WM TECHNOLOGY, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read together with our condensed consolidated financial
statements and the related notes to those statements included in Item 1
"Financial Statements" in this Quarterly Report on Form 10-Q. In addition to
historical financial information, the following discussion and analysis contains
forward-looking statements that involve risks, uncertainties, and assumptions.
Our actual results and timing of selected events may differ materially from
those anticipated in these forward-looking statements as a result of many
factors, including those discussed under "Risk Factors" and included elsewhere
herein and in our Annual Report on Form 10-K for the year ended December 31,
2021.

Overview

On June 16, 2021, WM Holding Company, LLC (when referred to in its pre-Business
Combination capacity, "Legacy WMH" and following the Business Combination, "WMH
LLC") completed its previously announced business combination with Silver Spike
Acquisition Corp ("Silver Spike"). Legacy WMH was deemed to be the accounting
acquirer under accounting principles generally accepted in the United States of
America ("GAAP"). In connection with the closing, Silver Spike changed its name
to WM Technology, Inc. As used in this Quarterly Report on Form 10-Q, unless the
context requires otherwise, references to the "Company," "we," "us," and "our,"
and similar references refer to WM Technology, Inc, and its subsidiaries
following the Business Combination and to Legacy WMH prior to the Business
Combination.

WM Technology, Inc. is one of the oldest and largest marketplace and technology
solutions providers exclusively servicing the cannabis industry, primarily
consumers, retailers and brands in the United States state-legal and Canadian
cannabis markets. Our business primarily consists of our commerce-driven
marketplace, Weedmaps, and our monthly subscription software offering, WM
Business. Our Weedmaps marketplace provides information on the cannabis plant
and the industry and advocates for legalization. The Weedmaps marketplace
provides consumers with information regarding cannabis retailers and brands, as
well as the strain, pricing, and other information regarding locally available
cannabis products, through our website and mobile apps, permitting product
discovery, access to deals and discounts, and reservation of products for pickup
by consumers or delivery to consumers by participating retailers. We believe the
size of our user base and the frequency of consumption of cannabis of that user
base is highly valuable to our clients and results in clients paying for our
services. WM Business, our subscription package, is a comprehensive set of
eCommerce and compliance software solutions catered towards cannabis retailers,
delivery services and brands where clients receive access to a standard listing
page and our suite of software solutions, including WM Orders, WM Dispatch, WM
Store, WM Dashboard, our WM Connectors (integrations and API platform), as well
as access to our WM Exchange products, where available. We charge a monthly fee
to clients for access to our WM Business subscription package and then offer
other add-on products for additional fees, including our featured listings and
our Sprout (customer relationship management), Cannveya (delivery and logistics
software) and Enlighten (software, digital signage services and multi-media
offerings) solutions. We sell our WM Business offering in the United States,
currently offer some of our WM Business solutions in Canada (including a third
party integration that enables our clients to accept payments from consumers,
currently available only in Canada) and have a limited number of non-monetized
listings in several other countries, including Austria, Germany, the
Netherlands, Spain and Switzerland. We operate in the United States, Canada, and
other foreign jurisdictions where medical and/or adult cannabis use is legal
under state or applicable national law. We are headquartered in Irvine,
California.

We were founded in 2008 and operate a leading online marketplace with a
comprehensive set of eCommerce and compliance software solutions sold to
retailers and brands in the U.S. state-legal and Canadian cannabis markets. The
Company's mission is to power a transparent and inclusive global cannabis
economy. We address the challenges facing both consumers seeking to understand
cannabis products and businesses who serve cannabis patients and customers in a
legally compliant fashion with our Weedmaps marketplace and WM Business software
solutions. Over the past 13 years, we have grown the Weedmaps marketplace to
become a premier destination for cannabis consumers to discover and browse
information regarding cannabis and cannabis products, permitting product
discovery and order-ahead for pickup or delivery by participating retailers. WM
Business is a set of eCommerce-enablement tools designed to help our retailer
and brand clients get the best out of their Weedmaps experience, while creating
labor efficiency and managing their compliance needs.

We have grown the Weedmaps marketplace to become the premier destination for
cannabis consumers to discover and browse information regarding cannabis and
cannabis products with 17.4 million monthly active users ("MAUs") as of June 30,
2022 on the demand side and 5,537 and 5,282 average monthly paying business
clients during the three and six months ended June 30, 2022, respectively, on
the supply-side of our marketplace, see "-Monthly Active Users" below for
additional information regarding MAUs. These paying clients include retailers,
brands and other client types (such as doctors). Further, these clients, who can
choose to purchase multiple listings solutions for each business, had purchased
over 9,400 listing pages as of June 30, 2022 (of the over 17,600 listing pages
on the marketplace). The Weedmaps marketplace provides consumers with
information regarding cannabis retailers and brands, as well as the strain,
pricing, and other information regarding locally

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available cannabis products, through our website and mobile apps, permitting
product discovery and order-ahead for pickup or delivery by participating
retailers. Our weedmaps.com site, our iOS Weedmaps mobile application and our
Android Weedmaps mobile application also have educational content including news
articles, information about cannabis strains, a number of "how-to" guides,
policy white-papers and research to allow consumers to educate themselves on
cannabis and its history, uses and legal status. While consumers can discover
cannabis products, brands, and retailers on our site, we neither sell (or
fulfill purchases of) cannabis products, nor do we process payments for cannabis
transactions across our marketplace or SaaS solutions.

Costs for business combinations and public companies

On June 16, 2021, Silver Spike consummated the business combination (the
"Business Combination") pursuant to the certain Agreement and Plan of Merger,
dated December 10, 2020 (the "Merger Agreement"), by and among Silver Spike,
Silver Spike Merger Sub LLC, a Delaware limited liability company and a wholly
owned direct subsidiary of Silver Spike Acquisition Corp. ("Merger Sub"), Legacy
WMH, and Ghost Media Group, LLC, a Nevada limited liability company, solely in
its capacity as the initial holder representative (the "Holder Representative").
Pursuant to the Merger Agreement, Merger Sub merged with and into Legacy WMH,
whereupon the separate limited liability company existence of Merger Sub ceased
and Legacy WMH became the surviving company and continued in existence as a
subsidiary of Silver Spike. On the Closing Date, and in connection with the
Closing, Silver Spike changed its name to WM Technology, Inc. Legacy WMH was
deemed to be the accounting acquirer in the Business Combination based on an
analysis of the criteria outlined in Accounting Standards Codification 805.
While Silver Spike was the legal acquirer in the Business Combination, because
Legacy WMH was deemed the accounting acquirer, the historical financial
statements of Legacy WMH became the historical financial statements of the
combined company, upon the Closing.

