BM Technologies, Inc. (NYSE:BMTX) Q1 2024 Earnings Conference Call May 16, 2024 9:00 AM ET Company Participants Brian Prenoveau - IR Luvleen Sidhu - CEO Ajay Asija - CFO Jamie Donahue - President and Chief Technology Officer Conference Call Participants Greg Pendy - Chardan Mike Grondahl - Northland Securities Bill DeZellem - Titan Capital Operator Good morning everyone, and welcome to the BM Technologies First Quarter and 2024 Earnings Call. Please note that this event is being recorded. Following manageme ...

Revenue Performance - For the three months ended March 31, 2024, the company recognized $2.6 million in revenues from Customers Bank, a decrease from $12.4 million in the same period of 2023[182]. - The company reported net revenues of $12.5 million from First Carolina Bank for the three months ended March 31, 2024, compared to zero in the same period of 2023[184]. - The company has four primary revenue sources: interchange and card revenue, servicing fees, account fees, and university fees, primarily driven by customer activity[164]. Financial Position - Cash and cash equivalents were reported at $14.63 million as of March 31, 2024[176]. - Accounts receivable, net, amounted to $6.875 million as of March 31, 2024[176]. - The company has deferred revenue recognized over the service period on a straight-line basis or when contractual obligations are satisfied[165]. Workforce and Restructuring - The company completed a workforce reduction of approximately 3 employees in Q1 2024, with restructuring expenses totaling less than $0.1 million, down from $0.8 million for 60 employees in Q1 2023[185]. Risk Factors - The company is exposed to concentration of credit risk primarily from accounts receivable from Customers Bank and other partners, with minimal historical losses reported[202]. - The company has established relationships with Partner Banks, which are related parties, impacting its financial operations[176]. Earnings Calculations - The company’s performance shares and warrants were excluded from diluted earnings calculations due to conditions not being met as of March 31, 2024[168].

Part I [Business](index=7&type=section&id=Item%201%2E%20Business) BM Technologies, Inc. (BMTX) provides digital banking and disbursement services through a BaaS model and university partnerships - BMTX operates as a **fintech company**, not a bank, facilitating services between customers and partner banks (Customers Bank and First Carolina Bank)[186](index=186&type=chunk) - The business model focuses on low-cost customer acquisition through **Banking-as-a-Service (BaaS)** and Higher Education partnerships[186](index=186&type=chunk) - The company is classified as an **\"emerging growth company\"** under the JOBS Act, benefiting from reduced reporting requirements and an extended transition period for new accounting standards[188](index=188&type=chunk)[225](index=225&type=chunk) - As of December 31, 2023, the company had approximately **200 full-time employees** located in the United States[227](index=227&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A%2E%20Risk%20Factors) The company faces significant risks related to its business, regulatory environment, and common stock, including cybersecurity and market volatility [Risks Related to our Business and Industry](index=9&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) The company faces risks from partner dependence, intense competition, cybersecurity threats, and the need to execute its Profit Enhancement Plan - The company's BaaS business is significantly dependent on its partnership with **T-Mobile**, which can be terminated with 30 days' written notice despite renewal through February 2025[248](index=248&type=chunk)[392](index=392&type=chunk) - On December 1, 2023, the company transitioned Higher Education deposits and accounts to **First Carolina Bank (FCB)**, introducing integration and operational risks[393](index=393&type=chunk) - The company faces intense competition from other payment providers, traditional banks, and digital banking platforms[13](index=13&type=chunk) - **Data breaches, cybersecurity incidents, and fraud** are significant risks, compounded by reliance on third-party vendors like FIS and MasterCard[347](index=347&type=chunk)[280](index=280&type=chunk) - As of December 31, 2023, **developed software** had a net carrying value of **$16.2 million**, representing approximately **30% of total consolidated assets**, subject to impairment risk[12](index=12&type=chunk) - The company's **Profit