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What changed in Dave Inc./DE's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Dave Inc./DE's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+612 added−722 removedSource: 10-K (2024-03-05) vs 10-K (2023-03-13)

Top changes in Dave Inc./DE's 2023 10-K

612 paragraphs added · 722 removed · 493 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

119 edited+18 added−15 removed66 unchanged
Biggest changeOur Dave Banking account includes some of the best features and rewards in banking, including: • Zero account minimums; • 40,000 MoneyPass ATM network locations to make no-fee withdrawals; • Paychecks delivered up to two days earlier than the scheduled payment date with direct deposit into the Dave Banking account, a feature accessible with no additional mandatory fees; 8 • Access to mobile wallets such as Apple Pay and Google Pay; • Round-up feature allowing Members to round-up their debit card transaction into a Goals account which helps Members accumulate savings; and • Up to $500 in ExtraCash capacity for short-term liquidity.
Biggest changeThere are no fees for a Dave Banking account, making it accessible for people of all financial situations. 8 Our Dave Banking account includes what we believe are some of the best features and rewards in banking, including: • Zero account minimums; • 40,000 MoneyPass ATM network locations to make no-fee withdrawals; • Paychecks delivered up to two days earlier than the scheduled payment date with direct deposit into the Dave Banking account, a feature accessible with no additional mandatory fees; • Access to mobile wallets such as Apple Pay and Google Pay; • 4% APY accrued on deposits in Members’ Dave Spend Account; • Free cash deposits with in-app barcode at Walgreens and CVS locations nationwide; • Free remote check deposit with optional instant fund availability for a fee; • Round-up feature allowing Members to round-up their debit card transaction into a Goals account which helps Members accumulate savings; and • Ability to receive discounted ExtraCash instant transfer fees when advances are disbursed to Members' Dave Banking accounts.
As an example, our ExtraCash product allows Members to access up to $500 to cover an overdraft at their existing bank or everyday expenses such as rent, gas or groceries. We are able to do this by 4 leveraging our proprietary machine learning engine that analyzes a Member’s prior transaction history at their existing bank.
As 4 an example, our ExtraCash product allows Members to access up to $500 to cover an overdraft at their existing bank or everyday expenses such as rent, gas or groceries. We are able to do this by leveraging our proprietary machine learning engine that analyzes a Member’s prior transaction history at their existing bank.
In addition, the regulatory framework for our products and services is evolving and uncertain and specifically the framework that applies to our ExtraCash advance business, as federal and state governments and regulators consider the application of existing laws and potential adoption of new laws.
In addition, the regulatory framework for our products and services is evolving and uncertain and specifically the framework that applies to the ExtraCash advance business, as federal and state governments and regulators consider the application of existing laws and potential adoption of new laws.
These competitors include: • Banking Competitors : Traditional banks and credit unions (e.g., Bank of America, Chase, Wells Fargo), new entrants obtaining banking licenses (e.g., Varo Money), and other non-bank digital providers that white-label regulated products, offering banking-related services (e.g., Chime). • Lending and Earned Income Advance Competitors : Traditional banks and credit unions, specialty finance and other non-bank providers, offering consumer lending-related or advance products (e.g., Upstart, MoneyLion). • Innovators in Consumer Finance : Consumer-oriented commerce enablement platforms (e.g., Affirm, Afterpay), finance-oriented social networks (e.g., CashApp, Venmo), and lending platforms (e.g., OpenLending, LendingClub).
These competitors include: • Banking Competitors : Traditional banks and credit unions (e.g., Bank of America, Chase, Wells Fargo), new entrants obtaining banking licenses (e.g., Varo Money), and other non-bank digital providers that white-label regulated products, offering banking-related services (e.g., Chime). • Lending and Earned Income Advance Competitors : Traditional banks and credit unions, specialty finance and other non-bank providers, offering consumer lending-related or advance products (e.g., Upstart, MoneyLion). • Innovators in Consumer Finance : Consumer-oriented commerce enablement platforms (e.g., Affirm), finance-oriented social networks (e.g., CashApp, Venmo), and lending platforms (e.g., OpenLending, LendingClub).
In connection with our arrangements with Evolve, we have also entered into a multi-year service agreement with Galileo Financial Technologies, LLC (f/k/a Galileo Financial Technologies, Inc.) (“Galileo”), a payment processing platform, in which Galileo has agreed to process all transactions for our Dave Banking accounts and debit cards, and to handle corresponding payments and adjustments.
In connection with our arrangements with Evolve, we have also entered into a multi-year service agreement with Galileo Financial Technologies, LLC (f/k/a Galileo Financial Technologies, Inc.) (“Galileo”), a payment processing platform, in which Galileo has agreed to process all transactions for our Dave ExtraCash and Banking accounts and debit cards, and to handle corresponding payments and adjustments.
Most financial technology companies in the consumer banking space have largely retained this model, requiring a primary banking relationship in order to access their tools around financial health. At Dave, we believe this approach is exclusionary and discourages participation in the banking system for tens of millions of Americans who need it most.
Most financial technology companies in the consumer banking space have largely retained this model, requiring a primary banking relationship in order to access their financial health tools. At Dave, we believe this approach is exclusionary and discourages participation in the banking system for tens of millions of Americans who need it most.
On the repayment date, we trigger an automated withdrawal from the Member’s account for the ExtraCash advance amount plus the optional instant transfer fee and optional tip if a Member opted for those services. We take a consumer-friendly approach to the withdrawal process by attempting to check Member balances before initiating all withdrawals.
On the repayment date, we trigger an automated withdrawal from the Member’s account for the ExtraCash advance amount plus the optional instant transfer fee and optional tip if a Member opted for those services. We take a consumer-friendly approach to the withdrawal process by attempting to check Member balances before initiating all ACH withdrawals.
Retail banks—large-scale depository institutions, regional banks, credit unions and other traditional financial institutions—are largely set up to serve Americans who are financially stable. For these Americans, existing financial services offerings largely address their needs; they offer mortgages, savings accounts, credit cards, wealth management and more.
Retail banks—large-scale depository institutions, regional banks, credit unions and other traditional financial institutions—are largely set up to serve Americans who are financially stable. For these Americans, existing financial services offerings largely address their needs; they offer mortgages, savings accounts, credit cards, wealth 5 management and more.
A Member is limited to one ExtraCash advance per pay period and may only have one ExtraCash advance outstanding 7 at any given time. The maximum term for an ExtraCash advance is 31 days. Dave develops and manages the entire risk management and decisioning process associated with issuing and servicing ExtraCash advances.
A Member is limited to one ExtraCash advance per pay period and may only have one ExtraCash advance outstanding at any given time. The maximum term for an ExtraCash advance is 31 days. Dave develops and manages the entire risk management and decisioning process associated with issuing and servicing ExtraCash advances.
In the event there are insufficient funds to cover the repayment amount, we do not attempt the withdrawal and will wait until the Member has a sufficient balance before initiating the transaction in order to minimize the possibility of triggering an overdraft for our Members.
In the event there are insufficient funds to cover the repayment amount, we do not attempt the ACH withdrawal and will wait until the Member has a sufficient balance before initiating the transaction in order to minimize the possibility of triggering an overdraft for our Members.
In certain circumstances, GLBA requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information, and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and nonaffiliated entities, as well as to safeguard personal Member information.
In certain circumstances, GLBA requires financial institutions to limit the use and 15 further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information, and requires financial institutions to disclose certain privacy policies and practices with respect to information sharing with affiliated and nonaffiliated entities, as well as to safeguard personal Member information.
That is why we have developed financial products that address the needs of more than 160 million Americans. To date, we have helped our Members avoid nearly $2 billion in overdraft fees from their legacy bank relationships through our ExtraCash product.
That is why we have developed financial products that address the needs of more than 160 million Americans. To date, we have helped our Members avoid nearly $2.5 billion in overdraft fees from their legacy bank relationships through our ExtraCash product.
Over the last year, we have continued to see the benefits from our strategic decision to operate as a Virtual First company. We now have team members in over 30 states and have greatly changed the profile of talent at Dave by removing geographic limitations.
Over the last year, we have continued to see the benefits from our strategic decision to operate as a Virtual First company. We have team members in 30 states and have greatly changed the profile of talent at Dave by removing geographic limitations.
Galileo also maintains cardholder information, implements certain fraud control processes and procedures, and provides related services in connection with the Dave Banking accounts and debit cards. We pay the greater of actual fees or the minimum monthly fee for these services.
Galileo also maintains cardholder information, implements certain fraud control processes and procedures, and provides related services in connection with the ExtraCash and Dave Banking accounts and debit cards. We pay the greater of actual fees or the minimum monthly fee for these services.
Dave Banking offers robust security controls such as multi-factor authentication, contactless payment, instant card lock and protection against unauthorized purchases if cards are lost or stolen. Our Dave Banking demand deposit accounts are currently issued by Evolve.
Dave Banking offers security controls such as multi-factor authentication, contactless payment, instant card lock and protection against unauthorized purchases if cards are lost or stolen. Our Dave Banking demand deposit accounts are currently issued by Evolve.
When a Member connects their existing bank account to Dave, we analyze several months of historical spending and income data using our proprietary machine-learning and income-detection algorithms. To date, we have analyzed tens of billions Member transactions.
When a Member connects their existing bank account to Dave, we analyze several months of historical spending and income data using our proprietary machine-learning-based income-detection algorithms. To date, we have analyzed tens of billions Member transactions.
Our Product Platform Our intuitive and Member-friendly app provides a fast, seamless experience across all of our products. We are committed to delivering a delightful Member experience; we continuously listen to our Members’ feedback and implement improvements on a rapid release cycle.
Our Product Platform Our intuitive and Member-friendly app provides a fast, seamless experience across all of our products. We are committed to delivering a delightful Member experience; we continuously listen to our Members’ feedback and seek to implement improvements on a rapid release cycle.
While 6 early wage access and cash advance products have become increasingly common across banking innovators, these products typically depend on multiple direct deposits into a bank account—often requiring multiple weeks and pay cycles.
While early wage access and cash advance products have become increasingly common across banking innovators, these products typically depend on multiple direct deposits into a bank account—often requiring multiple weeks and pay cycles.
Beilman has served as Chief Financial Officer and Secretary since the closing of the Business Combination and prior to the Business Combination served as Legacy Dave’s Chief Financial Officer since January 2021 and between July 2017 to October 2019 and Chief Operating Officer from October 2019 to January 2021.
Beilman has served as Chief Financial Officer and Secretary since the closing of the Business Combination and prior to the Business Combination served as Legacy Dave’s Chief Financial Officer since January 2021 and between July 2017 to October 2019 and Chief Operating Officer from October 2019 to January 2021. Since January 2021, Mr.
Our unique ability to offer an immediate short-term solution to near-term financial instability, without direct deposit or bank account relationship length requirements, has proven highly compelling to a broad range of Members. Further, our digitally-native interface and the community impact of our products creates a compelling Member experience that paves the way to offer additional products within our ecosystem.
Our unique ability to offer an immediate short-term solution to near-term financial instability, without direct deposit or bank account relationship length requirements, has proven highly compelling to a broad range of Members. Further, our digitally-native interface and the community impact of our products create a compelling Member experience that paves the way to offer additional products within our ecosystem.
A side hustle can be an important part of a Member’s long-term financial health, as it allows Members to quickly address unexpected expenses or cash needs with incremental income. Supplemental Income Generation: “Surveys” Our recently launched Surveys product allows for additional earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application.
A side hustle can be an important part of a Member’s long-term financial health, as it allows Members to quickly address unexpected expenses or cash needs with incremental income. Supplemental Income Generation: “Surveys” Our Surveys product allows for additional earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application.
This flexible approach to Member choice and speed to value has been a key driver of our highly efficient customer acquisition costs, Member engagement and growth as well as best-in-class brand favorability. Dave leads its peers in Apple’s app-store ratings, with a 4.8 average rating from over 625,000 reviews.
This flexible approach to Member choice and speed to value has been a key driver of our highly efficient customer acquisition costs, Member engagement and growth as well as best-in-class brand favorability. Dave leads its peers in Apple’s app-store ratings, with a 4.8 average rating from over 670,000 reviews.
This power includes rule making authority in enumerated areas of federal law such as truth in lending, credit discrimination, electronic fund transfers and truth in savings.
This power includes rule making authority in enumerated 14 areas of federal law such as truth in lending, credit discrimination, electronic fund transfers and truth in savings.
We refer to this cycle as our “Dave Flywheel.” Over ten million Americans have downloaded and registered accounts on the Dave app, and more than six million Americans have connected their existing bank accounts to Dave. Our Member acquisition efficiency is a testament to Dave’s product-market fit and trusted brand.
We refer to this cycle as our “Dave Flywheel.” Over 13 million Americans have downloaded and registered accounts on the Dave app, and more than six million Americans have connected their existing bank accounts to Dave. Our Member acquisition efficiency is a testament to Dave’s product-market fit and trusted brand.
No credit check is required and eligibility for ExtraCash is based on the verification of the Member’s checking account and the Member’s identity. Beginning in the summer of 2022, all new Members receive a Dave Banking account to which they can receive their ExtraCash advance; alternatively, Members can disburse their advance to a checking account with another financial institution.
No credit check is required and eligibility for ExtraCash is based on the verification of the Member’s checking account and the Member’s identity. Beginning in the summer of 2022, all new Members began receiving a Dave Banking account to which they can receive their ExtraCash advance; alternatively, Members can disburse their advance to a checking account with another financial institution.
We are continually optimizing our current products, while also developing new features and solutions. We build products for our Members that we believe not only impact their daily financial lives, but are also intuitive and easy to use. At the same time, we design our products to drive value for our business and be technically scalable.
We are continually optimizing our current products, while also developing new features and solutions. We build products for our Members that we believe are not only impactful to their daily financial lives, but also intuitive and easy to use. At the same time, we design our products to drive value for our business and be technically scalable.
We also help Members generate extra income for spending or emergencies through our Side Hustle product, where we present Members with supplemental work opportunities, and through our recently launched Surveys product, where Members can earn supplemental income by taking surveys. Our budgeting tool helps Members manage their upcoming bills to avoid overspending.
