10-Q

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 30, 2023

OR

☐ 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 shares of common stock, par value $0.0001 per share, as of August 21, 2023.

Table of Contents

	Page
Part I - Financial Information	2
Item 1. Unaudited Consolidated Financial Statements	2
Consolidated Balance Sheets at June 30, 2023 and December 31, 2022	2
Consolidated Statements of (Loss) Income for the Three and Six Months Ended June 30, 2023 and 2022	3
Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 2023 and 2022	4
Consolidated Statements of Cash Flows for the Six Months Ended June 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

1

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
ASSETS
Cash and cash equivalents	$	11,524	$	21,108
Accounts receivable, net allowance for doubtful accounts of $562 and $305	7,083		8,260
Prepaid expenses and other assets	10,742		9,076
Total current assets	29,349		38,444
Premises and equipment, net	531		508
Developed software, net	19,759		22,324
Goodwill	5,259		5,259
Other intangibles, net	4,269		4,429
Other assets	—		72
Total assets	$	59,167	$	71,036
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued liabilities	$	11,624	$	12,684
Deferred revenue	8,209		6,647
Total current liabilities	19,833		19,331
Non-current liabilities:
Liability for private warrants	811		2,847
Other non-current liabilities	480		—
Total liabilities	$	21,124	$	22,178
Commitments and contingencies (Note 7)
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
Additional paid-in capital	70,943		72,342
Accumulated deficit	(32,901)		(23,485)
Total shareholders’ equity	$	38,043	$	48,858
Total liabilities and shareholders’ equity	$	59,167	$	71,036

See accompanying notes to the unaudited consolidated financial statements.

2

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,
	2023		2022		2023		2022
Operating revenues:
Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958
Servicing fees	7,700		13,295		14,332		27,487
Account fees	1,910		2,207		4,050		4,762
University fees	1,373		1,446		2,879		3,049
Other revenue	200		745		327		799
Total operating revenues	12,987		23,008		26,471		48,055
Operating expenses:
Technology, communication, and processing	6,364		7,297		13,582		14,215
Salaries and employee benefits	6,139		10,440		12,564		19,922
Professional services	2,338		2,420		4,978		4,792
Provision for operating losses	1,813		1,839		3,490		3,441
Occupancy	10		368		24		675
Customer related supplies	222		221		450		451
Advertising and promotion	125		84		243		197
Restructuring, merger, and acquisition related expenses	274		1		993		290
Other expense	743		707		1,563		1,478
Total operating expenses	18,028		23,377		37,887		45,461
(Loss) income from operations	(5,041)		(369)		(11,416)		2,594
Non-operating income and expense:
Gain on fair value of private warrant liability	595		5,640		2,016		8,284
(Loss) income before income tax expense	(4,446)		5,271		(9,400)		10,878
Income tax expense	10		909		16		2,552
Net (loss) income	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Weighted average number of shares outstanding - basic	11,563		11,944		11,566		11,947
Weighted average number of shares outstanding - diluted	11,563		12,600		11,566		12,585
Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70
Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66

See accompanying notes to the unaudited consolidated financial statements.

3

BM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED

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

(amounts in thousands, except share data)

	Common Stock
	Shares of Common Stock Outstanding	Common Stock		Additional Paid in Capital		Accumulated Deficit		Total
Balance at December 31, 2022	12,240,237	$	1	$	72,342	$	(23,485)	$	48,858
Net loss	—	—		—		(4,960)		(4,960)
Conversion of private warrants to public warrants	—	—		20		—		20
Tax paid on behalf of employees related to net settlement of share-based awards	(473,874)	—		(2,429)		—		(2,429)
Share-based compensation expense	95,147	—		447		—		447
Balance at March 31, 2023	11,861,510	$	1	$	70,380	$	(28,445)	$	41,936
Net loss	—	—		—		(4,456)		(4,456)
Tax paid on behalf of employees related to net settlement of share-based awards	(1,765)	—		(5)		—		(5)
Share-based compensation expense	6,600	—		568		—		568
Balance at June 30, 2023	11,866,345	$	1	$	70,943	$	(32,901)	$	38,043

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

See accompanying notes to the unaudited consolidated financial statements.

4

BM TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(amounts in thousands)

	Six Months Ended June 30,
	2023		2022
Cash Flows from Operating Activities:
Net (loss) income	$	(9,416)	$	8,326
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation of premises and equipment	128		123
Loss on disposal of premises and equipment	—		38
Amortization of developed software	5,980		5,781
Amortization of other intangible assets	160		160
Amortization of leased assets	—		345
Provision for bad debt	257		(43)
Share-based compensation expense	1,358		5,972
Gain on fair value of private warrant liability	(2,016)		(8,284)
Changes in operating assets and liabilities:
Accounts receivable	920		2,156
Prepaid expenses and other current assets	(1,666)		(1,528)
Other assets	72		—
Accounts payable and accrued liabilities	(1,403)		1,734
Taxes payable	—		(1,807)
Operating lease liabilities	—		(360)
Deferred revenue	1,562		(190)
Net Cash (used in) provided by Operating Activities	(4,064)		12,423
Cash Flows from Investing Activities:
Development of internal use software	(2,935)		(3,185)
Purchases of premises and equipment	(151)		(256)
Net Cash used in Investing Activities	(3,086)		(3,441)
Cash Flows from Financing Activities:
Repurchase of private warrants	—		(1,977)
Payments related to net settlement of share-based compensation awards	(2,434)		(225)
Net Cash used in Financing Activities	(2,434)		(2,202)
Net (Decrease) Increase in Cash and Cash Equivalents	(9,584)		6,780
Cash and Cash Equivalents – Beginning	21,108		25,704
Cash and Cash Equivalents – Ending	$	11,524	$	32,484
Supplementary Cash Flow Information:
Income taxes paid, net of refunds	$	27	$	2,350
Noncash Operating, Investing, and Financing Activities:
Conversion of private warrants to public warrants	$	20	$	725
Contingent liability for acquired software	$	480	$	—

See accompanying notes to the unaudited consolidated financial statements.

5

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 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 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.

6

The initial term of the FCB Deposit Servicing Agreement is for four years, is subject to certain closing conditions, and will automatically renew for additional two-year terms unless either party gives written notice of non-renewal at least 120 days prior to the expiration of the then-current term. The FCB Deposit Servicing Agreement may be terminated early by either party upon material breach, by either party upon notice that the continuation of the Depositor Program violates Applicable Law or Network Rules (as defined in the FCB Deposit Servicing Agreement); by FCB if a regulatory authority determined that the performance of its obligations under the FCB Deposit Servicing Agreement was not consistent with safe and sound banking practices; by either party upon the other party commencing or being subject to certain bankruptcy proceedings; by the Company should it experience a change in control on or after March 16, 2026; and by either party should regulatory approvals not be obtained on or before July 15, 2023. 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 transfer has not yet occurred. See Note 15 - Subsequent Events for additional information for this agreement.

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

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.

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, 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 is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of $13.0 million at August 21, 2024.

7

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 months ended June 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 30, 2023, the Company had two premium finance arrangements outstanding with balances totaling $0.7 million, average remaining installment payment terms of 5.5 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 months ended June 30, 2023 totaled $0.1 million and $0.3 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 months ended June 30, 2023 there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to June 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 million at June 30, 2023 and $0.3 million at December 31, 2022.

8

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

NOTE 4 — PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

Premises and Equipment

The components of premises and equipment were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
IT equipment	3 to 5 years	$	789	$	1,377
Accumulated depreciation		(258)		(869)
Total		$	531	$	508

BMTX recorded depreciation expense of less than $0.1 million and $0.1 million for the three and six months ended June 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 million for the three and six months ended June 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 months ended June 30, 2023 and 2022.

Developed Software

The components of developed software were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
Higher One Disbursement business developed software	10 years	$	27,400	$	27,400
Internally developed software	3 to 7 years	44,299		42,504
Work-in-process		4,697		3,077
		76,396		72,981
Accumulated amortization		(56,637)		(50,657)
Total		$	19,759	$	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 million and $6.0 million for the three and six months ended June 30, 2023, respectively. BMTX recorded amortization expense of $2.9 million and $5.8 million for the three and six months ended June 30, 2022, respectively.

BMTX recorded no impairment expense during the three and six months ended June 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 months ended June 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.

9

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

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
Customer relationships – universities	20 years	$	6,402	$	6,402
Accumulated amortization		(2,133)		(1,973)
Total		$	4,269	$	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 $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively. BMTX recorded amortization expense of $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively.