The Business Combination was accounted for as a "reverse recapitalization." A
reverse recapitalization does not result in a new basis of accounting, and the
financial statements of the combined entity represent the continuation of the
financial statements of Legacy WMH in many respects. Under this method of
accounting, Silver Spike was treated as the "acquired" company for financial
reporting purposes. For accounting purposes, Legacy WMH was deemed to be the
accounting acquirer in the transaction and, consequently, the transaction was
treated as a recapitalization of Legacy WMH (i.e., a capital transaction
involving the issuance of stock by Silver Spike for the stock of Legacy WMH).
Accordingly, the consolidated assets, liabilities and results of operations of
Legacy WMH became the historical financial statements of the combined company,
and Silver Spike's assets, liabilities and results of operations were
consolidated with Legacy WMH beginning on the acquisition date. Operations prior
to the Business Combination are presented as those of Legacy WMH. The net assets
of Silver Spike were recognized at historical cost (which are consistent with
carrying value), with no goodwill or other intangible assets recorded.

As a consequence of the Business Combination, Legacy WMH became the successor to
an SEC-registered and Nasdaq-listed company which requires us to hire additional
personnel and implement procedures and processes to address public company
regulatory requirements and customary practices. We have and expect to continue
to incur additional annual expenses as a public company for, among other things,
directors' and officers' liability insurance, director fees and additional
internal and external accounting, legal and administrative resources, including
increased audit and legal fees.

Key operating and financial metrics

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

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                                              Three Months Ended June 30,                  Six Months Ended June 30,
                                               2022                  2021                  2022                  2021
                                                   (dollars in thousands, except for revenue per paying client)
Revenues                                 $       58,294          $   46,931          $      115,746          $   88,085
Net income (loss)                        $       19,848          $   16,837          $      (11,385)         $   24,568
EBITDA(1)                                $       20,996          $   17,433          $       (8,040)         $   26,407
Adjusted EBITDA(1)                       $         (595)         $    8,503          $       (1,548)         $   17,477
Average monthly revenue per paying
client(2)                                $        3,509          $    3,706          $        3,652          $    3,609
Average monthly paying clients(3)                 5,537               4,221                   5,282               4,068
MAUs (in thousands)(4)                           17,402              12,302                  17,402              12,302


___________________________

(1)For further information about how we calculate EBITDA and Adjusted EBITDA as
well as limitations of its use and a reconciliation of EBITDA and Adjusted
EBITDA to net income, see "-EBITDA and Adjusted EBITDA" below.
(2)Average monthly revenue per paying client is defined as the average monthly
revenue for any particular period divided by the average monthly paying clients
in the same respective period.
(3)Average monthly paying clients are defined as the average of the number of
paying clients billed in a month across a particular period (and for which
services were provided).
(4)See "-Monthly Active Users" below for additional information regarding MAUs.

revenue

We offer WM Business subscriptions, which include access to the Weedmaps
marketplace and certain SaaS solutions. As add-ons for additional fees, we offer
other products, including featured listings, placements, promoted deals, nearby
listings, other display advertising, customer relationship management, digital
menus, and delivery and logistics services. Our WM Business subscriptions
generally have one-month terms that automatically renew unless notice of
cancellation is provided in advance. We have a fixed inventory of featured
listing and display advertising in each market, and price is generally
determined through a competitive auction process that reflects local market
demand, though we are testing a more dynamic, performance-based pricing model
for these solutions across several markets. For clients that pay us in advance
for listing and other services we record deferred revenue and recognize revenue
over the applicable subscription term.

EBITDA and Adjusted EBITDA

To provide investors with additional information regarding our financial
results, we have disclosed EBITDA and Adjusted EBITDA, both of which are
non-GAAP financial measures that we calculate as net income (loss) before
interest, taxes and depreciation and amortization expense in the case of EBITDA
and further adjusted to exclude stock-based compensation, change in fair value
of warrant liability, transaction related bonuses, transaction costs, legal
settlements and other non-cash, unusual and/or infrequent costs in the case of
Adjusted EBITDA. Below we have provided a reconciliation of net (loss) income
(the most directly comparable GAAP financial measure) to EBITDA and from EBITDA
to Adjusted EBITDA.

We present EBITDA and Adjusted EBITDA because these metrics are a key measure
used by our management to evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the allocation of
investment capacity. Accordingly, we believe that EBITDA and Adjusted EBITDA
provide useful information to investors and others in understanding and
evaluating our operating results in the same manner as our management.

EBITDA and Adjusted EBITDA have limitations as an analytical tool and should not be viewed in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:

•although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized may have to be replaced in the future, and both EBITDA
and Adjusted EBITDA do not reflect cash capital expenditure requirements for
such replacements or for new capital expenditure requirements;

•EBITDA and Adjusted EBITDA do not reflect changes or liquidity requirements for our working capital needs; and

•EBITDA and Adjusted EBITDA do not reflect tax payments that may represent a reduction in the cash available to us.

Because of these limitations, you should consider EBITDA and Adjusted EBITDA
alongside other financial performance measures, including net income and our
other GAAP results.

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A reconciliation of net income (loss) to non-GAAP EBITDA and Adjusted EBITDA is
as follows:

                                              Three Months Ended June 30,                 Six Months Ended June 30,
                                                2022                  2021                 2022                  2021
                                                                          (in thousands)
Net income (loss)                         $       19,848          $  16,837          $      (11,385)         $  24,568
Benefit from income taxes                         (1,310)              (392)                 (3,058)              (151)
Depreciation and amortization expenses             2,458                988                   6,403              1,990
EBITDA                                            20,996             17,433                  (8,040)            26,407
Stock-based compensation                           8,094             19,433                  15,611             19,433

Change in fair value of option liability (32,234) (37,791)

                (14,015)           (37,791)
Transaction related bonuses                        1,073              1,550                   3,030              1,550
Transaction costs                                      -                  -                     251                  -
Legal settlements and other legal costs              925                  -                   1,064                  -
Warrant transaction costs                              -              5,506                       -              5,506
Impairment of right-of-use assets                    551              2,372                     551              2,372
Adjusted EBITDA                           $         (595)         $   8,503          $       (1,548)         $  17,477


Average monthly revenue per paying customer

Average monthly revenue per paying client measures how much clients, for the
period of measurement, are willing to pay us for our subscription and additional
offerings and the efficiency of the bid-auction process for our featured
listings placements. We calculate this metric by dividing the average monthly
revenue for any particular period by the average monthly number of paying
clients in the same respective period.