We also help Members generate extra income for spending or emergencies through our Side Hustle product, where we present Members with supplemental work opportunities, and through our Surveys product, where Members can earn supplemental income by taking surveys. Our budgeting tool helps Members manage their upcoming bills to avoid overspending.
We continue our investment in great people leadership as we know that great people leaders have a multiplying effect on what a business is able to achieve. This insight has led us to invest very early in defining what it means to be a great leader at Dave.
We continue to invest in great people leadership as we know that great people leaders have a multiplying effect on what a business is able to achieve. This insight has led us to invest very early in defining what it means to be a great leader at Dave.
This wealth of data, combined with our machine-learning capabilities and underwriting excellence, is competitive advantages that will increase with Member scale. We expect to continue to develop these technologies and use them for product expansion in the future. Focusing on community building with our Members: We take our mission to build products that level the financial playing field seriously.
This wealth of data, combined with our machine-learning capabilities and underwriting excellence, is a competitive advantage that will increase with Member scale. We expect to continue to develop these technologies and use them for product expansion in the future. Focusing on community building with our Members: We take our mission to build products that level the financial playing field seriously.
For example, traditional banks charge up to $34 for access to as little as $5 of overdraft, whereas many others in the financial services sector do not allow for overdraft at all.
For example, traditional banks charge up to $35 for access to as little as $5 of overdraft, whereas many others in the financial services sector do not allow for overdraft at all.
Year Average 28-Day Delinquency Rate 2020 4.34% 2021 3.93% 2022 3.65% There are no fees associated with the delivery of ExtraCash funds to a checking account (typically delivered within two to five business days) via ACH.
Year Average 28-Day Delinquency Rate 2020 4.34% 2021 3.93% 2022 3.65% 2023 2.51% There are no fees associated with the delivery of ExtraCash funds to a checking account (typically delivered within two to five business days) via ACH.
Seasonality Our service based revenue is typically weakest in the first quarter when the Company tends to reduce its marketing expense in order to optimize returns on our advertising spend.
Seasonality Our service based revenue is typically weakest in the first quarter when the Company aims to reduce its marketing expense in order to optimize returns on our advertising spend.
Market research conducted by Dave found that legacy financial institutions commonly require a more extensive banking relationship and days or even weeks of wait times to access their features and services, which can potentially be more onerous in order to obtain premium features (e.g., access to higher interest rates requires direct deposit or higher minimum daily balances).
Market research conducted by Dave found that legacy financial institutions commonly require a more extensive banking relationship and days or even weeks of wait times to access their features and services, which can potentially be more onerous for premium features (e.g., access to higher interest rates requires direct deposit or higher minimum daily balances).
Regulation of our bank partnership model Pursuant to our partnership with Evolve, we offer our Members FDIC-insured, non-interest-bearing deposit accounts and debit cards that Members can use to access their account balances. These deposit accounts and debit cards are provided by Evolve.
Regulation of our bank partnership model Pursuant to our partnership with Evolve, we offer our Members FDIC-insured, non-interest-bearing deposit accounts (including the ExtraCash account), interest bearing deposit accounts and debit cards that Members can use to access their account balances. These deposit accounts and debit cards are provided by Evolve.
Even new challenger banks often take multiple days or even weeks before allowing members to access certain premium features, according to the same research. In contrast, Dave's Members are able to utilize all of Dave’s products individually and instantly, whether or not their primary banking relationship is with us.
Even new challenger banks often take multiple days or even weeks before allowing members to access certain premium features, according to the same research. In contrast, Dave's Members are able to utilize each of Dave’s products instantly, whether or not their primary banking relationship is with us.
Since inception and through the date of this Annual Report on Form 10-K, over 10 million Members have registered on the Dave app and over eight million of them have used at least one of our current products and we believe that we have a substantial opportunity to continue growing our Member base going forward.
Since inception and through the date of this Annual Report on Form 10-K, over 13 million Members have registered on the Dave app and over 10 million Members have used at least one of our products and we believe that we have a substantial opportunity to continue growing our Member base going forward.
In January 2023, we executed an amended agreement with Galileo that should significantly reduce the fees that we pay to Galileo for these services. In conjunction with the amended agreement, the term of the agreement was amended such that the agreement expires on the fifth anniversary of the effective date of the amended agreement.
In January 2023, we executed an amended agreement with Galileo that significantly reduced the fees that we pay to Galileo for these services. In conjunction with the amended agreement, the term of the agreement was amended such that the agreement expires on the fifth anniversary of the effective date of the amended agreement.
Recent Developments On January 4, 2023, the Board of Directors of the Company approved an amendment to the Company’s certificate of incorporation to complete a 1-for-32 reverse stock split effective January 5, 2023. The primary goal of the reverse stock split is to bring the Company’s stock price above the share bid price requirement for continued listing on Nasdaq.
Recent Developments On January 4, 2023, our Board of Directors approved an amendment to our Company’s certificate of incorporation to complete a 1-for-32 reverse stock split effective January 5, 2023. The primary goal of the reverse stock split was to bring our stock price above the share bid price requirement for continued listing on Nasdaq.
Dave invented a short-term liquidity alternative called ExtraCash, which allows Members to receive a cash advance of up to $500 with an option to advance funds to their bank account via the automated clearing house (ACH) network (which typically takes two to five business days) and avoid fees altogether.
Dave invented a short-term liquidity alternative called ExtraCash, offered through our partnership with Evolve, which allows Members to receive a cash advance of up to $500 with an option to advance funds to their bank account via the automated clearing house (ACH) network (which typically takes two to five business days) and avoid fees altogether.
Beginning in January 2021, subsequent to the formation of Dave OD Funding I, LLC (“Dave OD Funding”), a subsidiary of Dave which is consolidated in Dave’s financial statements, ExtraCash advances have been funded through a combination of balance sheet cash and funding available under Dave OD Funding’s debt facility with Victory Park Capital, an affiliate of VPCC.
Subsequent to the formation of Dave OD Funding I, LLC (“Dave OD Funding”), a subsidiary of Dave which is consolidated in Dave’s financial statements, ExtraCash advances have been funded through a combination of balance sheet cash and funding available under Dave OD Funding’s debt facility with Victory Park Management, LLC, an affiliate of VPCC.
However, the application of state licensing requirements (including those applicable to consumer lenders) to our business model is not always clear and state regulators may request or require that we obtain licenses or otherwise comply with additional requirements in the future, which may result in changes to our business practices.
However, the application of state licensing requirements (including those applicable to bank partnerships involving consumer lending) to our business model is not always clear and state regulators may request or require that we obtain licenses or otherwise comply with additional requirements in the future, which may result in changes to our business practices.
We have only begun to address the many inequities in financial services, but our progress to date demonstrates the demand for Dave to rewire the financial system for the everyday person.
We have only begun to address the many inequities in financial services, but we believe our progress to date demonstrates the demand for Dave to improve the financial system for the everyday person.
Dave Banking accounts do not have overdraft or minimum balance fees, allow for early paycheck payment, offer a Dave debit card to facilitate everyday spending including cashback reward offers, and provide Federal Deposit Insurance Corporation (“FDIC”) insurance on checking account balances up to $250,000.
Dave Banking accounts do not have overdraft or minimum balance fees, allow for early paycheck payment, offer a Dave debit card to facilitate everyday spending including cashback reward offers, and provide FDIC insurance on checking account balances up to $250,000.
The instant transfer fee ranges from $1.99 to $12.99, depending on the size of the advance taken and whether the ExtraCash advance is disbursed to an external account or the Members’s Dave Banking account. Members are offered lower instant transfer fees if they elect to disburse ExtraCash funds internally to their Dave Banking account.
The instant transfer fee ranges from $3 to $25, depending on the size of the advance taken and whether the ExtraCash advance is disbursed to an external account or the Members’s Dave Banking account. Members are offered lower instant transfer fees if they elect to disburse ExtraCash funds internally to their Dave Banking account.
From a delinquency performance perspective, the first quarter is typically the strongest quarter for ExtraCash given the repayment support which tax refunds provide our Members. Transaction based revenue is typically strongest in the first quarter as the liquidity support which tax refunds provide causes higher levels of Dave Banking debit card spending and, hence, interchange revenue.
From a credit performance perspective, the first quarter is typically the strongest quarter for ExtraCash when tax refunds provide repayment support for our Members. Transaction based revenue is typically strongest in the first quarter as the liquidity support which tax refunds provide causes higher levels of Dave Banking debit card spending and interchange revenue.
This allows us to offer immediate budgeting insights such as an upcoming utility bill and rapidly approve Members for up to $500 of ExtraCash which can be accessed within hours.
This allows us to offer immediate budgeting insights such as an upcoming utility bill and, if eligible, rapidly approve Members for up to $500 of ExtraCash which can be accessed within minutes.
As of December 31, 2022, we had received nearly 625,000 ratings on the Apple app store, with a 4.8 rating. Dave’s current product platform includes: “ExtraCash” Advance Product ExtraCash is our 0% APR cash advance product that gives Members access to much-needed liquidity to avoid overdraft fees or bridge themselves to their next paycheck.
As of December 31, 2023, we had received nearly 670,000 ratings on the Apple app store, with a 4.8 average rating. Dave’s current product platform includes: “ExtraCash” Advance Product ExtraCash is our 0% interest cash advance product that gives Members access to much-needed liquidity to avoid overdraft fees or bridge themselves to their next paycheck.
Timing of the repayment of the ExtraCash advance is determined when the ExtraCash advance is made and is based on the estimated date that the Member will receive his or her next paycheck, which typically ranges from seven to 10 days from when they apply for an ExtraCash advance.
Timing of the scheduled repayment date of the ExtraCash advance is determined when the ExtraCash advance is made and is based on the estimated date that the Member will receive his or her next paycheck or other income, which typically ranges from seven to 10 days from when they ask for an ExtraCash advance.
Our partnership with Evolve allows us to provide deposit accounts and debit cards while complying with various federal, state, and other laws. Evolve also sponsors access to debit networks and ACH for payment transactions, funding transactions and associated settlement of funds.
Our partnership with Evolve allows us to offer ExtraCash as well as other deposit accounts and debit cards while complying with various federal, state, and other laws. Evolve also sponsors access to debit networks and ACH for payment transactions, funding transactions and associated settlement of funds.
According to a report by The Financial Health Network (“FHN”), legacy financial institutions charge approximately $30 billion in fees annually. The FHN estimates that financially “coping” and “vulnerable” populations pay over $120 billion a year in fees and interest for access to short-term credit. Our prospective Member opportunity is also significant.
According to a 2023 report by The Financial Health Network (“FHN”), legacy financial institutions charge nearly $40 billion in fees annually. The FHN estimates that financially “coping” and “vulnerable” populations pay over $160 billion a year in fees and interest for access to short-term credit. Our prospective Member opportunity is also significant.
Through our charity program, we have delivered 80 million meals and pledged over $8 million to Feeding America and other causes. Dave has been named a Best Place to Work by Built In for three consecutive years, most recently being recognized as one of the best remote workplaces in the U.S.
Through our charity program, we have delivered over 149 million meals through our pledge of over $18 million to Feeding America and other causes. Dave has been named a Best Place to Work by Built In for four consecutive years, most recently being recognized as one of the best remote workplaces in the U.S.
The efficiency of the Company's marketing expense, based on relative levels of customer acquisition costs, is typically softest in the first quarter given how tax refunds help to support the liquidity needs of the Company's Members.
The efficiency of the Company's marketing expense, based on relative levels of customer acquisition costs, is typically softest in the first quarter when tax refunds help support the liquidity needs of our Members.
Similarly, the December 2022 Paycheck to Paycheck Report published by PYMNTS found that, in November 2022, 63%, or approximately 160 million, of all U.S. consumers were living paycheck to paycheck, up from 58% merely six months earlier.
Similarly, the December 2023 Paycheck to Paycheck Report published by PYMNTS found that, in November 2023, 62%, or approximately 160 million, of all U.S. consumers were living paycheck to paycheck, up from 57% merely six months earlier.
Finally, we know there is value in in-person collaboration and, with that in mind, we encourage team offsites and have implemented a co-working stipend to help give team members optionality in where they work.
Finally, we know there is value in in-person collaboration and, with that in mind, we encourage team offsites, bring the company together twice a year and have implemented a co-working stipend to help give team members optionality in where they work.
Historically, Members have incurred an average of $300-400 per year in fees from their legacy banks. 5 At Dave, we have built an all-in-one mobile platform that offers the following financial products to directly address the financial instability that these Americans face: ExtraCash: Many Americans are often unable to maintain a positive balance between paychecks, driving a reliance on overdraft products, payday loans, auto title loans and other forms of expensive credit to put food on the table, gas in their car or pay for unexpected emergencies.
At Dave, we have built an all-in-one mobile platform that offers the following financial products to directly address the financial instability that these Americans face: ExtraCash: Many Americans are often unable to maintain a positive balance between paychecks, driving a reliance on overdraft products, payday loans, auto title loans and other forms of expensive credit to put food on the table, gas in their car or pay for unexpected emergencies.
Evolve is also the issuer of all Dave Banking debit cards and sponsors access to debit networks for payment transactions, funding transactions and associated settlement of funds under a sponsorship agreement with Dave. Evolve also provides sponsorship and support for ACH and associated funds settlement.
Evolve is also the issuer of all Dave Banking debit cards and sponsors access to debit networks for payment transactions, funding transactions and associated settlement of funds under a sponsorship agreement with Dave. Evolve also provides sponsorship and support for ACH and associated funds settlement. See “Our Business Model” below for additional information.
Some of our current and potential competitors have longer operating histories, particularly with respect to financial products similar to what we offer, significantly greater financial, technical, marketing and other resources, and a larger Member base.
Our competitors are generally large, well-capitalized financial services companies. Some of our current and potential competitors have longer operating histories, particularly with respect to financial products similar to what we offer, significantly greater financial, technical, marketing and other resources, and a larger Member base.
In addition, other federal and state laws, public policy, and general principles of equity, such as laws prohibiting unfair and deceptive acts or practices, may apply to our activities in banking, ExtraCash advances, payments, and other areas.
