References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer to South Mountain Merger Corp. References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer to South Mountain, LLC. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek" and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's Annual Report on Form 10-K filed with the SEC. The Company's securities filings can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We are a blank check company formed under the laws of the State of Delaware on February 28, 2019 for the purpose of effecting capital stock exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.

The issuance of additional shares of our stock in a Business Combination:

• may significantly dilute the equity interest of investors, which dilution would


   increase if the anti-dilution provisions in the Class B common stock resulted
   in the issuance of Class A shares on a greater than one-to-one basis upon
   conversion of the Class B common stock;

• may subordinate the rights of holders of common stock if preferred stock is

issued with rights senior to those afforded our common stock;

• could cause a change of control if a substantial number of shares of our common


   stock are issued, which may affect, among other things, our ability to use our
   net operating loss carry forwards, if any, and could result in the resignation
   or removal of our present officers and directors;

• may have the effect of delaying or preventing a change of control of us by

diluting the stock ownership or voting rights of a person seeking to obtain

control of us; and

• may adversely affect prevailing market prices for our Class A common stock

and/or warrants.

Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:

• default and foreclosure on our assets if our operating revenues after an

initial Business Combination are insufficient to repay our debt obligations;

• acceleration of our obligations to repay the indebtedness even if we make all


   principal and interest payments when due if we breach certain covenants that
   require the maintenance of certain financial ratios or reserves without a
   waiver or renegotiation of that covenant;

• our immediate payment of all principal and accrued interest, if any, if the

debt is payable on demand;

• our inability to obtain necessary additional financing if the debt contains

covenants restricting our ability to obtain such financing while the debt is

outstanding;

• our inability to pay dividends on our common stock;

• using a substantial portion of our cash flow to pay principal and interest on


   our debt, which will reduce the funds available for dividends on our common
   stock if declared, expenses, capital expenditures, acquisitions and other
   general corporate purposes;



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• limitations on our flexibility in planning for and reacting to changes in our

business and in the industry in which we operate;

• increased vulnerability to adverse changes in general economic, industry and

competitive conditions and adverse changes in government regulation; and

• limitations on our ability to borrow additional amounts for expenses, capital

expenditures, acquisitions, debt service requirements, execution of our

strategy and other purposes and other disadvantages compared to our competitors

who have less debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.

Recent Developments

On October 18, 2020, we entered into the Business Combination Agreement with First Merger Sub, Second Merger Sub and Billtrust. Pursuant to the terms of the Business Combination Agreement, a business combination between us and Billtrust will be effected through (a) the merger of First Merger Sub with and into Billtrust (the "First Merger"), with Billtrust surviving the merger as our wholly owned subsidiary (Billtrust, in its capacity as the surviving corporation of the First Merger, is sometimes referred to as the "Surviving Corporation") and (b) as soon as practicable, but in any event within 10 days following the First Merger and as part of the same overall transaction as the First Merger, a merger of the Surviving Corporation with and into Second Merger Sub (the "Second Merger" and, together with the First Merger, the "Mergers"), with Second Merger Sub being the surviving entity of the Second Merger (Second Merger Sub, in its capacity as the surviving entity of the Second Merger, is sometimes referred to herein as the "Surviving Entity"). See Note 9 to Item 1 above for a description of the Business Combination Agreement and the transactions contemplated thereby.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception through September 30, 2020 were organizational activities and those necessary to prepare for the Initial Public Offering, described below, and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2020, we had a net loss of $147,481, which consists of operating costs of $207,011, offset by interest income on marketable securities held in the Trust Account of $20,326 and income tax benefit of $39,204.

For the nine months ended September 30, 2020, we had net income of $163,492, which consists of interest income on marketable securities held in the Trust Account of $903,655, offset by operating costs of $696,703 and a provision for income taxes of $43,460.

For the three months ended September 30, 2019, we had net income of $808,635, which consists of interest income on marketable securities held in the Trust Account of $1,245,883, offset by operating costs of $222,295, and a provision for income taxes of $214,953.

For the period from February 28, 2019 (inception) through September 30, 2019, we had net income of $824,196, which consists of interest income on marketable securities held in the Trust Account of $1,332,389, offset by operating costs of $289,103, and a provision for income taxes of $219,090.

Liquidity and Capital Resources

On June 24, 2019, we consummated the Initial Public Offering of 25,000,000 Units, which includes a partial exercise by the underwriter of the over-allotment option to purchase an additional 2,500,000 Units, at $10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 6,954,500 Private Placement Warrants, at $1.00 per Private Placement Warrant, to our Sponsor, generating gross proceeds of $6,954,500.

As of September 30, 2020, we had marketable securities held in the Trust Account of $252,287,249 (including approximately $2,287,000 of interest income) consisting of money market funds, which primarily invest in U.S. Treasury securities. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through September 30, 2020, we withdrew $954,463 of interest earned on the Trust Account, of which $482,347 was withdrawn during the nine months ended September 30, 2020.

For the nine months ended September 30, 2020, cash used in operating activities was $650,609. Net income of $163,492 was offset by interest earned on marketable securities held in the Trust Account of $903,655. Changes in operating assets and liabilities provided $89,554 of cash from operating activities.



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Table of Contents For the period from February 28, 2019 (inception) through September 30, 2019, cash used in operating activities was $552,883. Net income of $824,196 was offset by interest earned on marketable securities held in the Trust Account of $1,332,389. Changes in operating assets and liabilities provided $44,690 of cash from operating activities.

We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of amounts withdrawn to pay our taxes) to complete a Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business.

As of September 30, 2020, we had cash of $1,437,999 held outside the Trust Account. We intend to use the funds held outside the Trust Account to pay for our accrued expenses, working capital costs and to identify and evaluate prospective acquisition candidates, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses, review corporate documents and material agreements of prospective target businesses, select the target business to acquire and structure, negotiate and complete a Business Combination

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our initial stockholders, officers and directors or their affiliates may, but are not obligated to, loan us funds from time to time or at any time, as may be required. If we complete a Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into private warrants at a price of $1.00 per private warrant at the option of the lender. The private warrants would be identical to the Private Placement Warrants.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amounts necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.

Contractual Obligations

We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $25,000 for office space, administrative and support services, provided to the Company. We began incurring these fees on June 19, 2019 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and our liquidation.

The underwriter is entitled to a deferred fee of 3.5% of the gross proceeds from the Units sold in the Initial Public Offering, or $7,970,375. The deferred fee will be forfeited by the underwriter solely in the event that we fail to complete a Business Combination, subject to the terms of the underwriting agreement. The underwriter did not receive any underwriting discount or commissions on Units purchased by a fund managed by an affiliate of our Sponsor.

Critical Accounting Policies

The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:



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Common Stock Subject to Possible Redemption

We account for our common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders' equity section of our condensed balance sheets.

Net Loss Per Common Share

We apply the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not our income or losses.

Recent Accounting Standards

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

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