                                            Three Months Ended June 30,     

Six months ended June 30th,

                                               2022              2021                2022                 2021

Average monthly revenue per paying customer $3,509 $3,706

$3,652 $3,609

Average monthly paying customers

We define average monthly paying clients as the monthly average of clients
billed each month over a particular period (and for which services were
provided). Our paying clients include both individual cannabis businesses as
well as retail sites or businesses within a larger organization that have
independent relationships with us, many of whom are owned by holding companies
where decision-making is decentralized such that purchasing decisions are made,
and relationships with us are located, at a lower organizational level. In
addition, any client may choose to purchase multiple listing solutions for each
of their retail sites or businesses. Average monthly paying clients for the
three months ended June 30, 2022 increased approximately 31% to 5,537 average
monthly paying clients from 4,221 average monthly paying clients in the same
period in 2021. Average monthly paying clients for the six months ended June 30,
2022 increased approximately 30% to 5,282 average monthly paying clients from
4,068 average monthly paying clients in the same period in 2021. The increase in
average monthly paying clients in the three and six months ended June 30, 2022
as compared to the same periods in 2021 was primarily due to broad increases
throughout our Featured Listing product, WM Business subscription offering and
other ad solutions.

                                                   Three Months Ended June 30,                         Six Months Ended June 30,
                                                 2022                        2021                  2022                          2021
Average monthly paying clients                   5,537                      4,221                   5,282                        4,068


Monthly active users

In any given period, we calculate our monthly active users by determining the
total number of unique users who opened our Weedmaps mobile app or gained access
to our Weedmaps.com website during the final calendar month of the period. This
number has been reported as Monthly Active Users ("MAUs"). This statistic
includes users who gain access to the website through paid advertising channels.
In the second quarter of 2022, our board of directors received an internal
complaint regarding the calculation, definition, and reporting of our MAUs. In
response, the board of directors formed a special committee (the "Special
Committee") of independent directors to conduct an internal investigation with
the assistance of outside counsel. As a result of this internal investigation,
we have determined to provide the following information.

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As we have previously disclosed, one of the ways in which we acquire users is
through paid advertising. To an increasing degree over time, growth of our
monthly active users, reported as MAUs, has been driven by the purchase of
pop-under advertisements, which are marketing advertisements on third party
websites that automatically present our platform on users' screens in certain
circumstances. Our internal data suggests that the vast majority of users who
are directed to weedmaps.com via pop-under advertisements close the site without
clicking on any links. Based on management's review, users whose access to the
website resulted from these pop-under advertisements represented approximately
65% of our MAUs as of June 30, 2022, and 54%, 50% and 54% of our MAUs as of
March 31, 2022, December 31, 2021 and September 30, 2021, respectively.

Our management has employed pop-under ads and other digital marketing strategies based on the belief that they provide a cost-effective means of promoting the weedmaps.com website and Weedmaps mobile apps. However, we expect to shift our marketing spend over the coming months to use less pop-under advertising.

In addition, there are inherent limitations on the ability of online platforms
to identify unique, rather than repeat, users across sessions. In particular,
incognito browsing, usage across devices or mobile and internet platforms,
blocking or deleting cookies and IP addresses or other similar methods employed
by users limits our ability to identify unique users and, as a result, we
believe it is likely that our MAUs may include a significant number of repeat
underlying users.

Prior to and in the course of the internal investigation described above, we
have continued to review user engagement metrics to determine which metrics may
be most useful for investors in evaluating our evolving business and quarterly
results of operations, and we intend to update investors on those efforts in
connection with the results of operations for the quarter ending September 30,
2022.

The information described above, which is currently under further consideration by the Special Committee, is not expected to affect our GAAP financial results or the reporting or disclosure of any non-GAAP financial measures currently released.



                                As of June 30,
                            2022                2021
MAUs (in thousands)       17,402               12,302



For information on risks associated with reliance on specific metrics, including MAUs, see “Part II Item 1A. Risk Factors” below.

Factors affecting our performance

growth of our Two-sided Weedmaps marketplace

We have historically grown through and intend to focus on continuing to grow
through the expansion of our two-sided marketplace, which occurs through growth
of the number and type of businesses and consumers that we attract to our
platform. We believe that expansion of the number and types of cannabis
businesses that choose to list on our platform will continue to make our
platform more compelling for consumers and drive traffic and consumer
engagement, which in turn will make our platform more valuable to cannabis
businesses.

Growth and retention of our paying customers

Our revenue grows primarily through acquiring and retaining paying clients and
increasing the revenue per paying client over time. We have a history of
attracting new paying clients and increasing their annual spend with us over
time, primarily due to the value they receive once they are onboarded and able
to take advantage of the benefits of participating in our two-sided marketplace
and leveraging our software solutions. Our monthly net dollar retention, which
is defined as total revenue from clients in a given month who were paying
clients in the immediately preceding month, averaged at 98% in the first half of
2022.

Prices of certain commodity products, including gas prices, are historically
volatile and subject to fluctuations arising from changes in domestic and
international supply and demand, labor costs, competition, market speculation,
government regulations, trade restrictions and tariffs, the effects of the
coronavirus (COVID-19) pandemic and Russia's initiation of military action
against Ukraine. Increasing prices in the component materials for the goods or
services of our clients may impact their ability to maintain or increase their
spend with us and their ability to pay their invoices on time. Rapid and
significant changes in commodity prices, such as fuel, may negatively affect our
revenue if our clients are unable to mitigate inflationary increases through
various customer pricing actions and cost reduction initiatives. This could also
negatively impact our net dollar retention and collections on our accounts
receivable.

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Regulation and maturation of the cannabis markets

We believe that we will have significant opportunities for greater growth as
more jurisdictions legalize cannabis for medical and/or adult-use and the
regulatory environment continues to develop. Thirty-eight U.S. states, the
District of Columbia, Puerto Rico, and several U.S. territories have legalized
some form of whole-plant cannabis cultivation, sales, and use for certain
medical purposes. Nineteen of those states and the District of Columbia have
also legalized cannabis use by adults for non-medical or adult-use purposes, and
several other states are at various stages of similar legalization measures. We
intend to explore new expansion opportunities as additional jurisdictions
legalize cannabis for medical or adult use and leverage our business model
informed by our 13-year operating history to enter new markets.

We also have a significant opportunity to monetize transactions originating from
users engaging with a retailer on the Weedmaps marketplace or tracked via one of
our WM Business solutions. Given U.S. federal prohibitions on plant-touching
businesses and our current policy not to participate in the chain of commerce
associated with the sale of cannabis products, we do not charge take-rates or
payment fees for transactions originating from users who engage with a retailer
on the Weedmaps platform or tracked via one of our WM Business solutions. A
change in U.S. federal regulations could result in our ability to engage in such
monetization efforts without adverse consequences to our business.

Our long-term growth depends on our ability to successfully capitalize on new
and existing cannabis markets. Each market must reach a critical mass of both
cannabis businesses and consumers for listing subscriptions, advertising
placements and other solutions to have meaningful appeal to potential clients.
As regulated markets mature and as we incur expenses to attract paying clients
and convert non-paying clients to paying clients, we may generate losses in new
markets for an extended period.