Enhancement Plan (PEP)**, announced January 26, 2023, aims for over **$15 million in annualized cost reductions**, but its success is not guaranteed[242](index=242&type=chunk) [Risks Related to our Common Stock and Warrants](index=19&type=section&id=Risks%20Related%20to%20our%20Common%20Stock%20and%20Warrants) Risks include illiquid trading, potential stock price depression from future sales or warrant exercise, warrant redemption risk, and anti-takeover provisions - As of December 31, 2023, **22,703,004 warrants** were outstanding at **$11.50 per share**, potentially causing significant stockholder dilution[311](index=311&type=chunk) - The company can redeem public warrants at **$0.01 per warrant** if the stock price exceeds **$24.00** for a specified period, potentially rendering unexercised warrants worthless[303](index=303&type=chunk)[309](index=309&type=chunk) - **Anti-takeover provisions**, such as a staggered board, may discourage takeovers and entrench management[298](index=298&type=chunk) - The company's charter designates the **Delaware Court of Chancery** as the exclusive forum for certain stockholder litigation, potentially limiting forum choice[301](index=301&type=chunk)[308](index=308&type=chunk) [Regulatory Risks](index=21&type=section&id=Regulatory%20Risks) The company faces significant regulatory risks from banking laws, U.S. Department of Education Title IV rules, privacy laws, and potential future agency regulations - As a **\"third-party servicer\"** under Title IV, the company is **jointly and severally liable** with client institutions for Department of Education violations, potentially leading to material fines[307](index=307&type=chunk)[314](index=314&type=chunk) - The company is subject to **ED's cash management regulations**, restricting marketing of financial products to students and fee types[316](index=316&type=chunk)[317](index=317&type=chunk) - The company is subject to privacy regulations including **FERPA** and **GLBA**, governing student and customer data handling[325](index=325&type=chunk)[327](index=327&type=chunk) - Partner Banks are subject to extensive banking regulations, including the **Durbin Amendment**, which limits interchange fees and indirectly impacts BMTX's revenue[323](index=323&type=chunk)[320](index=320&type=chunk) [Cybersecurity](index=25&type=section&id=Item%201C%2E%20Cybersecurity) BMTX maintains a cybersecurity risk management program aligned with industry best practices, overseen by the Board, with no material incidents identified to date - The company has a **cybersecurity risk management program** integrated into its enterprise risk management to protect IT systems and confidential information[338](index=338&type=chunk)[339](index=339&type=chunk) - The **Board of Directors** oversees the cybersecurity program as part of its risk oversight function, receiving regular updates[341](index=341&type=chunk) - The company has not identified any past cybersecurity incidents that have materially affected its business, operations, or financial condition[340](index=340&type=chunk) [Properties](index=25&type=section&id=Item%202%2E%20Properties) The company's corporate headquarters in Wayne, PA, operates under a short-term lease, with current facilities deemed sufficient for its needs - The corporate headquarters is located in **Wayne, PA**, and operates under a **short-term lease**[342](index=342&type=chunk) [Legal Proceedings](index=26&type=section&id=Item%203%2E%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, none of which are expected to have a material effect on its financial condition or operations - As of the report date, the company is not involved in any legal proceedings expected to have a **material impact**[356](index=356&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=27&type=section&id=Item%205%2E%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock and warrants trade on the NYSE American, with no cash dividends paid to date or planned, and no issuer equity purchases during the period - Common stock and warrants trade on the **NYSE American** under symbols **\"BMTX\"** and **\"BMTX-WT\"**[358](index=358&type=chunk) - As of April 1, 2024, there were **783 holders of record of common stock** and **12 holders of record of warrants**[359](index=359&type=chunk) - The company has not paid cash dividends and has no current plans to do so[30](index=30&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%207%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) BMTX reported a net loss of **$17.3 million** in 2023, driven by a **34% revenue decrease** and a **19% expense reduction**, with cash decreasing to **$14.3 million** [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Operating revenues decreased by **34%** to **$55.3 million** in 2023, while expenses fell by **19%** to **$75.2 million**, leading to a **$20.0 million** operating loss Operating Results Summary (in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Operating revenues** | **$55,252** | **$83,597** | **$(28,345)** | **(34)%** | | **Operating expenses** | **$75,232** | **$92,853** | **$(17,621)** | **(19)%** | | Loss from operations | $(19,980) | $(9,256) | $(10,724) | 116% | | Gain on fair value of private warrant liability | $2,665 | $8,066 | $(5,401) | (67)% | | **Net loss** | **$(17,331)** | **$(779)** | **$(16,552)** | **NM** | | Basic/Diluted loss per share | $(1.50) | $(0.07) | $(1.43) | NM | Operating Revenues Breakdown (in thousands) | Revenue Source | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Interchange and card revenue | $9,447 | $22,318 | $(12,871) | (58)% | | Servicing fees | $31,460 | $44,581 | $(13,121) | (29)% | | Account fees | $8,099 | $8,992 | $(893) | (10)% | | University fees | $5,701 | $5,734 | $(33) | (1)% | | Other revenue | $545 | $1,972 | $(1,427) | (72)% | | **Total operating revenues** | **$55,252** | **$83,597** | **$(28,345)** | **(34)%** | Operating Expenses Breakdown (in thousands) | Expense Category | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Technology, communication, and processing | $27,775 | $29,176 | $(1,401) | (5)% | | Salaries and employee benefits | $22,489 | $39,926 | $(17,437) | (44)% | | Professional services | $11,257 | $10,747 | $510 | 5% | | Provision for operating losses | $8,311 | $6,798 | $1,513 | 22% | | **Total operating expenses** | **$75,232** | **$92,853** | **$(17,621)** | **(19)%** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and cash equivalents decreased by **$6.8 million** to **$14.3 million** in 2023, primarily due to investing and financing activities, though management believes liquidity is sufficient for 12 months Cash and Cash Equivalents Position (in thousands) | Period | Amount | | :--- | :--- | | December 31, 2023 | $14,288 | | December 31, 2022 | $21,108 | Summary of Cash Flows (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,527 | $3,480 | | Net cash used in investing activities | $(5,873) | $(5,675) | | Net cash used in financing activities | $(2,474) | $(2,401) | | **Net decrease in cash** | **$(6,820)** | **$(4,596)** | - Management concluded the company has sufficient funds to support operations for at least the **next 12 months** from the financial statement issuance date[426](index=426&type=chunk)[471](index=471&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%207A%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces credit risk concentration from accounts receivable with key partners and cash deposits exceeding FDIC limits, though management deems the risk not significant Accounts Receivable Concentration | Partner | % of Total A/R, Net (Dec 31, 2023) | % of Total A/R, Net (Dec 31, 2022) | | :--- | :--- | :--- | | BaaS Partner | 48% | 60% | | MasterCard | 21% | 10% | | Customers Bank | 16% | 17% | - The company holds cash at **Customers Bank** that may exceed the **$250,000 FDIC coverage limit**, creating credit risk, though management deems it not significant[441](index=441&type=chunk) [Consolidated Financial Statements and Supplementary Data](index=36&type=section&id=Item%208%2E%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2023 and 2022, including balance sheets, statements of loss, equity, and cash flows, along with detailed accounting notes - KPMG LLP issued an **unqualified audit opinion** on the consolidated financial statements[439](index=439&type=chunk)[443](index=443&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$54,640** | **$71,036** | | Cash and cash equivalents | $14,288 | $21,108 | | Developed software, net | $16,173 | $22,324 | | **Total Liabilities** | **$23,668** | **$22,178** | | **Total Shareholders' Equity** | **$30,972** | **$48,858** | Consolidated Statement of Loss Highlights (in thousands) | Account | 2023 | 2022 | | :--- | :--- | :--- | | Total operating revenues | $55,252 | $83,597 | | Total operating expenses | $75,232 | $92,853 | | Loss from operations | $(19,980) | $(9,256) | | **Net loss** | **$(17,331)** | **$(779)** | [NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=42&type=section&id=NOTE%202%20%E2%80%94%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements are prepared under U.S. GAAP on a going concern basis, with key policies covering revenue recognition, developed software, warrants, and share-based compensation, utilizing emerging growth company provisions - Management concluded funds are sufficient to support operations for at least **12 months** from the April 5, 2024 issuance date, based on a going concern assessment[471](index=471&type=chunk) - The company recognizes revenue under **ASC 606**, presenting interchange and card revenue net of expenses as it acts as an agent[509](index=509&type=chunk) - **Private warrants** are accounted for as liabilities and marked-to-market, while **public warrants** are treated as equity instruments and not re-measured[501](index=501&type=chunk)[502](index=502&type=chunk)[503](index=503&type=chunk) - The provision for operating losses, including fraud and Regulation E claims, was estimated at **$1.3 million** at December 31, 2023, up from **$0.4 million** in 2022[523](index=523&type=chunk)[524](index=524&type=chunk) [NOTE 7 — COMMITMENTS AND CONTINGENCIES](index=55&type=section&id=NOTE%207%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) The company records loss contingencies when probable and estimable, with no unaccrued material matters, and acquired software technology in June 2023 with **$0.5 million** in contingent consideration - On June 5, 2023, the company acquired software technology assets, including **$0.5 million** of potential contingent consideration payable over three years upon successful deployment[2](index=2&type=chunk) [NOTE 8 — SHAREHOLDERS' EQUITY AND PRIVATE WARRANT LIABILITY](index=55&type=section&id=NOTE%208%20%E2%80%94%20SHAREHOLDERS%27%20EQUITY%20AND%20PRIVATE%20WARRANT%20LIABILITY) As of December 31, 2023, the company had **11.98 million** common shares outstanding, **22.7 million** warrants, and recognized **$1.8 million** in share-based compensation expense Common Stock Outstanding | Date | Shares Issued and Outstanding | | :--- | :--- | | Dec 31, 2023 | 11,984,133 | | Dec 31, 2022 | 12,240,237 | Warrants Outstanding | Type | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Public Warrants | 17,294,044 | 17,227,189 | | Private Warrants | 5,408,960 | 5,475,815 | | **Total** | **22,703,004** | **22,703,004** | - The **2020 Equity Incentive Plan** was amended in June 2023, increasing total authorized shares from **1,220,037 to 2,500,000**[35](index=35&type=chunk) - Share-based compensation expense for RSUs and PBRSUs totaled **$1.8 million** in 2023, compared to **$2.0 million** in 2022[52](index=52&type=chunk)[53](index=53&type=chunk) - The company recorded a non-cash gain of **$2.7 million** in 2023 and **$8.1 million** in 2022 from the revaluation of its private warrant liability[62](index=62&type=chunk) [NOTE 9 — REVENUES](index=60&type=section&id=NOTE%209%20%E2%80%94%20REVENUES) Total revenues decreased to **$55.3 million** in 2023, with most recognized at a point in time, and deferred revenue significantly increased to **$12.4 million** Revenues by Type (in thousands) | Revenue Type | 2023 | 2022 | | :--- | :--- | :--- | | **Recognized at Point in Time** | | | | Interchange and card revenue | $9,447 | $22,318 | | Servicing fees | $31,460 | $44,581 | | Account fees | $8,099 | $8,992 | | University fees - disbursement | $881 | $1,108 | | **Recognized Over Time** | | | | University fees - subscriptions | $4,820 | $4,626 | | **Total Revenues** | **$55,252** | **$83,597** | Deferred Revenue (in thousands) | Date | Amount | | :--- | :--- | | Dec 31, 2023 | $12,449 | | Dec 31, 2022 | $6,647 | [NOTE 10 — INCOME TAXES](index=61&type=section&id=NOTE%2010%20%E2%80%94%20INCOME%20TAXES) The company recorded minimal income tax expense in 2023, maintains a full valuation allowance against deferred tax assets, and has **$18.5 million** in federal net operating loss carryforwards - A **full valuation allowance** was recorded against deferred tax assets at year-end 2023 and 2022, as realization is not more likely than not[75](index=75&type=chunk) - As of December 31, 2023, the company had **$18.5 million** of federal net operating loss (NOL) carryforwards that do not expire[268](index=268&type=chunk) Income Tax Expense (Benefit) (in thousands) | Component | 2023 | 2022 | | :--- | :--- | :--- | | Total current expense (benefit) | $16 | $(411) | | Total deferred expense (benefit) | $0 | $0 | | **Total income tax expense (benefit)** | **$16** | **$(411)** | [NOTE 11 — LOSS PER