Gain on fair value of private warrant liability	(2,016)		(8,284)		Gain on fair value of private warrant liability	(2,449)		(6,916)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	920		2,156		Accounts receivable	(601)		510
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(1,666)		(1,528)		Prepaid expenses and other current assets	2,988		(4,851)
Other assets	Other assets	72		—		Other assets	72		—
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(1,403)		1,734		Accounts payable and accrued liabilities	(537)		3,556
Taxes payable	Taxes payable	—		(1,807)		Taxes payable	—		(1,807)
Operating lease liabilities	Operating lease liabilities	—		(360)		Operating lease liabilities	—		(416)
Deferred revenue	Deferred revenue	1,562		(190)		Deferred revenue	(3,207)		(4,313)

Net Cash (used in) provided by Operating Activities	Net Cash (used in) provided by Operating Activities	(4,064)		12,423		Net Cash (used in) provided by Operating Activities	(5,530)		7,450
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Development of internal use software	Development of internal use software	(2,935)		(3,185)		Development of internal use software	(4,114)		(4,013)
Purchases of premises and equipment	Purchases of premises and equipment	(151)		(256)		Purchases of premises and equipment	(224)		(506)
Net Cash used in Investing Activities	Net Cash used in Investing Activities	(3,086)		(3,441)		Net Cash used in Investing Activities	(4,338)		(4,519)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Repurchase of private warrants	Repurchase of private warrants	—		(1,977)		Repurchase of private warrants	—		(1,977)
Payments related to net settlement of share-based compensation awards	Payments related to net settlement of share-based compensation awards	(2,434)		(225)		Payments related to net settlement of share-based compensation awards	(2,438)		(225)
Net Cash used in Financing Activities	Net Cash used in Financing Activities	(2,434)		(2,202)		Net Cash used in Financing Activities	(2,438)		(2,202)
Net (Decrease) Increase in Cash and Cash Equivalents	Net (Decrease) Increase in Cash and Cash Equivalents	(9,584)		6,780		Net (Decrease) Increase in Cash and Cash Equivalents	(12,306)		729
Cash and Cash Equivalents – Beginning	Cash and Cash Equivalents – Beginning	21,108		25,704		Cash and Cash Equivalents – Beginning	21,108		25,704
Cash and Cash Equivalents – Ending	Cash and Cash Equivalents – Ending	$	11,524	$	32,484	Cash and Cash Equivalents – Ending	$	8,802	$	26,433

Supplementary Cash Flow Information:	Supplementary Cash Flow Information:					Supplementary Cash Flow Information:
Income taxes paid, net of refunds		$	27	$	2,350
Income taxes (refunded) paid, net						Income taxes (refunded) paid, net	$	(4,323)	$	7,704
Noncash Operating, Investing, and Financing Activities:	Noncash Operating, Investing, and Financing Activities:					Noncash Operating, Investing, and Financing Activities:
Conversion of private warrants to public warrants	Conversion of private warrants to public warrants	$	20	$	725	Conversion of private warrants to public warrants	$	20	$	—
Contingent liability for acquired software	Contingent liability for acquired software	$	480	$	—	Contingent liability for acquired software	$	480	$	—

See accompanying notes to the unaudited consolidated financial statements.

BM TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF THE BUSINESS

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

BankMobile Technologies, Inc. (“BankMobile”) was incorporated in May 2016 as a wholly-owned subsidiary of Customers Bank. On August 6, 2020, the Company entered into an Agreement and Plan of Merger, by and among Megalith Financial Acquisition Corporation, a special purpose acquisition company (“Megalith”), incorporated in Delaware in November 2017, MFAC Merger Sub Inc., a wholly-owned subsidiary of Megalith, BankMobile Technologies, Inc., and Customers Bank, the sole stockholder of BankMobile. On January 4, 2021, BankMobile became an independent company after the completion of a divestiture transaction and was rebranded BM Technologies, Inc.

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

Customers Bank currently holds the FDIC insured deposits that BMTX sources and services and is the issuing bank on BMTX’s debit cards. Customers Bank pays the Company a servicing fee for the deposits generated and passes through interchange income earned from transactions on debit cards.

On November 7, 2022, the Company and Customers Bank amended the Deposit Processing Services Agreement (the “DPSA Amendment”). The DPSA Amendment, among other things, will facilitate the transfer of the Company’s serviced deposits to a new partner bank and extends the termination date of the Deposit Processing Services Agreement until the earlier of: (i) entry into a definitive agreement with a new partner bank to transfer the Company’s serviced deposits to such partner bank and the successful completion of such transfer; or (ii) June 30, 2023.

On March 22, 2023, the Company and Customers Bank entered into a second amendment to the Deposit Processing Services Agreement (the “DPSA Second Amendment”) for the Higher Education serviced deposit accounts. The DPSA Second Amendment, among other things, extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s Higher Education serviced deposits to a Durbin-exempt partner bank; or (ii) June 30, 2024; and revises the fee structure of the Deposit Processing Services Agreement. ~~See~~ ~~Note 15 - Subsequent Events~~ ~~for additional information for this agreement.~~

Also on March 22, 2023, the Company and Customers Bank entered into a new agreement for the current BaaS serviced deposit accounts (the “2023 Deposit Servicing Agreement”), under which, effective March 31, 2023, the Company will perform, on behalf of Customers Bank, Customer Bank’s services, duties, and obligations by and between Customers Bank and T-Mobile USA, Inc. that are not required to be provided by an FDIC insured financial institution.

On August 18, 2023, the Company and Customers Bank entered into a third amendment to the Deposit Processing Services Agreement (the “DPSA Third Amendment”) for the Higher Education serviced deposit accounts. The DPSA Third Amendment extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s Higher Education serviced deposits to a Durbin-exempt partner bank; or (ii) April 15, 2025.

On March 16, 2023, the Company entered into a Deposit Servicing Agreement (the “FCB Deposit Servicing Agreement”) with a new partner bank, First Carolina Bank, a North Carolina chartered, non-member community bank (“FCB”), which provides that FCB will establish and maintain deposit accounts and other banking services in connection with customized products and services offered by the Company to its Higher Education institution clients, and the Company will provide certain other related services in connection with the accounts.

~~The initial term of~~On August 20, 2023, the Company and FCB entered into an amendment to the FCB Deposit Servicing Agreement ~~is for~~(the “FCB DPSA First Amendment”). The FCB DPSA First Amendment, among other things, (i) extends the initial term from four years ~~is subject~~ to ~~certain closing conditions,~~five years after the effective date, (ii) provides that FCB will work with the Company and ~~will automatically renew for additional~~ ~~two-year terms unless either party gives written notice~~Customers Bank on the timely transfer of ~~non-renewal at least 120 days prior~~existing student depositor accounts on or before the effective date, and as agreed to by the ~~expiration of~~parties, and (iii) amends the ~~then-current term.~~ effective date to be the date on which FCB takes on deposits from the existing student depositor accounts.

The FCB Deposit Servicing Agreement and Amendment thereof may be terminated early by either party upon material breach, by either party upon notice that the continuation of the Depositor Program violates Applicable Law or Network Rules (as defined in the FCB Deposit Servicing Agreement); by FCB if a regulatory authority determined that the performance of its obligations under the FCB Deposit Servicing Agreement was not consistent with safe and sound banking practices; by either party upon the other party commencing or being subject to certain bankruptcy proceedings; and by the Company should it experience a change in control on or after March 16, ~~2026; and by either party should regulatory approvals not be obtained on or before July 15, 2023.~~2026. The Company continues to actively work on the transfer of its Higher Education customer deposits from Customers Bank to ~~FCB; however, as of the date of this report, the regulatory review process is continuing, and the~~FCB with transfer ~~has not yet occurred. See~~ ~~Note 15 - Subsequent Events~~ ~~for additional information for this agreement.~~expected to occur during December 2023.

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

NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These interim unaudited consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Any reference to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in the annual consolidated financial statements have been omitted from these interim unaudited consolidated financial statements as permitted by U.S. GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). These interim unaudited consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of Management, necessary to present a fair statement of the financial position and the results of operations and cash flows of BMTX for the interim periods presented.

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

FASB ASC 205-40, Presentation of Financial Statements - Going Concern, requires Management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date.

Management has performed this required assessment as of ~~August 21,~~November 20, 2023, ~~including consideration of the effect of the DPSA Third Amendment, see~~ ~~Note 15 - Subsequent Events~~ ~~for additional information, and the 2023 Deposit Servicing Agreement with Customers Bank,~~ and believes there isare sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of ~~$13.0~~$11.1 million at ~~August 21,~~November 20, 2024.

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

Based upon the results of Management’s assessment, these interim unaudited consolidated financial statements have been prepared on a going concern basis. The interim unaudited consolidated financial statements do not include any adjustments that could result from the outcome of the aforementioned risks and uncertainties.

Significant Accounting Policies

These interim unaudited consolidated financial statements should be read in conjunction with the 2022 audited consolidated financial statements and related notes of BMTX, which describe BMTX’s significant accounting policies. There have been no material changes to BMTX’s significant accounting policies during the ~~six~~nine months ended ~~June~~September 30, 2023 except as noted below.

Insurance Premium Finance Obligations

The Company includes the obligation for its insurance premium financing in Accounts payable and accrued liabilities on the interim unaudited Consolidated Balance Sheets. At ~~June~~September 30, 2023, the Company had two premium finance arrangements outstanding with balances totaling ~~$0.7~~$0.3 million, average remaining installment payment terms of ~~5.5~~2.5 months, and a weighted average annualized finance charge of 4.95%.

401(k) Plan

On January 3, 2023, the Company implemented the BM Technologies, Inc. 401(k) Plan (the “401(k) Plan”) for the benefit of BMTX’s eligible employees. The 401(k) Plan permits eligible employees to make voluntary contributions, up to a maximum of $63.5 thousand per year, subject to certain limitations. The Company offers a matching contribution equal to 50% of an eligible employee’s deferral election up to 3% of their annual salary. The Company records its contributions to the 401(k) Plan in Salaries and employee benefits on the unaudited Consolidated Statements of (Loss) Income. The Company’s employer contribution to the 401(k) Plan for the three and ~~six~~nine months ended ~~June~~September 30, 2023 totaled $0.1 million and ~~$0.3~~$0.5 million, respectively.