In addition, other federal and state laws, public policy, and general principles of equity, such as laws prohibiting unfair and deceptive acts or practices, may apply to our activities in banking, ExtraCash advances, payments, and other areas. These laws and regulations impact our business both directly and indirectly.
Beyond the first quarter, service based revenue is typically strongest in the second and third quarter when the Company tends to accelerate marketing expense in a disciplined manner given how it can generally achieve attractive returns on that investment at greater scale.
Beyond the first quarter, service based revenue is typically stronger in the second, third, and fourth quarters when the Company aims to increase marketing expense in a disciplined manner given how it can generally achieve attractive returns on that investment at greater scale.
Please see the section titled “ Risk Factors—Risks Relating to Dave’s Business and Industry— 16 Stringent and changing laws and regulations relating to privacy and data protection could result in claims, harm our results of operations, financial condition, and future prospects, or otherwise harm our business. ” Laws Governing Marketing and Member Communications.
Please see the section titled “ Risk Factors—Risks Related to Regulatory and Legal Matters—Stringent and changing laws and regulations relating to privacy and data protection could result in claims against us, harm our results of operations, financial condition, and future prospects, or otherwise harm our business. ” Laws Governing Marketing and Member Communications.
Our multi-pronged growth strategy is designed to continue building upon the momentum we have generated to date to create even greater value for consumers: • Continue penetrating our large addressable market; • Accelerate cross-sell into Dave Banking; • Deliver new products and features to cross-sell to Members; and • Evaluate additional strategic acquisitions. 10 Continue penetrating our large addressable market: More than 160 million Americans are in need of more financial stability.
Our multi-pronged growth strategy is designed to continue building upon the momentum we have generated to date to create even greater value for consumers: • Continue penetrating our large addressable market; • Accelerate cross-sell into Dave Banking; 10 • Deliver new products and features to cross-sell to Members; and • Evaluate additional strategic partnerships and acquisitions.
As of the summer of 2022, all new Members receive a Dave Banking account to which they can receive an ExtraCash advance and with which they can satisfy their major funding and spending needs.
Currently, all new Members started to receive a Dave Banking account to which they can receive an ExtraCash advance and with which they can satisfy their major funding and spending needs.
The FHN study implies that approximately 70% of Americans fall into these low or volatile income and credit-challenged categories, which is up from 66% in 2021, which is the first notable increase in the five years of this FHN study.
The FHN study implies that over 70% of Americans fall into these low or volatile income and credit-challenged categories, which is up from 66% in 2021.
The FHN estimates that approximately 176 million Americans are “financially vulnerable” or “financially coping” based on financial health scores which reflect spending patterns relative to income, the sufficiency of liquid savings, and the manageability of debt obligations; this figure grew 6% or by 9 million Americans in 2022 as fiscal stimulus impacts waned and as inflationary and interest rate pressures mounted.
In the 2023 report, the FHN estimated that approximately 180 million Americans are “financially vulnerable” or “financially coping” based on financial health scores which reflect spending patterns relative to income, the sufficiency of liquid savings, and the manageability of debt obligations; this figure grew 8% or by 14 million Americans in 2021 as fiscal stimulus impacts waned and as inflationary and interest rate pressures persisted.
Today, more than 176 million Americans are either financially vulnerable or financially coping, with over 30% unable to afford a one-time $400 emergency expense, according to the Federal Reserve's report on the Economic Well-Being of U.S. Households, and 63% are living paycheck-to-paycheck, according to results from the December 2022 Paycheck to Paycheck Report published by PYMNTS.
Today, approximately 180 million Americans are either financially vulnerable or financially coping, with nearly 40% unable to afford a one-time $400 emergency expense, according to the Federal Reserve's report on the Economic Well-Being of U.S. Households, and 62% are living paycheck-to-paycheck, according to results from the December 2023 Paycheck to Paycheck Report published by PYMNTS.
Product marketing efforts are aimed at increasing Member engagement, through-funnel conversion and retention at a very low cost. 11 Dave's management team believes that its customer acquisition cost is one of the lowest in the industry which we attribute to both the sophistication of our marketing strategy and channel optimization as well as ExtraCash’s ability to address what our proprietary research reveals as the primary pain point for our Member base: short term liquidity.
Dave's management team believes that its customer acquisition cost is one of the lowest in the industry, which we attribute to both the sophistication of our marketing strategy and channel optimization as well as ExtraCash’s ability to address what our proprietary research reveals as the primary pain point for our Member base: short-term liquidity.
Creating frictionless access to high-impact products: In order to access the financial tools many retail banks offer, consumers are often first required to establish a checking account with that bank. Banks may also require a direct deposit relationship to discourage switching banks.
These channels drive engagement within the Dave ecosystem and deepen our relationship to our Members’ financial wellbeing. Creating frictionless access to high-impact products: In order to access the financial tools many retail banks offer, consumers are often first required to establish a checking account with that bank. Banks may also require a direct deposit relationship to discourage switching banks.
See “ Risk Factors—We operate in an uncertain regulatory environment and may from time to time be subject to governmental investigations or other inquiries by state, federal and local governmental authorities ” and “ —Our business is subject to extensive regulation and oversight in a variety of areas, including registration and licensing requirements under federal, state and local laws and regulations. ” In addition, we may become subject to additional legal or regulatory requirements we are not subject to today if laws or regulations change in the jurisdictions in which we operate, or if we were to release new products or services.
See “ Risk Factors—Our business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws, and is subject to regulatory investigations and consumer litigation. ” In addition, we may become subject to additional legal or regulatory requirements we are not subject to today if laws or regulations change in the jurisdictions in which we operate, or if we were to release new products or services.
Members also have the option to advance funds to their bank account via the debit card network (which typically takes minutes or hours) for an express service fee. Dave Banking: Dave offers a full-service digital checking account through our partnership with Evolve Bank and Trust (“Evolve”), an Arkansas state-chartered bank owned by Evolve Bancorp Inc.
Members also have the option to advance funds to their bank account via the debit card network (which typically takes minutes or hours) for an instant transfer fee. Dave Banking: Dave offers a full-service digital checking account through our partnership with Evolve.
We are party to a Bank Services Agreement with Evolve, with a term which is set to automatically renew on July 13, 2023 and which will automatically renew for successive one-year periods unless either party provides written notice of non-renewal, which may be provided without cause to the other party at least 180 days prior to the end of any such term.
We are party to a Bank Services Agreement with Evolve, with a current term set to automatically renew annually unless either party provides written notice of non-renewal, which may be provided without cause to the other party at least 180 days prior to the end of any such term.
Unless otherwise indicated, the effects of the reverse stock split have been reflected in this Annual Report on Form 10-K, including the consolidated financial statements and the footnotes in this Annual Report on Form 10-K. Our Strategy Americans have been underserved by existing financial products for decades.
Unless otherwise indicated, the effects of the reverse stock split have been reflected in this Annual Report on Form 10-K, including the consolidated financial statements and the footnotes hereto.
We have also implemented Quarterly Business Reviews, which are an opportunity for the most senior leaders of the company to review KPI performance from the previous quarter and ensure alignment on our plans for the upcoming quarter.
We conduct Quarterly Business Reviews, which are an opportunity for the most senior leaders of the company to review key performance indicators from the previous quarter, ensure alignment on our plans for the upcoming quarter, and discuss key strategic focus areas for the business.
For example, with respect to our ExtraCash advance product, certain state laws may, if applicable, regulate the charges or fees we 13 can assess and how we may obtain repayment from our Members.
For example, with respect to our ExtraCash overdraft advance product offered through Evolve, certain state laws may, if applicable, regulate the charges or fees that can be assessed by us and how we may obtain repayment from our Members.
In the future we will be looking closely at the possibility of filing design and utility patents to further enhance the measures of intellectual property protection for the company. However, these laws, agreements, and procedures provide only limited protection.
In the future we will be looking closely at the possibility of filing design and utility patents to further enhance the measures of intellectual property protection for the company. However, these laws, agreements, and procedures provide only limited protection. In the United States, we own several registered trademarks and have pending trademark applications in various stages of review.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, we may not have been, and may not always be, in compliance with these and other laws. 15 No assurance is given that our compliance policies and procedures have been or will be effective or adequate as laws change or are applied to us in a new manner.
No assurance is given that our compliance policies and procedures have been or will be effective or adequate as laws change or are applied to us in a new manner.
Evaluate Additional Strategic Acquisitions: We believe acquisitions will be an important tool to accelerate realization of our strategic roadmap going forward. We plan to be intentional in evaluating opportunities to serve larger populations with our leading products, to develop new avenues for engagement with and retention of our current Members and to enter new and synergistic product categories.
We plan to be intentional in evaluating opportunities to serve larger populations with our leading products, to develop new avenues for engagement with and retention of our current Members and to enter new and synergistic product categories.
All website addresses in this report are intended to be inactive textual references only. 17 Information About Our Executive Officers and Directors Executive Officers Name Age Position Jason Wilk 37 President and Chief Executive Officer Kyle Beilman 35 Chief Financial Officer Jason Wilk . Mr.
Our website and the information contained on or through that site are not incorporated into this report. All website addresses in this report are intended to be inactive textual references only. Information About Our Executive Officers and Directors Executive Officers Name Age Position Jason Wilk 38 President & Chief Executive Officer Kyle Beilman 36 Chief Financial Officer Jason Wilk .
Wilk co-founded Dave Inc. and has served as President and Chief Executive Officer since the closing of the Business Combination and prior to the Business Combination as Legacy Dave’s Chief Executive Officer since May 2016. Kyle Beilman . Mr.
Mr. Wilk co-founded Dave Inc. and has served as President and Chief Executive Officer since the closing of the Business Combination and prior to the Business Combination as Legacy Dave’s Chief Executive Officer since May 2016. Mr. Wilk has over 15 years of experience building digital companies. Prior to Dave, from October 2009 to July 2016, Mr.
In contrast, low-income or low-balance consumers are discouraged or disqualified from traditional financial services offerings as a result of their onerous overdraft fees, minimum account balance fees, minimum credit score requirements and other stringent requirements.
In contrast, low-income or low-balance consumers are discouraged or disqualified from traditional financial services offerings as a result of their onerous overdraft fees, minimum account balance fees, minimum credit score requirements and other stringent requirements. Historically, Members have incurred an average of $300-400 per year in overdraft, maintenance and other fees from their legacy banks for basic checking services.
The legal and regulatory framework for privacy and security issues is rapidly evolving, and, although we endeavor to comply with these laws and regulations and our own policies and documentation, we may fail to do so or be alleged to have failed to do so.
Accordingly, we publish our privacy policies and terms of service, which describe our practices concerning the collection, storage, use, disclosure, transmission, processing, and protection of information. 16 The legal and regulatory framework for privacy and security issues is rapidly evolving, and, although we endeavor to comply with these laws and regulations and our own policies and documentation, we may fail to do so or be alleged to have failed to do so.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

112 edited+28 added−25 removed212 unchanged
Biggest changeThe debt facility contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition. • If our present or any future key banking relationships are terminated and we are not able to secure or successfully migrate client portfolios to a new bank partner or partners, our business would be adversely affected. 19 • We depend upon several third-party service providers for processing our transactions and provide other important services for our business.
Biggest changeIf these assumptions, analyses or estimates prove to be incorrect or inaccurate, Dave’s actual operating results may differ materially and adversely from those forecasted or projected. • Fraudulent and other illegal activity involving our products and services could lead to reputational damage to us, reduce the use of our platform and services and may adversely affect our financial position and results of operations. • Dave’s management has limited experience in operating a public company. • We accept funds from and transfer funds to our Members daily, which in the aggregate comprise substantial sums, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results. • Dave has guaranteed its subsidiary’s obligations under a debt facility, which contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition. • If our present or any future key banking relationships are terminated and we are not able to secure or successfully migrate client portfolios to a new bank partner or partners, our business would be adversely affected. • We depend upon several third-party service providers for processing our transactions and provide other important services for our business.
If we were to become directly subject to banking regulations or be subjected to additional third-party risk management obligations, our business model may need to be substantially altered and we may not be able to continue to operate our business as it is currently operated. We are not currently subject to laws and regulations applicable to traditional banks.
If we were to become directly subject to banking regulations or be subjected to additional third-party risk management obligations, our business model may need to be substantially altered and we may not be able to continue to operate our business as it is currently operated. We are not currently directly subject to laws and regulations applicable to traditional banks.
If we were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, or agree to resolve such concerns by voluntary agreement, we could be subject to or agree to pay fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties, and other penalties or consequences, and the advances facilitated through our platform could be rendered void in whole or in part, any of which could have an adverse effect on our business, results of operations, and financial condition.
If we were found to be in violation of applicable state licensing or other requirements by a court or a state, federal, or local enforcement agency, or agree to resolve such concerns by voluntary agreement, we could be subject to or agree to pay fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties, and other penalties or consequences, and the advances facilitated through our platform could be rendered void in whole or in part, any of which could have an adverse effect on our business, results of operations, and financial condition.
This will limit or preclude your ability to influence corporate matters, including the outcome of important transactions, including a change in control. Shares of Dave Class V Common Stock will have 10 votes per share, while shares of Dave Class A Common Stock will have one vote per share.
This will limit or preclude your ability to influence corporate matters, including the outcome of important transactions, including a change in control. Shares of Dave Class V Common Stock have 10 votes per share, while shares of Dave Class A Common Stock have one vote per share.