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

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

There was no impairment for Other intangibles, net, for the three and six months ended June 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 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 months ended June 30, 2023, respectively. BMTX recorded lease expense of $0.2 million and $0.4 million for the three and six months ended June 30, 2022, respectively.

Cash paid pursuant to operating lease liabilities totaled zero for the three and six months ended June 30, 2023, respectively. Cash paid pursuant to operating lease liabilities totaled $0.2 million and $0.4 million for the three and six months ended June 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.

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On June 5, 2023, the Company entered into an agreement to purchase certain software technology assets from a third-party. Purchase consideration consists of a 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 30, 2023, there were 11,866,345 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 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.

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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
Balance as of December 31, 2022	1,168,146	$	14.87
Vested	(749,854)	$	14.87
Net settlement of share-based awards for taxes	(418,292)	$	14.87
Balance as of June 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 months ended June 30, 2023, respectively. BMTX recorded share-based compensation expense related to these awards of $2.3 million and $4.5 million for the three and six months ended June 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 months ended June 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 ASC 718. 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.

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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
	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	324,790	$	8.84	335,000	$	7.09
Granted	564,530	$	3.40	455,000	$	2.94
Vested	(101,747)	$	8.79	—	$	—
Forfeited	(44,184)	$	8.30	(45,000)	$	7.09
Balance as of June 30, 2023	743,389	$	4.75	745,000	$	4.56

For the three and six months ended June 30, 2023, the share-based compensation expense related to the RSU awards totaled $0.6 million and $0.9 million, respectively. For the three and six months ended June 30, 2022, the share-based compensation expense related to the RSU awards totaled $0.5 million and $0.9 million, respectively.

For the three and six months ended June 30, 2023, the share-based compensation expense related to the PBRSU awards totaled $0.2 million and $0.4 million, respectively. For the three and six months ended June 30, 2022, the share-based compensation expense related to the PBRSU awards totaled $0.3 million and $0.5 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 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 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 public warrants and 5,408,960 and 5,475,815 private warrants as of June 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 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.

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During the three and six months ended June 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 months ended June 30, 2023.

During the three and six month period ended June 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 100 warrants exercised in the three and six months ended June 30, 2022.

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 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 months ended June 30, 2023, we recorded a gain of $0.6 million and $2.0 million, respectively, resulting from the revaluation of the private warrants. For the three and six months ended June 30, 2022, we recorded a gain of $5.6 million and $8.3 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 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 months ended June 30, 2022, the Company repurchased private warrants from related parties for cash consideration totaling $2.0 million. No such transactions occurred during the six months ended June 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 months ended June 30, 2023, there were no exercises of public warrants. During the three and six months ended June 30, 2022, there were 100 exercises of public warrants.

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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 months ended June 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,
(amounts in thousands)	2023		2022		2023		2022
Revenues:
Revenue recognized at point in time:
Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958
Servicing fees	7,700		13,295		14,332		27,487
Account fees	1,910		2,207		4,050		4,762
University fees - disbursement activity	172		281		432		757
Other revenue	57		745		96		799
Total revenue recognized at point in time	11,643		21,843		23,793		45,763
Revenue recognized over time:
University fees - subscriptions	1,201		1,165		2,447		2,292
Other revenue - maintenance and support	143		—		231		—
Total revenue recognized over time	1,344		1,165		2,678		2,292
Total revenues	$	12,987	$	23,008	$	26,471	$	48,055

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 30, 2023 and December 31, 2022 was $8.2 million and $6.6 million, respectively.

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

Unbilled receivables

The Company had $1.9 million of unbilled receivables, or amounts recognized as revenue for which invoices have not yet been issued, as of June 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)% and (0.2)% for the three and six months ended June 30, 2023, respectively. The Company’s effective tax rate was 17.2% and 23.5% for the three and six months ended June 30, 2022, respectively.

The deferred tax asset at June 30, 2023 and 2022 was $29.6 million and $30.4 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 30, 2023 also includes net operating loss carryforwards for federal and state purposes.

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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 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,
(amounts in thousands, except per common share data)	2023		2022		2023		2022
Net (loss) income available to common shareholders	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Net (loss) income used for EPS	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Weighted-average number of common shares outstanding – basic	11,563		11,944		11,566		11,947
Weighted-average number of common shares outstanding – diluted	11,563		12,600		11,566		12,585
Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70
Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66

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,
(amounts in thousands)	2023	2022	2023	2022
Weighted-average number of common shares outstanding – basic	11,563	11,944	11,566	11,947
Add:
Service-based RSUs	—	656	—	638
Weighted-average number of common shares outstanding – diluted	11,563	12,600	11,566	12,585

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 months ended June 30, 2023 and 2022, the vesting criteria has not been met and they are not included.

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For the three and six months ended June 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 months ended June 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 months ended June 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 30, 2023. For the three and six months ended June 30, 2023, our service-based RSUs were excluded as the effect would be antidilutive.

For the three and six months ended June 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 months ended June 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 months ended June 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 30, 2022.

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,
(amounts in thousands)	2023	2022	2023	2022
Performance shares	300	300	300	300
Public warrants	17,294	17,227	17,294	17,227
Private warrants	5,409	5,476	5,409	5,476
Performance-based RSUs	745	348	745	348
Service-based RSUs	743	—	743	—
Total	24,491	23,351	24,491	23,351

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 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.

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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 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 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 30, 2023 were the following: a term of 2.52 years; volatility of 54%; a dividend yield of zero; an underlying stock price of $2.98; a risk free interest rate of 4.62%; and a closing price of the public warrants of $0.15 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 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.

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

					Fair Value Measurements at June 30, 2023
(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	$	11,524	$	11,524	$	11,524	$	—	$	—
Accounts receivable, net	7,083		7,083		7,083		—		—
Liabilities:
Liability for private warrants	$	811	$	811	$	—	$	—	$	811

					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.

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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 15 - Subsequent Events for additional information for this agreement.

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 months ended June 30, 2022 totaled $0.2 million and $0.4 million, respectively.

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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 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 months ended June 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 30, 2023 and December 31, 2022 were $0.3 million and $1.4 million, respectively. The Deferred revenue balances related to Customers Bank as of June 30, 2023 and December 31, 2022 were $5.9 million and $3.8 million, respectively. The Accounts payable and accrued liabilities balances related to Customers Bank as of June 30, 2023 and December 31, 2022 were zero and $3.8 million, respectively.

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

The Company recognized $20.5 million and $43.6 million in revenues from Customers Bank for the three and six months ended June 30, 2022, respectively. Of these amounts, $5.5 million and $11.9 million are paid directly by MasterCard or individual account holders to the Company for the three and six months ended June 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 months ended June 30, 2023, respectively.

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

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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 61 employees during the six months ended June 30, 2023. The Company’s workforce reduction expenses, consisting of severance and other termination benefits for the three and six months ended June 30, 2023, totaled $0.3 million 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 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 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 August 20, 2023, the Company 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.

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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 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;

•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;

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•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

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 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.

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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 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 the FCB Deposit Servicing Agreement is for four years, is subject to certain closing conditions, and will automatically renew for additional two-year terms unless either party gives written notice of non-renewal at least 120 days prior to the expiration of the then-current term. The FCB Deposit Servicing Agreement may be terminated early by either party upon material breach, by either party upon notice that the continuation of the Depositor Program violates Applicable Law or Network Rules (as defined in the FCB Deposit Servicing Agreement); by FCB if a regulatory authority determined that the performance of its obligations under the FCB Deposit Servicing Agreement was not consistent with safe and sound banking practices; by either party upon the other party commencing or being subject to certain bankruptcy proceedings; by the Company should it experience a change in control on or after March 16, 2026; and by either party should regulatory approvals not be obtained on or before July 15, 2023. 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 transfer has not yet occurred. See Note 15 - Subsequent Events for additional information for this agreement.

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

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

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 months ended June 30, 2023 there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to June 30, 2023, which were not yet effective, considered relevant or material to the Company’s financial statements taken as a whole.

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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 months ended June 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%.

For the three months ended June 30, 2023, Net income decreased $8.8 million as compared to the three months ended June 30, 2022, resulting in a Net loss of $4.5 million, which included a $5.0 million decrease in the Gain on fair value of private warrant liability as compared to the three months ended June 30, 2022. Loss from operations for the three months ended June 30, 2023 increased by $4.7 million as compared to the three months ended June 30, 2022. Operating revenues decreased by $10.0 million, or 44%, and Operating expenses decreased by $5.3 million, or 23%. 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), 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.