Accounting Standards Update

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

From time to time, new accounting pronouncements are issued by the FASB that are adopted by BMTX as of the required effective dates. During the ~~six~~nine months ended ~~June~~September 30, 2023 there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to ~~June~~September 30, 2023, which were not yet effective, considered relevant or material to the Company’s financial statements taken as a whole.

NOTE 3 — ACCOUNTS RECEIVABLE

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

Accounts receivable deemed to be uncollectible are individually identified and are charged-off against the allowance for doubtful accounts. The allowance for doubtful accounts was ~~$0.6~~$0.7 million at ~~June~~September 30, 2023 and $0.3 million at December 31, 2022.


(amounts in thousands)	(amounts in thousands)	Beginning Balance		Additions		Reductions		Ending Balance		(amounts in thousands)	Beginning Balance		Additions		Reductions		Ending Balance
Allowance for doubtful accounts	Allowance for doubtful accounts									Allowance for doubtful accounts
Six months ended June 30, 2023		$	305	$	432	$	(175)	$	562
Nine months ended September 30, 2023										Nine months ended September 30, 2023	$	305	$	1,001	$	(651)	$	655
Twelve months ended December 31, 2022	Twelve months ended December 31, 2022	$	79	$	381	$	(155)	$	305	Twelve months ended December 31, 2022	$	79	$	381	$	(155)	$	305

NOTE 4 — PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

Premises and Equipment

The components of premises and equipment were as follows:


(amounts in thousands)	(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022		(amounts in thousands)	Expected Useful Life	September 30, 2023		December 31, 2022

IT equipment	IT equipment	3 to 5 years	$	789	$	1,377	IT equipment	3 to 5 years	$	862	$	1,377

Accumulated depreciation	Accumulated depreciation		(258)		(869)		Accumulated depreciation		(328)		(869)
Total	Total		$	531	$	508	Total		$	534	$	508

BMTX recorded depreciation expense of less than $0.1 million and ~~$0.1~~$0.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, as a component of Technology, communication, and processing expense on the unaudited Consolidated Statements of (Loss) Income and less than $0.1 million and ~~$0.1~~$0.3 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, as a component of Occupancy expense on the unaudited Consolidated Statements of (Loss) Income.

BMTX recorded no impairment expense during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Developed Software

The components of developed software were as follows:


(amounts in thousands)	(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022		(amounts in thousands)	Expected Useful Life	September 30, 2023		December 31, 2022
Higher One Disbursement business developed software	Higher One Disbursement business developed software	10 years	$	27,400	$	27,400	Higher One Disbursement business developed software	10 years	$	27,400	$	27,400
Internally developed software	Internally developed software	3 to 7 years	44,299		42,504		Internally developed software	3 to 7 years	44,647		42,504
Work-in-process	Work-in-process		4,697		3,077		Work-in-process		5,528		3,077
			76,396		72,981				77,575		72,981
Accumulated amortization	Accumulated amortization		(56,637)		(50,657)		Accumulated amortization		(59,907)		(50,657)
Total	Total		$	19,759	$	22,324	Total		$	17,668	$	22,324

Amortization is recorded in Technology, communication, and processing expense on the unaudited Consolidated Statements of (Loss) Income. BMTX recorded amortization expense of ~~$3.0~~$3.3 million and ~~$6.0~~$9.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. BMTX recorded amortization expense of ~~$2.9~~$2.8 million and ~~$5.8~~$8.6 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

BMTX recorded no impairment expense during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

NOTE 5 — GOODWILL AND OTHER INTANGIBLES

Goodwill represents the excess of the purchase price over the identifiable net assets of businesses acquired through business combinations accounted for under the acquisition method. Goodwill is reviewed for impairment annually as of October 31 and between annual tests when events and circumstances indicate that impairment may have occurred. There was no goodwill impairment for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

Other intangibles, net represent purchased assets that lack physical substance but can be distinguished from goodwill because of contractual or other legal rights. We have one intangible asset which is being amortized on a straight-line basis over twenty years.

The components of Other intangibles, net as of ~~June~~September 30, 2023 and December 31, 2022 were as follows:


(amounts in thousands)	(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022		(amounts in thousands)	Expected Useful Life	September 30, 2023		December 31, 2022
Customer relationships – universities	Customer relationships – universities	20 years	$	6,402	$	6,402	Customer relationships – universities	20 years	$	6,402	$	6,402
Accumulated amortization	Accumulated amortization		(2,133)		(1,973)		Accumulated amortization		(2,213)		(1,973)
Total	Total		$	4,269	$	4,429	Total		$	4,189	$	4,429

Other intangibles, net, includes assets subject to amortization that are reviewed for impairment under FASB ASC 360, Property, Plant and Equipment. Amortization is recorded in Other expense on the unaudited Consolidated Statements of (Loss) Income. BMTX recorded amortization expense of less than $0.1 million and $0.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. BMTX recorded amortization expense of less than $0.1 million and $0.2 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

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


Remainder of 2023	Remainder of 2023	$	160	Remainder of 2023	$	80
2024	2024	320		2024	320
2025	2025	320		2025	320
2026	2026	320		2026	320
2027	2027	320		2027	320
After 2027	After 2027	2,829		After 2027	2,829
Total	Total	$	4,269	Total	$	4,189

~~There was~~BMTX recorded no impairment ~~for~~ ~~Other intangibles, net,~~ ~~for~~expense during the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022.

NOTE 6 — LEASES

At January 1, 2022, BMTX leased two offices under operating leases. On March 31, 2022, one of the two office leases matured, and we exited our New Haven, CT office facility. On September 30, 2022, the second office lease matured at our Wayne, PA office. On October 1, 2022, the Company entered into a 3-month short-term lease extension for this office under substantially identical terms and conditions as the original lease. At December 31, 2022, the 3-month short-term lease extension expired and was not renewed. The Company’s corporate headquarters is currently operating under a month-to-month short-term lease.

At ~~June~~September 30, 2023 and December 31, 2022, the Company had no operating lease right-of-use assets and operating lease liabilities outstanding.

Operating lease expenses are recorded in Occupancy on the unaudited Consolidated Statements of (Loss) Income. BMTX recorded lease expense of less than $0.1 million and $0.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. BMTX recorded lease expense of ~~$0.2~~less than $0.1 million and ~~$0.4~~$0.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

Cash paid pursuant to operating lease liabilities totaled zero for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. Cash paid pursuant to operating lease liabilities totaled ~~$0.2~~less than $0.1 million and ~~$0.4~~$0.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. These cash payments are reported as a component of cash flows (used in) provided by operating activities on the unaudited Consolidated Statements of Cash Flows.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable, and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the interim unaudited consolidated financial 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 BMTX’s results of operations for a particular period, and future changes in circumstances or additional information could result in accruals or resolution in excess of established accruals, which could adversely affect BMTX’s results of operations, potentially materially.

On June 5, 2023, the Company entered into an agreement to purchase certain software technology assets from a third-party. Purchase consideration ~~consists~~was comprised of a cash payment of less than $0.1 million at closing and potential future contingent consideration of $0.5 million over the next three years if the technology is successfully and continuously deployed by the Company. The $0.5 million of contingent consideration is reported in Other non-current liabilities on the unaudited Consolidated Balance Sheets.

NOTE 8 — SHAREHOLDERS’ EQUITY AND PRIVATE WARRANT LIABILITY

Common Stock

The Company is authorized to issue 1,000,000,000 shares of common stock, par value 0.0001 per share. At ~~June~~September 30, 2023, there were ~~11,866,345~~11,869,925 shares of common stock issued and outstanding, which includes the 300,000 performance shares discussed below. At December 31, 2022 there were 12,240,237 shares of common stock issued and outstanding which includes the 300,000 performance shares discussed below.

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

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. At ~~June~~September 30, 2023 and December 31, 2022, there were no shares of preferred stock issued or outstanding.

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

Dividend Policy

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

January 4, 2021 Share-Based Compensation Award

In connection with its January 4, 2021 divestiture of the Company, Customers Bank, the Company’s former parent, granted 1,317,035 of the merger consideration shares of the Company it received to certain employees and executives of the Company. The share-based compensation award was subject to vesting conditions, including a required service condition from award recipients through January 3, 2023. The grant date fair value of the award, totaling $19.6 million, was recorded as share-based compensation expense on the unaudited Consolidated Statements of (Loss) Income on a straight-line basis over the two-year post-grant vesting period, net of any actual forfeitures. The shares awarded were restricted until fully vested. The holders of restricted shares were provided an option to surrender a portion of their shares on the vesting date to cover their income tax obligations. On January 3, 2023, all restricted shares, net of prior forfeitures, vested.

The change in unvested shares under the January 4, 2021 Share-Based Compensation Award is shown below:


		Number of Awards	Weighted-Average Grant-Date Fair Value Per Award			Number of Awards	Weighted-Average Grant-Date Fair Value Per Award
Balance as of December 31, 2022	Balance as of December 31, 2022	1,168,146	$	14.87	Balance as of December 31, 2022	1,168,146	$	14.87
Vested	Vested	(749,854)	$	14.87	Vested	(749,854)	$	14.87
Net settlement of share-based awards for taxes	Net settlement of share-based awards for taxes	(418,292)	$	14.87	Net settlement of share-based awards for taxes	(418,292)	$	14.87
Balance as of June 30, 2023		—	$	—
Balance as of September 30, 2023					Balance as of September 30, 2023	—	$	—

BMTX recorded share-based compensation expense related to these awards of zero and less than $0.1 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. BMTX recorded share-based compensation expense related to these awards of ~~$2.3~~$2.4 million and ~~$4.5~~$6.9 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

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 both the Company 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.

On June 20, 2023, an amendment to the Equity Incentive Plan was approved by the Company’s stockholders. The amendment increased the total number of shares of common stock authorized under the Equity Incentive Plan by 1,279,963, from 1,220,037 (the number of shares authorized under the original 2020 Equity Incentive Plan) to 2,500,000.

Grants were made under the Equity Incentive Plan during the three and ~~six~~nine months ended ~~June~~September 30, 2023 as described within Restricted Stock Units and Performance - Based Restricted Stock Units below.