Factors that may affect the trading price of Dave securities include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to Dave; • changes in the market’s expectations about Dave’s operating results; • success of competitors; • Dave’s operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning Dave or the market in general; • operating and stock price performance of other companies that investors deem comparable to Dave; • Dave’s ability to market new and enhanced products and technologies on a timely basis; • changes in laws and regulations affecting Dave’s business; • Dave’s ability to meet compliance requirements; • commencement of, or involvement in, litigation involving Dave; • changes in Dave’s capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of Dave Class A Common Stock available for public sale; • any major change in the Board or management; 42 • sales of substantial amounts of Dave Class A Common Stock by Dave’s directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
Factors that may affect the trading price of Dave securities include: • actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to Dave; • changes in the market’s expectations about Dave’s operating results; • success of competitors; 42 • Dave’s operating results failing to meet the expectation of securities analysts or investors in a particular period; • changes in financial estimates and recommendations by securities analysts concerning Dave or the market in general; • operating and stock price performance of other companies that investors deem comparable to Dave; • Dave’s ability to market new and enhanced products and technologies on a timely basis; • changes in laws and regulations affecting Dave’s business; • Dave’s ability to meet compliance requirements; • commencement of, or involvement in, litigation involving Dave; • changes in Dave’s capital structure, such as future issuances of securities or the incurrence of additional debt; • the volume of Dave Class A Common Stock available for public sale; • any major change in the Board or management; • sales of substantial amounts of Dave Class A Common Stock by Dave’s directors, executive officers or significant stockholders or the perception that such sales could occur; and • general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.
We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year (i) following March 4, 2025, the fifth anniversary of our IPO, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time) or (iii) in which we are deemed to be a large accelerated filer, which means the market value of the shares of Dave Class A Common Stock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
We will 43 remain an emerging growth company until the earliest of (a) the last day of the fiscal year (i) following March 4, 2025, the fifth anniversary of our IPO, (ii) in which we have total annual gross revenue of at least $1.07 billion (as adjusted for inflation pursuant to SEC rules from time to time) or (iii) in which we are deemed to be a large accelerated filer, which means the market value of the shares of Dave Class A Common Stock that are held by non-affiliates exceeds $700 million as of the last business day of our prior second fiscal quarter, and (b) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three year period.
If The Nasdaq Stock Market delists the Dave Class A Common Stock from trading on its exchange for failure to meet the listing standards, our stockholders could face significant material adverse consequences including: • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that the Dave Class A Common Stock is a “penny stock” which will require brokers trading in the Dave Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
If The Nasdaq Stock Market delists the 41 Dave Class A Common Stock from trading on its exchange for failure to meet the listing standards, our stockholders could face significant material adverse consequences including: • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that the Dave Class A Common Stock is a “penny stock” which will require brokers trading in the Dave Class A Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
Any damage to, or failure of, third party computer network systems or data centers generally, or those of our vendors (including as a result of disruptions at our third-party data center hosting facilities and cloud providers), or an improper action by our employees, agents or third-party vendors, 29 could result in interruptions in our services, causing Members and other partners to become dissatisfied with our products and services or subject us to potential financial losses.
Any damage to, or failure of, third party computer network systems or data centers generally, or those of our vendors (including as a result of disruptions at our third-party data center hosting facilities and cloud providers), or an improper action by our employees, agents or third-party vendors, could result in interruptions in our services, causing Members and other partners to become dissatisfied with our products and services or subject us to potential financial losses.
The development and implementation of the standards and controls and the hiring of experienced personnel necessary to achieve the level of accounting standards required of a public company may require expenditures greater than expected, and a delay could impact our ability to accurately and timely report our operating results, timely file required reports with the SEC and comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
The development and implementation of the standards and controls and the 31 hiring of experienced personnel necessary to achieve the level of accounting standards required of a public company may require expenditures greater than expected, and a delay could impact our ability to accurately and timely report our operating results, timely file required reports with the SEC and comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
For example, State attorneys general have indicated that they will take a more active role in enforcing consumer protection laws, including through the establishment of state consumer protection agencies as well as the use of Dodd-Frank Act provisions that authorize state attorneys general to enforce certain provisions of federal consumer financial laws and obtain civil money penalties and other relief available to the CFPB.
For example, State attorneys general have indicated that they will take a more active role in enforcing consumer protection laws, 34 including through the establishment of state consumer protection agencies as well as the use of Dodd-Frank Act provisions that authorize state attorneys general to enforce certain provisions of federal consumer financial laws and obtain civil money penalties and other relief available to the CFPB.
Wilk holds approximately 60.0% of the voting power of our capital stock on an outstanding basis and will be able to control matters submitted to its stockholders for approval, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of Dave’s assets or other major corporate transactions. Mr.
Wilk holds approximately 60.0% of the voting power of our capital stock on an outstanding basis and will be able to control matters submitted to our stockholders for approval, including the election of directors, amendments to our organizational documents and any merger, consolidation, sale of all or substantially all of Dave’s assets or other major corporate transactions. Mr.
Fluctuations in our quarterly or annual results of operations might result from a number of factors, many of which are outside of our control, including, but not limited to: • the election by our Members of expedited processing of our ExtraCash advance product; • the timing and volume of tips our Members send to us, advance payments and subscriptions and use of our products and services; • the timing and success of new product or service introductions by us or our competitors; 25 • fluctuations in Member retention rates; • changes in the mix of products and services that we provide to our Members; • the timing of commencement of new product development and initiatives, the timing of costs of existing product roll-outs and the length of time we must invest in those new products before they generate material operating revenues; • our ability to effectively sell our products through direct-to-consumer initiatives; • changes in our or our competitors’ pricing policies or sales terms; • costs associated with significant changes in our risk policies and controls; • the amount and timing of costs related to fraud losses; • the amount and timing of commencement and termination of major advertising campaigns, including partnerships and sponsorships; • disruptions in the performance of our products and services, and the associated financial impact thereof; • the amount and timing of costs of any major litigation to which we are a party; • the amount and timing of costs related to the acquisition of complementary businesses; • the amount and timing of capital expenditures and operating costs related to the maintenance and expansion of our business; • changes in our executive leadership team; • our ability to control costs, including third-party service provider costs and sales and marketing expenses in an increasingly competitive market; and • changes in the political or regulatory environment affecting the banking or financial technology service industries.
Fluctuations in our quarterly or annual results of operations might result from a number of factors, many of which are outside of our control, including, but not limited to: • the election by our Members of expedited processing of the ExtraCash advance product; • the timing and volume of optional tips our Members send to us, advance payments and subscriptions and use of our products and services; 26 • the timing and success of new product or service introductions by us or our competitors; • fluctuations in Member retention rates; • changes in the mix of products and services that we provide to our Members; • the timing of commencement of new product development and initiatives, the timing of costs of existing product roll-outs and the length of time we must invest in those new products before they generate material operating revenues; • our ability to effectively sell our products through direct-to-consumer initiatives; • changes in our or our competitors’ pricing policies or sales terms; • costs associated with significant changes in our risk policies and controls; • the amount and timing of costs related to fraud losses; • the amount and timing of commencement and termination of major advertising campaigns, including partnerships and sponsorships; • disruptions in the performance of our products and services, and the associated financial impact thereof; • the amount and timing of costs of any major litigation to which we are a party; • the amount and timing of costs related to the acquisition of complementary businesses; • the amount and timing of capital expenditures and operating costs related to the maintenance and expansion of our business; • changes in our executive leadership team; • our ability to control costs, including third-party service provider costs and sales and marketing expenses in an increasingly competitive market; and • changes in the political or regulatory environment affecting the banking or financial technology service industries.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise 36 adversely affect the growth of our business.
This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business.
Any failure or perceived failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions and/or damage our reputation, which could materially and adversely affect our business. Moreover, any competitors subject to different, or in some cases less restrictive, legislative or regulatory regimes may have or obtain a competitive advantage over us.
Any failure or perceived failure to comply with any of these laws or regulations could subject us to lawsuits or governmental actions and/or damage our reputation, which could materially and adversely affect our 33 business. Moreover, any competitors subject to different, or in some cases less restrictive, legislative or regulatory regimes may have or obtain a competitive advantage over us.
In addition to cyberattacks and other security breaches involving the theft of sensitive and confidential information, hackers, terrorists, sophisticated nation-state and nation-state supported actors and other malicious third parties recently have engaged in attacks that are designed to disrupt key business services, such as consumer-facing websites.
In addition to cyberattacks and other security breaches involving the theft of sensitive and confidential information, hackers, terrorists, sophisticated nation-state and nation-state supported actors and other malicious third parties recently have engaged in attacks that are designed to disrupt key business services, such as consumer-facing applications and websites.
Factors that could materially affect Dave’s future effective tax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standards or practices, (c) changes in the composition of operating income by tax jurisdiction, and (d) pre-tax operating results of Dave’s business.
Factors that 39 could materially affect Dave’s future effective tax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standards or practices, (c) changes in the composition of operating income by tax jurisdiction, and (d) pre-tax operating results of Dave’s business.
The Warrant Agreement provides that the terms of the Public Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.
The Warrant Agreement provides that the terms of the Public Warrants 40 may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding Public Warrants to make any change that adversely affects the interests of the registered holders of Public Warrants.
If we were to become directly subject to banking regulations or if the third-party risk management requirements applicable to us were to change, our business model may need to be substantially altered and we may not be able to continue to 34 operate our business as it is currently operated.
If we were to become directly subject to banking regulations or if the third-party risk management requirements applicable to us were to change, our business model may need to be substantially altered and we may not be able to continue to operate our business as it is currently operated.
However, our ability to transition to new 20 services and technologies that we develop may be inhibited by a lack of industry-wide standards, changes to the regulatory landscape, resistance by consumers to these changes, or by the intellectual property rights of third parties.
However, our ability to transition to new services and technologies that we develop may be inhibited by a lack of industry-wide standards, changes to the regulatory landscape, resistance by consumers to these changes, or by the intellectual property rights of third parties.
We expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, marketing, consumer communications, and information security, and we cannot determine the impact such future laws, regulations, and standards may have on our business.
We 36 expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, marketing, consumer communications, and information security, and we cannot determine the impact such future laws, regulations, and standards may have on our business.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.32 per warrant, provided that the last reported sales price of the Dave Class A Common Stock equals or exceeds $576.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Dave Class A Common Stock equals or exceeds $576.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met.
See “Cautionary Note Regarding Forward-Looking Statements.” Unless otherwise noted or the context otherwise requires, the disclosures in this Item 1A refer to Dave Inc. and its consolidated subsidiaries following the consummation of the Business Combination.
See “Cautionary Note Regarding Forward-Looking Statements.” 18 Unless otherwise noted or the context otherwise requires, the disclosures in this Item 1A refer to Dave Inc. and its consolidated subsidiaries following the consummation of the Business Combination.
Our allowance for losses is an estimate, and if actual repayment defaults are materially greater than our allowance for losses, or more generally, if our forecasts are not accurate, our financial position, liquidity and results of operations could be materially adversely affected.
Our allowance for credit losses is an estimate, and if actual repayment defaults are materially greater than our allowance for credit losses, or more generally, if our forecasts are not accurate, our financial position, liquidity and results of operations could be materially adversely affected.
Tax authorities could disagree with Dave’s intercompany charges, 39 cross-jurisdictional transfer pricing or other matters and assess additional taxes. If Dave does not prevail in any such disagreements, Dave’s profitability may be affected.
Tax authorities could disagree with Dave’s intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If Dave does not prevail in any such disagreements, Dave’s profitability may be affected.
If 40 and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
To increase our revenue, in addition to acquiring new Members, we must continue to retain existing Members and convince them to expand their use of our platform by increasing the number of Members and incentivizing them to pay for additional functionality.
To increase our revenue, in addition to acquiring new Members, we must continue to retain existing Members and expand their use of our platform by increasing the number of Members and incentivizing them to pay for additional functionality.
The MOU requires us to provide the 35 CA DFPI with certain information as requested by the CA DFPI and adhere to certain best practices in connection with our ExtraCash advance product (including certain disclosures related to us not being licensed by the CA DFPI).
The MOU requires us to provide the CA DFPI with certain information as requested by the CA DFPI and adhere to certain best practices in connection with our ExtraCash advance product (including certain disclosures related to us not being licensed by the CA DFPI).
Sales of a substantial number of the Dave Class A Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could 41 reduce the market price of the Dave Class A Common Stock.
Sales of a substantial number of the Dave Class A Common Stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of the Dave Class A Common Stock.
If we are not able to meet the customer support needs of our Members by chat and email during the hours that we currently provide support, we may need to increase our support coverage and provide additional phone-based support, which may reduce our profitability. 23 If our present or any future key banking relationships are terminated and we are not able to secure or successfully migrate client portfolios to a new bank partner or partners, our business would be adversely affected.
If we are not able to meet the customer support needs of our Members by chat and email during the hours that we currently provide support, we may need to increase our support coverage and provide additional phone-based support, which may reduce our profitability. 24 If our present or any future key banking relationships are terminated and we are not able to secure or successfully migrate client portfolios to a new bank partner or partners, our business would be adversely affected.
If we are unable to differentiate our products and platform from and successfully compete with those of our competitors, our business, results of operations and financial condition will be materially and adversely affected.
If we are unable to differentiate our products and platform from 20 and successfully compete with those of our competitors, our business, results of operations and financial condition will be materially and adversely affected.
Furthermore, any costs incurred as a result of this potential liability could harm our operating results. Any future litigation against us could be costly and time-consuming to defend.
Furthermore, any costs incurred as a result of this potential liability could harm our operating results. Litigation against us could be costly and time-consuming to defend.
These risks are discussed more fully below and include, but are not limited to, risks related to: • The industries in which we compete are highly competitive, which could adversely affect our results of operations. • If we are unable to keep pace with the rapid technological developments in our industry and the larger financial services industry necessary to continue providing our Members with new and innovative products and services, the use of our platform and other products and services could decline.
These risks are discussed more fully below and include, but are not limited to, risks related to: • The industries in which we operate are highly competitive, which could adversely affect our results of operations. • If we are unable to keep pace with the rapid technological developments in our industry and the larger financial services industry necessary to continue providing our Members with new and innovative products and services, the use of our platform and other products and services could decline.
These factors include: • actual or anticipated fluctuations in operating results; 37 • failure to meet or exceed financial estimates and projections of the investment community or that Dave provides to the public; • issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general; • announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • operating and share price performance of other companies in the industry or related markets; • the timing and magnitude of investments in the growth of the business; • actual or anticipated changes in laws and regulations; • additions or departures of key management or other personnel; • increased labor costs; • disputes or other developments related to intellectual property or other proprietary rights, including litigation; • the ability to market new and enhanced solutions on a timely basis; • sales of substantial amounts of the Dave Class A Common Stock by Dave’s directors, executive officers or significant stockholders or the perception that such sales could occur; • changes in capital structure, including future issuances of securities or the incurrence of debt; and • general economic, political and market conditions, including rising interest rates.