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Operating Revenues

	Three Months Ended June 30,						% Change
(dollars in thousands)	2023		2022		Change
Interchange and card revenue	$	1,804	$	5,315	$	(3,511)	(66)	%
Servicing fees	7,700		13,295		(5,595)		(42)	%
Account fees	1,910		2,207		(297)		(13)	%
University fees	1,373		1,446		(73)		(5)	%
Other revenue	200		745		(545)		(73)	%
Total operating revenues	$	12,987	$	23,008	$	(10,021)	(44)	%

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

	Six Months Ended June 30,						% Change
(dollars in thousands)	2023		2022		Change
Interchange and card revenue	$	4,883	$	11,958	$	(7,075)	(59)	%
Servicing fees	14,332		27,487		(13,155)		(48)	%
Account fees	4,050		4,762		(712)		(15)	%
University fees	2,879		3,049		(170)		(6)	%
Other revenue	327		799		(472)		(59)	%
Total operating revenues	$	26,471	$	48,055	$	(21,584)	(45)	%

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

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Operating Expenses

	Three Months Ended June 30,						% Change
(dollars in thousands)	2023		2022		Change
Technology, communication, and processing	$	6,364	$	7,297	$	(933)	(13)	%
Salaries and employee benefits	6,139		10,440		(4,301)		(41)	%
Professional services	2,338		2,420		(82)		(3)	%
Provision for operating losses	1,813		1,839		(26)		(1)	%
Occupancy	10		368		(358)		(97)	%
Customer related supplies	222		221		1		—	%
Advertising and promotion	125		84		41		49	%
Restructuring, merger, and acquisition related expenses	274		1		273		NM
Other expense	743		707		36		5	%
Total operating expenses	$	18,028	$	23,377	$	(5,349)	(23)	%

NM refers to changes greater than 150%.

Total Operating expenses decreased $5.3 million, or 23%, in the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. This decrease is primarily attributable to a $4.3 million, or 41%, decrease in Salaries and employee benefits, driven primarily by a $2.3 million reduction in share-based compensation expenses due to the full vesting of the January 4, 2021 Share-Based Compensation Award, and a $2.0 million reduction driven primarily by the effect of the PEP initiatives. In addition, there was a $0.9 million, or 13%, decrease Technology, communication, and processing driven primarily by cost savings from the PEP and higher capitalization of internally developed software expenses and a $0.4 million, or 97%, decrease in Occupancy due to physical office closures in 2023.These decreases were offset in part by $0.3 million of Restructuring, merger, and acquisition related expenses incurred in order to execute the PEP cost savings initiatives.

	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)	%

NM refers to changes greater than 150%.

Total Operating expenses decreased $7.6 million, or 17%, in the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. This decrease is primarily attributable to a $7.4 million, or 37%, decrease in Salaries and employee benefits, driven primarily by a $4.5 million reduction in share-based compensation expenses due to the full vesting of the January 4, 2021 Share-Based Compensation Award, and a $2.9 million reduction driven primarily by the effect of the PEP initiatives. 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 million, or 96%, decrease in Occupancy due to physical office closures in 2023. These decreases were offset in part by $0.7 million of increased Restructuring, merger, and acquisition related expenses incurred in order to execute the PEP cost savings initiatives.

28

Income Tax Expense

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

LIQUIDITY AND CAPITAL RESOURCES

Our Cash and cash equivalents consist of non-interest bearing, highly-liquid demand deposits. We had $11.5 million of Cash and cash equivalents at June 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.

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, 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 is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of $13.0 million at August 21, 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.

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

	Six Months Ended June 30,						% Change
(dollars in thousands)	2023		2022		Change
Net cash (used in) provided by operating activities	$	(4,064)	$	12,423	$	(16,487)	(133)	%
Net cash used in investing activities	(3,086)		(3,441)		355		(10)	%
Net cash used in financing activities	(2,434)		(2,202)		(232)		11	%
Net decrease in cash and cash equivalents	$	(9,584)	$	6,780	$	(16,364)	NM

NM refers to changes greater than 150%.

Cash flows used in operating activities

Cash used in operating activities was $4.1 million in the six months ended June 30, 2023 which is a $16.5 million net decrease in cash provided by operating activities as compared to the six months ended June 30, 2022. The decrease in net cash provided by operating activities is driven primarily by a $16.0 million decrease in cash Net income, a $1.2 million decreased source of cash from Accounts receivable, and a $3.1 million increased use of cash for Accounts payable and accrued liabilities, offset in part by a $1.8 million decreased use of cash for Taxes payable, a $1.6 million increased source of cash from Deferred revenue, and a $0.4 million decreased use of cash for Operating lease liabilities.

29

Cash flows used in investing activities

Cash used in investing activities decreased $0.4 million in the six months ended June 30, 2023 as compared to the six months ended June 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 months ended June 30, 2023 as compared to the six months ended June 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 30, 2023 and December 31, 2022, Customers Bank accounted for 4% and 17% of our total Accounts receivable, net, respectively. At June 30, 2023 and December 31, 2022, a BaaS partner accounted for 59% and 60% of our total Accounts receivable, net, respectively. At June 30, 2023 and December 31, 2022, MasterCard accounted for 21% 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 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 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 quarter of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

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

Reference is made to: (i) the description of “Deposit Servicing Agreement” set forth in Item 1.01 of the Current Report on Form 8-K of BM Technologies, Inc. (the “Company”) dated January 4, 2021 and filed with 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”) 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 10.1 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.

Items (i) through (vi) above are hereby incorporated by this reference. 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, extended 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) June 30, 2024. On August 18, 2023, the Company and Customers Bank entered into 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-Q 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.

31

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”) that, among other things: (i) extends the Initial Term from four years until 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” rather than “prior to May 1, 2023, subject to receipt of all Requisite Regulatory Approvals” and (iii) amends “Effective Date” to 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”.

The foregoing summary of the FCB First Amendment does not purport to be complete 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.

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 with the SEC on June 30, 2023.
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 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 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 30, 2023 (formatted in Inline XBRL and included in Exhibit 101).*
* Filed or furnished herewith
† Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The registrant hereby agrees to       furnish a copy of any omitted schedules to the Commission upon request.
+ Indicates a management or compensatory plan.

32

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

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Luvleen Sidhu, certify that:

(1)I have reviewed this Quarterly Report on Form 10-Q of BM Technologies, Inc.,

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Luvleen Sidhu

Luvleen Sidhu

Chief Executive Officer

(Principal Executive Officer)

Date: August 21, 2023

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Rajinder Singh, certify that:

(1)I have reviewed this Quarterly Report on Form 10-Q of BM Technologies, Inc.,

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Rajinder Singh

Rajinder Singh

Co-Chief Executive Officer

(Principal Executive Officer)

Date: August 21, 2023

EX-31.3

Exhibit 31.3

CERTIFICATION

I, James Dullinger, certify that:

(1)I have reviewed this Quarterly Report on Form 10-Q of BM Technologies, Inc.,

(2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ James Dullinger

James Dullinger

Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: August 21, 2023

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BM Technologies, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Luvleen Sidhu, Chief Executive Officer of the Company, Rajinder Singh, Co-Chief Executive Officer of the Company, and James Dullinger, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Luvleen Sidhu

Name: Luvleen Sidhu

Title:   Chief Executive Officer

(Principal Executive Officer)

Date: August 21, 2023

/s/ Rajinder Singh

Name; Rajinder Singh

Title: Co-Chief Executive Officer

(Principal Executive Officer)

Date: August 21, 2023

/s/: James Dullinger

Name: James Dullinger

Title:   Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: August 21, 2023

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification “accompanies” the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 21, 2023
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-38633
Entity Registrant Name	BM Technologies, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-3410369
Entity Address, Address Line One	201 King of Prussia Road, Suite 650
Entity Address, City or Town	Wayne
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	19087
City Area Code	877
Local Phone Number	327-9515
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		11,870,295
Entity Central Index Key	0001725872
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock
Entity Information [Line Items]
Title of 12(b) Security	Common Stock
Trading Symbol	BMTX
Security Exchange Name	NYSEAMER
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
Entity Information [Line Items]
Title of 12(b) Security	Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
Trading Symbol	BMTX-WT
Security Exchange Name	NYSEAMER