Furthermore, we compete with cannabis-focused and general two-sided
marketplaces, internet search engines, and various other newspaper, television
and media companies and other software providers. We expect competition to
intensify in the future as the regulatory regime for cannabis becomes more
settled and the legal market for cannabis becomes more accepted, which may
encourage new participants to enter the market, including established companies
with substantially greater financial, technical and other resources than
existing market participants. Our current and future competitors may also enjoy
other competitive advantages, such as greater name recognition, more offerings
and larger marketing budgets.

brand awareness and reputation

We believe that maintaining and enhancing our brand identity and our reputation
is critical to maintaining and growing our relationships with clients and
consumers and to our ability to attract new clients and consumers. Historically,
a substantial majority of our marketing spending was on out-of-home advertising
on billboards, buses and other non-digital outlets. Starting in 2019, consistent
with the overall shift in perceptions regarding cannabis, a number of
demand-side digital advertising platforms allowed us to advertise online. We
also invested in growing our internal digital performance advertising team. We
believe there is an opportunity to improve market efficiency through digital
channels and expect to shift our marketing spending accordingly. Over the longer
term, we expect to shift and accelerate our marketing spend to additional online
and traditional channels, such as broadcast television or radio, as they become
available to us.

Negative publicity, whether or not justified, relating to events or activities
attributed to us, our employees, clients or others associated with any of these
parties, may tarnish our reputation and reduce the value of our brand. Given our
high visibility and relatively long operating history compared to many of our
competitors, we may be more susceptible to the risk of negative publicity.
Damage to our reputation and loss of brand equity may reduce demand for our
platform and have an adverse effect on our business, operating results and
financial condition. Moreover, any attempts to rebuild our reputation and
restore the value of our brand may be costly and time consuming, and such
efforts may not ultimately be successful.

We also believe that the importance of our brand recognition and reputation will
continue to increase as competition in our market continues to develop. If our
brand promotion activities are not successful, our operating results and growth
may be adversely impacted.

Investments in Growth

We intend to continue to make targeted organic and inorganic investments to grow our sales and scale operations to support this growth.

Given our long operating history in the United States and the strength of our
network, often businesses will initially list on our platform without targeted
sales or marketing efforts by us. However, we plan to accelerate our investments
in marketing to maintain and increase our brand awareness through both online
and offline channels. We also plan to invest in expanding our business listings
thereby enhancing our client and consumer experience, and improving the depth
and quality of information provided on our platform. We also intend to continue
to invest in several areas to continue enhancing the functionality of our WM
Business offering. We expect significant near-term investments to enhance our
data assets and evolve our current listings

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and software offerings for our branded customers, among others. We anticipate making such investments to be able to capitalize on the rapidly growing cannabis market.

On January 14, 2022, we acquired Eyechronic LLC ("Eyechronic") d/b/a Enlighten,
a Delaware limited liability company and a provider of software, digital signage
services and multi-media offerings to dispensaries and brands. We are continuing
to integrate Eyechronic and our other acquisitions and will continue to invest
in them appropriately to scale during this fiscal year 2022.

On September 3, 2021, the Company acquired certain assets of the Sprout business
("Sprout"), a leading, cloud-based customer relationship management ("CRM") and
marketing platform for the cannabis industry.

On September 29, 2021, the Company acquired all of the equity interests of
Transport Logistics Holding Company, LLC ("TLH"), which is the parent company of
Cannveya & CannCurrent. Cannveya is a logistics platform that enables the
compliant delivery of cannabis and CannCurrent is a technology integrations and
connectors platform facilitating custom integrations with third party technology
providers.

As operating expenses and capital expenditures fluctuate over time, we may accordingly experience an adverse impact on our results of operations and cash flows in the near term.

Components of our earnings situation

revenues

We offer WM Business subscriptions, which include access to the Weedmaps
marketplace and certain SaaS solutions. As add-ons for additional fees, we offer
other products, including featured listings, placements, promoted deals, nearby
listings, other display advertising, customer relationship management, digital
menus, and delivery and logistics services. Our WM Business subscriptions
generally have one-month terms that automatically renew unless notice of
cancellation is provided in advance. We have a fixed inventory of featured
listing and display advertising in each market, and price is generally
determined through a competitive auction process that reflects local market
demand, though we are testing a more dynamic, performance-based pricing model
for these solutions across several markets. For clients that pay us in advance
for listing and other services we record deferred revenue and recognize revenue
over the applicable subscription term.

cost of revenue

Cost of sales consists primarily of web hosting, internet services, credit card processing costs and inventory costs related to multimedia offerings.

Sales and Marketing Expenses

Selling and marketing expenses consist of salaries, benefits, travel expense and
incentive compensation for our sales and marketing employees. In addition, sales
and marketing expenses include business acquisition marketing, events cost, and
branding and advertising costs. We expect our sales and marketing expenses to
increase on an absolute basis as we enter new markets. Over the longer term, we
expect sales and marketing expense to increase in a manner consistent with
revenue growth, however, we may experience fluctuations in some periods as we
enter and develop new markets or have large one-time marketing projects.

Product development expenses

Product development costs consist of salaries and benefits for employees,
including engineering and technical teams who are responsible for building new
products, as well as maintaining and improving existing products. Product
development costs that do not meet the criteria for capitalization are expensed
as incurred. The majority of our new software development costs have
historically been expensed. We believe that continued investment in our platform
is important for our growth and expect our product development expenses will
increase in a manner consistent with revenue growth as our operations grow.

General and administrative expenses

General and administrative expenses consist primarily of payroll and related
benefit costs for our employees involved in general corporate functions
including our senior leadership team as well as costs associated with the use by
these functions of software and facilities and equipment, such as rent,
insurance, and other occupancy expenses. General and administrative expenses
also include professional and outside services related to legal and other
consulting services. General and administrative expenses are primarily driven by
increases in headcount required to support business growth and meeting our
obligations as a public company. We expect general and administrative expenses
to decline as a percentage of revenue as we scale our business and leverage
investments in these areas.

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Depreciation and amortization expenses

Depreciation and amortization expenses primarily consist of depreciation on
computer equipment, furniture and fixtures, leasehold improvements, capitalized
software development costs and amortization of purchased intangibles. We expect
depreciation and amortization expenses to increase on an absolute basis for the
foreseeable future as we scale our business.

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operating results

The following tables present our results of operations for the periods presented and express the relationship of certain items as a percentage of net sales for those periods. Period comparisons of financial results are not necessarily indicative of future results.