Restricted Stock Units

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

Performance - Based Restricted Stock Units

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

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

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

The change in unvested RSUs and PBRSUs awarded is shown below:


		Restricted Stock Units			Performance-Based Restricted Stock Units				Restricted Stock Units			Performance-Based Restricted Stock Units
		Number of RSUs	Weighted-Average Grant-Date Fair Value Per RSU		Number of RSUs	Weighted-Average Grant-Date Fair Value Per RSU			Number of RSUs	Weighted-Average Grant-Date Fair Value Per RSU		Number of RSUs	Weighted-Average Grant-Date Fair Value Per RSU
Balance as of December 31, 2022	Balance as of December 31, 2022	324,790	$	8.84	335,000	$	7.09	Balance as of December 31, 2022	324,790	$	8.84	335,000	$	7.09
Granted	Granted	564,530	$	3.40	455,000	$	2.94	Granted	570,780	$	3.40	455,000	$	2.94
Vested	Vested	(101,747)	$	8.79	—	$	—	Vested	(106,580)	$	8.65	—	$	—
Forfeited	Forfeited	(44,184)	$	8.30	(45,000)	$	7.09	Forfeited	(308,554)	$	4.21	(295,000)	$	3.57
Balance as of June 30, 2023		743,389	$	4.75	745,000	$	4.56
Balance as of September 30, 2023								Balance as of September 30, 2023	480,436	$	5.39	495,000	$	5.37

For the three and ~~six~~nine months ended ~~June~~September 30, 2023, the share-based compensation expense related to the RSU awards, net of forfeitures, totaled ~~$0.6~~$0.3 million and $~~0.9~~1.2 million, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the share-based compensation expense related to the RSU awards, net of forfeitures, totaled ~~$0.5~~$0.1 million and $~~0.9~~1.0 million, respectively.

For the three and ~~six~~nine months ended ~~June~~September 30, 2023, the share-based compensation expense related to the PBRSU awards, net of forfeitures, totaled ~~$0.2~~$(0.1) million and $~~0.4~~0.3 million, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, the share-based compensation expense related to the PBRSU awards, net of forfeitures, totaled ~~$0.3~~$0.2 million and $~~0.5~~0.7 million, respectively.

Employee Stock Purchase Plan (“ESPP”)

The Company has an ESPP (the “BM Technologies Inc. 2021 Employee Stock Purchase Plan”) which has an effective date of May 1, 2021. The purpose of the ESPP is to provide eligible employees with an incentive to advance the interests of the Company and its Subsidiaries, by affording them an opportunity to purchase stock of the Company at a favorable price. As of ~~June~~September 30, 2023, there have been no shares purchased on behalf of employees under the ESPP, as the program has not yet been made available for employee participation.

Warrants

At ~~June~~September 30, 2023 and 2022, respectively, there were 22,703,004 warrants to purchase our common stock outstanding. The warrant totals for each period-end consist of 17,294,044 and ~~17,227,289~~17,227,189 public warrants and 5,408,960 and 5,475,815 private warrants as of ~~June~~September 30, 2023 and 2022, respectively.

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

Through ~~June~~September 30, 2023, 1,600 of the Company’s outstanding public warrants have been exercised and 1,169,903 of the private warrants have been repurchased by the Company from related parties at $1.69 per warrant.

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, zero and 66,855 of the private warrants have been reclassified to public warrants based upon a sale of the private warrants by the original holders which resulted in a modification of terms that effect classification as public warrants, respectively. There were no warrants exercised in the three and ~~six~~nine months ended ~~June~~September 30, 2023.

During the three and ~~six~~nine month period ended ~~June~~September 30, 2022, zero and 300,000 of the private warrants have been reclassified to public warrants based upon a sale of the private warrants by the original holders which resulted in a modification of terms that effect classification as public warrants, respectively. There were zero and 100 warrants exercised in the three and ~~six~~nine months ended ~~June~~September 30, ~~2022.~~2022, respectively.

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

Private Warrants

In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, the private warrants are accounted for as liabilities and are marked-to-market each reporting period with the change in fair value recognized in earnings. In general, under the mark-to-market accounting model, as our stock price increases, the private warrant liability increases, and we recognize additional expense on the unaudited Consolidated Statements of (Loss) Income – with the opposite when our stock price declines. Accordingly, the periodic revaluation of the private warrants could result in significant volatility in our reported earnings.

Income Statement Impact: Subsequent to the close of the merger, any change in fair value of the private warrants is recognized on the unaudited Consolidated Statements of (Loss) Income below operating profit as Gain (loss) on fair value of private warrant liability with a corresponding amount recognized in the Liability for private warrants on the unaudited Consolidated Balance Sheets. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, we recorded a gain of ~~$0.6~~$0.4 million and ~~$2.0~~$2.4 million, respectively, resulting from the revaluation of the private warrants. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, we recorded a loss of $1.4 million and a gain of ~~$5.6 million and $8.3~~$6.9 million, respectively, resulting from the revaluation of the private warrants.

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

Cash Flow Impact: The impact of the change in the fair value of the private warrants has no impact on our cash flows as it is a noncash adjustment. Cash received for the exercise of warrants is recorded in cash flows from financing activities. Cash paid for the repurchase of warrants is recorded in cash flows from financing activities. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company repurchased private warrants from related parties for cash consideration totaling $2.0 million. No such transactions occurred during the ~~six~~nine months ended ~~June~~September 30, 2023.

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

Public Warrants

In accordance with FASB ASC Topic 480, Distinguishing Liabilities from Equity, the public warrants are treated as equity instruments under U.S. GAAP. The public warrants are not marked-to-market each reporting period, thus there is no impact to earnings. Exercises of the public warrants are recorded as cash is received and are recorded in Cash and cash equivalents with a corresponding offset recorded in Common stock and Additional paid in-capital within equity. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, there were no exercises of public warrants. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, there were 100 ~~exercises of~~ public ~~warrants.~~warrants exercised.

NOTE 9 — REVENUES

Revenues

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

The following table presents BMTX’s revenues disaggregated by nature of the revenue stream and the pattern or timing of revenue recognition for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The Company has one reportable segment, and all revenues are earned in the U.S.


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(amounts in thousands)	(amounts in thousands)	2023		2022		2023		2022		(amounts in thousands)	2023		2022		2023		2022
Revenues:	Revenues:									Revenues:
Revenue recognized at point in time:	Revenue recognized at point in time:									Revenue recognized at point in time:
Interchange and card revenue	Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958	Interchange and card revenue	$	2,652	$	5,325	$	7,535	$	17,283
Servicing fees	Servicing fees	7,700		13,295		14,332		27,487		Servicing fees	8,658		10,163		22,990		37,650
Account fees	Account fees	1,910		2,207		4,050		4,762		Account fees	1,931		2,110		5,981		6,872
University fees - disbursement activity	University fees - disbursement activity	172		281		432		757		University fees - disbursement activity	207		175		639		932
Other revenue	Other revenue	57		745		96		799		Other revenue	60		903		155		1,702
Total revenue recognized at point in time	Total revenue recognized at point in time	11,643		21,843		23,793		45,763		Total revenue recognized at point in time	13,508		18,676		37,300		64,439
Revenue recognized over time:	Revenue recognized over time:									Revenue recognized over time:
University fees - subscriptions	University fees - subscriptions	1,201		1,165		2,447		2,292		University fees - subscriptions	1,205		1,182		3,652		3,474
Other revenue - maintenance and support	Other revenue - maintenance and support	143		—		231		—		Other revenue - maintenance and support	28		—		260		—
Total revenue recognized over time	Total revenue recognized over time	1,344		1,165		2,678		2,292		Total revenue recognized over time	1,233		1,182		3,912		3,474
Total revenues	Total revenues	$	12,987	$	23,008	$	26,471	$	48,055	Total revenues	$	14,741	$	19,858	$	41,212	$	67,913

Deferred Revenue

Deferred revenue consists of payments received from customers 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 deferred revenue balance as of ~~June~~September 30, 2023 and December 31, 2022 was ~~$8.2~~$3.4 million and $6.6 million, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2023, the Company recognized revenue of approximately ~~$5.9~~$6.6 million included in deferred revenue at the beginning of the period. During the ~~six~~nine months ended ~~June~~September 30, 2022, the Company recognized revenue of approximately ~~$15.0~~$15.4 million included in deferred revenue at the beginning of the period.

Unbilled receivables

The Company had ~~$1.9~~$3.7 million of unbilled receivables, or amounts recognized as revenue for which invoices have not yet been issued, as of ~~June~~September 30, 2023, and $1.5 million as of December 31, 2022. Unbilled receivables are reported in Accounts receivable, net on the unaudited Consolidated Balance Sheets.

NOTE 10 — INCOME TAXES

The Company’s effective tax rate was ~~(0.2)%~~zero and ~~(0.2)~~(0.1)% for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. The Company’s effective tax rate was ~~17.2%~~12.9% and ~~23.5%~~34.9% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively.

The deferred tax asset at ~~June~~September 30, 2023 and 2022 was ~~$29.6~~$30.8 million and ~~$30.4~~$30.5 million, respectively. The balance consisted mainly of Section 197 intangibles for both periods. These Section 197 intangibles resulted from a step-up in tax basis of the assets acquired from BankMobile Technologies, Inc., which for U.S. GAAP purposes, were not recorded at fair value. The deferred tax asset balance at ~~June~~September 30, 2023 also includes net operating loss carryforwards for federal and state purposes.

A full valuation allowance has been recorded against the deferred tax asset balance for all periods presented. 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 three years of cumulative losses outweighs any available positive evidence as of ~~June~~September 30, 2023, but will continue to evaluate this determination each quarterly period going forward.