XML

CONSOLIDATED BALANCE SHEETS - UNAUDITED - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Cash and cash equivalents	$ 11,524	$ 21,108
Accounts receivable, net allowance for doubtful accounts of $562 and $305	7,083	8,260
Prepaid expenses and other assets	10,742	9,076
Total current assets	29,349	38,444
Premises and equipment, net	531	508
Developed software, net	19,759	22,324
Goodwill	5,259	5,259
Other intangibles, net	4,269	4,429
Other assets	0	72
Total assets	59,167	71,036
Liabilities:
Accounts payable and accrued liabilities	11,624	12,684
Deferred revenue	8,209	6,647
Total current liabilities	19,833	19,331
Non-current liabilities:
Liability for private warrants	811	2,847
Other non-current liabilities	480	0
Total liabilities	21,124	22,178
Commitments and contingencies (Note 7)
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	0	0
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
Additional paid-in capital	70,943	72,342
Accumulated deficit	(32,901)	(23,485)
Total shareholders’ equity	38,043	48,858
Total liabilities and shareholders’ equity	$ 59,167	$ 71,036

XML

CONSOLIDATED BALANCE SHEETS - UNAUDITED (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 562	$ 305	$ 79
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,000,000,000	1,000,000,000
Common stock, shares issued (in shares)	11,866,345	12,240,237
Common stock, shares outstanding (in shares)	11,866,345	12,240,237

XML

CONSOLIDATED STATEMENTS OF (LOSS) INCOME - UNAUDITED - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating revenues:
Total operating revenues	$ 12,987	$ 23,008	$ 26,471	$ 48,055
Operating expenses:
Technology, communication, and processing	6,364	7,297	13,582	14,215
Salaries and employee benefits	6,139	10,440	12,564	19,922
Professional services	2,338	2,420	4,978	4,792
Provision for operating losses	1,813	1,839	3,490	3,441
Occupancy	10	368	24	675
Customer related supplies	222	221	450	451
Advertising and promotion	125	84	243	197
Restructuring, merger, and acquisition related expenses	274	1	993	290
Other expense	743	707	1,563	1,478
Total operating expenses	18,028	23,377	37,887	45,461
(Loss) income from operations	(5,041)	(369)	(11,416)	2,594
Non-operating income and expense:
Gain on fair value of private warrant liability	595	5,640	2,016	8,284
(Loss) income before income tax expense	(4,446)	5,271	(9,400)	10,878
Income tax expense	10	909	16	2,552
Net (loss) income	$ (4,456)	$ 4,362	$ (9,416)	$ 8,326
Weighted average number of shares outstanding - basic (in shares)	11,563	11,944	11,566	11,947
Weighted average number of shares outstanding - diluted (in shares)	11,563	12,600	11,566	12,585
Basic (loss) earnings per common share (in dollars per share)	$ (0.39)	$ 0.37	$ (0.81)	$ 0.70
Diluted (loss) earnings per common share (in dollars per share)	$ (0.39)	$ 0.35	$ (0.81)	$ 0.66
Interchange and card revenue
Operating revenues:
Total operating revenues	$ 1,804	$ 5,315	$ 4,883	$ 11,958
Servicing fees
Operating revenues:
Total operating revenues	7,700	13,295	14,332	27,487
Account fees
Operating revenues:
Total operating revenues	1,910	2,207	4,050	4,762
University fees
Operating revenues:
Total operating revenues	1,373	1,446	2,879	3,049
Other revenue
Operating revenues:
Total operating revenues	$ 200	$ 745	$ 327	$ 799

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands	Total	Common Stock	Additional Paid in Capital	Accumulated Deficit
Balance, beginning of period (in shares) at Dec. 31, 2021		12,193,378
Balance, beginning of period at Dec. 31, 2021	$ 37,981	$ 1	$ 60,686	$ (22,706)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	3,964			3,964
Conversion of private warrants to public warrants	725		725
Tax paid on behalf of employees related to net settlement of share-based awards (in shares)		(37,506)
Tax paid on behalf of employees related to net settlement of share-based awards	(225)		(225)
Share-based compensation expense (in shares)		90,075
Share-based compensation expense	2,919		2,919
Balance, end of period (in shares) at Mar. 31, 2022		12,245,947
Balance, end of period at Mar. 31, 2022	45,364	$ 1	64,105	(18,742)
Balance, beginning of period (in shares) at Dec. 31, 2021		12,193,378
Balance, beginning of period at Dec. 31, 2021	37,981	$ 1	60,686	(22,706)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	8,326
Balance, end of period (in shares) at Jun. 30, 2022		12,238,947
Balance, end of period at Jun. 30, 2022	52,779	$ 1	67,158	(14,380)
Balance, beginning of period (in shares) at Mar. 31, 2022		12,245,947
Balance, beginning of period at Mar. 31, 2022	45,364	$ 1	64,105	(18,742)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	4,362			4,362
Share-based compensation expense (in shares)		(7,000)
Share-based compensation expense	3,053		3,053
Balance, end of period (in shares) at Jun. 30, 2022		12,238,947
Balance, end of period at Jun. 30, 2022	$ 52,779	$ 1	67,158	(14,380)
Balance, beginning of period (in shares) at Dec. 31, 2022	12,240,237	12,240,237
Balance, beginning of period at Dec. 31, 2022	$ 48,858	$ 1	72,342	(23,485)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(4,960)			(4,960)
Conversion of private warrants to public warrants	20		20
Tax paid on behalf of employees related to net settlement of share-based awards (in shares)		(473,874)
Tax paid on behalf of employees related to net settlement of share-based awards	(2,429)		(2,429)
Share-based compensation expense (in shares)		95,147
Share-based compensation expense	447		447
Balance, end of period (in shares) at Mar. 31, 2023		11,861,510
Balance, end of period at Mar. 31, 2023	$ 41,936	$ 1	70,380	(28,445)
Balance, beginning of period (in shares) at Dec. 31, 2022	12,240,237	12,240,237
Balance, beginning of period at Dec. 31, 2022	$ 48,858	$ 1	72,342	(23,485)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	$ (9,416)
Balance, end of period (in shares) at Jun. 30, 2023	11,866,345	11,866,345
Balance, end of period at Jun. 30, 2023	$ 38,043	$ 1	70,943	(32,901)
Balance, beginning of period (in shares) at Mar. 31, 2023		11,861,510
Balance, beginning of period at Mar. 31, 2023	41,936	$ 1	70,380	(28,445)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income	(4,456)			(4,456)
Tax paid on behalf of employees related to net settlement of share-based awards (in shares)		(1,765)
Tax paid on behalf of employees related to net settlement of share-based awards	(5)		(5)
Share-based compensation expense (in shares)		6,600
Share-based compensation expense	$ 568		568
Balance, end of period (in shares) at Jun. 30, 2023	11,866,345	11,866,345
Balance, end of period at Jun. 30, 2023	$ 38,043	$ 1	$ 70,943	$ (32,901)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities:
Net (loss) income	$ (9,416)	$ 8,326
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation of premises and equipment	128	123
Loss on disposal of premises and equipment	0	38
Amortization of developed software	5,980	5,781
Amortization of other intangible assets	160	160
Amortization of leased assets	0	345
Provision for bad debt	257	(43)
Share-based compensation expense	1,358	5,972
Gain on fair value of private warrant liability	(2,016)	(8,284)
Changes in operating assets and liabilities:
Accounts receivable	920	2,156
Prepaid expenses and other current assets	(1,666)	(1,528)
Other assets	72	0
Accounts payable and accrued liabilities	(1,403)	1,734
Taxes payable	0	(1,807)
Operating lease liabilities	0	(360)
Deferred revenue	1,562	(190)
Net Cash (used in) provided by Operating Activities	(4,064)	12,423
Cash Flows from Investing Activities:
Development of internal use software	(2,935)	(3,185)
Purchases of premises and equipment	(151)	(256)
Net Cash used in Investing Activities	(3,086)	(3,441)
Cash Flows from Financing Activities:
Repurchase of private warrants	0	(1,977)
Payments related to net settlement of share-based compensation awards	(2,434)	(225)
Net Cash used in Financing Activities	(2,434)	(2,202)
Net (Decrease) Increase in Cash and Cash Equivalents	(9,584)	6,780
Cash and Cash Equivalents – Beginning	21,108	25,704
Cash and Cash Equivalents – Ending	11,524	32,484
Supplementary Cash Flow Information:
Income taxes paid, net of refunds	27	2,350
Noncash Operating, Investing, and Financing Activities:
Conversion of private warrants to public warrants	20	725
Contingent liability for acquired software	$ 480	$ 0

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DESCRIPTION OF THE BUSINESS

6 Months Ended

Jun. 30, 2023

Business Description And Reverse Recapitalization [Abstract]

DESCRIPTION OF THE BUSINESS

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 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 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 the FCB Deposit Servicing Agreement is for four years, is subject to certain closing conditions, and will automatically renew for additional two-year terms unless either party gives written notice of non-renewal at least 120 days prior to the expiration of the then-current term. The FCB Deposit Servicing Agreement may be terminated early by either party upon material breach, by either party upon notice that the continuation of the Depositor Program violates Applicable Law or Network Rules (as defined in the FCB Deposit Servicing Agreement); by FCB if a regulatory authority determined that the performance of its obligations under the FCB Deposit Servicing Agreement was not consistent with safe and sound banking practices; by either party upon the other party commencing or being subject to certain bankruptcy proceedings; by the Company should it experience a change in control on or after March 16, 2026; and by either party should regulatory approvals not be obtained on or before July 15, 2023. 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 transfer has not yet occurred. See Note 15 - Subsequent Events for additional information for this agreement.