                                                Three Months Ended June 30,                 Six Months Ended June 30,
                                                  2022                  2021                 2022                  2021
                                                                            (in thousands)
Revenues                                    $       58,294          $  46,931          $      115,746          $  88,085

Operating expenses:
Cost of revenues                                     3,858              1,908                   7,598              3,765
Sales and marketing                                 22,123             15,271                  44,005             24,388
Product development                                 13,263             10,271                  26,353             18,139
General and administrative                          29,610             33,770                  58,665             47,136
Depreciation and amortization                        2,458                988                   6,403              1,990
Total operating expenses                            71,312             62,208                 143,024             95,418
Operating loss                                     (13,018)           (15,277)                (27,278)            (7,333)
Other income (expenses)
Change in fair value of warrant liability           32,234             37,791                  14,015             37,791
Other expense, net                                    (678)            (6,069)                 (1,180)            (6,041)
Income (loss) before income taxes                   18,538             16,445                 (14,443)            24,417
Benefit from income taxes                           (1,310)              (392)                 (3,058)              (151)
Net income (loss)                                   19,848             16,837                 (11,385)            24,568
Net income (loss) attributable to
noncontrolling interests                             8,156             12,574                  (9,184)            20,305
Net income (loss) attributable to WM
Technology, Inc.                            $       11,692          $   4,263          $       (2,201)         $   4,263



                                                 Three Months Ended June 30,                  Six Months Ended June 30,
                                                 2022                  2021                  2022                  2021
Revenues                                             100  %                100  %                100  %                100  %

Operating expenses:
Cost of revenues                                       7  %                  4  %                  7  %                  4  %
Sales and marketing                                   38  %                 33  %                 38  %                 28  %
Product development                                   23  %                 22  %                 23  %                 21  %
General and administrative                            51  %                 72  %                 51  %                 54  %
Depreciation and amortization                          4  %                  2  %                  6  %                  2  %
Total operating expenses                             122  %                133  %                124  %                108  %
Operating (loss) income                              (22) %                (33) %                (24) %                 (8) %
Other income (expenses)
Change in fair value of warrant liability             55  %                 81  %                 12  %                 43  %
Other income, net                                     (1) %                (13) %                 (1) %                 (7) %
Income (loss) before income taxes                     32  %                 35  %                (12) %                 28  %
Benefit from income taxes                             (2) %                 (1) %                 (3) %                  0  %
Net income (loss)                                     34  %                 36  %                (10) %                 28  %
Net income (loss) attributable to
noncontrolling interests                              14  %                 27  %                 (8) %                 23  %
Net income (loss) attributable to WM
Technology, Inc.                                      20  %                  9  %                 (2) %                  5  %


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Comparison of the past three months June 30, 2022 and 2021

Revenues

                   Three Months Ended June 30,                  Change
                       2022                   2021          ($)         (%)
                                 (dollars in thousands)
Revenues    $       58,294                 $ 46,931      $ 11,363       24


Total revenues increased by $11.4 million, or 24% for the three months ended
June 30, 2022 compared to the same period in 2021. The increase was primarily
driven by a 31% increase in average monthly paying clients. Our growth in
average monthly paying clients primarily reflects growth in our featured listing
product of $3.8 million, WM Business subscription offering of $0.9 million and
other ad and SaaS solutions of $6.6 million, which includes revenues
attributable to companies we acquired since the second quarter of 2021. For the
three months ended June 30, 2022, featured listing product, WM Business
subscription offering and other ad and SaaS solutions represented 51%, 20% and
29% of our total revenues, respectively.

Cost of Revenues

                            Three Months Ended June 30,                   Change
                           2022                         2021          ($)         (%)
                                           (dollars in thousands)
Cost of revenues     $       3,858                   $ 1,908       $ 1,950       102
Gross margin                    93   %                    96  %


Cost of revenues was $3.9 million for the three months ended June 30, 2022
compared to $1.9 million for the same period in 2021. The increase was primarily
related to an increase of $1.6 million attributable to inventory costs of
certain advertising revenue as well as the cost of revenue attributable to a
company we acquired in the third quarter of 2021.

Sales and Marketing Expenses

                                        Three Months Ended June 30,                 Change
                                       2022                       2021           ($)        (%)
                                                      (dollars in thousands)
Sales and marketing expenses     $      22,123                 $ 15,271       $ 6,852       45
Percentage of revenue                       38   %                   33  %


Sales and marketing expenses increased by $6.9 million, or 45% for the three
months ended June 30, 2022 compared to the same period in 2021. The increase was
primarily due to increases in personnel-related costs of $4.9 million, branding
and advertising costs of $1.0 million, outside services costs of $0.8 million,
website advertising expense of $0.3 million as more advertising options become
available in the cannabis industry, and travel and entertainment expense of $0.5
million, offset by a decrease in event expense of $1.0 million. The increase in
personnel-related costs was attributable to increased headcount and a $0.8
million of bonus expense related to future bonus payouts in connection with
prior acquisitions, offset by a decrease in stock-based compensation expense of
$1.8 million due to additional stock-based compensation expense recognized in
the 2021 period as a result of the Business Combination.

Product development expenses

                                        Three Months Ended June 30,                 Change
                                       2022                       2021           ($)        (%)
                                                      (dollars in thousands)
Product development expenses     $      13,263                 $ 10,271       $ 2,992       29
Percentage of revenue                       23   %                   22  %


Product development expenses increased by $3.0 million, or 29% for the three
months ended June 30, 2022 compared to the same period in 2021. This increase
was primarily due to an increase in personnel-related costs of $7.0 million and
an increase in outside services of $0.6 million, offset by capitalized software
costs of $4.6 million. The increase in personnel

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The associated costs are mainly due to wage and salary increases $4.8 million and an increase in bonus effort of $1.4 million.

General and administrative expenses

                                                Three Months Ended June 30,                         Change
                                                  2022                  2021               ($)                 (%)
                                                                      (dollars in thousands)
General and administrative expenses         $      29,610           $  33,770          $  (4,160)                (12)
Percentage of revenue                                  51   %              72  %


General and administrative expenses decreased by $4.2 million, or 12% for the
three months ended June 30, 2022 compared to the same period in 2021. This
decrease was primarily due to decreases in personnel-related costs of $9.5
million and impairment of right-of-use assets of $1.8 million, offset by
increases in insurance costs of $2.2 million for additional insurance coverage
as a public company, software costs of $1.2 million, bad debt expense of $1.4
million and professional fees of $2.3 million. The decrease in personnel-related
costs includes a decrease in stock-based compensation expense of $9.1 million as
a result of the additional stock-based compensation expense recognized in the
2021 period as a result of the Business Combination.