NOTE 11 — (LOSS) EARNINGS PER COMMON SHARE

The following are the components and results of operations and (loss) earnings per common share calculations for the periods presented:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(amounts in thousands, except per common share data)	(amounts in thousands, except per common share data)	2023		2022		2023		2022		(amounts in thousands, except per common share data)	2023		2022		2023		2022
Net (loss) income available to common shareholders	Net (loss) income available to common shareholders	$	(4,456)	$	4,362	$	(9,416)	$	8,326	Net (loss) income available to common shareholders	$	(3,952)	$	(4,920)	$	(13,368)	$	3,406

Net (loss) income used for EPS	Net (loss) income used for EPS	$	(4,456)	$	4,362	$	(9,416)	$	8,326	Net (loss) income used for EPS	$	(3,952)	$	(4,920)	$	(13,368)	$	3,406
Weighted-average number of common shares outstanding – basic	Weighted-average number of common shares outstanding – basic	11,563		11,944		11,566		11,947		Weighted-average number of common shares outstanding – basic	11,570		11,940		11,567		11,944
Weighted-average number of common shares outstanding – diluted	Weighted-average number of common shares outstanding – diluted	11,563		12,600		11,566		12,585		Weighted-average number of common shares outstanding – diluted	11,570		11,940		11,567		12,215
Basic (loss) earnings per common share	Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70	Basic (loss) earnings per common share	$	(0.34)	$	(0.41)	$	(1.16)	$	0.29
Diluted (loss) earnings per common share	Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66	Diluted (loss) earnings per common share	$	(0.34)	$	(0.41)	$	(1.16)	$	0.28

The following table presents the reconciliation from basic to diluted weighted average shares outstanding used in the calculation of basic and diluted (loss) earnings per common share:


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
(amounts in thousands)	(amounts in thousands)	2023	2022	2023	2022	(amounts in thousands)	2023	2022	2023	2022
Weighted-average number of common shares outstanding – basic	Weighted-average number of common shares outstanding – basic	11,563	11,944	11,566	11,947	Weighted-average number of common shares outstanding – basic	11,570	11,940	11,567	11,944
Add:	Add:					Add:

Service-based RSUs	Service-based RSUs	—	656	—	638	Service-based RSUs	—	—	—	271
Weighted-average number of common shares outstanding – diluted	Weighted-average number of common shares outstanding – diluted	11,563	12,600	11,566	12,585	Weighted-average number of common shares outstanding – diluted	11,570	11,940	11,567	12,215

For basic (loss) earnings per common share, the performance shares are subject to forfeiture, and they are considered share-indexed instruments and not outstanding shares until they are vested. During the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the vesting criteria has not been met and they are not included.

For the three and ~~six~~nine months ended ~~June~~September 30, 2023, our performance shares, public warrants, and private warrants were excluded from the computation of diluted weighted average shares outstanding as the necessary conditions had not been achieved for the performance shares and the average stock price for the period was below the strike price for the warrants. The performance shares are only considered in the calculation for diluted (loss) earnings per common share if they are dilutive in nature. The performance shares are only dilutive when the average share price is greater than the strike price and when positive net income is reported. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, the average share price was below the strike price and these shares were not included in the diluted (loss) earnings per common share calculations. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, our performance-based RSUs were excluded because the vesting is contingent upon the satisfaction of certain conditions which had not been achieved as of ~~June~~September 30, 2023. For the three and ~~six~~nine months ended ~~June~~September 30, 2023, our service-based RSUs were excluded as the effect would be antidilutive.

For the three and ~~six~~nine months ended ~~June~~September 30, 2022, our performance shares, public warrants, and private warrants were excluded from the computation of diluted weighted average shares outstanding as the necessary conditions had not been achieved for the performance shares and the average stock price for the period was below the strike price for the warrants. The performance shares are only considered in the calculation for diluted (loss) earnings per common share if they are dilutive in nature. The performance shares are only dilutive when the average share price is greater than the strike price and when positive net income is reported. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, the average share price was below the strike price and these shares were not included in the diluted (loss) earnings per common share calculations. For the three and ~~six~~nine months ended ~~June~~September 30, 2022, our performance-based RSUs were excluded because the vesting is contingent upon the satisfaction of certain conditions which had not been achieved as of ~~June~~September 30, 2022. For the three months ended September 30, 2022, our service-based RSUs were excluded as the effect would be antidilutive.

The following table presents the potentially dilutive shares that were excluded from the computation of diluted (loss) earnings per common share:


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
(amounts in thousands)	(amounts in thousands)	2023	2022	2023	2022	(amounts in thousands)	2023	2022	2023	2022
Performance shares	Performance shares	300	300	300	300	Performance shares	300	300	300	300
Public warrants	Public warrants	17,294	17,227	17,294	17,227	Public warrants	17,294	17,227	17,294	17,227
Private warrants	Private warrants	5,409	5,476	5,409	5,476	Private warrants	5,409	5,476	5,409	5,476
Performance-based RSUs	Performance-based RSUs	745	348	745	348	Performance-based RSUs	495	348	495	348
Service-based RSUs	Service-based RSUs	743	—	743	—	Service-based RSUs	480	343	480	72
Total	Total	24,491	23,351	24,491	23,351	Total	23,978	23,694	23,978	23,423

NOTE 12 — DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

In accordance with FASB ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for BMTX’s financial instruments. In cases 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 the instrument.

The fair value guidance provides a consistent definition of fair value, focusing on an exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price 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 of significant judgment. The fair value is a reasonable 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 describes 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 fair value measurement.

The following methods and assumptions were used to estimate the fair value of BMTX’s financial instruments as of ~~June~~September 30, 2023 and December 31, 2022:

Cash and cash equivalents

Cash and cash equivalents reported on the unaudited Consolidated Balance Sheets consists of non-interest bearing demand deposits, for which carrying value approximates fair value.

Accounts receivable, net

The carrying amount of accounts receivable approximates fair value because of the short-term nature of these items.

Liability for Private Warrants

The fair value of the private warrants was estimated using a modified version of the binomial lattice model incorporating the Cox-Ross-Rubenstein methodology at ~~June~~September 30, 2023 and at December 31, 2022. We assumed a term for the private warrants equal to the contractual term from the date of the merger with Megalith and then discounted the resulting value to the valuation date.

Among the key inputs and assumptions used in the pricing formula at ~~June~~September 30, 2023 were the following: a term of ~~2.52~~2.27 years; volatility of ~~54%~~64%; a dividend yield of zero; an underlying stock price of ~~$2.98;~~$2.00; a risk free interest rate of ~~4.62%~~4.91%; and a closing price of the public warrants of ~~$0.15~~$0.07 per share.

Among the key inputs and assumptions used in the pricing formula at December 31, 2022 were the following: a term of 3.01 years; volatility of 43%; a dividend yield of zero; an underlying stock price of $5.21; a risk free interest rate of 4.17%; and a closing price of the public warrants of $0.52 per share.

At ~~June~~September 30, 2023 and December 31, 2022, the warrant liability is classified as a Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

The estimated fair value of BMTX’s financial instruments at ~~June~~September 30, 2023 and December 31, 2022 were as follows:


						Fair Value Measurements at June 30, 2023											Fair Value Measurements at September 30, 2023
(amounts in thousands)	(amounts in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		(amounts in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:	Assets:											Assets:
Cash and cash equivalents	Cash and cash equivalents	$	11,524	$	11,524	$	11,524	$	—	$	—	Cash and cash equivalents	$	8,802	$	8,802	$	8,802	$	—	$	—
Accounts receivable, net	Accounts receivable, net	7,083		7,083		7,083		—		—		Accounts receivable, net	8,511		8,511		8,511		—		—
Liabilities:	Liabilities:											Liabilities:
Liability for private warrants	Liability for private warrants	$	811	$	811	$	—	$	—	$	811	Liability for private warrants	$	378	$	378	$	—	$	—	$	378


					Fair Value Measurements at December 31, 2022
(amounts in thousands)	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	$	21,108	$	21,108	$	21,108	$	—	$	—
Accounts receivable, net	8,260		8,260		8,260		—		—
Liabilities:
Liability for private warrants	$	2,847	$	2,847	$	—	$	—	$	2,847

NOTE 13 — RELATED PARTY TRANSACTIONS

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

Cash management

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

Servicing fees and interchange income

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

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

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

On March 22, 2023, we signed the DPSA Second Amendment. The DPSA Second Amendment, among other things, extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s serviced deposits to a Durbin-exempt partner bank; or (ii) June 30, 2024; and revises the fee structure of the Deposit Processing Services Agreement. The other terms of the Deposit Processing Services Agreement, as amended by the DPSA Amendment, remain in effect through the new termination date. ~~See~~

~~Note~~

On March 22, 2023, the Company and Customers Bank entered into the 2023 Deposit Servicing Agreement, under which, effective March 31, 2023, the Company will perform, on behalf of Customers Bank, Customer Bank’s services, duties, and obligations under the Private Label Banking Program Agreement (the “PLBPA”) by and between Customers Bank and T-Mobile USA, Inc. that are not required by Applicable Law (as defined in the 2023 Deposit Servicing Agreement) to be provided by an FDIC insured financial institution. The obligations of the Company and Customers Bank under the 2023 Deposit Servicing Agreement are similar to those under the Deposit Processing Services Agreement; provided, however, that (i) as of March 31, 2023, the 2023 Deposit Servicing Agreement and not the Deposit Processing Services Agreement shall govern the terms, conditions, roles, responsibilities, duties, and obligations of the Company and Customers Bank with respect to the PLBPA and the Depositor Accounts (as defined in the 2023 Deposit Servicing Agreement); (ii) the Deposit Processing Services Agreement is amended to the extent necessary or advisable to effect the same, including, without limitation, such that “Depositor” under the Deposit Processing Services Agreement shall not include any T-Mobile Customer (as defined in the PLBPA); and (iii) there is a different fee structure under the 2023 Deposit Servicing Agreement from that set forth in the Deposit Processing Services Agreement. The initial term of the 2023 Deposit Servicing Agreement continues until February 24, 2025, and will automatically renew for additional one-year terms unless either party gives written notice of non-renewal at least 180 days prior to the expiration of the then-current term. The 2023 Deposit Servicing Agreement may be terminated early by either party upon material breach, upon notice of an uncured objection from a regulatory authority, or by the Company upon 120 days’ written notice upon the satisfaction of certain conditions.

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

Transition Services Agreement

On January 4, 2021, we entered into a Transition Services Agreement with Customers Bank, pursuant to which each party agreed for a period of up to twelve months to provide certain transition services listed therein to the other party. A limited number of these transition services were subsequently extended through March 31, 2022. In consideration for the services, we paid Customers Bank a service fee of $12,500 per month, plus any expenses associated with the services.

The Transition Services Agreement included a provision for providing the Company with assistance in the establishment and administration of a 401(k) plan for the benefit of Company employees. The Customers Bank 401(k) plan is a multi-employer plan, as defined by the U.S. Department of Labor in accordance with the Employee Retirement Income Security Act of 1974, and through December 31, 2022, the Customers Bank 401(k) covered both the full-time employees of Customers Bank and the Company. The Company records its contributions to the Customers Bank 401(k) Plan in Salaries and employee benefits on the unaudited Consolidated Statements of (Loss) Income. The Company’s employer contribution to the Customers Bank 401(k) Plan for the three and ~~six~~nine months ended ~~June~~September 30, 2022 totaled $0.2 million and ~~$0.4~~$0.6 million, respectively.