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

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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.

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, 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 is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of $13.0 million at August 21, 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 months ended June 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 30, 2023, the Company had two premium finance arrangements outstanding with balances totaling $0.7 million, average remaining installment payment terms of 5.5 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 months ended June 30, 2023 totaled $0.1 million and $0.3 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 months ended June 30, 2023 there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to June 30, 2023, which were not yet effective, considered relevant or material to the Company’s financial statements taken as a whole.

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ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

ACCOUNTS RECEIVABLE

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 million at June 30, 2023 and $0.3 million at December 31, 2022.

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

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PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE

Premises and Equipment

The components of premises and equipment were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
IT equipment	3 to 5 years	$	789	$	1,377
Accumulated depreciation		(258)		(869)
Total		$	531	$	508

BMTX recorded depreciation expense of less than $0.1 million and $0.1 million for the three and six months ended June 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 million for the three and six months ended June 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 months ended June 30, 2023 and 2022.

Developed Software

The components of developed software were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
Higher One Disbursement business developed software	10 years	$	27,400	$	27,400
Internally developed software	3 to 7 years	44,299		42,504
Work-in-process		4,697		3,077
		76,396		72,981
Accumulated amortization		(56,637)		(50,657)
Total		$	19,759	$	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 million and $6.0 million for the three and six months ended June 30, 2023, respectively. BMTX recorded amortization expense of $2.9 million and $5.8 million for the three and six months ended June 30, 2022, respectively.

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

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GOODWILL AND OTHER INTANGIBLES

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

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 months ended June 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 30, 2023 and December 31, 2022 were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
Customer relationships – universities	20 years	$	6,402	$	6,402
Accumulated amortization		(2,133)		(1,973)
Total		$	4,269	$	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 $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively. BMTX recorded amortization expense of $0.1 million and $0.2 million for the three and six months ended June 30, 2022, respectively.

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

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

There was no impairment for Other intangibles, net, for the three and six months ended June 30, 2023 and 2022.

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LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

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 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 months ended June 30, 2023, respectively. BMTX recorded lease expense of $0.2 million and $0.4 million for the three and six months ended June 30, 2022, respectively.

Cash paid pursuant to operating lease liabilities totaled zero for the three and six months ended June 30, 2023, respectively. Cash paid pursuant to operating lease liabilities totaled $0.2 million and $0.4 million for the three and six months ended June 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.

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COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIESLoss 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 of a 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.

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SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY

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 30, 2023, there were 11,866,345 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 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
Balance as of December 31, 2022	1,168,146	$	14.87
Vested	(749,854)	$	14.87
Net settlement of share-based awards for taxes	(418,292)	$	14.87
Balance as of June 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 months ended June 30, 2023, respectively. BMTX recorded share-based compensation expense related to these awards of $2.3 million and $4.5 million for the three and six months ended June 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 months ended June 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 ASC 718. 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
	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	324,790	$	8.84	335,000	$	7.09
Granted	564,530	$	3.40	455,000	$	2.94
Vested	(101,747)	$	8.79	—	$	—
Forfeited	(44,184)	$	8.30	(45,000)	$	7.09
Balance as of June 30, 2023	743,389	$	4.75	745,000	$	4.56

For the three and six months ended June 30, 2023, the share-based compensation expense related to the RSU awards totaled $0.6 million and $0.9 million, respectively. For the three and six months ended June 30, 2022, the share-based compensation expense related to the RSU awards totaled $0.5 million and $0.9 million, respectively.

For the three and six months ended June 30, 2023, the share-based compensation expense related to the PBRSU awards totaled $0.2 million and $0.4 million, respectively. For the three and six months ended June 30, 2022, the share-based compensation expense related to the PBRSU awards totaled $0.3 million and $0.5 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 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 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 public warrants and 5,408,960 and 5,475,815 private warrants as of June 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 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 months ended June 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 months ended June 30, 2023.

During the three and six month period ended June 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 100 warrants exercised in the three and six months ended June 30, 2022.

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 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 months ended June 30, 2023, we recorded a gain of $0.6 million and $2.0 million, respectively, resulting from the revaluation of the private warrants. For the three and six months ended June 30, 2022, we recorded a gain of $5.6 million and $8.3 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 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 months ended June 30, 2022, the Company repurchased private warrants from related parties for cash consideration totaling $2.0 million. No such transactions occurred during the six months ended June 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 months ended June 30, 2023, there were no exercises of public warrants. During the three and six months ended June 30, 2022, there were 100 exercises of public warrants.

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REVENUES

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUES

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 months ended June 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,
(amounts in thousands)	2023		2022		2023		2022
Revenues:
Revenue recognized at point in time:
Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958
Servicing fees	7,700		13,295		14,332		27,487
Account fees	1,910		2,207		4,050		4,762
University fees - disbursement activity	172		281		432		757
Other revenue	57		745		96		799
Total revenue recognized at point in time	11,643		21,843		23,793		45,763
Revenue recognized over time:
University fees - subscriptions	1,201		1,165		2,447		2,292
Other revenue - maintenance and support	143		—		231		—
Total revenue recognized over time	1,344		1,165		2,678		2,292
Total revenues	$	12,987	$	23,008	$	26,471	$	48,055

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 30, 2023 and December 31, 2022 was $8.2 million and $6.6 million, respectively.

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

Unbilled receivables

The Company had $1.9 million of unbilled receivables, or amounts recognized as revenue for which invoices have not yet been issued, as of June 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.

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INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

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

The deferred tax asset at June 30, 2023 and 2022 was $29.6 million and $30.4 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 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 30, 2023, but will continue to evaluate this determination each quarterly period going forward.

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(LOSS) EARNINGS PER COMMON SHARE

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

(LOSS) EARNINGS PER COMMON SHARE

(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,
(amounts in thousands, except per common share data)	2023		2022		2023		2022
Net (loss) income available to common shareholders	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Net (loss) income used for EPS	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Weighted-average number of common shares outstanding – basic	11,563		11,944		11,566		11,947
Weighted-average number of common shares outstanding – diluted	11,563		12,600		11,566		12,585
Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70
Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66

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,
(amounts in thousands)	2023	2022	2023	2022
Weighted-average number of common shares outstanding – basic	11,563	11,944	11,566	11,947
Add:
Service-based RSUs	—	656	—	638
Weighted-average number of common shares outstanding – diluted	11,563	12,600	11,566	12,585

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 months ended June 30, 2023 and 2022, the vesting criteria has not been met and they are not included.

For the three and six months ended June 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 months ended June 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 months ended June 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 30, 2023. For the three and six months ended June 30, 2023, our service-based RSUs were excluded as the effect would be antidilutive.

For the three and six months ended June 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 months ended June 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 months ended June 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 30, 2022.

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,
(amounts in thousands)	2023	2022	2023	2022
Performance shares	300	300	300	300
Public warrants	17,294	17,227	17,294	17,227
Private warrants	5,409	5,476	5,409	5,476
Performance-based RSUs	745	348	745	348
Service-based RSUs	743	—	743	—
Total	24,491	23,351	24,491	23,351

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DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

In accordance with ASC 820, the fair value of a financial instrument is the price that would be received to sell an asset or paid 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 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 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 30, 2023 were the following: a term of 2.52 years; volatility of 54%; a dividend yield of zero; an underlying stock price of $2.98; a risk free interest rate of 4.62%; and a closing price of the public warrants of $0.15 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 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 30, 2023 and December 31, 2022 were as follows:

					Fair Value Measurements at June 30, 2023
(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	$	11,524	$	11,524	$	11,524	$	—	$	—
Accounts receivable, net	7,083		7,083		7,083		—		—
Liabilities:
Liability for private warrants	$	811	$	811	$	—	$	—	$	811

					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

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

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 15 - Subsequent Events for additional information for this agreement.