SHARE](index=62&type=section&id=NOTE%2011%20%E2%80%94%20LOSS%20PER%20SHARE) The company reported a basic and diluted loss per share of **$1.50** in 2023, with potentially dilutive securities excluded due to the net loss Loss Per Share Calculation | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net loss (in thousands) | $(17,331) | $(779) | | Weighted-average shares - basic/diluted (in thousands) | 11,574 | 11,942 | | **Basic/Diluted loss per common share** | **$(1.50)** | **$(0.07)** | - For 2023, **23.9 million** potentially dilutive shares were excluded from diluted loss per share calculation due to their antidilutive effect[84](index=84&type=chunk)[85](index=85&type=chunk) [NOTE 12 — DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS](index=63&type=section&id=NOTE%2012%20%E2%80%94%20DISCLOSURES%20ABOUT%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The company uses a three-level fair value hierarchy, with private warrant liability as the only Level 3 instrument, valued at **$0.2 million** at year-end 2023 using a binomial lattice model - The **private warrant liability** is the primary financial instrument measured at fair value on a recurring basis, classified as **Level 3** due to unobservable inputs[91](index=91&type=chunk)[95](index=95&type=chunk) Fair Value of Private Warrant Liability (Level 3) | Date | Fair Value (in thousands) | | :--- | :--- | | Dec 31, 2023 | $162 | | Dec 31, 2022 | $2,847 | - The fair value of private warrants at December 31, 2023, was estimated using a **binomial lattice model** with a stock price of **$2.05** and **58% volatility**[89](index=89&type=chunk)[90](index=90&type=chunk) [NOTE 13 — RELATED PARTY TRANSACTIONS](index=65&type=section&id=NOTE%2013%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) The company has significant related party transactions with partner banks, recognizing **$48.3 million** from Customers Bank and **$3.4 million** from First Carolina Bank in 2023, with a key account transfer completed December 1, 2023 - The company recognized **$48.3 million** in revenues from **Customers Bank** in 2023, down from **$74.7 million** in 2022[115](index=115&type=chunk) - On March 16, 2023, the company entered a Deposit Servicing Agreement with **First Carolina Bank (FCB)** for its Higher Education business, completing student account transfer on December 1, 2023[118](index=118&type=chunk)[127](index=127&type=chunk) - The company recognized **$3.4 million** in net revenues from **FCB** for the twelve months ended December 31, 2023[128](index=128&type=chunk) - The President and Executive Chairman of Customers Bank are immediate family members of the Company's CEO[111](index=111&type=chunk) [NOTE 14 — RESTRUCTURING ACTIVITIES](index=68&type=section&id=NOTE%2014%20%E2%80%94%20RESTRUCTURING%20ACTIVITIES) In January 2023, the company initiated a Profit Enhancement Plan (PEP) including a **25% workforce reduction**, resulting in **$1.0 million** in restructuring charges - On January 26, 2023, the company committed to a **Profit Enhancement Plan (PEP)**, including a targeted **25% workforce reduction** from year-end 2022 levels[129](index=129&type=chunk)[121](index=121&type=chunk) - The company completed a workforce reduction of **58 employees** in 2023, incurring **$1.0 million** in related restructuring expenses[130](index=130&type=chunk) [NOTE 15 — IMMATERIAL CORRECTION OF PRIOR PERIOD ERROR](index=69&type=section&id=NOTE%2015%20%E2%80%94%20IMMATERIAL%20CORRECTION%20OF%20PRIOR%20PERIOD%20ERROR) An immaterial error in interim 2023 financial statements led to overstatement of interchange revenue and expenses, with no impact on net loss, balance sheet, or cash flows - An immaterial error was identified where certain interchange revenues were reported gross instead of net for the first three quarters of 2023[123](index=123&type=chunk) - The error overstated both revenue and an expense line item by equal amounts, having no effect on Net loss[133](index=133&type=chunk)[132](index=132&type=chunk) [NOTE 16 — SUBSEQUENT EVENTS](index=69&type=section&id=NOTE%2016%20%E2%80%94%20SUBSEQUENT%20EVENTS) Subsequent to year-end, the company announced CFO transition to Ajay Asija and modified performance-based RSU awards for the CEO and President - CFO James Dullinger's employment ended April 5, 2024, with **Ajay Asija** appointed as the new CFO effective April 6, 2024[135](index=135&type=chunk)[137](index=137&type=chunk)[141](index=141&type=chunk) - In February 2024, unvested performance-based RSUs for the CEO and President