These factors include: • actual or anticipated fluctuations in operating results; • failure to meet or exceed financial estimates and projections of the investment community or that Dave provides to the public; • issuance of new or updated research or reports by securities analysts or changed recommendations for the industry in general; • announcements of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; • operating and share price performance of other companies in the industry or related markets; • the timing and magnitude of investments in the growth of the business; • actual or anticipated changes in laws and regulations; • additions or departures of key management or other personnel; • increased labor costs; • disputes or other developments related to intellectual property or other proprietary rights, including litigation; • the ability to market new and enhanced solutions on a timely basis; • sales of substantial amounts of the Dave Class A Common Stock by Dave’s directors, executive officers or significant stockholders or the perception that such sales could occur; • limited liquidity and trading volumes in the Dave Class A Common Stock; • changes in capital structure, including future issuances of securities or the incurrence of debt; and • general economic, political and market conditions, including rising interest rates.
Regulators have broad discretion with respect to the interpretation, implementation, and enforcement of these laws and regulations, including through enforcement actions that could subject us to civil money penalties, Member remediations, increased compliance costs, and limits or prohibitions on our ability to offer certain products or services or to engage in certain activities.
Regulators have broad discretion with respect to the interpretation, implementation, and enforcement of these laws and regulations, including through enforcement actions that could subject us to civil money penalties, Member remediation, increased compliance costs, and limits or prohibitions on our ability to offer certain products or services or to engage in certain activities.
Information security risks in the financial services industry continue to increase generally, in part because of new technologies, the use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and 27 other malicious third parties.
Information security risks in the financial services industry continue to increase generally, in part because of new technologies, the use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business 28 transactions and the increased sophistication and activities of organized criminals, perpetrators of fraud, hackers, terrorists and other malicious third parties.
Our rapid growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. Risks Related to Our Business and Industry The industries in which we compete are highly competitive, which could adversely affect our results of operations.
Our rapid growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful. Risks Related to Our Business and Industry The industries in which we operate are highly competitive, which could adversely affect our results of operations.
We rely on agreements with Evolve to provide deposit accounts, debit card services and other transaction services to us and our Members.
We rely on agreements with Evolve to provide ExtraCash and other deposit accounts, debit card services and other transaction services to us and our Members.
We believe it is likely that our risk control mechanisms may continue to adversely affect the growth of our Dave banking product for the foreseeable future and as a result, negatively impact our operating revenues. 26 We are exposed to losses from Dave banking Member accounts.
We believe it is likely that our risk control mechanisms may continue to adversely affect the growth of our Dave banking product for the foreseeable future and, as a result, negatively impact our operating revenues. 27 We are exposed to losses from Dave banking Member accounts.
In addition, fluctuations in the price of Dave securities could contribute to the loss of all or part of your investment. If an active market for our securities develops and continues, the trading price of Dave securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.
In addition, fluctuations in the price of Dave securities could contribute to the loss of all or part of Dave shareholders’ investment. If an active market for our securities develops and continues, the trading price of Dave securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.
We transfer funds to our Members daily, which in the aggregate comprise substantial sums, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.
We receive funds from, and transfer funds to, our Members daily, which in the aggregate comprise substantial sums, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.
As we have 28 increased our Member base and our brand has become more widely known and recognized, third parties may continue to seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our Members’ data.
As we have increased our Member base and our brand has become more 29 widely known and recognized, third parties may continue to seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our Members’ data.
As of March 1, 2023, our current officers and directors hold approximately 15% of the outstanding shares of Common Stock, including the 1,514,082 shares of Dave Class V Common Stock convertible into shares of Dave Class A Common Stock, which represents approximately 60.0% of the voting power of the outstanding shares of Common Stock.
As of March 1, 2024, our current officers and directors hold approximately 15% of the outstanding shares of Common Stock, including the 1,514,082 shares of Dave Class V Common Stock convertible into shares of Dave Class A Common Stock, which represents approximately 60.0% of the voting power of the outstanding shares of Common Stock.
If our banking partner or other strategic partners were to conclude that our systems and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected.
If our banking partner or other strategic partners were to conclude that our systems and security policies and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected.
As of December 31, 2022, material weaknesses were identified in our internal control over financial reporting. These material weaknesses, as well as our remediation plans, are described in Item 9A of this Annual Report on Form 10-K.
As of December 31, 2023, material weaknesses were identified in our internal control over financial reporting. These material weaknesses, as well as our remediation plans, are described in Item 9A of this Annual Report on Form 10-K.
You should consider our business and prospects in light of the risks and significant challenges we face as a new entrant in our industry, including, among other things, with respect to our ability to: • build a well-recognized, trusted and respected brand; • establish and expand our Member base; • successfully market our products and services; • properly price our services and successfully anticipate the usage of such services by our Members; • improve and maintain our operational efficiency; • maintain a reliable, secure, high-performance and scalable technology infrastructure; 22 • predict our future revenues and appropriately budget our expenses; • attract, retain and motivate talented employees; • anticipate trends that may emerge and affect our business; • anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; and • navigate an evolving and complex regulatory environment.
Our business and prospects should be considered in light of the risks and significant challenges we face as a new entrant in our industry, including, among other things, with respect to our ability to: • build a well-recognized, trusted and respected brand; • establish and expand our Member base; • successfully market our products and services; • properly price our services and successfully anticipate the usage of such services by our Members; • improve and maintain our operational efficiency; 23 • maintain a reliable, secure, high-performance and scalable technology infrastructure; • predict our future revenues and appropriately budget our expenses; • attract, retain and motivate talented employees; • anticipate trends that may emerge and affect our business; • anticipate and adapt to changing market conditions, including technological developments and changes in competitive landscape; and • navigate an evolving and complex regulatory environment.
If we are unable to find a replacement financial institution to provide the services we receive from Evolve, we would not be able to service our deposit accounts, debit cards and other services, which would have a material adverse effect on our business, financial condition and results of operations.
If we are unable to find a replacement financial institution to provide the services we receive from Evolve, we would not be able to offer ExtraCash advances, service our deposit accounts, debit cards and other services, which would have a material adverse effect on our business, financial condition and results of operations.
A single significant incident of fraud, or increases in the overall level of fraud, involving our products and services, have in the past and could in the future, result in reputational damage to us.
A single significant incident of fraud, or increases in the overall level of fraud, involving our products and services, have in the past and could in the future, result in operational losses and reputational damage to us.
In connection with the preparation and audits of our consolidated financial statements for the years ended December 31, 2022 and 2021, material weaknesses were identified in our internal control over financial reporting.
In connection with the preparation and audits of our consolidated financial statements for the years ended December 31, 2023 and 2022, material weaknesses were identified in our internal control over financial reporting.
Such negative publicity could involve: the transparency, fairness, Member experience, quality, and reliability of our platform or consumer fintech platforms in general, the effectiveness of our risk models, our ability to effectively manage and resolve complaints, our privacy and security practices, litigation, regulatory activity, misconduct by our employees, funding sources, bank partners, service providers, or others in our industry, the experience of consumers with our platform or services.
Such negative publicity could involve: the transparency, fairness, Member experience, quality, and reliability of our platform or consumer fintech platforms in general, the effectiveness of our risk models, our ability to effectively manage and resolve complaints, our privacy and security practices, litigation, regulatory activity, misconduct by our employees, funding sources, bank partners and structure of our bank partner products, service providers, or others in 32 our industry, the experience of consumers with our platform or services.
As a result, we may be unable to retain existing Members or increase the usage of our platform by them, which would have an adverse effect on our business, revenue, gross margins, and other operating results, and accordingly, on the trading price of our common stock.
As a result, we may be unable to retain existing Members or increase their usage of our platform, which would have an adverse effect on our business, revenue, gross margins, and other operating results, and accordingly, on the trading price of our common stock.
To address the challenges we face with respect to fraudulent activity of the nature outlined above and other activity as well, we have implemented risk control mechanisms that have made it more difficult for all Members, including legitimate Members, to obtain and use our Dave banking product.
To address the challenges we face with respect to fraudulent activity of the nature outlined above and other fraudulent activities, we have implemented risk control mechanisms that have made it more difficult for all Members, including legitimate Members, to obtain and use our Dave banking product.
Our underwriting standards may not offer adequate protection against the risk of non-payment, especially in periods of economic uncertainty such as has existed with the onset of the COVID-19 pandemic and more recently with rising interest rates and inflationary pressures.
Our underwriting standards may not offer adequate protection against the risk of non-payment, especially in periods of economic uncertainty such as existed during the COVID-19 pandemic and more recently with rising interest rates, and inflationary pressures.
Our pricing strategy for new products and services we introduce may prove to be unappealing to our Members, and our competitors could choose to bundle certain products and services competitive with ours.
Our pricing strategy for new products and services may prove to be unappealing to our Members, and our competitors could choose to bundle certain products and services to be competitive with ours.
In addition, we expect to continue to expand substantial financial and other resources on: • product development, including investments in our product development team and the development of new products and new functionality for our platform; • sales, marketing and customer success; • technology infrastructure, including systems architecture, scalability, availability, performance and security; • acquisitions and/or strategic investments; 24 • regulatory compliance and risk management; and • general administration, including increased legal and accounting expenses associated with being a public company.
In addition, we expect to invest substantial financial and other resources on: • product development, including investments in our product development team and the development of new products and new functionality for our platform; • sales, marketing and customer success; • technology infrastructure, including systems architecture, scalability, availability, performance and security; • acquisitions and/or strategic investments; 25 • regulatory compliance and risk management; and • general administration, including increased legal and accounting expenses associated with being a public company.
Dave is a U.S. corporation and thus subject to U.S. corporate income tax on its worldwide income. Further, since Dave’s operations and customers are located throughout the United States, Dave will be subject to various U.S. state and local taxes.
Dave is a U.S. corporation and thus subject to U.S. corporate income tax on its worldwide income. Further, since Dave’s operations and customers are located throughout the United States, Dave will be subject to various U.S. state and local taxes, including local and state sales and use taxes.
Any such actions could subject us to civil money penalties and fines, Member remediations, 33 and increased compliance costs, damage our reputation and brand and limit or prohibit our ability to offer certain products and services or engage in certain business practices.
Any such actions could subject us to civil money penalties and fines, Member remediation, and increased compliance costs, damage our reputation and brand and limit or prohibit our ability to offer certain products and services or engage in certain business practices.
Furthermore, our financial results could be adversely affected if our costs associated with using Evolve materially change or if any penalty or claim for damages is imposed as a result of our breach of our agreements with them or their other requirements.
Furthermore, our financial results could be adversely affected if our costs associated with using Evolve materially change or if any penalty or claim for damages is imposed as a result of our breach of our agreements with them.
While we believe these efforts will be sufficient to remediate the material weaknesses, we cannot assure you that we will be able to complete our evaluation, testing or any required remediation in a timely fashion, or at all or that the measures we have taken to date and may take in the future will prevent or avoid potential future material weaknesses.
While we believe these efforts will be sufficient to remediate the material weaknesses, we cannot provide assurance that we will be able to complete our evaluation, testing or any required remediation in a timely fashion, or at all or that the measures we have taken to date and may take in the future will prevent or avoid potential future material weaknesses.
In addition, the insurance we maintain may be insufficient to cover our losses resulting from disasters, cyber-attacks, or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance.
In addition, the insurance we maintain may not cover or may be insufficient to cover our losses resulting from disasters, or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance.
Jason Wilk, Dave’s co-founder and its Chief Executive Officer and President, respectively, holds all of the issued and outstanding shares of Dave Class V Common Stock. Accordingly, as of March 1, 2023, Mr.
Jason Wilk, Dave’s co-founder and its Chief Executive Officer and President, holds all of the issued and outstanding shares of Dave Class V Common Stock. Accordingly, as of March 1, 2024, Mr.
Our ExtraCash advance product exposes us to financial losses if Members do not repay the advance we provide to them. The timing and volume of advance repayments have a significant impact on our financial results and cash flows. If a large number of Members do not repay advances, our financial condition and operating results would be adversely affected.
The ExtraCash advance product exposes us to financial losses if Members do not repay the advance provided. The timing and volume of advance repayments have a significant impact on our financial results and cash flows. If a large number of Members do not repay advances, our financial condition and operating results would be adversely affected.
In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support, risk and compliance operations, and professional services, to serve our growing Member base. 21 Any failure of or delay in these efforts could result in service interruptions, impaired system performance, and reduced Member satisfaction, which could hurt our revenue growth.
In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support, risk and compliance operations, and professional services, to serve our growing Member base. 22 Any failure of or delay in these efforts could result in service interruptions, impaired system performance, and reduced Member satisfaction, which could negatively impact our revenue growth.
Dave’s management has limited experience in operating a public company. Many of our senior management team have limited experience in the management of a publicly-traded company.
Dave’s management has limited experience in operating a public company. Many of our senior management team have limited experience in managing a publicly-traded company.
We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
We cannot provide assurance that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
We have incurred net losses in previous fiscal years, including fiscal year 2022, and we may incur losses again in the future.
We have incurred net losses in previous fiscal years, including fiscal year 2023, and we may incur losses again in the future.
Many existing and potential competitors are entities substantially larger in size, have more resources, are more highly diversified in revenue and substantially more established with significantly more brand awareness than ours. As such, many of our competitors can leverage their size, robust networks, financial wherewithal, brand awareness, pricing power and technological assets to compete with us.
Many existing and potential competitors are entities substantially larger in size and more established, including with greater resources, highly diversified revenues and significantly more brand awareness than ours. As such, many of our competitors can leverage their size, robust networks, financial wherewithal, brand awareness, pricing power and technological assets to compete with us.
If we lose key personnel, if their reputations are damaged, or if we are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.
If we lose key personnel, or if we are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of the company’s operations.
Their limited experience with the increasingly complex laws pertaining to public companies could be a significant disadvantage and an increasing amount of their time may be devoted to these activities, which will result in less time being devoted to the management and growth of the company’s operations.