Other

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

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

Both the President and Executive Chairman of the Board of Customers Bank are immediate family members of the Company’s CEO, and together with their spouses, own less than 5.0% of the Company’s outstanding common stock at ~~June~~September 30, 2023.

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

On April 20, 2022, the Company entered into a Special Limited Agency Agreement (“SLA”) with Customers Bank that provides for marketing assistance from the Company for the referral of consumer installment loans funded by Customers Bank. In consideration for this marketing assistance, the Company receives certain fees specified within the SLA which are recorded as a component of Other revenue on the unaudited Consolidated Statements of (Loss) Income. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, no revenue was realized under the SLA. The SLA was terminated on May 16, 2023.

Positions with Customers Bank are presented on the unaudited Consolidated Balance Sheets in Accounts receivable, net, Deferred revenue, and Accounts payable and accrued liabilities. The Accounts receivable balances related to Customers Bank as of ~~June~~September 30, 2023 and December 31, 2022 were ~~$0.3~~$3.3 million and $1.4 million, respectively. The Deferred revenue balances related to Customers Bank as of ~~June~~September 30, 2023 and December 31, 2022 were ~~$5.9 million~~zero and $3.8 million, respectively. The Accounts payable and accrued liabilities balances related to Customers Bank as of ~~June~~September 30, 2023 and December 31, 2022 were zero and $3.8 million, respectively.

The Company recognized ~~$11.1~~$13.0 million and ~~$22.6~~$35.6 million in revenues from Customers Bank for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. Of these amounts, ~~$4.4~~$5.3 million and ~~$9.9~~$15.2 million are paid directly by MasterCard or individual account holders to the Company for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. These amounts are presented on the unaudited Consolidated Statements of (Loss) Income in Total operating revenue.

The Company recognized ~~$20.5~~$17.3 million and ~~$43.6~~$60.9 million in revenues from Customers Bank for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. Of these amounts, ~~$5.5~~$5.2 million and ~~$11.9~~$17.2 million are paid directly by MasterCard or individual account holders to the Company for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. These amounts are presented on the unaudited Consolidated Statements of (Loss) Income in Total operating revenue.

The Company recognized zero expenses from Customers Bank for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively.

The Company recognized zero and less than $0.1 million of expenses from Customers Bank for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. These amounts are presented on the unaudited Consolidated Statements of (Loss) Income in Total operating expenses.

NOTE 14 — RESTRUCTURING ACTIVITIES

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

Included within the PEP is a targeted reduction of the Company’s 2023 employee workforce of approximately 25% as compared to its headcount at December 31, 2022. This workforce reduction is in addition to targeted spend reduction and service provider rationalization.

The Company completed a workforce reduction of 6160 employees during the ~~six~~nine months ended ~~June~~September 30, 2023. The Company’s workforce reduction expenses, consisting of severance and other termination benefits for the three and ~~six~~nine months ended ~~June~~September 30, 2023, totaled ~~$0.3 million~~zero and $1.1 million, respectively, and are recorded in Restructuring, merger, and acquisition related expenses on the unaudited Consolidated Statements of (Loss) Income. $0.4 million of these expenses were incurred but not paid at ~~June~~September 30, 2023 and are included in Accounts payable and accrued liabilities on the unaudited Consolidated Balance Sheets.

NOTE 15 — SUBSEQUENT EVENTS

~~On August 18, 2023, the~~The Company ~~and Customers Bank entered into a third amendment~~has evaluated events subsequent to the ~~Deposit Processing Services Agreement (the “DPSA Third Amendment”)~~balance sheet date and prior to the filing of this Quarterly Report on Form 10-Q for the Higher Education serviced deposit accounts. The DPSA Third Amendment extends the termination date of the Deposit Processing Services Agreement until the earlier of (i) the transfer of the Company’s Higher Education serviced depositsthree and nine months ended September 30, 2023, and has determined that no events have occurred that would require adjustment to ~~a Durbin-exempt partner bank; or (ii) April 15, 2025.~~

~~On August 20, 2023, the Company~~our interim unaudited consolidated financial statements and FCB entered into an amendment to the FCB Deposit Servicing Agreement (the “FCB DPSA First Amendment”). The FCB DPSA First Amendment, among other things, (i) extends the initial term from four years to five years after the effective date, (ii) provides that FCB will work with the Company and Customers Bank on the timely transfer of existing student depositor accounts on or before the effective date, and as agreed to by the parties, and (iii) amends the effective date to be the date on which FCB takes on deposits from the existing student depositor accounts.related notes.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our Management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our interim unaudited consolidated financial statements and the related notes included in Item 1 “Unaudited Consolidated Financial Statements” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2022. 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,” and “our” refer to the business and operations of BM Technologies, Inc. (“BMTX”) and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including, without limitation, statements under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements generally, but not always, can be identified by the use of forward-looking terminology, including the words “believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “may”, “will”, “potential”, “projects”, “predicts”, “continue”, or “should”, or, in each case, their negative or other variations or comparable terminology.

These forward-looking statements reflect our current views with respect to, among other things, statements relating to the Company’s assets, business, cash flows, condition (financial or otherwise), credit quality, financial performance, liquidity, short and long-term performance goals, prospects, results of operations, strategic initiatives, the benefits, cost, and synergies of completed acquisitions or dispositions, and the timing, benefits, costs, and synergies of future acquisitions, dispositions, and other growth opportunities. There can be no assurance that actual results will not materially differ from expectations. These statements are based on Management’s current expectations, but actual results may differ materially due to various factors. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control), and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to the following:

•negative economic and political conditions that adversely affect the general economy, the job market, consumer confidence, the financial condition of our ~~borrowers~~serviced deposit account holders and consumer spending habits, which may affect, among other things, our revenues and provision for operating losses;

•strategic, market, operational, liquidity and interest rate risks associated with our business;

•our concentration of credit risk and any potential deterioration in the financial quality of our partner ~~bank;~~banks;

•the risks of expansion into new product markets;

•risks with respect to recent, pending, or potential future mergers or acquisitions, including our ability to successfully obtain regulatory, and when required, shareholder approval and thereafter, to complete acquisitions and successfully integrate or expand businesses and operations that we acquire;

•our ability to attract and retain key employees;

•competition from financial institutions and other financial service providers, including non-bank financial technology providers, and our ability to attract customers from other financial institutions;

•losses due to fraudulent and negligent conduct of our customers, third party service providers, or employees;

•cybersecurity risks and the vulnerability of our network and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss, and other security breaches that could adversely affect our business and financial performance or reputation;

•our reliance on third parties to provide key components of our business infrastructure and services required to operate our business;

•the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;

•the availability of and access to capital;

•legislative, regulatory, or accounting changes that may adversely affect us;

•adverse results (including judgments, costs, fines, reputational harm, inability to obtain necessary approvals, and/or other negative effects) from current or future litigation, regulatory proceedings, examinations, investigations, or similar matters, or developments related thereto;

•failure to maintain an effective system of disclosure controls and internal control over financial reporting;

•any event or development that would cause us to conclude that there was impairment of any asset, including intangible assets, such as goodwill; and

•other risks and uncertainties disclosed in documents filed or furnished by us with or to the SEC, any of which could cause actual results to differ materially from future results expressed, implied, or otherwise anticipated by such forward-looking statements.

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We caution readers that the foregoing list of factors is not exclusive, is not necessarily in order of importance, and readers should not place undue reliance on forward-looking statements. Additional factors that may cause actual results to differ materially from those contemplated by any forward-looking statements may also be found in our 2022 Annual Report on Form 10-K (including the “Risk Factor” section of that report), Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available at the SEC’s website at http://www.sec.gov. We do not intend to and, except as required by law, hereby disclaim any obligation to update or revise any forward-looking statement contained in this Quarterly Report on Form 10-Q, which speaks only as of the date of its filing with the SEC, whether as a result of new information, future events, or otherwise.

BUSINESS OVERVIEW

~~The initial term of~~

On August 20, 2023, the Company and FCB entered into an amendment to the FCB Deposit Servicing Agreement ~~is for~~(the “FCB DPSA First Amendment”). The FCB DPSA First Amendment, among other things, (i) extends the initial term from four years ~~is subject~~ to ~~certain closing conditions,~~five years after the effective date, (ii) provides that FCB will work with the Company and ~~will automatically renew for additional two-year terms unless either party gives written notice~~Customers Bank on the timely transfer of ~~non-renewal at least 120 days prior~~existing student depositor accounts on or before the effective date, and as agreed to by the ~~expiration of~~parties, and (iii) amends the ~~then-current term.~~ effective date to be the date on which FCB takes on deposits from the existing student depositor accounts.

expected to occur during December 2023.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

For information regarding our critical accounting policies and estimates, please refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to the critical accounting policies and estimates previously disclosed in that report.

NEW ACCOUNTING PRONOUNCEMENTS

From time to time, new accounting pronouncements are issued by the FASB that are adopted by BMTX as of the required effective dates. During the ~~six~~nine months ended ~~June~~September 30, 2023, there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to ~~June~~September 30, 2023, which were not yet effective, considered relevant or material to the Company’s financial statements taken as a whole.

RESULTS OF OPERATIONS

The following discussion of our results of operations should be read in conjunction with our interim unaudited consolidated financial statements, including the accompanying notes.

