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DESCRIPTION OF THE BUSINESS AND MERGER TRANSACTION
 3 Months Ended
Mar. 31, 2021
Business Description And Reverse Recapitalization [Abstract]  
DESCRIPTION OF THE BUSINESS AND MERGER TRANSACTION DESCRIPTION OF THE BUSINESS AND MERGER TRANSACTION
Description of the Business

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

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

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

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

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

BankMobile was determined to be the accounting acquirer based on the following predominant factors:

•Customers Bank stockholders have the largest portion of voting rights in the post-combination company;
•The board of directors and senior management of the post-combination company are primarily composed of individuals associated with BankMobile;

•BankMobile was the larger entity based on historical operating activity, assets, revenues and employees at the time of the closing of the merger;
•The ongoing operating activities of the post-combination company comprise those of BankMobile.
The following table provides a summary of the significant sources and uses of cash related to the closing of the merger transaction:
(amounts in thousands)
Cash at Megalith$27,669 
Cash from PIPE (private investment in public entity) investors20,003 
   Total sources of cash47,672 
Cash paid to underwriters and other transaction costs(3,987)
Cash paid to Customers Bank as consideration (23,125)
Cash from recapitalization transaction (A)20,560 
Cash used to pay down BMT debt (8,834)
Cash received by BMT and used to pay down debt (6,738)
Total cash used to pay down outstanding debt (B)(15,572)
Net cash received by BMT from the reverse recapitalization transaction at March 31, 2021 (=A+B)4,988 
90 day merger true-up, accrued by BMT at March 31, 2021 (a)(3,672)
Final cash to BMT from the reverse recapitalization transaction$1,316 
(a) The Company expects to payout the $3.7 million in cash in late May 2021.

The following table provides a reconciliation of the common shares related to the merger:

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