We cannot assure you that we will be able to develop products and services on our platform that will enable us to meet quality, price and engineering standards, as well as comply with any regulatory standards we may be subject to.
We cannot provide assurance that we will be able to develop products and services on our platform that will enable us to meet quality, price and engineering standards, as well as comply with any regulatory standards we may be subject to.
Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
Any of the factors listed below could have a material adverse effect on investments in our securities and our securities may trade at prices significantly below the price paid for such investments. In such circumstances, the trading price of our securities may not recover and may experience a further decline.
In the event of a major earthquake, 32 hurricane or catastrophic event such as fire, power loss, telecommunications failure, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in the availability of our products and services, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.
In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, political instability, civil unrest, war, or terrorist attack, we may be unable to continue our operations and may experience system interruptions, reputational harm, delays in our application development, lengthy interruptions in the availability of our products and services, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.
We also have arrangements in place with certain third-party service providers that require us to share consumer information.
We also have arrangements in place with certain third-party service providers that require us to share consumer information for servicing purposes.
Our ExtraCash advances expose us to credit risk of our Members and if our underwriting criteria for making advances is not sufficient to mitigate against this risk, our financial condition and operating results could be adversely affected if a substantial number of our Members fail to repay the ExtraCash advance they receive.
ExtraCash advances expose us to credit risk of our Members and if our underwriting criteria for making advances is not sufficient to mitigate against this risk, or if the data we use to underwrite is inaccurate or incomplete, our financial condition and operating results could be adversely affected if a substantial number of our Members fail to repay the ExtraCash advance they receive.
The financial services industry continues to be targeted by new laws or regulations in many jurisdictions, including the U.S. states in which we operate, that could restrict the products and services we offer, impose additional compliance costs on us, render our current operations unprofitable or even prohibit our current operations.
The financial services industry continues to be highly regulated and subject to new laws or regulations in many jurisdictions, including the U.S. states in which we operate, which could restrict the products and services we offer, impose additional compliance costs on us, render our current operations unprofitable or even prohibit our current or future operations.
Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for stockholders to receive a premium for their shares of Dave Class A Common Stock, and could also affect the price that some investors are willing to pay for the Dave Class A Common Stock. 38 Dave is subject to risks related to taxation in the United States.
Any of the foregoing provisions and terms that have the effect of delaying or deterring a change in control could limit the opportunity for stockholders to receive a premium for their shares of Dave Class A Common Stock, and could also affect the price that some investors are willing to pay for the Dave Class A Common Stock.
Although we maintain insurance to cover losses resulting from our errors and omissions, there can be no assurance that our insurance will cover all losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.
There can be no assurance that our insurance will cover losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.
We took remedial measures, including the engagement of an outside security consultant to monitor for ongoing dark web activity and to conduct a security audit and incident investigation, and notified relevant parties as required under applicable law and agreements.
The May 2020 and June 2020 incidents are collectively referred to herein as the "2020 Incidents." We took remedial measures, including the engagement of an outside security consultant to monitor for ongoing dark web activity and to conduct a security audit and incident investigation, and notified relevant parties as required under applicable law and agreements.
Risks Related to Regulatory and Legal Matters Our business is subject to extensive regulation and oversight in a variety of areas, including registration and licensing requirements under federal, state and local laws and regulations. We are subject to extensive regulation under United States federal and state laws and regulations.
Risks Related to Regulatory and Legal Matters Our business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws, and is subject to regulatory investigations and consumer litigation. We are subject to extensive regulation under United States federal and state laws and regulations.
In the event that a third-party service provider fails to perform such functions for any reason, including negligence, willful misconduct or fraud, fire, natural disaster, power loss, telecommunication failures, software and hardware defects, terrorist attacks and similar events, our ability to process payments and perform other operational functions for which we currently rely on such third-party service providers will suffer and our business, cash flows and future prospects may be negatively impacted.
In the event that a third-party service provider fails to perform such functions for any reason, including negligence, willful misconduct or fraud, fire, natural disaster, power loss, telecommunication failures, software and hardware defects, terrorist attacks and similar events, our ability to process payments and perform other operational functions for which we currently rely on such third-party service providers will suffer and our business, cash flows and future prospects may be negatively impacted. 30 We use both internally developed and third-party systems, including cloud computing and storage systems, for our services and certain aspects of transaction processing.
The Debt Facility contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition. We depend upon several third-party service providers for processing our transactions and provide other important services for our business.
We have guaranteed certain of Dave OD Funding’s obligations under the Debt Facility. The Debt Facility contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition. We depend upon several third-party service providers for processing our transactions and provide other important services for our business.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeSee Note 14, ”Commitments and Contingencies,” to our audited consolidated financial statements included in this report for information regarding legal proceedings in which we are involved. Item 4. Mine Safety Disclosures. Not applicable. 44 PART II
Biggest changeSee Note 12, ”Commitments and Contingencies,” to our consolidated financial statements included in this report for information regarding legal proceedings in which we are involved. Item 4. Mine Safety Disclosures. Not applicable. 45 PART II
Item 2. Propert ies. We operate out of our headquarters in Los Angeles, California. We maintain two sublease agreements for approximately 9,000 square feet located in Los Angeles, California. The subleases for the Los Angeles spaces are scheduled to expire in October 2023 and December 2025, respectively. Item 3. Legal Pr oceedings.
Item 2. Propert ies. We operate out of our headquarters in Los Angeles, California. We maintain two sublease agreements for approximately 9,000 square feet located in Los Angeles, California. The subleases for the Los Angeles spaces are scheduled to expire in October 2028 and December 2025, respectively. Item 3. Legal Pr oceedings.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+1 added−0 removed4 unchanged
Biggest changeThe terms of the convertible note are described in Note 10 Convertible Note Payable in the notes to our audited consolidated financial statements for the year ended December 31, 2022 contained in this Annual Report on Form 10-K. Issuer Purchases of Equity Securities None. Item 6. Reserved 45
Biggest changeThe terms of the convertible note are described in Note 9 Convertible Note Payable in the notes to our consolidated financial statements for the year ended December 31, 2023 contained in this Annual Report on Form 10-K.
Holders of Record As of December 31, 2022, there were 84 holders of record of Dave Class A common stock, one holder of record of our Class V common stock and two holders of record of the public warrants.
Holders of Record As of December 31, 2023, there were 95 holders of record of Dave Class A common stock, one holder of record of our Class V common stock and two holders of record of the public warrants.
Added
On January 29, 2024, the Company repurchased the $105.5 million outstanding balance of the convertible note as of December 31, 2023 for $71.0 million. Refer to Note 21 in the accompanying consolidated financial statements of Dave for additional information. Issuer Purchases of Equity Securities None. Item 6. [Reserved] 46

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

98 edited+14 added−62 removed34 unchanged
Biggest changeThe increase of $25.3 million, or 58%, was primarily attributable to the following: • an increase in insurance related costs of $7.0 million, primarily related to director and officer, general liability and cyber insurance premiums; • an increase in accounting costs of $2.3 million, primarily related to various audit, tax and Sarbanes-Oxley compliance readiness related fees associated with the Business Combination in January 2022; • an increase in technology and infrastructure expenses of $3.5 million, primarily due to increased costs to support the growth of our business and development of new products and features; • an increase in expenses related to our Checking Product of $8.6 million, primarily attributable to processing fees, card fees and fraud related costs associated with the growth in Members and the number of transactions processed; • an increase in legal fees of $2.9 million primarily due to ongoing litigation, compliance, employment and general corporate related matters; • an increase in various administrative expenses of $2.1 million, primarily due to increases in investor relations fees, company meetings, bank service charges, sales tax, licenses and fees, travel and entertainment and other administrative expenses; • an increase in depreciation and amortization of $3.7 million, primarily due to accelerated amortization related to the change in useful life of a certain intangible asset, increased amortization of internally developed software due to increased internally developed capitalized costs, and depreciation related to leasehold improvements and equipment purchases; and • an increase in rent expense of $0.8 million, due to additional leased office space; offset by • a decrease in charitable contribution expenses of $1.6 million, primarily due to decreased amounts pledged to charitable meal donations related to Members’ tips; and • a decrease of $4.0 million related to primarily due to non-recurring fraudulent activity in relation to our Checking Product during the first quarter of 2021.
Biggest changeThe increase of $2.1 million, or 3.1%, was primarily attributable to the following: • an increase in legal fees of $4.0 million primarily due to ongoing litigation, settlement, compliance, employment and general corporate related matters; • an increase in expenses related to our Checking Product of $2.7 million, primarily attributable to processing fees, card fees and fraud related costs associated with the growth in Members and the number of transactions processed; • an increase in charitable contribution expenses of $2.0 million, primarily due to increased amounts pledged to charitable meal donations related to Members’ tips; • an increase in technology and infrastructure expenses of $0.8 million, primarily due to increased costs to support the growth of our business and development of new products and features; 52 • a decrease in insurance related costs of $3.5 million, primarily related to reductions in director and officer premiums; • a decrease in rent expense of $1.8 million due to a reduction in leased office space; • a decrease in depreciation and amortization of $1.2 million, primarily due to accelerated amortization related to the change in useful life of a certain intangible asset during the year ended December 31, 2022, offset by increased amortization of internally developed software due to increased internally developed capitalized costs, and depreciation related to leasehold improvements and equipment purchases; and • a decrease in administrative expenses of $0.8 million, primarily due to reductions in investor relations fees, accounting related fees, in-person company meetings, bank service charges, sales tax, licenses and fees, travel and entertainment and other administrative expenses.
Except for processing and servicing fees associated with advance disbursements which are recorded net against revenue, all other processing and service fees are expensed as incurred. Advertising and Marketing Advertising and marketing expenses consist primarily of fees we pay to our platform partners.
Except for processing and servicing fees associated with advance disbursements which are recorded net against revenue, all other processing and service fees are expensed as incurred. Advertising and Marketing Advertising and marketing expenses consist primarily of fees we pay to our advertising and marketing platform partners.
We believe that our cash on hand should be sufficient to meet our working capital and capital expenditure requirements for a period of at least 12 months from the date of this report and sufficient to fund our operations. We may raise additional capital through private or public equity or debt financings.
We believe that our cash on hand should be sufficient to meet our working capital and capital expenditure requirements and fund our operations for a period of at least 12 months from the date of this report. We may raise additional capital through private or public equity or debt financings.
Excluding non-cash impacts, changes in cash flows from operations included an increase in receivables related to revenue from Member advances of $6.8 million, an increase in prepaid expenses and other current assets of $6.8 million, a decrease in accrued expenses of $1.7 million, and a decrease in other current liabilities of $0.3 million.
Excluding non-cash impacts, changes in cash flows from operations included an increase in receivables related to revenue from Member advances of $6.8 million, a decrease in other current liabilities of $0.3 million, an increase in prepaid expenses and other current assets of $6.8 million, and a decrease in accrued expenses of $1.7 million.
Subject to certain conditions set forth in the JOBS Act, if we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd- Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audited consolidated financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
Subject to certain conditions set forth in the JOBS Act, if we intend to rely on such exemptions, we are not required to, among other things: (a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd- Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the consolidated financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.
Compensation and Benefits 48 Compensation and benefits expenses represent the compensation, inclusive of stock-based compensation and benefits, that we provide to our employees and the payments we make to third-party contractors. While we have an in-house customer service function, we employ third-party contractors to conduct call center operations and handle routine customer service inquiries and support.
Compensation and Benefits Compensation and benefits expenses represent the compensation, inclusive of stock-based compensation and benefits, that we provide to our employees and the payments we make to third-party contractors. While we have an in-house customer service function, we employ third-party contractors to conduct call center operations and handle routine customer service inquiries and support.
We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison among fiscal periods. The non-GAAP financial measure is not, and should not be viewed as, a substitute for GAAP reporting measures.
We believe that the non-GAAP financial information may be helpful in assessing our operating performance and facilitates an alternative comparison among fiscal 54 periods. The non-GAAP financial measure is not, and should not be viewed as, a substitute for GAAP reporting measures.
While our significant accounting estimates are described in the notes to our audited consolidated financial statements, we believe that the following accounting estimates require a greater degree of judgment and complexity and are the most critical to understanding our financial condition and historical and future results of operations.
While our significant accounting estimates are described in the notes to our consolidated financial statements, we believe that the following accounting estimates require a greater degree of judgment and complexity and are the most critical to understanding our financial condition and historical and future results of operations.
The preparation of these audited consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the audited consolidated financial statements, as well as the reported revenues and expenses incurred during the reporting periods.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported revenues and expenses incurred during the reporting periods.
The $7.5 million in transaction costs were also included as part of additional paid in capital within our audited consolidated balance sheets as the transaction costs were originally capitalized in conjunction with the Business Combination.
The $7.5 million in transaction costs were also included as part of additional paid in capital within our consolidated balance sheets as the transaction costs were originally capitalized in conjunction with the Business Combination.
Cash Flows From Financing Activities During the year ended December 31, 2022, net cash provided by financing activities was $321.8 million, which consisted of $195.0 million in proceeds from PIPE financing in connection with the Business Combination, $29.7 million in proceeds from the Business Combination, net of redemptions, $0.6 million in proceeds from stock option exercises, $100 million in proceeds from borrowings related to the Purchase Agreement with FTX Ventures, and $40.0 million related to debt facility borrowings, partially offset by $23.0 million for the payment of issuance costs related to the Business Combination, $20.0 million related to the repayment of the credit facility borrowings, and $0.5 million related to the repurchase of Class A Common Stock.
During the year ended December 31, 2022, net cash provided by financing activities was $321.8 million, which consisted of $195.0 million in proceeds from PIPE financing in connection with the Business Combination, $29.7 million in proceeds from the Business Combination, net of redemptions, $0.6 million in proceeds from stock option exercises, $100 million in proceeds from borrowings related to the Note Purchase Agreement with FTX Ventures, 57 and $40.0 million related to debt facility borrowings, partially offset by $23.0 million for the payment of issuance costs related to the Business Combination, $20.0 million related to the repayment of the credit facility borrowings, and $0.5 million related to the repurchase of Class A Common Stock.