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 months ended June 30, 2022 totaled $0.2 million and $0.4 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 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 months ended June 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 30, 2023 and December 31, 2022 were $0.3 million and $1.4 million, respectively. The Deferred revenue balances related to Customers Bank as of June 30, 2023 and December 31, 2022 were $5.9 million and $3.8 million, respectively. The Accounts payable and accrued liabilities balances related to Customers Bank as of June 30, 2023 and December 31, 2022 were zero and $3.8 million, respectively.

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

The Company recognized $20.5 million and $43.6 million in revenues from Customers Bank for the three and six months ended June 30, 2022, respectively. Of these amounts, $5.5 million and $11.9 million are paid directly by MasterCard or individual account holders to the Company for the three and six months ended June 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 months ended June 30, 2023, respectively.

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

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RESTRUCTURING ACTIVITIES

6 Months Ended

Jun. 30, 2023

Restructuring and Related Activities [Abstract]

RESTRUCTURING ACTIVITIES

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 61 employees during the six months ended June 30, 2023. The Company’s workforce reduction expenses, consisting of severance and other termination benefits for the three and six months ended June 30, 2023, totaled $0.3 million 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 30, 2023 and are included in Accounts payable and accrued liabilities on the unaudited Consolidated Balance Sheets.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

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 August 20, 2023, the Company 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.

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Presentation

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.

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, 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 is sufficient funds available to support its ongoing business operations and continue as a going concern for at least the next 12 months with projected liquidity of $13.0 million at August 21, 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.

Accounting Standards Update

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 months ended June 30, 2023 there were no ASUs adopted by the Company that were considered material and there were no ASUs issued prior to June 30, 2023, which were not yet effective, considered relevant or material to the Company’s financial statements taken as a whole.

Dividends Policy

Dividend Policy

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

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ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2023

Receivables [Abstract]

Schedule of Allowance for Doubtful Accounts

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

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PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE (Tables)

6 Months Ended

Jun. 30, 2023

Property, Plant and Equipment [Abstract]

Components of Premises and Equipment and Developed Software

The components of premises and equipment were as follows:

(amounts in thousands)	Expected Useful Life	June 30, 2023		December 31, 2022
IT equipment	3 to 5 years	$	789	$	1,377
Accumulated depreciation		(258)		(869)
Total		$	531	$	508

The components of developed software were as follows:

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

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GOODWILL AND OTHER INTANGIBLES (Tables)

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Components of Other Intangibles

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

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

Schedule of Future Amortization

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

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

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SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY (Tables)

6 Months Ended

Jun. 30, 2023

Equity [Abstract]

Summary of Change in Unvested Awards

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
Balance as of December 31, 2022	1,168,146	$	14.87
Vested	(749,854)	$	14.87
Net settlement of share-based awards for taxes	(418,292)	$	14.87
Balance as of June 30, 2023	—	$	—

Summary of Change in Unvested RSUs

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

	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
Balance as of December 31, 2022	324,790	$	8.84	335,000	$	7.09
Granted	564,530	$	3.40	455,000	$	2.94
Vested	(101,747)	$	8.79	—	$	—
Forfeited	(44,184)	$	8.30	(45,000)	$	7.09
Balance as of June 30, 2023	743,389	$	4.75	745,000	$	4.56

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REVENUES (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

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,
(amounts in thousands)	2023		2022		2023		2022
Revenues:
Revenue recognized at point in time:
Interchange and card revenue	$	1,804	$	5,315	$	4,883	$	11,958
Servicing fees	7,700		13,295		14,332		27,487
Account fees	1,910		2,207		4,050		4,762
University fees - disbursement activity	172		281		432		757
Other revenue	57		745		96		799
Total revenue recognized at point in time	11,643		21,843		23,793		45,763
Revenue recognized over time:
University fees - subscriptions	1,201		1,165		2,447		2,292
Other revenue - maintenance and support	143		—		231		—
Total revenue recognized over time	1,344		1,165		2,678		2,292
Total revenues	$	12,987	$	23,008	$	26,471	$	48,055

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(LOSS) EARNINGS PER COMMON SHARE (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Components and Results of Operations and Earnings (Loss) Per Common Share Calculations

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,
(amounts in thousands, except per common share data)	2023		2022		2023		2022
Net (loss) income available to common shareholders	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Net (loss) income used for EPS	$	(4,456)	$	4,362	$	(9,416)	$	8,326
Weighted-average number of common shares outstanding – basic	11,563		11,944		11,566		11,947
Weighted-average number of common shares outstanding – diluted	11,563		12,600		11,566		12,585
Basic (loss) earnings per common share	$	(0.39)	$	0.37	$	(0.81)	$	0.70
Diluted (loss) earnings per common share	$	(0.39)	$	0.35	$	(0.81)	$	0.66

Schedule of Weighted Average Shares Outstanding

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,
(amounts in thousands)	2023	2022	2023	2022
Weighted-average number of common shares outstanding – basic	11,563	11,944	11,566	11,947
Add:
Service-based RSUs	—	656	—	638
Weighted-average number of common shares outstanding – diluted	11,563	12,600	11,566	12,585

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

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,
(amounts in thousands)	2023	2022	2023	2022
Performance shares	300	300	300	300
Public warrants	17,294	17,227	17,294	17,227
Private warrants	5,409	5,476	5,409	5,476
Performance-based RSUs	745	348	745	348
Service-based RSUs	743	—	743	—
Total	24,491	23,351	24,491	23,351

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DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Estimated Fair Values of Financial Instruments

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

					Fair Value Measurements at June 30, 2023
(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	$	11,524	$	11,524	$	11,524	$	—	$	—
Accounts receivable, net	7,083		7,083		7,083		—		—
Liabilities:
Liability for private warrants	$	811	$	811	$	—	$	—	$	811

					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

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DESCRIPTION OF THE BUSINESS - Narrative (Details) - revenue_source			6 Months Ended
	Mar. 22, 2023	Mar. 16, 2023	Jun. 30, 2023
Business Description And Reverse Recapitalization [Abstract]
Number of primary revenue sources			4
Initial agreement term		4 years
Automatic renewal term	1 year	2 years
Notice period for non-renewal	180 days	120 days

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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)			3 Months Ended		6 Months Ended
	Aug. 21, 2024 USD ($)	Jan. 03, 2023 USD ($)	Jun. 30, 2023 USD ($) performance_obligation	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) performance_obligation	Jun. 30, 2022 USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Number of premium finance obligations outstanding | performance_obligation			2		2
Total premium finance obligations outstanding			$ 700,000		$ 700,000
Average remaining term			8 months 15 days		8 months 15 days
Weighted average annual interest rate			4.95%		4.95%
Maximum voluntary contributions		$ 63,500
Employer matching contribution, percent of match		50.00%
Employer matching contribution, percent of eligible compensation		3.00%
401(k) matching contributions			$ 100,000	$ 200,000	$ 300,000	$ 400,000
Forecast
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Projected liquidity of ongoing project	$ 13,000,000

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ACCOUNTS RECEIVABLE - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Receivables [Abstract]
Allowance for doubtful accounts	$ 0.6	$ 0.3

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ACCOUNTS RECEIVABLE - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss [Roll Forward]
Beginning Balance	$ 305	$ 79
Additions	432	381
Reductions	(175)	(155)
Ending Balance	$ 562	$ 305

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PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE - Premises and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Accumulated depreciation	$ (258,000)		$ (258,000)		$ (869,000)
Total	531,000		531,000		508,000
Depreciation expense	100,000	$ 100,000	100,000	$ 100,000
Impairment recognized	0	$ 0	0	$ 0
IT equipment
Property, Plant and Equipment [Line Items]
IT equipment	$ 789,000		$ 789,000		$ 1,377,000
IT equipment | Minimum
Property, Plant and Equipment [Line Items]
Expected useful life (in years)	3 years		3 years
IT equipment | Maximum
Property, Plant and Equipment [Line Items]
Expected useful life (in years)	5 years		5 years

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PREMISES AND EQUIPMENT AND DEVELOPED SOFTWARE - Developed Software (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Developed software, gross	$ 76,396		$ 76,396		$ 72,981
Accumulated amortization	(56,637)		(56,637)		(50,657)
Total	19,759		19,759		22,324
Amortization of developed software	$ 3,000	$ 2,900	$ 5,980	$ 5,781
Higher One Disbursement business developed software
Property, Plant and Equipment [Line Items]
Expected useful life (in years)	10 years		10 years
Developed software, gross	$ 27,400		$ 27,400		27,400
Internally developed software
Property, Plant and Equipment [Line Items]
Developed software, gross	$ 44,299		$ 44,299		42,504
Internally developed software | Minimum
Property, Plant and Equipment [Line Items]
Expected useful life (in years)	3 years		3 years
Internally developed software | Maximum
Property, Plant and Equipment [Line Items]
Expected useful life (in years)	7 years		7 years
Work-in-process
Property, Plant and Equipment [Line Items]
Developed software, gross	$ 4,697		$ 4,697		$ 3,077