Depreciation and amortization expenses

                                               Three Months Ended June 30,                         Change
                                                 2022                  2021               ($)                 (%)
                                                                     (dollars in thousands)
Depreciation and amortization expenses    $        2,458           $     988          $   1,470                 149
Percentage of revenue                                  4   %               2  %


Depreciation and amortization expenses increased $1.5 million, or 149% for the
three months ended June 30, 2022 compared to the same period in 2021. The
increase was primarily due to increases in capitalized software amortization of
$0.9 million and amortization of intangible assets of $0.3 million.

Other income (expense), net

                                             Three Months Ended June 30,                          Change
                                               2022                  2021                 ($)                  (%)
                                                                     (dollars in thousands)
Change in fair value of warrant
liability                                $      32,234           $  37,791                (5,557)                (15)
Other expense, net                                (678)             (6,069)                5,391                 (89)
Other income (expense), net              $      31,556           $  31,722                  (166)                 (1)
Percentage of revenue                               54   %              68  %



Other income (expense), net decreased by $0.2 million for the three months ended
June 30, 2022 compared to the same period in 2021. The decrease in other income
was primarily due to comparatively unfavorable changes in fair value of warrant
liability of $5.6 million, offset by a decrease in other expense, net of $5.4
million primarily attributable to transaction costs of $5.5 million recognized
in the 2021 period related to the Business Combination.




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Comparison of the completed six months June 30, 2022 and 2021

Revenues

                  Six Months Ended June 30,                  Change
                      2022                 2021          ($)         (%)
                                (dollars in thousands)
Revenues    $      115,746              $ 88,085      $ 27,661       31


Total revenues increased by $27.7 million, or 31%, for the six months ended June
30, 2022 compared to the same period in 2021. The increase was driven by a 30%
increase in average monthly paying clients. Our growth in average monthly
revenue per paying client and average monthly paying clients primarily reflects
growth in our featured listing product of $11.5 million, WM Business
subscription offering of $2.7 million and other ad and SaaS solutions of $13.4
million, which includes revenues attributable to companies we acquired since the
second quarter of 2021. For the six months ended June 30, 2022, featured listing
product, WM Business subscription offering and other ad and SaaS solutions
represented 52%, 20% and 28% of our total revenues, respectively.

Cost of Revenues

                            Six Months Ended June 30,                  Change
                           2022                      2021          ($)         (%)
                                         (dollars in thousands)
Cost of revenues     $      7,598                 $ 3,765       $ 3,833       102
Gross margin                   93   %                  96  %


Cost of revenues increased by $3.8 million, or 102%, for the six months ended
June 30, 2022 compared to the same period in 2021. The increase was primarily
related to an increase of $3.1 million attributable to inventory costs of
certain advertising revenue as well as the cost of revenue attributable to a
company we acquired in the third quarter of 2021.

Sales and Marketing Expenses

                                       Six Months Ended June 30,                  Change
                                       2022                    2021           ($)         (%)
                                                     (dollars in thousands)
Sales and marketing expenses     $     44,005               $ 24,388       $ 19,617       80
Percentage of revenue                      38   %                 28  %


Sales and marketing expenses increased by $19.6 million, or 80%, for the six
months ended June 30, 2022 compared to the same period in 2021. The increase was
primarily due to increases in personnel-related costs of $13.8 million, outside
services costs of $2.6 million, branding and advertising expense of $1.5 million
and website advertising expense of $1.3 million. The increase in
personnel-related costs was primarily due to increased headcount, including
increases in salaries and wages of $8.6 million and bonus expense of $4.1
million, which includes $2.0 million of expense related to future bonus payouts
in connection with prior acquisitions.

Product Development Expenses

                                       Six Months Ended June 30,                 Change
                                       2022                    2021           ($)        (%)
                                                    (dollars in thousands)
Product development expenses     $     26,353               $ 18,139       $ 8,214       45
Percentage of revenue                      23   %                 21  %


Product development expenses increased by $8.2 million, or 45% for the six
months ended June 30, 2022 compared to the same period in 2021. The increase was
primarily due to increases in personnel-related costs of $14.9 million and
outside services costs of $1.4 million, offset by an increase in capitalized
software development costs of $8.3 million. The increase in personnel-related
costs was primarily due to increases in salaries, wages and bonus of $11.9
million, due to increased headcount, and stock-based compensation costs of $1.9
million driven by the issuance of restricted stock units to our employees

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in the second half of 2021 and the first half of 2022. Includes bonus expense for the first half of 2022 $0.7 million of expenses related to future bonus payments related to previous acquisitions.

General and administrative expenses

                                             Six Months Ended June 30,                  Change
                                             2022                    2021           ($)         (%)
                                                           (dollars in thousands)
General and administrative expenses    $     58,665               $ 47,136       $ 11,529       24
Percentage of revenue                            51   %                 54  %


General and administrative expenses increased by $11.5 million, or 24%, for the
six months ended June 30, 2022 compared to the same period in 2021. This
increase was primarily due to increases in salaries and wages of $2.7 million,
insurance costs of $5.4 million as a result of additional insurance coverage as
a public company, bad debt expense of $4.0 million due to higher reserves for
past due balances, professional services of $3.5 million and software expense of
$2.6 million. These increases were partially offset by a decrease in stock-based
compensation expense of $4.8 million and a decrease in impairment loss on
right-of-use assets of $1.8 million. The decrease in stock-based compensation
expense was a result of additional stock-based compensation expense recognized
in the 2021 period in connection with the Business Combination.

Depreciation and amortization expenses

                                            Six Months Ended June 30,                           Change
                                             2022                 2021                 ($)                 (%)
                                                                  (dollars in thousands)
Depreciation and amortization expenses $      6,403           $    1,990          $    4,413                  222
Percentage of revenue                             6   %                2  %


Depreciation and amortization expenses increased $4.4 million for the six months
ended June 30, 2022 compared to the same period in 2021. The increase was
primarily due to increases in capitalized software amortization of $2.6 million,
fixed asset depreciation of $0.9 million and intangible asset amortization of
$0.9 million. Capitalized software amortization included accelerated
depreciation of $1.1 million related to discontinued product features of WM
Retail in the first quarter of 2022.

Other (Expense) Income , net
                                           Six Months Ended June 30,                            Change
                                            2022                 2021                  ($)                   (%)
                                                                   (dollars in thousands)
Change in fair value of warrant
liability                             $     14,015           $   37,791                (23,776)                 (63)
Other expense, net                          (1,180)              (6,041)                 4,861                  (80)
Other (expense) income, net           $     12,835           $   31,750                (18,915)                 (60)
Percentage of revenue                           11   %               36  %


Other (expense) income, net decreased by $18.9 million for the six months ended
June 30, 2022 compared to the same period in 2021. The decrease in other
(expense) income, net was primarily due to comparatively unfavorable changes in
fair value of warrant liability of $23.8 million, which was partially offset by
a decrease in other expense, net of $4.9 million, primarily attributable to
transaction costs of $5.5 million recognized in the 2021 period related to the
Business Combination.