For U.S. income tax purposes, we are taxed as a Subchapter C corporation. We recognize deferred taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. We recorded a valuation allowance against our deferred tax assets, net of certain deferred tax liabilities, at December 31, 2022 and December 31, 2021.
For U.S. income tax purposes, we are taxed as a Subchapter C corporation. We recognize deferred taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. We recorded a valuation allowance against our deferred tax assets, net of certain deferred tax liabilities, at December 31, 2023 and December 31, 2022.
The increase of $4.3 million, or 100%, was primarily attributable to the extinguishment of a $7.5 million liability related to transaction costs associated with the Business Combination that were settled during 2022 in exchange for shares of our Class A common stock.
The decrease of $4.3 million, or 100%, was primarily attributable to the extinguishment of a $7.5 million liability related to transaction costs associated with the Business Combination that were settled during 2022 in exchange for shares of our Class A common stock.
Other Operating Expenses Other operating expenses consist primarily of technology and infrastructure (third-party Software as a Service “SaaS”), commitments to charity, transaction based costs (program expenses, association fees, processor fees, losses from Member-disputed transactions, bank card fees and fraud), depreciation and amortization of property and equipment and intangible assets, general and recurring legal fees, rent, certain sales tax related costs, office related expenses, public relations costs, professional service fees, travel and entertainment, and insurance.
Other Operating Expenses Other operating expenses consist primarily of technology and infrastructure (third-party Software as a Service “SaaS”), commitments to charity, transaction based costs (program expenses, association fees, processor fees, losses from Member-disputed transactions, bank card fees and fraud), depreciation and amortization of property and equipment and intangible assets, legal fees, rent, certain sales tax related costs, office related expenses, public relations costs, professional services fees, travel and entertainment, and insurance.
Income Taxes We follow ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the audited consolidated financial statements or tax returns.
Income Taxes We follow ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements 58 or tax returns.
We believe that the accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and estimates. Please refer to Note 2 in our accompanying audited consolidated financial statements for the years ended December 31, 2022 and 2021 included in this Annual Report on Form 10-K.
We believe that the accounting estimates discussed below are critical to understanding our historical and future performance, as these estimates relate to the more significant areas involving management’s judgments and estimates. Please refer to Note 2 in our accompanying consolidated financial statements for the years ended December 31, 2023 and 2022 included in this Annual Report on Form 10-K.
Critical Accounting Estimates Our audited consolidated financial statements have been prepared in accordance with U.S GAAP.
Critical Accounting Estimates Our consolidated financial statements have been prepared in accordance with U.S. GAAP.
This included payments for internally developed software costs of $8.6 million, the purchase of property and equipment of $0.7 million, net disbursements and collections of Member advances of $114.3 million, the purchase of short-term investments of $202.1 million, and the purchase of marketable securities of $317.7 million, offset by the sale of marketable securities of $325.6 million and the sale and maturity of short-term investments of $32.2 million.
This amount included payments for internally developed software costs of $8.6 million, the purchase of property and equipment of $0.7 million, net disbursements and collections of Member advances of $114.3 million, the purchase of investments of $202.1 million, and the purchase of marketable securities of $317.7 million, offset by the sale of marketable securities of $325.6 million and the sale and maturity of investments of $32.2 million.
We have only begun to address the many inequities in financial services, but our progress to date demonstrates the demand for Dave to rewire the financial system for the everyday person.
We have only begun to address the many inequities in financial services, but our progress to date demonstrates the demand for Dave to improve the financial system for the everyday person.
See Note 2 of our accompanying audited consolidated financial statements included in this report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the years ended December 31, 2022 and 2021. 61 In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act for emerging growth companies.
See Note 2 of our accompanying consolidated financial statements included in this report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the years ended December 31, 2023 and 2022. In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act for emerging growth companies.
The increase was primarily attributable to the growth in Members engaging with our Checking Product and corresponding growth in the number of transactions initiated by Members.
The increase was primarily attributable to the growth in Members engaging with our Checking Product and corresponding growth in the number of card spend transactions initiated by Members.
Since inception and through the date of this report, over 10 million Members have registered on the Dave app and over eight million of them have used at least one of our current products and we believe that we have a substantial opportunity to continue growing our Member base going forward.
Since inception and through the date of this report, over 13 million Members have registered on the Dave app and over 10 million Members have used at least one of our products and we believe that we have a substantial opportunity to continue growing our Member base going forward.
Cash Flows From Investing Activities During the year ended December 31, 2022, net cash used in investing activities was $285.6 million.
During the year ended December 31, 2022, net cash used in investing activities was $285.6 million.
Changes in fair value of earnout liability —Changes in fair value of earnout liabilities totaled a benefit of $9.6 million for the year ended December 31, 2022, compared to $0 for the year ended December 31, 2021.
Changes in fair value of earnout liability —Changes in fair value of earnout liabilities totaled a benefit of $0.02 million for the year ended December 31, 2023, compared to totaled a benefit of $9.6 million for the year ended December 31, 2022.
See Note 13, Debt and Credit Facility in the notes to our audited consolidated financial statements in this report. Additionally, we also have certain contractual payment obligations for interest owed under the $100.0 million Note we issued and sold pursuant to the Purchase Agreement entered into with FTX Ventures.
See Note 11, Debt and Credit Facility in the notes to our consolidated financial statements in this report. Additionally, we also had certain contractual payment obligations for interest owed under the $100.0 million Note we issued and sold pursuant to the Note Purchase Agreement entered into with FTX Ventures.
According to a report by FHN, legacy financial institutions charge approximately $30 billion in fees annually. The FHN estimates that financially “coping” and “vulnerable” populations pay over $120 billion a year in fees and interest for access to short-term credit. Our prospective Member opportunity is also significant.
According to a 2023 report by FHN, legacy financial institutions charge approximately $40 billion in fees annually. The FHN estimates that financially “coping” and “vulnerable” populations pay over $160 billion a year in fees and interest for access to short-term credit. Our prospective Member opportunity is also significant.
Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Subsequent recoveries, if any, of Member advances written-off are recorded as a reduction to Member advances, resulting in a reduction to the allowance for unrecoverable advances and a corresponding reduction to the provision for unrecoverable advances in the audited consolidated statements of operations when collected.
Subsequent recoveries, if any, of Member advances written-off are recorded as a reduction to Member advances, resulting in a reduction to the allowance for credit losses and a corresponding reduction to the provision for credit losses in the consolidated statements of operations when collected.
We have estimated $0.9 million and $0.5 million of uncertain tax positions as of December 31, 2022 and 2021, respectively, related to state income taxes and federal and state R&D tax credits. We are subject to income tax in jurisdictions in which we operate, including the United States.
We have estimated $1.3 million and $0.9 million of uncertain tax positions as of December 31, 2023 and 2022, respectively, related to state income taxes and federal and state R&D tax credits. We are subject to income tax in jurisdictions in which we operate, including the United States.
We also help Members generate extra income for spending or emergencies through our Side Hustle product, where we present Members with supplemental work opportunities, and through our recently launched Surveys product, where Members can earn supplemental income by taking surveys. Our budgeting tool helps Members manage their upcoming bills to avoid overspending.
We also help Members generate extra income for spending or emergencies through high APY savings rates, our Side Hustle product, where we present Members with supplemental work opportunities, and through our Surveys product, where Members can earn supplemental income by taking surveys. Our budgeting tool helps Members manage their upcoming bills to avoid overspending.
The increase of $6.7 million, or 261%, was primarily attributable to interest related to increased borrowings from the delayed draw senior secured loan facility (the “Debt Facility”) which Dave OD Funding I, LLC (“Dave OD”) entered into during January 2021, and which was subsequently amended in November 2021 to include a $20 million line of credit (the “Credit Facility”), along with interest related to the Note with FTX Ventures and higher interest rates on borrowings under the Debt Facility and Credit Facility.
The increase of $2.6 million, or 28%, was primarily attributable to interest related to a higher average outstanding balance during 2023 from the delayed draw senior secured loan facility (the “Debt Facility”) which Dave OD Funding I, LLC (“Dave OD”) entered into during January 2021, and which was subsequently amended in November 2021 to include a $20 million line of credit (the “Credit Facility”), along with interest related to the Note with FTX Ventures and higher interest rates on borrowings under the Debt Facility and Credit Facility.
In response to our remote employee workforce strategy in the U.S., we have not yet closed our leased office locations. We are required to continue making our contractual payments until our operating leases are formally terminated or expire.
Although we have fully implemented our remote employee workforce strategy in the U.S., we have not closed our leased office locations. We are required to continue making our contractual payments until our operating leases are formally terminated or expire.
The increase of $9.6 million, or 100%, was primarily attributable to fair value adjustments associated with certain earnout shares liability due to decreases in our underlying Class A Common Stock price.
The decrease of $9.6 million, or 99.8%, was primarily attributable to fair value adjustments associated with certain earnout shares liability due to decreases in our underlying Class A Common Stock price.
All impaired advances deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for unrecoverable advances.
All impaired advances are deemed uncollectible and subsequently written off and are a direct reduction to the allowance for credit losses.
All impaired advances are deemed uncollectible and subsequently written-off and are a direct reduction to the allowance for unrecoverable advances.
All impaired advances deemed uncollectible are subsequently written-off and are a direct reduction to the allowance for credit losses.
Comparison of Years Ended December 31, 2021 and 2020 A discussion regarding our results of operations for the year ended December 31, 2021 compared to the results for the year ended December 31, 2020 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Dave – Results of Operations” in our Form 8-K/A filed with the SEC on August 22, 2022 , which is available on the SEC’s website at www.sec.gov .
Comparison of Years Ended December 31, 2022 and 2021 A discussion regarding our results of operations for the year ended December 31, 2022 compared to the results for the year ended December 31, 2021 can be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Dave – Results of Operations” in our Form 10-K filed with the SEC on March 13, 2023 , which is available on the SEC’s website at www.sec.gov .
Legal settlement and litigation expenses —Legal settlement and litigation expenses totaled $6.3 million for the year ended December 31, 2022, compared to $1.7 million for the year ended December 31, 2021. See Note 14 Commitments and Contingencies in the accompanying audited consolidated financial statements of Dave included in this report for more information regarding pending legal actions.
Legal settlement and litigation expenses —Legal settlement and litigation expenses totaled $0 for the year ended December 31, 2023, compared to $6.3 million for the year ended December 31, 2022. See Note 13 Commitments and Contingencies in the accompanying consolidated financial statements of Dave included in this report for more information regarding pending legal actions.
As of December 31, 2022 and 2021, our cash and cash equivalents, marketable securities and short-term investments balance was $192.0 million and $40.2 million, respectively. As an early-stage company, the expenses we have incurred since inception are consistent with our strategy and approach to capital allocation.
As of December 31, 2023 and 2022, our cash and cash equivalents, marketable securities and investments balance was $155.9 million and $192.0 million, respectively. As an early-stage company, the expenses we have incurred since inception are consistent with our strategy and approach to capital allocation.
The increase of $4.6 million, or 277%, was primarily attributable to the settlement of an employee-related legal matter. Other strategic financing and transactional expenses —Other strategic financing and transactional expenses totaled $4.6 million for the year ended December 31, 2022, compared to $0.3 million for the year ended December 31, 2021.
The decrease of $6.3 million, or 100%, was primarily attributable to the settlement of an employee-related legal matter during the year ended December 31, 2022. Other strategic financing and transactional expenses —Other strategic financing and transactional expenses totaled $0 for the year ended December 31, 2023, compared to $4.6 million for the year ended December 31, 2022.
The increase of $4.3 million was related to certain one-time strategic opportunities in addition to certain one-time post-closing expenses associated with the Business Combination. Gain on extinguishment of liability —Gain on extinguishment of liability totaled $4.3 million for the year ended December 31, 2022, compared to $0 for the year ended December 31, 2021.
The 53 decrease of $4.6 million was related to one-time strategic opportunities in addition to one-time post-closing expenses associated with the Business Combination that occurred in 2022. Gain on extinguishment of liability —Gain on extinguishment of liability totaled $0 for the year ended December 31, 2023, compared to $4.3 for the year ended December 31, 2022.
We will remain an emerging growth company under the JOBS Act until the earliest of (1) the last day of the fiscal year (a) following March 4, 2026, (b) in which we have total annual gross revenue of at least $1.07 billion, (c) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years.
We will remain an emerging growth company under the JOBS Act until the earliest of (1) the last day of the fiscal year (a) following March 4, 2026, (b) in which we have total annual gross revenue of at least $1.235 billion, (c) in which we are deemed to be a “large accelerated filer” under the rules of the SEC, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years. 59 Recently Issued Accounting Standards Refer to Note 2, “Significant Accounting Policies,” of our consolidated financial statements included in this report for a discussion of the impact of recent accounting pronouncements.
Processing and service costs —Processing and servicing costs totaled $31.9 million for the year ended December 31, 2022, compared to $23.5 million for the year ended December 31, 2021.
Processing and service costs —Processing and servicing costs totaled $28.9 million for the year ended December 31, 2023, compared to $31.9 million for the year ended December 31, 2022.
Changes in fair value of derivative asset on loans to stockholders —Changes in fair value of derivative asset on loans to stockholders totaled $5.6 million for the year ended December 31, 2022, compared to a benefit of $34.8 million for the year ended December 31, 2021.
Changes in fair value of derivative asset on loans to stockholders —Changes in fair value of derivative asset on loans to stockholders totaled $0 for the year ended December 31, 2023, compared $5.6 million for the year ended December 31, 2022.
Changes in fair value of warrant liability —Changes in fair value of warrant liability totaled a benefit of $14.2 million for the year ended December 31, 2022, compared to an expense of $3.6 million for the year ended December 31, 2021.
Changes in fair value of warrant liability —Changes in fair value of warrant liability totaled a benefit of $0.3 million for the year ended December 31, 2023, compared to total a benefit of $14.2 million for the year ended December 31, 2022.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes related thereto which are included in “Item 8.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.
Changes to the allowance have a direct impact on the provision for unrecoverable advances in the audited consolidated statement of operations. We consider advances over 120 days past due or which become uncollectible based on information available to us as impaired.