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GOODWILL AND OTHER INTANGIBLES - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill impairment	$ 0	$ 0	$ 0	$ 0
Intangible asset amortization period	20 years		20 years
Amortization expense	$ 100,000	100,000	$ 160,000	160,000
Impairment for other intangibles, net	$ 0	$ 0	$ 0	$ 0

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GOODWILL AND OTHER INTANGIBLES - Components of Other Intangibles (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Acquired Finite-Lived Intangible Assets [Line Items]
Expected useful life (in years)	20 years
Accumulated amortization	$ (2,133)	$ (1,973)
Total	$ 4,269	4,429
Customer relationships – universities
Acquired Finite-Lived Intangible Assets [Line Items]
Expected useful life (in years)	20 years
Customer relationships – universities	$ 6,402	$ 6,402

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GOODWILL AND OTHER INTANGIBLES - Future Amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 160
2024	320
2025	320
2026	320
2027	320
After 2027	2,829
Total	$ 4,269	$ 4,429

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LEASES - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)	Oct. 01, 2022	Mar. 31, 2022 location	Jan. 01, 2022 location
Leases [Abstract]
Number of office space locations leased under operating leases | location								2
Number of office space locations matured under operating leases | location							1
Operating lease terms (in years)					3 months	3 months
Operating lease right-of-use assets	$ 0		$ 0		$ 0
Operating lease liabilities outstanding	0		0		$ 0
Lease expense	100,000	$ 200,000	100,000	$ 400,000
Operating lease cash payments	$ 0	$ 200,000	$ 0	$ 400,000

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Jun. 05, 2023
Commitments and Contingencies Disclosure [Abstract]
Contingent consideration	$ 0.5	$ 0.1
Contingent consideration upon year one		0.5
Contingent consideration upon year two		0.5
Contingent consideration upon year three		$ 0.5

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SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY - Narrative (Details)				3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 20, 2023 shares	Mar. 01, 2022 USD ($)	Jan. 04, 2021 USD ($) shares	Jun. 30, 2023 USD ($) installment vote $ / shares shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2023 USD ($) vote installment trading_day $ / shares shares	Jun. 30, 2022 USD ($) shares	Dec. 31, 2022 $ / shares shares	Jun. 19, 2023 shares
Class of Warrant or Right [Line Items]
Common stock, shares authorized (in shares)				1,000,000,000		1,000,000,000		1,000,000,000
Common stock, par value (in dollars per share) | $ / shares				$ 0.0001		$ 0.0001		$ 0.0001
Common stock, shares outstanding (in shares)				11,866,345		11,866,345		12,240,237
Common stock, shares issued (in shares)				11,866,345		11,866,345		12,240,237
Performance shares (in shares)						300,000		300,000
Number of votes for each share held | vote				1		1
Preferred stock, shares authorized (in shares)				10,000,000		10,000,000		10,000,000
Preferred stock, par value (in dollars per share) | $ / shares				$ 0.0001		$ 0.0001		$ 0.0001
Preferred stock, shares issued (in shares)				0		0		0
Preferred stock, shares outstanding (in shares)				0		0		0
Performance shares, par value (in dollars per share) | $ / shares				$ 0.0001		$ 0.0001
Performance shares, period post closing date of merger after which shares would be forfeited and cancelled if no Release Event has occurred						7 years
Performance shares, stock price trigger (in dollars per share) | $ / shares				$ 15.00		$ 15.00
Performance shares, threshold trading days | trading_day						20
Performance shares, threshold trading day period | trading_day						30
Warrants to purchase common stock outstanding (in shares)				22,703,004,000	22,703,004,000	22,703,004,000	22,703,004,000
Number of whole shares of common stock entitled to purchase upon exercise of each whole warrant ( in shares)				1		1
Exercise price (in dollars per share) | $ / shares				$ 11.50		$ 11.50
Maximum expiration period after completion of merger (in years)						5 years
Redemption rights, stock price trigger (in dollars per share) | $ / shares				$ 24.00		$ 24.00
Redemption rights, threshold trading days | trading_day						20
Redemption rights, threshold trading day period | trading_day						30
Reclassified warrants (in shares)				0	0	66,855	300,000
Gain on fair value of private warrant liability | $				$ 595,000	$ 5,640,000	$ 2,016,000	$ 8,284,000
Repurchase of private warrants | $						$ 0	$ 1,977,000
10% + Equity Incentive Plan
Class of Warrant or Right [Line Items]
Increase in aggregate number of shares of common stock (in shares)	1,279,963
Aggregate number of shares of common stock (in shares)	2,500,000								1,220,037
Public Warrants
Class of Warrant or Right [Line Items]
Warrants to purchase common stock outstanding (in shares)				17,294,044,000	17,227,289,000	17,294,044,000	17,227,289,000
Outstanding warrants exercised (in shares)					100	1,600	100
Exercises of public warrants				0	100	0	100
Private Warrants
Class of Warrant or Right [Line Items]
Warrants to purchase common stock outstanding (in shares)				5,408,960,000	5,475,815,000	5,408,960,000	5,475,815,000
Private warrants repurchased (in shares)				1,169,903		1,169,903
Private warrants, price per share (in dollars per share) | $ / shares				$ 1.69		$ 1.69
Gain on fair value of private warrant liability | $				$ 600,000	$ 5,600,000	$ 2,000,000	$ 8,300,000
Repurchase of private warrants | $		$ 2,000,000				0	2,000,000
Merger Consideration Share Based Compensation Award
Class of Warrant or Right [Line Items]
RSUs granted (in shares)			1,317,035
Fair value | $			$ 19,600,000
Vesting period			2 years
Share-based compensation expense | $				0	2,300,000	$ 100,000	4,500,000
Restricted Stock Units (RSUs)
Class of Warrant or Right [Line Items]
RSUs granted (in shares)						564,530
Share-based compensation expense | $				$ 600,000	500,000	$ 900,000	900,000
Restricted Stock Units (RSUs) | Minimum
Class of Warrant or Right [Line Items]
Vesting installments | installment				3		3
Restricted Stock Units (RSUs) | Maximum
Class of Warrant or Right [Line Items]
Vesting installments | installment				4		4
Performance Based Restricted Stock Units
Class of Warrant or Right [Line Items]
RSUs granted (in shares)						455,000
Share-based compensation expense | $				$ 200,000	$ 300,000	$ 400,000	$ 500,000

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SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY - Summary of Change in Unvested Awards and RSUs (Details) - $ / shares		6 Months Ended
	Jan. 04, 2021	Jun. 30, 2023
Merger Consideration Share Based Compensation Award
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance (in shares)		1,168,146
Granted (in shares)	1,317,035
Vested (in shares)		(749,854)
Net settlement of share-based awards for taxes (in shares)		418,292
Ending balance (in shares)		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance (in dollars per share)		$ 14.87
Vested (in dollars per share)		14.87
Net settlement of share-based awards for taxes (in dollars per share)		14.87
Ending balance (in dollars per share)		$ 0
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance (in shares)		324,790
Granted (in shares)		564,530
Vested (in shares)		(101,747)
Forfeited (in shares)		(44,184)
Ending balance (in shares)		743,389
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance (in dollars per share)		$ 8.84
Granted (in dollars per share)		3.40
Vested (in dollars per share)		8.79
Forfeited (in dollars per share)		8.30
Ending balance (in dollars per share)		$ 4.75
Performance Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance (in shares)		335,000
Granted (in shares)		455,000
Vested (in shares)		0
Forfeited (in shares)		(45,000)
Ending balance (in shares)		745,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Beginning balance (in dollars per share)		$ 7.09
Granted (in dollars per share)		2.94
Vested (in dollars per share)		0
Forfeited (in dollars per share)		7.09
Ending balance (in dollars per share)		$ 4.56