The following summarized tables set forth our operating results for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022:

Three Months Ended
June 30, Change % Change
(dollars in thousands, except per common share data) 2023 2022
Operating revenues $ 12,987 $ 23,008 $ (10,021) (44) %
Operating expenses 18,028 23,377 (5,349) (23) %
(Loss) income from operations (5,041) (369) (4,672) NM
Gain on fair value of private warrant liability 595 5,640 (5,045) (89) %
(Loss) income before income tax expense (4,446) 5,271 (9,717) NM
Income tax expense 10 909 (899) (99) %
Net (loss) income $ (4,456) $ 4,362 $ (8,818) NM
Basic (loss) earnings per common share $ (0.39) $ 0.37 $ (0.76) NM
Diluted (loss) earnings per common share $ (0.39) $ 0.35 $ (0.74) NM

~~NM refers to changes greater than 150%.~~


	Three Months Ended September 30,				Change		% Change
(dollars in thousands, except per common share data)	2023		2022
Operating revenues	$	14,741	$	19,858	$	(5,117)	(26)	%
Operating expenses	19,126		24,138		(5,012)		(21)	%
Loss from operations	(4,385)		(4,280)		(105)		2	%
Gain (loss) on fair value of private warrant liability	433		(1,369)		1,802		(132)	%
Loss before income tax expense	(3,952)		(5,649)		1,697		(30)	%
Income tax benefit	—		(729)		729		(100)	%
Net loss	$	(3,952)	$	(4,920)	$	968	(20)	%

Basic loss per common share	$	(0.34)	$	(0.41)	$	0.07	(17)	%
Diluted loss per common share	$	(0.34)	$	(0.41)	$	0.07	(17)	%

For the three months ended ~~June~~September 30, 2023, Net ~~income~~loss decreased ~~$8.8~~$1.0 million as compared to the three months ended ~~June~~September 30, 2022, resulting in a Net loss of ~~$4.5~~$4.0 million, which included a ~~$5.0~~$1.8 million decrease in the Gain on fair value of private warrant liability as compared to the three months ended ~~June~~September 30, 2022. Loss from operations for the three months ended ~~June~~September 30, 2023 increased by ~~$4.7~~$0.1 million as compared to the three months ended ~~June~~September 30, 2022. Operating revenues decreased by ~~$10.0~~$5.1 million, or ~~44%~~26%, and Operating expenses decreased by ~~$5.3~~$5.0 million, or ~~23%~~21%. Changes in operating revenues and expenses are discussed in greater detail below. Basic and diluted loss per common share, which decreased to $(0.34), are both driven by the impact of the total net loss in the current year.


	Nine Months Ended September 30,				Change		% Change
(dollars in thousands, except per common share data)	2023		2022
Operating revenues	$	41,212	$	67,913	$	(26,701)	(39)	%
Operating expenses	57,013		69,600		(12,587)		(18)	%
Loss from operations	(15,801)		(1,687)		(14,114)		NM
Gain on fair value of private warrant liability	2,449		6,916		(4,467)		(65)	%
(Loss) income before income tax expense	(13,352)		5,229		(18,581)		NM
Income tax expense	16		1,823		(1,807)		(99)	%
Net (loss) income	$	(13,368)	$	3,406	$	(16,774)	NM

Basic (loss) earnings per common share	$	(1.16)	$	0.29	$	(1.45)	NM
Diluted (loss) earnings per common share	$	(1.16)	$	0.28	$	(1.44)	NM

NM refers to changes greater than 150%.

For the nine months ended September 30, 2023, Net income decreased $16.8 million as compared to the nine months ended September 30, 2022, resulting in a Net loss of $13.4 million, which included a $4.5 million decrease in the Gain on fair value of private warrant liability as compared to the nine months ended September 30, 2022. Loss from operations for the nine months ended September 30, 2023 increased $14.1 million, as compared to the nine months ended September 30, 2022, resulting in a Loss from operations of $15.8 million. Operating revenues decreased by $26.7 million, or 39%, and Operating expenses decreased by $12.6 million, or 18%. Changes in operating revenues and expenses are discussed in greater detail below. Basic and diluted (loss) earnings per common share, which decreased to ~~$(0.39)~~$(1.16), are both driven by the impact of the total net loss in the current year.

Six Months Ended
June 30, Change % Change
(dollars in thousands, except per common share data) 2023 2022
Operating revenues $ 26,471 $ 48,055 $ (21,584) (45) %
Operating expenses 37,887 45,461 (7,574) (17) %
(Loss) income from operations (11,416) 2,594 (14,010) NM
Gain on fair value of private warrant liability 2,016 8,284 (6,268) (76) %
(Loss) income before income tax expense (9,400) 10,878 (20,278) NM
Income tax expense 16 2,552 (2,536) (99) %
Net (loss) income $ (9,416) $ 8,326 $ (17,742) NM
Basic (loss) earnings per common share $ (0.81) $ 0.70 $ (1.51) NM
Diluted (loss) earnings per common share $ (0.81) $ 0.66 $ (1.47) NM

~~NM refers to changes greater than 150%.~~

~~For the six months ended June 30, 2023,~~ ~~Net income~~ ~~decreased $17.7 million as compared to the six months ended June 30, 2022, resulting in a~~ ~~Net loss~~ ~~of $9.4 million, which included a $6.3 million decrease in the~~ ~~Gain on fair value of private warrant liability~~ ~~as compared to the six months ended June 30, 2022.~~ ~~Income from operations~~ ~~for the six months ended June 30, 2023 decreased $14.0 million, as compared to the six months ended June 30, 2022, resulting in a~~ ~~Loss from operations~~ ~~of $11.4 million.~~ ~~Operating revenues~~ ~~decreased by $21.6 million, or 45%, and~~ ~~Operating expenses~~ decreased by $7.6 million, or 17%. Changes in operating revenues and expenses are discussed in greater detail below. Basic and diluted (loss) earnings per common share, which decreased to $(0.81), are both driven by the impact of the total net loss in the current year.

Operating Revenues


		Three Months Ended June 30,						% Change			Three Months Ended September 30,						% Change
(dollars in thousands)	(dollars in thousands)	2023		2022		Change				(dollars in thousands)	2023		2022		Change
Interchange and card revenue	Interchange and card revenue	$	1,804	$	5,315	$	(3,511)	(66)	%	Interchange and card revenue	$	2,652	$	5,325	$	(2,673)	(50)	%
Servicing fees	Servicing fees	7,700		13,295		(5,595)		(42)	%	Servicing fees	8,658		10,163		(1,505)		(15)	%
Account fees	Account fees	1,910		2,207		(297)		(13)	%	Account fees	1,931		2,110		(179)		(8)	%
University fees	University fees	1,373		1,446		(73)		(5)	%	University fees	1,412		1,357		55		4	%
Other revenue	Other revenue	200		745		(545)		(73)	%	Other revenue	88		903		(815)		(90)	%
Total operating revenues	Total operating revenues	$	12,987	$	23,008	$	(10,021)	(44)	%	Total operating revenues	$	14,741	$	19,858	$	(5,117)	(26)	%

Total Operating revenues decreased ~~$10.0~~$5.1 million, or ~~44%~~26%, in the three months ended ~~June~~September 30, 2023 as compared to the three months ended ~~June~~September 30, 2022. This decrease is primarily attributable to a ~~$5.6~~$2.7 million, or ~~42%~~50%, decrease in Interchange and card revenue driven primarily by the loss of Durbin-exempt rates, offset in part by higher overall spend; a $1.5 million, or 15%, decrease in Servicing fees, driven primarily by a ~~53%~~47% reduction in average total deposits, offset in part by higher deposit yields under the new deposit processing services ~~agreements,~~agreements; and a ~~$3.5~~$0.8 million or ~~66%,~~90% decrease in ~~Interchange and card~~Other revenue ~~driven primarily by the loss of Durbin-exempt rates as well as slightly~~due to lower ~~overall spend.~~current year development revenues.


		Six Months Ended June 30,						% Change			Nine Months Ended September 30,						% Change
(dollars in thousands)	(dollars in thousands)	2023		2022		Change				(dollars in thousands)	2023		2022		Change
Interchange and card revenue	Interchange and card revenue	$	4,883	$	11,958	$	(7,075)	(59)	%	Interchange and card revenue	$	7,535	$	17,283	$	(9,748)	(56)	%
Servicing fees	Servicing fees	14,332		27,487		(13,155)		(48)	%	Servicing fees	22,990		37,650		(14,660)		(39)	%
Account fees	Account fees	4,050		4,762		(712)		(15)	%	Account fees	5,981		6,872		(891)		(13)	%
University fees	University fees	2,879		3,049		(170)		(6)	%	University fees	4,291		4,406		(115)		(3)	%
Other revenue	Other revenue	327		799		(472)		(59)	%	Other revenue	415		1,702		(1,287)		(76)	%
Total operating revenues	Total operating revenues	$	26,471	$	48,055	$	(21,584)	(45)	%	Total operating revenues	$	41,212	$	67,913	$	(26,701)	(39)	%

Total Operating revenues decreased ~~$21.6~~$26.7 million, or ~~45%~~39%, in the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the ~~six~~nine months ended ~~June~~September 30, 2022. This decrease is primarily attributable to a ~~$13.2~~$14.7 million, or ~~48%~~39%, decrease in Servicing fees, driven primarily by a 49% reduction in average total deposits, offset in part by higher deposit yields ~~during~~beginning in the second quarter of 2023 under the new deposit processing services ~~agreements, and~~agreements; a ~~$7.1~~$9.7 million, or ~~59%~~56%, decrease in Interchange and card revenue driven primarily by the loss of Durbin-exempt ~~rates as well as slightly~~rates; and a $1.3 million or 76% decrease in Other revenue due to lower ~~overall spend.~~current year development revenues.

Operating Expenses


		Three Months Ended June 30,						% Change			Three Months Ended September 30,						% Change
(dollars in thousands)	(dollars in thousands)	2023		2022		Change				(dollars in thousands)	2023		2022		Change
Technology, communication, and processing	Technology, communication, and processing	$	6,364	$	7,297	$	(933)	(13)	%	Technology, communication, and processing	$	8,186	$	7,731	$	455	6	%
Salaries and employee benefits	Salaries and employee benefits	6,139		10,440		(4,301)		(41)	%	Salaries and employee benefits	4,773		10,773		(6,000)		(56)	%
Professional services	Professional services	2,338		2,420		(82)		(3)	%	Professional services	2,948		2,454		494		20	%
Provision for operating losses	Provision for operating losses	1,813		1,839		(26)		(1)	%	Provision for operating losses	2,138		1,564		574		37	%
Occupancy	Occupancy	10		368		(358)		(97)	%	Occupancy	9		160		(151)		(94)	%
Customer related supplies	Customer related supplies	222		221		1		—	%	Customer related supplies	227		225		2		1	%
Advertising and promotion	Advertising and promotion	125		84		41		49	%	Advertising and promotion	128		242		(114)		(47)	%
Restructuring, merger, and acquisition related expenses	Restructuring, merger, and acquisition related expenses	274		1		273		NM		Restructuring, merger, and acquisition related expenses	—		—		—		—	%
Other expense	Other expense	743		707		36		5	%	Other expense	717		989		(272)		(28)	%
Total operating expenses	Total operating expenses	$	18,028	$	23,377	$	(5,349)	(23)	%	Total operating expenses	$	19,126	$	24,138	$	(5,012)	(21)	%

NM refers to changes greater than 150%.