were cancelled and replaced with new awards with modified vesting criteria[142](index=142&type=chunk)[143](index=143&type=chunk) [Controls and Procedures](index=71&type=section&id=Item%209A%2E%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of December 31, 2023, due to a material weakness in controls over serviced deposit account balances and revenues, with a remediation plan underway - Management concluded disclosure controls and procedures were **not effective** as of December 31, 2023, due to a **material weakness** in internal control over financial reporting[148](index=148&type=chunk)[286](index=286&type=chunk) - The material weakness related to inadequately designed controls over the accuracy of serviced deposit account balances and related revenues[151](index=151&type=chunk) - The material weakness did not result in a material misstatement of the annual or interim financial statements[152](index=152&type=chunk) - A remediation plan is underway, including hiring new personnel and enhancing policies, with anticipated completion by the **end of Q3 2024**[153](index=153&type=chunk)[156](index=156&type=chunk) [Other Information](index=72&type=section&id=Item%209B%2E%20Other%20Information) The company's Insider Trading Policy was updated in Q4 2023 to permit Rule 10b5-1 trading plans, though no directors or officers adopted or terminated such plans during the quarter - No directors or officers adopted or terminated a **Rule 10b5-1 trading arrangement** during the quarter ended December 31, 2023[192](index=192&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=73&type=section&id=Item%2010%2E%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2024 Proxy Statement - Information for this item is incorporated by reference from the **2024 Proxy Statement**[195](index=195&type=chunk) [Executive Compensation](index=73&type=section&id=Item%2011%2E%20Executive%20Compensation) Information for this item, including Compensation Discussion and Analysis, is incorporated by reference from the 2024 Proxy Statement - Information for this item is incorporated by reference from the **2024 Proxy Statement**[163](index=163&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters](index=73&type=section&id=Item%2012%2E%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholders%20Matters) Security ownership information is incorporated by reference from the 2024 Proxy Statement, detailing outstanding awards and shares available for future issuance under equity plans Equity Compensation Plan Information as of Dec 31, 2023 | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 940,106 | N/A | 1,679,149 | | Total | 940,106 | N/A | 1,679,149 | [Certain Relationships and Related Transactions, and Director Independence](index=73&type=section&id=Item%2013%2E%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the 2024 Proxy Statement under specific headings related to related party transactions and director independence - Information for this item is incorporated by reference from the **2024 Proxy Statement**[199](index=199&type=chunk) [Principal Accounting Fees and Services](index=74&type=section&id=Item%2014%2E%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the 2024 Proxy Statement under the heading \"Appointment of Independent Registered Public Accounting Firm\" - Information for this item is incorporated by reference from the **2024 Proxy Statement**[201](index=201&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=75&type=section&id=Item%2015%2E%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, referencing financial statements and noting the omission of schedules, along with an index of exhibits - This item provides a list of financial statements and exhibits filed with the **Form 10-K**[206](index=206&type=chunk)[207](index=207&type=chunk) [Form 10-K Summary](index=75&type=section&id=Item%2016%2E%20Form%2010-K%20Summary) This report does not include a Form 10-K summary - The report indicates **\"None\"** for this item[208](index=208&type=chunk)

Jamie Donahue, President and Chief Technology Officer stated, "The Company is actively executing on its technology transformation plan to accelerate growth opportunities and enhance the competitive advantage that already exists in our unique position in the higher education market. We have rewritten and unified our platform infrastructure to seamlessly power both our student disbursement and BaaS experiences going forward. This investment in modernization will reduce operational costs and fraud risk, accele ...