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REVENUES - Disaggregation of Revenue (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment	Jun. 30, 2022 USD ($)
Revenue from Contract with Customer [Abstract]
Number of reportable segments | segment			1
Disaggregation of Revenue [Line Items]
Total revenues	$ 12,987	$ 23,008	$ 26,471	$ 48,055
Interchange and card revenue
Disaggregation of Revenue [Line Items]
Total revenues	1,804	5,315	4,883	11,958
Servicing fees
Disaggregation of Revenue [Line Items]
Total revenues	7,700	13,295	14,332	27,487
Account fees
Disaggregation of Revenue [Line Items]
Total revenues	1,910	2,207	4,050	4,762
University fees
Disaggregation of Revenue [Line Items]
Total revenues	1,373	1,446	2,879	3,049
Other revenue
Disaggregation of Revenue [Line Items]
Total revenues	200	745	327	799
Revenue recognized at a point in time
Disaggregation of Revenue [Line Items]
Total revenues	11,643	21,843	23,793	45,763
Revenue recognized at a point in time | Interchange and card revenue
Disaggregation of Revenue [Line Items]
Total revenues	1,804	5,315	4,883	11,958
Revenue recognized at a point in time | Servicing fees
Disaggregation of Revenue [Line Items]
Total revenues	7,700	13,295	14,332	27,487
Revenue recognized at a point in time | Account fees
Disaggregation of Revenue [Line Items]
Total revenues	1,910	2,207	4,050	4,762
Revenue recognized at a point in time | University fees
Disaggregation of Revenue [Line Items]
Total revenues	172	281	432	757
Revenue recognized at a point in time | Other revenue
Disaggregation of Revenue [Line Items]
Total revenues	57	745	96	799
Revenue recognized over time
Disaggregation of Revenue [Line Items]
Total revenues	1,344	1,165	2,678	2,292
Revenue recognized over time | University fees
Disaggregation of Revenue [Line Items]
Total revenues	1,201	1,165	2,447	2,292
Revenue recognized over time | Other revenue
Disaggregation of Revenue [Line Items]
Total revenues	$ 143	$ 0	$ 231	$ 0

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REVENUES - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 8,209		$ 6,647
Amount recognized in the period from amounts included in deferred revenue at beginning of period	5,900	$ 15,000
Unbilled receivables	$ 1,900		$ 1,500

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INCOME TAXES (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	(0.20%)	17.20%	(0.20%)	23.50%
Deferred tax assets	$ 29.6	$ 30.4	$ 29.6	$ 30.4

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(LOSS) EARNINGS PER COMMON SHARE - Components and Results of Operations and Earnings (Loss) Per Common Share Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Net (loss) income available to common shareholders	$ (4,456)	$ 4,362	$ (9,416)	$ 8,326
Net (loss) income used for EPS	$ (4,456)	$ 4,362	$ (9,416)	$ 8,326
Weighted average common shares outstanding - basic (in shares)	11,563	11,944	11,566	11,947
Weighted average common shares outstanding - diluted (in shares)	11,563	12,600	11,566	12,585
Basic (loss) earnings per common share (in dollars per share)	$ (0.39)	$ 0.37	$ (0.81)	$ 0.70
Diluted (loss) earnings per common share (in dollars per share)	$ (0.39)	$ 0.35	$ (0.81)	$ 0.66

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(LOSS) EARNINGS PER COMMON SHARE - Summary of Weighted Average Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Abstract]
Weighted average number of shares outstanding - basic (in shares)	11,563	11,944	11,566	11,947
Service-based RSUs (in shares)	0	656	0	638
Diluted shares outstanding (in shares)	11,563	12,600	11,566	12,585

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(LOSS) EARNINGS PER COMMON SHARE - Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	24,491	23,351	24,491	23,351
Performance shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	300	300	300	300
Public warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	17,294	17,227	17,294	17,227
Private warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	5,409	5,476	5,409	5,476
Performance-based RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	745	348	745	348
Service-based RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities (in shares)	743	0	743	0

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DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - Private Warrants - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value assumptions, expected term (in years)	2 years 6 months 7 days	3 years 3 days
Fair value assumptions, volatility rate (as a percent)	54.00%	43.00%
Fair value assumptions, dividend yield	0.00%	0.00%
Fair value assumptions, underlying stock price (in dollars per share)	$ 2.98	$ 5.21
Fair value assumptions, risk free interest rate (as a percent)	4.62%	4.17%
Fair value assumptions, exercise price, closing price of Public Warrants (in dollars per share)	$ 0.15	$ 0.52

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DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Liabilities:
Liability for private warrants	$ 811	$ 2,847
Carrying Amount | Fair Value, Recurring
Assets:
Cash and cash equivalents	11,524	21,108
Accounts receivable, net	7,083	8,260
Liabilities:
Liability for private warrants	811	2,847
Estimated Fair Value | Fair Value, Recurring
Assets:
Cash and cash equivalents	11,524	21,108
Accounts receivable, net	7,083	8,260
Liabilities:
Liability for private warrants	811	2,847
Estimated Fair Value | Fair Value, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and cash equivalents	11,524	21,108
Accounts receivable, net	7,083	8,260
Liabilities:
Liability for private warrants	0	0
Estimated Fair Value | Fair Value, Recurring | Significant Other Observable Inputs (Level 2)
Assets:
Cash and cash equivalents	0	0
Accounts receivable, net	0	0
Liabilities:
Liability for private warrants	0	0
Estimated Fair Value | Fair Value, Recurring | Significant Unobservable Inputs (Level 3)
Assets:
Cash and cash equivalents	0	0
Accounts receivable, net	0	0
Liabilities:
Liability for private warrants	$ 811	$ 2,847

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RELATED PARTY TRANSACTIONS (Details) - USD ($)					3 Months Ended		6 Months Ended
	Mar. 22, 2023	Mar. 16, 2023	Mar. 01, 2022	Jan. 04, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Automatic renewal term	1 year	2 years
Notice period for non-renewal	180 days	120 days
Notice period for termination	120 days
401(k) matching contributions					$ 100,000	$ 200,000	$ 300,000	$ 400,000
Warrant repurchase program, class of warrant or right, cost (in shares)			1,169,963
Warrant repurchase program, class of warrant or right, average cost per share (in dollars per share)			$ 1.69
Repurchase of private warrants							0	1,977,000
Accounts receivable, net allowance for doubtful accounts of $562 and $305					7,083,000		7,083,000		$ 8,260,000
Deferred revenue					8,209,000		8,209,000		6,647,000
Accounts payable and accrued liabilities					11,624,000		11,624,000		12,684,000
Total operating revenues					12,987,000	23,008,000	26,471,000	48,055,000
Expenses from affiliate bank					$ 18,028,000	23,377,000	37,887,000	45,461,000
Private Warrants
Related Party Transaction [Line Items]
Repurchase of private warrants			$ 2,000,000				$ 0	2,000,000
BM Technologies, Inc. | Affiliated Entity, Chief Executive Officer
Related Party Transaction [Line Items]
Ownership percentage (less than)					5.00%		5.00%
BM Technologies, Inc. | Affiliated Entity, Executive Chairman Of Board
Related Party Transaction [Line Items]
Ownership percentage (less than)					5.00%		5.00%
Partner Bank | Related Party
Related Party Transaction [Line Items]
Non-competition and non-solicitation agreement period				4 years
Percentage of equity interests in competitor				2.00%
Accounts receivable, net allowance for doubtful accounts of $562 and $305					$ 300,000		$ 300,000		1,400,000
Deferred revenue					5,900,000		5,900,000		3,800,000
Accounts payable and accrued liabilities					0		0		$ 3,800,000
Total operating revenues					11,100,000	20,500,000	22,600,000	43,600,000
Expenses from affiliate bank					0	0	0	100,000
Partner Bank | Deposit Servicing Agreement | Related Party
Related Party Transaction [Line Items]
Servicing fee percentage				3.00%
Period of written notice of non-renewal required prior to expiration of the term				180 days
Partner Bank | Transition Services Agreement | Related Party
Related Party Transaction [Line Items]
Period each party agreed to provide certain transition services to the other party (up to)				12 months
Monthly service fee				$ 12,500
Partner Bank | Software Licensing Agreement | Related Party
Related Party Transaction [Line Items]
Licensing agreement, term				10 years
MasterCard | Related Party
Related Party Transaction [Line Items]
Total operating revenues					$ 4,400,000	$ 5,500,000	$ 9,900,000	$ 11,900,000

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RESTRUCTURING ACTIVITIES - Narrative (Details) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2023 USD ($) employee	Jun. 30, 2023 USD ($)
Restructuring and Related Activities [Abstract]
Employee reduction | employee	61
Workforce reduction expenses	$ 0.3	$ 1.1
Expenses incurred but not paid	$ 0.4	$ 0.4