Total Operating expenses decreased ~~$5.3~~$5.0 million, or ~~23%~~21%, in the three months ended ~~June~~September 30, 2023 as compared to the three months ended ~~June~~September 30, 2022. This decrease is primarily attributable to a ~~$4.3~~$6.0 million, or ~~41%~~56%, decrease in Salaries and employee benefits ~~driven~~which included a $3.5 million reduction attributable primarily byto the effect of the PEP initiatives and a ~~$2.3~~$2.5 million reduction in share-based compensation expenses due primarily to the full vesting of the January 4, 2021 Share-Based Compensation Award and $0.3 million of forfeitures recorded during the current year. This decrease was offset in part by a ~~$2.0 million reduction driven primarily by the effect of the PEP initiatives. In addition, there was a $0.9~~$0.5 million, or ~~13%~~6%, ~~decrease~~increase in Technology, communication, and processing ~~driven primarily by cost savings from the PEP and~~which included higher ~~capitalization~~amortization of internally developed ~~software expenses~~software; a $0.5 million, or 20%, increase in Professional services which included higher third-party technical and professional contractor charges; and a ~~$0.4~~$0.6 million, or ~~97%~~37%, ~~decrease~~increase in ~~Occupancy~~Provision for operating losses ~~due to physical office closures in 2023.These decreases were offset in part by $0.3 million of~~ ~~Restructuring, merger,~~which included higher current year fraud and ~~acquisition related expenses~~ ~~incurred in order to execute the PEP cost savings initiatives.~~overdraft losses.

Six Months Ended
June 30, % Change
(dollars in thousands) 2023 2022 Change
Technology, communication, and processing $ 13,582 $ 14,215 $ (633) (4) %
Salaries and employee benefits 12,564 19,922 (7,358) (37) %
Professional services 4,978 4,792 186 4 %
Provision for operating losses 3,490 3,441 49 1 %
Occupancy 24 675 (651) (96) %
Customer related supplies 450 451 (1) — %
Advertising and promotion 243 197 46 23 %
Restructuring, merger, and acquisition related expenses 993 290 703 NM
Other expense 1,563 1,478 85 6 %
Total operating expenses $ 37,887 $ 45,461 $ (7,574) (17) %


	Nine Months Ended September 30,						% Change
(dollars in thousands)	2023		2022		Change
Technology, communication, and processing	$	21,768	$	21,944	$	(176)	(1)	%
Salaries and employee benefits	17,337		30,656		(13,319)		(43)	%
Professional services	7,926		7,225		701		10	%
Provision for operating losses	5,628		5,006		622		12	%
Occupancy	33		875		(842)		(96)	%
Customer related supplies	677		676		1		—	%
Advertising and promotion	371		461		(90)		(20)	%
Restructuring, merger, and acquisition related expenses	993		290		703		NM
Other expense	2,280		2,467		(187)		(8)	%
Total operating expenses	$	57,013	$	69,600	$	(12,587)	(18)	%

NM refers to changes greater than 150%.

Total Operating expenses decreased ~~$7.6~~$12.6 million, or ~~17%~~18%, in the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the ~~six~~nine months ended ~~June~~September 30, 2022. This decrease is primarily attributable to a ~~$7.4~~$13.3 million, or ~~37%~~43%, decrease in Salaries and employee benefits ~~driven~~which included a $7.5 million reduction attributable primarily byto the effect of the PEP initiatives and a ~~$4.5~~$7.1 million reduction in share-based compensation expenses due primarily to the full vesting of the January 4, 2021 Share-Based Compensation Award and ~~a $2.9~~current year forfeitures of unvested RSU grants offset by $1.3 million ~~reduction driven primarily by the effect~~lower capitalization and client reimbursement of ~~the PEP initiatives.~~labor expenses. In addition, there was a ~~$0.6 million, or 4%, decrease~~ ~~Technology, communication, and processing~~ ~~driven primarily by cost savings from the PEP and higher capitalization of internally developed software expenses and a $0.7~~$0.8 million, or 96%, decrease in Occupancy due to physical office closures in ~~2023.~~2022. These decreases were offset in part by a $0.7 million, or 10%, increase in Professional services which included higher third-party technical and professional contractor charges; a $0.6 million, or 12%, increase in Provision for operating losses which included higher current year fraud and overdraft losses; and $0.7 million of increased Restructuring, merger, and acquisition related expenses incurred in order to execute the PEP cost savings ~~initiatives.~~initiatives

Income Tax Expense

The Company’s effective tax rate was ~~(0.2)%~~0.0% and ~~(0.2)~~(0.1)% for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. The Company’s effective tax rate was ~~17.2%~~12.9% and ~~23.5%~~34.9% for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively. The Company was in a taxable loss position for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and the three months ended September 30, 2022 and was in a taxable income position for the ~~three and six~~nine months ended ~~June~~September 30, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Our Cash and cash equivalents consist of non-interest bearing, highly-liquid demand deposits. We had ~~$11.5~~$8.8 million of Cash and cash equivalents at ~~June~~September 30, 2023 as compared to $21.1 million of Cash and cash equivalents at December 31, 2022.

We finance our operations through cash flows provided primarily by operating activities. We intend to fund our ongoing operating activities with our existing cash and expected cash flows from future operations. However, should additional liquidity be necessary, the Company could consider equity or debt financing, but there are no assurances that additional capital would be available or on terms that are acceptable to us.

Management has performed this required assessment as of ~~August 21,~~November 20, 2023, ~~including consideration of the effect of the DPSA Third Amendment, see~~ ~~Note 15 - Subsequent Events~~ ~~for additional information, and the 2023 Deposit Servicing Agreement with Customers Bank~~ and believes there isare sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of ~~$13.0~~$11.1 million at ~~August 21,~~November 20, 2024.

The table below summarizes our cash flows for the periods indicated:


		Six Months Ended June 30,						% Change			Nine Months Ended September 30,						% Change
(dollars in thousands)	(dollars in thousands)	2023		2022		Change				(dollars in thousands)	2023		2022		Change
Net cash (used in) provided by operating activities	Net cash (used in) provided by operating activities	$	(4,064)	$	12,423	$	(16,487)	(133)	%	Net cash (used in) provided by operating activities	$	(5,530)	$	7,450	$	(12,980)	NM
Net cash used in investing activities	Net cash used in investing activities	(3,086)		(3,441)		355		(10)	%	Net cash used in investing activities	(4,338)		(4,519)		181		(4)	%
Net cash used in financing activities	Net cash used in financing activities	(2,434)		(2,202)		(232)		11	%	Net cash used in financing activities	(2,438)		(2,202)		(236)		11	%
Net decrease in cash and cash equivalents		$	(9,584)	$	6,780	$	(16,364)	NM
Net (decrease) increase in cash and cash equivalents										Net (decrease) increase in cash and cash equivalents	$	(12,306)	$	729	$	(13,035)	NM

NM refers to changes greater than 150%.

Cash flows used in operating activities

Cash used in operating activities was ~~$4.1~~$5.5 million in the ~~six~~nine months ended ~~June~~September 30, 2023 which is a ~~$16.5~~$13.0 million net decrease in cash provided by operating activities as compared to the ~~six~~nine months ended ~~June~~September 30, 2022.

The decrease in net cash provided by operating activities is driven primarily by a ~~$16.0~~$19.0 million decrease in cash Net income, a ~~$1.2~~$1.1 million decreased source of cash from Accounts receivable, and a ~~$3.1~~$4.1 million increased use of cash for Accounts payable and accrued liabilities, offset in part by a $7.9 million increased source of cash from Prepaid and other assets, of which $4.3 million was for a federal income tax refund received in September 2023, a $1.8 million decreased use of cash for Taxes payable, a ~~$1.6~~$1.1 million increased source of cash from Deferred revenue, and a $0.4 million decreased use of cash for Operating lease liabilities.

Cash flows used in investing activities

Cash used in investing activities decreased ~~$0.4~~$0.2 million in the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to ~~decreased capitalization of development costs related to internal use software and~~ decreased purchases of equipment.

Cash flows used in financing activities

Cash used in financing activities increased $0.2 million in the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the ~~six~~nine months ended ~~June~~September 30, 2022, primarily due to larger tax payments related to the net settlement of share-based compensation awards versus the private warrant repurchase transaction during the prior period.

ITEM 3. QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Credit Risk

We are exposed to various economic risks in the normal course of business including concentration of credit risk. Potential concentration of credit risk consists primarily of accounts receivable from Customers Bank, BaaS partners, MasterCard, and Higher Education institution clients. Historically, we have not experienced any material losses related to these balances and believe that there is minimal risk of expected future losses. However, there can be no assurance that there will not be losses on these balances.

At ~~June~~September 30, 2023 and December 31, 2022, Customers Bank accounted for 4%38% and 17% of our total Accounts receivable, net, respectively. At ~~June~~September 30, 2023 and December 31, 2022, a BaaS partner accounted for ~~59%~~23% and 60% of our total Accounts receivable, net, respectively. At ~~June~~September 30, 2023 and December 31, 2022, MasterCard accounted for ~~21%~~20% and 10% of our total Accounts receivable, net, respectively.

Financial instruments that potentially subject the Company to credit risk consist principally of cash held in the Company's operating account. Cash is maintained in accounts with Customers Bank, which, at times may exceed the FDIC coverage limit of $250,000. At ~~June~~September 30, 2023, the Company has not experienced losses on these cash accounts and Management believes, based upon the quality of Customers Bank, that the credit risk with regard to these deposits is not significant.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our Management, including our Chief Executive Officer ~~Co-Chief Executive Officer,~~ and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of Management, including our Chief Executive Officer ~~Co-Chief Executive Officer,~~ and ~~our~~ Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)), as of ~~June~~September 30, 2023. Based on this evaluation, the Company’s Chief ~~Executive Officer, Co-Chief~~ Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of that date.