Seasonality

Our rapid growth and recent changes in legislation have historically offset
seasonal trends in our business. While seasonality has not had a significant
impact on our results in the past, our clients may experience seasonality in
their businesses which in turn can impact the revenue generated from them. Our
business may become more seasonal in the future and historical patterns in our
business may not be a reliable indicator of future performance.

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liquidity and capital resources

The following tables show our cash, accounts receivable and working capital as of the dates shown:

                            June 30, 2022       December 31, 2021
                                        (in thousands)
Cash                       $       47,604      $           67,777
Accounts receivable, net           27,305                  17,550
Working capital                    45,462                  61,134


As of June 30, 2022, we had cash of $47.6 million. During the second quarter of
2021, we completed the Business Combination, resulting in proceeds of
approximately $80.0 million. Our funds are being used for funding our current
operations and potential strategic acquisitions in the future. We also intend to
increase our capital expenditures to support the organic growth in our business
and operations. We expect to fund our near-term capital expenditures from cash
provided by operating activities. We believe that our existing cash and cash
generated from operations will be sufficient to meet our anticipated cash needs
for at least the next 12 months. However, our liquidity assumptions may prove to
be incorrect, and we could exhaust our available financial resources sooner than
we currently expect. We may seek to raise additional funds at any time through
equity, equity-linked or debt financing arrangements. Our future capital
requirements and the adequacy of available funds will depend on many factors. We
may not be able to secure additional financing to meet our operating
requirements on acceptable terms, or at all.

sources of liquidity

We fund our operations and capital expenditures primarily from cash flows generated from operations.

To the extent existing cash and investments and cash from operations are not
sufficient to fund future activities, we may need to raise additional funds. We
may seek to raise additional funds through equity, equity-linked or debt
financings. If we raise additional funds through the incurrence of indebtedness,
such indebtedness may have rights that are senior to holders of our equity
securities and could contain covenants that restrict operations. Any additional
equity financing may be dilutive to stockholders. We may enter into investment
or acquisition transactions in the future, which could require us to seek
additional equity financing, incur indebtedness, or use cash resources.

Cash Flows

                                                                       Six Months Ended June 30,
                                                                       2022                  2021
                                                                            (in thousands)
Net cash (used in) provided by operating activities              $       (3,814)         $   16,539
Net cash used in investing activities                            $      (10,267)         $     (836)
Net cash (used in) provided by financing activities              $       

(6,092) $56,040

net cash (Used in) Provided by operational activities

Cash from operating activities consists primarily of net income (loss) adjusted
for certain non-cash items, including depreciation and amortization, change in
fair value of warrant liability, impairment charges, stock-based compensation,
provision for doubtful accounts, deferred taxes and the effect of changes in
working capital.

Net cash used in operating activities for the six months ended June 30, 2022 was
$3.8 million, which resulted from a net loss of $11.4 million, together with net
cash outflows of $2.6 million from changes in operating assets and liabilities,
and non-cash items of $10.2 million, consisting of depreciation and amortization
of $6.4 million, fair value of warrant liability of $14.0 million, stock-based
compensation of $15.6 million, deferred income taxes of $3.1 million, provision
for doubtful accounts of $4.7 million and impairment loss on right-of-use asset
of $0.6 million. Net cash outflows from changes in operating assets and
liabilities were primarily due to an increase in accounts receivable of
$13.6 million, partially offset by a decrease in prepaid expenses and other
assets of $2.9 million and an increase in accounts payable and accrued expenses
of $8.9 million. The changes in operating assets and liabilities are mostly due
to fluctuations in timing of cash receipts and payments.

Net cash provided by operating activities for the six months ended June 30, 2021
was $16.5 million, which resulted from net income of approximately
$24.6 million, together with net cash inflows of approximately $5.7 million from
changes in operating assets and liabilities, and non-cash items of
$13.7 million, consisting of depreciation and amortization of $2.0 million, fair
value of warrant liability of $37.8 million, stock-based compensation of
$19.4 million, impairment loss on right-of-use asset of $2.4 million, provision
for doubtful accounts of $0.7 million and deferred income taxes of $0.4 million.
The net cash

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inflows from changes in operating assets and liabilities were primarily due to a
decrease in prepaid expenses and other current assets of $4.4 million, an
increase in accounts payable and accrued expenses of $1.7 million, an increase
in deferred revenue of $1.7 million. These changes were partially offset by an
increase in accounts receivables of $2.1 million. The changes in operating
assets and liabilities are mostly due to fluctuations in timing of cash receipts
and payments.

Net Cash Used in investment activities

Cash used in investing activities in the past six months June 30, 2022 was
$10.3 millionwhat resulted from it $8.6 million Cash payments for purchases of property, plant and equipment, including certain capitalized software development costs, net cash payments for purchases of $0.7 million and cash payments for an acquisition retention release of $1.0 million.

Cash used in investing activities in the past six months June 30, 2021 was
$0.8 million for the purchase of property and equipment.

net cash (Used in) Provided by funding activities

Cash outflows from financing activities for the six months ended June 30, 2022
was $6.1 million, which primarily consists of repayments of insurance premium
financing of $4.3 million and distributions of $1.8 million to the Unit holders
other than the Company.

Net cash used in financing activities for the six months ended June 30, 2021 was
$56.0 million, which resulted from proceeds from the Business Combination of
$80.3 million, distributions of $18.1 million, repurchase of Class B Units of
$5.6 million and repayments of insurance premium financing of $0.4 million.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with
GAAP. The preparation of these consolidated financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, expenses and related disclosures. We evaluate our
estimates and assumptions on an ongoing basis. Our estimates are based on
historical experience and various other assumptions that we believe to be
reasonable under the circumstances. Our actual results could differ from these
estimates.

We believe that the assumptions and estimates associated with revenue
recognition, income taxes, stock-based compensation, capitalized software
development costs, goodwill and intangible assets and fair value measurements to
have the greatest potential impact on our consolidated financial statements.
Therefore, we consider these to be our critical accounting policies and
estimates. For further information on all of our significant accounting
policies, see Note 2 to our condensed consolidated financial statements included
herein.

Revenue Recognition

Our revenues are derived primarily from monthly subscriptions and additional
offerings for access to the Weedmaps platform and SaaS solutions. We recognize
revenue when the fundamental criteria for revenue recognition are met. We
recognize revenue by applying the following steps: the contract with the
customer is identified; the performance obligations in the contract are
identified; the transaction price is determined; the transaction price is
allocated to the performance obligations in the contract; and revenue is
recognized when (or as) we satisfy these performance obligations in an amount
that reflects the consideration we expect to be entitled to in exchange for
those services. We exclude sales taxes and other similar taxes from the
measurement of the transaction price. The determination of the performance
obligations and the timing of satisfaction of such obligations either over time
or at a point-in-time requires us to make significant judgement and estimates.