Financial Data and Key Metrics Changes - Operating revenues for the third quarter totaled $14.7 million, a 14% quarter-over-quarter improvement compared to the previous quarter [11] - Core operating expenses were $15.5 million for the quarter, reflecting a 16% year-over-year improvement driven by profit enhancement plan initiatives [79] - Core loss before interest, taxes, depreciation, and amortization totaled negative $0.8 million for Q3 2023, showing sequential improvement from negative $0.9 million in Q2 2023 [74] Business Line Data and Key Metrics Changes - Average service deposits totaled $853 million for Q3 2023, down from $922 million in Q2 2023 and from $1.6 billion in Q3 2022, primarily due to interest rate sensitivity [14] - New checking account sign-ups in the higher education vertical improved by 85% over Q2 2023 and 6% year-over-year [83] - Interchange and card revenue totaled $2.7 million for Q3 2023, down from $5.3 million in the prior year [41] Market Data and Key Metrics Changes - Spending totaled $737 million for Q3 2023, an increase from $658 million in Q2 2023 and from $683 million in Q3 2022 [42] - Average spend per 90-day active accounts in the higher education vertical was $2,267, and $1,523 in the BaaS vertical, both significantly up compared to the previous quarter and year [42] Company Strategy and Development Direction - The company plans to double down on its student business, which is seen as a unique opportunity, while also looking to opportunistically expand its BaaS strategy [40][113] - A move to First Carolina Bank is expected to improve interchange rates for the higher education vertical by approximately 20 basis points [6] - The company aims to achieve full profit enhancement plan savings within the first half of 2024 [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the tough year for the fintech industry due to unprecedented interest rate hikes and their impact on the deposit base [38] - There is optimism about future growth potential in the higher education segment, with significant untapped opportunities identified [85] - The company is focused on building a sustainable growth model and aims to return to $20 million plus in EBITDA over the next 24 to 36 months [114] Other Important Information - Liquidity remained strong with $8.8 million in cash and no debt as of September 30, 2023 [16] - The company processed over $3.6 billion of student financial aid refund disbursements during Q3 2023, compared to $3.4 billion in Q3 2022 [83] Q&A Session Summary Question: What are the thoughts on the buyback authorization? - Management confirmed that buyback is a strategic alternative actively considered for 2024, focusing on the highest return to shareholders [115] Question: How should we think about deposit growth in the higher education and BaaS sides? - Management indicated that chasing rate-sensitive deposits does not make sense currently, and they are not focused on deposit growth in that area [119] Question: Can you provide insights on the technology communications spending? - Management explained that the increase in technology spending is due to seasonality and increased transaction volume during peak quarters [89]

201 King of Prussia Road, Suite 650 Wayne, Pennsylvania 19087 (Address of Principal Executive) (Zip-Code) | --- | --- | --- | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|----------------------|-------|---------------------| | ASSETS | | September 30, 2023 | | December 31, 2022 | | C ...

BM Technologies, Inc. (NYSE:BMTX) Q2 2023 Earnings Conference Call August 22, 2023 5:00 PM ET Company Participants Brian Prenoveau - Investor Relations Luvleen Sidhu - Chief Executive Officer Jim Dullinger - Chief Financial Officer Raj Singh - Co-Chief Executive Officer Conference Call Participants Mike Grondahl - Northland Securities Greg Pendy - Chardan Bill Dezellem - Tieton Capital Operator Good afternoon, everyone, and welcome to the BM Technologies Second Quarter 2023 Earnings Call. Please note that t ...

201 King of Prussia Road, Suite 650 Wayne, Pennsylvania 19087 (Address of Principal Executive) (Zip-Code) (Former name, former address, and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: 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 r ...

BM Technologies, Inc. (NYSE:BMTX) Q1 2023 Earnings Conference Call May 22, 2023 5:00 PM ET Company Participants Brian Prenoveau - IR Luvleen Sidhu - CEO Jim Dullinger - CFO Raj Singh - Co-CEO Conference Call Participants Brian Dobson - Chardan Capital Markets Mike Grondahl - Northland Securities Bill Dezellem - Tieton Capital Operator Good afternoon, everyone, and welcome to the BM Technologies First Quarter 2023 Earnings Call. Please note that this event is being recorded. [Operator Instructions] At this t ...

Basis of Presentation Management has performed this required assessment as of May 22, 2023 including consideration of the effect of the DPSA Second Amendment 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 $21.5 million at May 22, 2024. These interim unaudited consolidated financial statements should be read in c ...