Changes in Internal Control over Financial Reporting

In the ordinary course of business, we routinely review our system of internal control over financial reporting and make changes to our systems and processes that are intended to ensure an effective internal control environment. Certain internal control deficiencies were identified during the second quarter of 2023, that upon assessment, did not rise to the level of a material weakness. Management is actively engaged in the implementation of remediation plans to address the controls contributing to these control deficiencies. There were no changes in the Company’s internal control over financial reporting during the ~~second~~third quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

Except as set forth in the following sentences, there have been no material changes to the Risk Factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. In our Annual Report on Form 10-K, we reported that a recent decision of the Delaware Court of Chancery had created uncertainty regarding the validity of our Amended Charter and whether the vote to approve the Amended Charter met the requirements under Section 242(b)(2) of the Delaware General Corporation Law (the “DGCL”), resulting in potential uncertainty with respect to our capitalization that could have had a material adverse effect on our operations, including our ability to complete financing transactions, until the underlying issues were definitively resolved. On April 7, 2023, we filed a petition (the “Petition”) in the Delaware Court of Chancery under Section 205 of the DGCL to seek validation of the Company’s Amended Charter effective upon our merger with Megalith Financial Acquisition Corporation, a special purpose acquisition company, on January 4, 2021. On April 24, 2023, the Petition was granted, and all shares of capital stock of the Company issued in reliance of the effectiveness of our Amended Charter were validated and declared effective as of the date and time of the original issuance of such shares. Accordingly, that risk no longer exists.

ITEM 5. OTHER INFORMATION

~~DPSA Third Amendment~~

(a) Dullinger Agreement:

Reference is made ~~to: (i)~~to the ~~description~~Employment Agreement dated as of ~~“Deposit Servicing~~January 26, 2023 (the “Employment Agreement” ~~set forth in Item 1.01 of the Current Report on Form 8-K of~~) between BM Technologies, Inc. (the “Company”) ~~dated January 4, 2021~~ and ~~filed with~~James Dullinger (“Executive”), the Securities and Exchange Commission (“SEC”) on January 8, 2021 (the “2021 Form 8-K”); (ii) the Deposit Processing Services Agreement dated as of January 4, 2021 between the Company and Customers Bank (the “DPSA”)Company’s Chief Financial Officer, filed as Exhibit 10.3 to the 2021 Form 8-K; (iii) Item 1.01 of the Company’s Current Report on Form 8-K dated November 8, 2022 and filed that same date with the SEC (the “2022 Form 8-K”); (iv) the First Amendment to the DPSA dated November 7, 2022 (the “First Amendment”) filed as Exhibit 10.1 to the 2022 Form 8-K; (v) Item 1.01 of the Company’s Current Report on Form 8-K/A dated March 16, 2023 and filed with the SEC on March 22, 2023; and (vi) the Second Amendment to the DPSA dated March 22, 2023 (the “Second Amendment”) filed as Exhibit 10.110.4 to the Company’s Quarterly Report on Form 10-Q for the ~~quarter~~quarterly period ended March 31, 2023 ~~filed with~~and incorporated herein by the ~~SEC on May 22, 2023.~~reference. Capitalized terms used in this description shall have the meanings set forth in the Employment Agreement unless the context clearly would clearly require otherwise.

As of November 1, 2023, the Company and the Executive executed the First Amendment to the Employment Agreement (the “Amendment”). The material changes to the Employment Agreement are as follows:

~~Items (i) through (vi) above are hereby incorporated by this reference.~~ a.The ~~DPSA originally had a~~ term ~~that expired on December 31, 2022. The First Amendment, among other things, extended the termination date~~ of the ~~DPSA for six months. The Second Amendment, among other things,~~Employment Agreement was extended from January 26, 2024 to March 31, 2024 (the “Expiration Date”), with any extensions requiring the ~~termination date~~agreement of both the Company and the Executive.

b.All the Executive’s RSUs that vest on or before the Expiration Date shall continue to vest through and including the Expiration Date. Any RSUs that are scheduled to vest after the Expiration Date will be forfeited unless the term of the ~~DPSA~~ Employment Agreement is further extended, in which case, the RSUs shall continue to vest in accordance with terms so long as Executive remains in the employ of the Company as its Chief Financial Officer.

c.~~until~~In addition to the other compensation provided to Executive in the Employment Agreement, Executive shall have the right to a 2023 incentive bonus of $110,000 (the “Bonus”), payable, at the discretion of the Company in either: (i) cash; (ii) shares of the Company’s common stock pursuant to the Company’s 2020 Executive Incentive Plan with a vesting date fair value of $110,000 (with Executive having the option to have shares withheld to satisfy any tax obligation resulting from the vesting of the shares); or (iii) a combination of (i) and (ii). The payment of any cash portion of the Bonus and the vesting of any stock portion of the Bonus shall take place on the earlier of: ~~(i) the transfer~~(x) March 15, 2024; or (y) termination of the ~~Company’s serviced deposits to a Durbin Exempt (as such term is defined in the DPSA) sponsor bank; or (ii) June 30, 2024.~~ ~~On August 18, 2023,~~Executive’s employment by the Company ~~and Customers Bank entered into~~without Cause or by the ~~Third Amendment to the DPSA (the “Third Amendment”) that, among other things, extends the termination date of the DPSA~~ ~~until the earlier of: (i) the transfer of the Company’s serviced deposits to a Durbin Exempt (as such term is defined in the DPSA) sponsor bank; or (ii) April 15, 2025.~~

The foregoing summary of the Third Amendment does not purport to be complete and is qualified in its entirety by reference to Amendment No. 3, a copy of which will be filed with the SEC as an exhibit not later than with the filing of the Company’s Quarterly Report on Form 10-QExecutive for ~~the quarter ended September 30, 2023.~~

~~FCB Deposit Servicing Agreement Amendment~~

Reference is made to: (i) the description of “2023 FCB Deposit Servicing Agreement” set forth in Item 1.01 of the Current Report on Form 8-K/A of the Company dated March 16, 2023 and filed with the SEC on March 22, 2023 (the “2023 Form 8-K/A”); and (ii) the Deposit Processing Services Agreement dated as of March 16, 2023 between the Company and First Carolina Bank (“FCB”) (the “FCB – DPSA”) filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 filed with the SEC on May 22, 2023.

Good Reason.

~~Items (i) and (ii) above are hereby incorporated by this reference. On August 20, 2023, the Company and FCB entered into the First Amendment to the FCB – DPSA (the “FCB First Amendment”~~d.Any paid time off (“PTO”) that ~~among other things: (i) extends~~remains unused as of December 31, 2023 shall carry over into 2024. All accrued PTO (including any carried over from 2023) shall be paid to Executive in cash on March 31, 2024 unless the ~~Initial Term from four years until five years after~~term of the ~~Effective Date; (ii) provides that FCB will work with~~Employment Agreement is further extended, in which case Executive shall be entitled to utilize up to one (1) full week in addition to normally accrued PTO to which the Company and Customers Bank on the timely transfer of Existing Student Depositor Accounts “on or before the Effective Date and as agreed to by the parties” rather than “prior to May 1, 2023, subject to receipt of all Requisite Regulatory Approvals” and (iii) amends “Effective Date” toExecutive would be ~~the date on which FCB takes on Deposits from the Existing Student Depositor Accounts “pursuant to section 8.1”, which is “as agreed to by the parties”.~~entitled during 2024.

~~The foregoing summary of the FCB First Amendment does not purport to be complete~~(b) Share repurchases: None

(c) Rule 10b5-1 and is qualified in its entirety by reference to the FCB First Amendment, a copy of which will be filed with the SEC as an exhibit not later than with the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.Non-Rule 10b5-1 Trading Arrangements: None.

ITEM 6. EXHIBITS

See exhibit index below for a list of the documents filed or furnished as part of this Quarterly Report on Form 10-Q:


Exhibit No.						Description
3.1						Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Form 8-K, filed with the SEC on January 8, 2021).
3.2						Amended and Restated Bylaws of the Company (incorporated by reference to the Company’s Form 8-K, filed with the SEC on January 8, 2021).
10.1+						First Amendment to the BM Technologies 2020 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8, filed ~~wit~~h with the SEC on June 30, 2023).
10.2+						Ex ec utive Transition Agree ment with Rajin d er Singh dated August 30, 2023 . *
10.3+						First Amendment to the Jan uary 26, 2023 Employment agreement with James Dullinger, dated November 1, 2023.*
10.4						Third Amendment to the Deposit Processing Servicing Agreement, dated A ugust 18 , 2023, by and between the Company and Customers Bank. *
10.5 †						First Amendment to the FCB Deposit Servicing Agreement, dated August 20, 2023, by and between the Company and First Carolina Bank. *
31.1						Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).*
31.2						Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).*
~~31.3~~						~~Certification of the Principal~~ Financial and Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a).*
32						Certification under 18 U.S.C. 1350.*
101						Interactive data files for BM Technologies, Inc.’s Quarterly Report on Form 10-Q for the quarter ended ~~June~~September 30, 2023, formatted in Inline XBRL: (i) the Consolidated Balance Sheets (unaudited); (ii) the Consolidated Statements of (Loss) Income (unaudited); (iii) the Consolidated Statements of Changes in Shareholders’ Equity (unaudited); (iv) the Consolidated Statements of Cash Flows (unaudited); and (v) the Notes to Unaudited Consolidated Financial Statements.*
104						The cover page from BM Technologies, Inc.’s Quarterly Report on Form 10-Q for the Quarter ended ~~June~~September 30, 2023 (formatted in Inline XBRL and included in Exhibit 101).*
* Filed or furnished ~~herewith~~herewith.
† ~~Schedules to~~Certain confidential information contained in this ~~exhibit have~~agreement has been omitted pursuant to Item 601(b)(2) of Registration S-K. The registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.because it is private or confidential and is not material.
+ Indicates a management or compensatory plan.

SIGNATURES

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


~~August 21,~~November 20, 2023	BM Technologies, Inc.
	(Registrant)

	By:	/s/ Luvleen Sidhu
	Name:	Luvleen Sidhu
	Title:	Chief Executive Officer
		(Principal Executive Officer)

~~August 21, 2023~~	~~BM Technologies, Inc.~~
	~~(Registrant)~~

	~~By:~~	~~/s/ Rajinder Singh~~
	~~Name:~~	~~Rajinder Singh~~
	~~Title:~~	~~Co-Chief Executive Officer~~
		~~(Principal Executive Officer)~~

~~August 21,~~November 20, 2023	BM Technologies, Inc.
	(Registrant)

	By:	/s/ James Dullinger
	Name:	James Dullinger
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)