Substantially all of our revenue is generated by providing standard listing
subscription services and other paid listing subscriptions services, including
featured listings, placements, promoted deals, nearby listings, other display
advertising as well as customer relationship management and delivery and
logistic services. These arrangements are recognized over-time, generally during
a month-to-month subscription period as the products are provided.

income tax

As a result of the Business Combination, WM Technology, Inc. became the sole
managing member of WMH LLC, which is treated as a partnership for U.S. federal
and most applicable state and local income tax purposes. As a partnership, WMH
LLC is not subject to U.S. federal and certain state and local income taxes.
Accordingly, no provision for U.S. federal and state income taxes has been
recorded in the financial statements for the period of January 1 to June 16,
2021 as this period was prior to the Business Combination.

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WM Technology, Inc. is subject to U.S. federal income taxes, in addition to
state and local income taxes with respect to its allocable share of any taxable
income of WMH LLC following the Business Combination. The Company is also
subject to taxes in foreign jurisdictions. Any taxable income or loss generated
by WMH LLC is passed through to and included in the taxable income or loss of
its members, including WM Technology, Inc. following the Business Combination,
on a pro rata basis. WM Technology, Inc. is also subject to taxes in foreign
jurisdictions. Tax laws and regulations are complex and periodically changing
and the determination of our provision for income taxes, including our taxable
income, deferred tax assets and tax receivable agreement liability, requires us
to make significant judgment, assumptions and estimates. In connection with the
Business Combination, the Company entered into a Tax Receivable Agreement
("TRA") with continuing members that provides for a payment to the continuing
members of 85% of the amount of tax benefits, if any, that WM Technology, Inc.
realizes, or is deemed to realize, as a result of redemptions or exchanges of
WMH Units. In connection with such potential future tax benefits resulting from
the Business Combination, the Company has established a deferred tax asset for
the additional tax basis and a corresponding TRA liability of 85% of the
expected benefit. The remaining 15% is recorded within paid-in capital. To date,
no payments have been made with respect to the TRA. Our calculation of the TRA
asset and liability requires estimates of its future qualified taxable income
over the term of the TRA as a basis to determine if the related tax benefits are
expected to be realized. As of June 30, 2022, total net deferred tax assets and
TRA liability were $183.2 million and $142.7 million, respectively.

Stock-Based Compensation

We measure fair value of employee stock-based compensation awards on the date of
grant and allocate the related expense over the requisite service period. The
fair value of restricted stock units ("RSUs") and performance-based restricted
stock units ("PRSUs") is equal to the market price of our Class A common stock
on the date of grant. The fair value of the Class P Units is measured using the
Black-Scholes-Merton valuation model. When awards include a performance
condition that impacts the vesting of the award, we record compensation cost
when it becomes probable that the performance condition will be met. The level
of achievement of such goals in the performance-based restricted stock awards
may cause the actual number of units that ultimately vest to range from 0% to
200% of the original units granted. Forfeitures of stock-based awards are
recognized as they occur. For the three and six months ended June 30, 2022, we
recognized stock-based compensation expense of $8.1 million and $15.6 million,
respectively, and for the three and six months ended June 30, 2021, we
recognized stock-based compensation expense of $19.4 million. See Note 11 to our
condensed consolidated financial statements included herein.

Capitalized software development costs

We capitalize certain costs related to the development and enhancement of the
Weedmaps platform and SaaS solutions. In accordance with authoritative guidance,
we began to capitalize these costs when preliminary development efforts were
successfully completed, management has authorized and committed project funding,
and it was probable that the project would be completed and the software would
be used as intended. Such costs are amortized when placed in service, on a
straight-line basis over the estimated useful life of the related asset,
generally estimated to be three years. Costs incurred prior to meeting these
criteria together with costs incurred for training and maintenance are expensed
as incurred and recorded in product development expenses on our consolidated
statements of operations. Costs incurred for enhancements that were expected to
result in additional features or functionality are capitalized and expensed over
the estimated useful life of the enhancements, generally three years. The
accounting for website and internal-use software costs requires us to make
significant judgement, assumptions and estimates related to the timing and
amount of recognized capitalized software development costs. For the three and
six months ended June 30, 2022, we capitalized $4.5 million and $8.6 million of
costs related to the development of software applications, respectively.

benevolence and intangible assets

Assets and liabilities acquired from acquisitions are recorded at their
estimated fair values. The excess of the purchase price over the estimated fair
values of the net assets acquired, including identifiable intangible assets, is
recorded as goodwill. The accounting for goodwill and intangible assets requires
us to make significant judgement, estimates and assumptions. Significant
estimates and assumptions in valuing acquired intangible assets and liabilities
include projected cash flows attributable to the assets or liabilities, asset
useful lives and discount rates.

Goodwill is not amortized and is subject to annual impairment testing, or
between annual tests if an event or change in circumstance occurs that would
more likely than not reduce the fair value of a reporting unit below its
carrying value. Intangible assets deemed to have finite lives are amortized on a
straight-line basis over their estimated useful lives, where the useful life is
the period over which the asset is expected to contribute directly, or
indirectly, to our future cash flows. Intangible assets are reviewed for
impairment on an interim basis when certain events or circumstances exist. For
amortizable intangible assets, impairment exists when the carrying amount of the
intangible asset exceeds its fair value. At least annually, the remaining useful
life is evaluated. See Note 2 to our consolidated financial statements included
herein.

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Fair Value Measurement

In connection with the Business Combination, we assumed 12,499,993 Public
Warrants and 7,000,000 Private Placement Warrants. As of June 30, 2022,
12,499,973 of the Public Warrants and all of the Private Placement Warrants
remained outstanding . The warrants are measured at fair value under ASC 820 -
Fair Value Measurements. The fair value of the Public Warrants is classified as
Level 1 financial instruments and is based on the publicly listed trading price
of our Public Warrants. The fair value of the Private Warrants is determined
with Level 3 inputs using the Black-Scholes model. The fair value of the Private
Placement Warrants may change significantly as additional data is obtained. In
evaluating this information, considerable judgment is required to interpret the
data used to develop the assumptions and estimates. The estimates of fair value
may not be indicative of the amounts that could be realized in a current market
exchange. Accordingly, the use of different market assumptions and/or different
valuation techniques may have a material effect on the estimated fair value, and
such changes could materially impact our results of operations in future
periods. As of June 30, 2022 and December 31, 2021, warranty liability was
$13.4 million and $27.5 million, respectively. See Note 4 to our condensed
consolidated financial statements included herein.

Current accounting pronouncements

See Note 2 to our condensed consolidated financial statements contained herein.

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