Changes to the allowance have a direct impact on the provision for credit losses in the consolidated statement of operations. We consider advances aged more than 120 days or which become uncollectible based on information available to us as impaired.
Excluding non-cash impacts, changes in cash flows from operations included an increase in receivables related to revenue from Member advances of $2.3 million, a decrease in other current liabilities of $1.6 million and a decrease in other non-current liabilities of $0.5 million.
Excluding non-cash impacts, changes in cash flows from operations included an increase in receivables related to revenue from Member advances of $4.1 million, a decrease in accounts payable of $5.9 million, a decrease in legal settlement accrual of $5.6 million, and a decrease in other current liabilities of $1 million.
The increase in provision expense related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to significant increases in average advance amounts and total advance volume from $1,413 million to $2,709 million for the year ended December 31, 2021 and 2022, respectively.
The increase in provision expense of $8.8 million related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was attributed to increases in transacting members, average advance amounts from $134 to $152 and total advance volume from $2,709 million to $3,629 million for the years ended December 31, 2022 and 2023, respectively.
Compensation and benefits —Compensation and benefits expenses totaled $103.4 million for the year ended December 31, 2022, compared to $49.5 million for the year ended December 31, 2021.
Compensation and benefits —Compensation and benefits expenses totaled $94.9 million for the year ended December 31, 2023, compared to $103.4 million for the year ended December 31, 2022.
For information on the aging of Member advances and a rollforward of the allowance for unrecoverable advances, refer to the tables in Note 6 Member Cash Advances, Net in the accompanying audited consolidated financial statements of Dave included in this report.
For information on the aging of Member advances and a roll-forward of the allowance for credit losses, refer to the tables in Note 5 Member Advances, Net in the accompanying consolidated financial statements of Dave included in this report.
Risk Factors” and elsewhere in this Annual Report on Form 10-K. On January 5, 2023, the Board of Directors approved an amendment to the Company’s certificate of incorporation to complete a 1-for-32 reverse stock split effective January 5, 2023. The effects of the reverse stock split have been reflected in the audited consolidated financial statements and the footnotes.
On January 5, 2023, the Board of Directors approved an amendment to the Company’s certificate of incorporation to complete a 1-for-32 reverse stock split effective January 5, 2023. The effects of the reverse stock split have been reflected in the consolidated financial statements and the footnotes. Overview In the story of David vs.
Our ability to access capital when needed is not assured and, if capital is not available to Dave when, and in the amounts needed, Dave could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results.
We expect to incur net losses in accordance with our operating plan as we continue to expand and improve upon our financial platform. 55 Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition and operating results.
Transaction based revenue, net —Transaction based revenue, net for the year ended December 31, 2022 was $16.0 million, an increase of $5.1 million, or 48%, from $10.8 million, for the year ended December 31, 2021.
Transaction based revenue, net —Transaction based revenue, net for the year ended December 31, 2023 was $26.9 million, an increase of $10.9 million, or 68%, from $16.0 million, for the year ended December 31, 2022.
Our remaining leases have terms of 10 months to 3 years, subject to renewal options of varying terms, and as of December 31, 2022, we had a total lease liability of $0.8 million. See Note 15, Leases in the notes to our audited consolidated financial statements for additional information regarding our lease liabilities as of December 31, 2022.
Our remaining leases have terms of approximately 2 to 5 years as of December 31, 2023, and we had a total lease liability of $0.8 million. See Note 13, Leases in the notes to our consolidated financial statements for additional information regarding our lease liabilities as of December 31, 2023.
The increase was primarily attributable to increases in total advance volume from approximately $1,413 million to approximately $2,709 million year over year along with average advance amounts that increased from $104 to $144 as of the years ended December 31, 2021 and 2022, respectively.
The increase was primarily attributable to increases in transacting Members, increases in total advance volume from approximately $2,709 million to approximately $3,629 million year over year and average advance amounts that increased from $134 to $152 as of the years ended December 31, 2022 and 2023, respectively.
Overview In the story of David vs. Goliath, the small underdog is able to outsmart and defeat his larger adversary.
Goliath, the small underdog is able to outsmart and defeat his larger adversary.
We currently estimate the allowance balance required using historical 60 loss and collections experience, and, if relevant, the nature and volume of the portfolio, economic conditions, and other factors such as cash received subsequent to period-end. Interpretations of the nature of volume of the portfolio and projections of future economic conditions involve a high degree of subjectivity.
We currently estimate the allowance balance required using historical loss and collections experience, and, if relevant, the nature and volume of the portfolio, economic conditions, and other factors such as collections trends and cash collections received subsequent to the balance sheet date.
The following table reconciles net loss to Adjusted EBITDA for the years ended December 31 2022 and 2021, respectively: 54 For Year Ended (in thousands) December 31, 2022 2021 Net loss $ (128,906 ) $ (19,993 ) Interest expense, net 6,244 2,258 (Benefit from) provision for income taxes (67 ) 97 Depreciation and amortization 6,661 2,976 Stock-based compensation 40,639 7,381 Legal settlement and litigation expenses 6,282 1,667 Other strategic financing and transactional expenses 4,591 264 Gain on extinguishment of liability (4,290 ) - Changes in fair value of earnout liabilities (9,629 ) - Changes in fair value of derivative asset on loans to stockholders 5,572 (34,791 ) Changes in fair value of warrant liabilities (14,192 ) 3,620 Adjusted EBITDA $ (87,095 ) $ (36,521 ) Liquidity and Capital Resources Since inception, we have financed our operations primarily from the issuance of preferred stock, issuances of convertible notes, funds from borrowings under the Debt Facility and the Credit Facility, and funds received as a result of the Business Combination.
The following table reconciles net loss to Adjusted EBITDA for the years ended December 31, 2023 and 2022: For the Year Ended (in thousands) December 31, 2023 2022 Net loss $ (48,517 ) $ (128,906 ) Interest expense, net 6,479 6,244 Provision for (benefit from) income taxes 120 (67 ) Depreciation and amortization 5,450 6,661 Stock-based compensation 26,674 40,639 Legal settlement and litigation expenses - 6,282 Other strategic financing and transactional expenses - 4,591 Gain on extinguishment of liability - (4,290 ) Changes in fair value of earnout liabilities (22 ) (9,629 ) Changes in fair value of derivative asset on loans to stockholders - 5,572 Changes in fair value of public and private warrant liabilities (260 ) (14,192 ) Adjusted EBITDA $ (10,076 ) $ (87,095 ) Liquidity and Capital Resources In the past, we have financed our operations primarily from cash receipts from service and transaction based revenues, equity financings, borrowings under the Debt Facility, issuances of convertible notes and funds received as a result of the business combination.
Cash Flows Summary (in thousands) For Year Ended Total cash (used in) provided by: December 31, 2022 December 31, 2021 Operating activities $ (44,883 ) $ (541 ) Investing activities (285,579 ) (37,202 ) Financing activities 321,767 65,046 Net (decrease) increase in cash and cash equivalents and restricted cash $ (8,695 ) $ 27,303 Cash Flows From Operating Activities We recorded a net loss of $128.9 million for the year ended December 31, 2022, and a net loss of $20.0 million for the year ended December 31, 2021.
Cash Flows Summary (in thousands) For the Year Ended December 31, Total cash provided by (used in): 2023 2022 Operating activities $ 33,754 $ (44,883 ) Investing activities (14,375 ) (285,579 ) Financing activities 22 321,767 Net increase (decrease) in cash and cash equivalents and restricted cash $ 19,401 $ (8,695 ) 56 Cash Flows From Operating Activities We recorded a net loss of $48.5 million for the year ended December 31, 2023, and a net loss of $128.9 million for the year ended December 31, 2022.
Costs associated with technology and infrastructure, rent, depreciation and amortization of our property and equipment and intangible assets, professional service fees, travel and entertainment, public relations costs, utilities, office-related expenses and insurance technology and infrastructure (third-party subscriptions), depreciation and amortization of property and equipment and intangible assets, general and recurring legal fees, rent, office-related expenses, public relations costs, professional service fees, travel and entertainment and insurance vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics.
Costs associated with technology and infrastructure (third-party SaaS), depreciation and amortization of property and equipment and intangible assets, legal fees, rent, office related expenses, public relations costs, professional services fees, travel and entertainment, and insurance vary based upon our investment in infrastructure, business development, risk management and internal controls and are generally not correlated with our operating revenues or other transaction metrics. 49 Other (income) expenses Other (income) expenses consist of interest income, interest expense, other strategic financing and transactional expenses, earnout liabilities fair value adjustments, derivative asset fair value adjustments, and changes in fair value of warrant liabilities.
Some of our competitors may at times seek to increase their market share by undercutting pricing terms prevalent in that market, which could adversely affect our market share for any of our products and services or require us to incur higher member acquisition costs. 47 Key Components of Statements of Operations Basis of presentation Currently, we conduct business through one operating segment which constitutes a single reportable segment.
Some of our competitors may at times seek to increase their market share by undercutting pricing terms prevalent in that market, which could adversely affect our market share for any of our products and services or require us to incur higher member acquisition costs.
Provision for income taxes For Year Ended Change (in thousands, except for percentages) December 31, $ % 2022 2021 2022/2021 2022/2021 (Benefit from) provision for income taxes (67 ) 97 (164 ) -169 % Total $ (67 ) $ 97 $ (164 ) -169 % 53 Provision for income taxes for the year ended December 31, 2022 decreased by $0.16 million, or 169%, compared to the year ended December 31, 2021.
Provision for income taxes For the Year Ended Change (in thousands, except for percentages) December 31, $ % 2023 2022 2023/2022 2023/2022 Provision for (benefit from) income taxes 120 (67 ) 187 -279 % Total $ 120 $ (67 ) $ 187 -279 % Provision for income taxes for the year ended December 31, 2023 increased by $0.2 million, or 279%, compared to the year ended December 31, 2022.
These changes were offset primarily by a decrease in prepaid income taxes of $2.6 56 million, an increase in accounts payable of $2.6 million, an increase in accrued expenses of $7.1 million, and an increase in legal settlement accrual of $0.5 million.
These changes were offset primarily by a decrease in prepaid income taxes of 0.7 million, a decrease in prepaid expenses and other current assets of $2.9 million, an increase in accrued expenses of $1.7 million.
The increase of $2.7 million, or 929%, was primarily attributable to interest earned from yields from short-term investments and higher interest rates during the year ended December 31, 2022 as compared to the year ended December 31, 2021. 52 Interest expense — Interest expense totaled $9.2 million for the year ended December 31, 2022, compared to $2.5 million for the year ended December 31, 2021.
The increase of $2.3 million, or 79.3%, was primarily attributable to interest earned from yields from investments and higher interest rates during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
The increase of $34.1 million, or 106%, was primarily attributable to an increase in provision expense of $21.0 million related to Member 50 advances aged over 120 days and those that have become uncollectible based on information available to us, in addition to an increase in provision expense of $13.1 million related to Member advances aged 120 days and under.
The decrease of $7.9 million, or 12%, was primarily attributable to an increase of $8.8 million related to Member advances aged over 120 days and those that have become uncollectible based on information available to us, partially offset by a decrease in provision expense of $16.7 million related to Member advances aged 120 days and under.
These underwriting modifications primarily consisted of lower advance amounts and stricter eligibility requirements. Any changes to our historical loss and collections experience directly affects the historical loss rates utilized in the calculation of the allowance for uncollectible advances. The changes in the allowance for unrecoverable advances, period over period, has a direct impact on the provision for unrecoverable advances.
Any changes to our historical loss and collections experience directly affect the historical loss rates utilized in the calculation of the allowance for uncollectible advances. The changes in the allowance for credit losses, period over period, has a direct impact on the provision for credit losses.
We reported cash flows used in operating activities of $44.9 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively.
We reported cash flows provided by operating activities of $33.8 million for the year ended December 31, 2023 and cash flows used in operating activities of $44.9 million for the year ended December 31, 2022.
Key Factors Affecting Operating Results Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including Member growth and activity, product expansion, competition, industry trends and general economic conditions.
Comparability of Financial Information Our future results of operations and financial position may not be comparable to historical results as a result of the consummation of the Business Combination. 47 Key Factors Affecting Operating Results Our future operating results and cash flows are dependent upon a number of opportunities, challenges and other factors, including Member growth and activity, product expansion, competition, industry trends and general economic conditions.
Net cash used in operating activities for the year ended December 31, 2021 included a net loss of $20.0 million, adjusted for non-cash items of $3.1 million for depreciation and amortization, $32.2 million for provision for unrecoverable advances, $3.6 million for an increase in warrant liability fair value, and $7.4 million for stock-based compensation expense, partially offset by $34.8 million for an increase in derivative asset fair value.
Net cash used in operating activities for the year ended December 31, 2022 included a net loss of $128.9 million, adjusted for non-cash items of $7.1 million for depreciation and amortization, $66.3 million for provision for credit losses, $5.6 million for a decrease in derivative asset fair value, and $40.6 million for stock-based compensation expense, partially offset by $9.6 million for a decrease in earnout liabilities fair value, and 14.2 million for a decrease in warrant liabilities fair value.
Our critical accounting estimates and assumptions are evaluated on an ongoing basis including those related to the following: (i) Fair value of a derivative asset; (ii) Fair value of warrant liabilities; (iii) Fair value of earnout liabilities; (iv) Allowance for unrecoverable advances; (v) Fair value of common stock; and (vi) Income taxes. 57 Actual results may differ from these estimates under different assumptions or conditions.
Our critical accounting estimates and assumptions are evaluated on an ongoing basis, including those related to the following: (i) Allowance for credit losses; and (ii) Income taxes. Actual results may differ from these estimates under different assumptions or conditions.
The average amount of tip Members chose to leave increased for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Subscriptions Subscriptions for the year ended December 31, 2022 were $19.1 million, an increase of $1.9 million, or 11%, from $17.2 million for the year ended December 31, 2021.
The average tip Members chose to leave increased while the percentage of Members that chose to leave a tip decreased for the year ended December 31, 2023 as compared to the year ended December 31, 2022. 50 Subscriptions Subscriptions for the year ended December 31, 2023 were $21.5 million, an increase of $2.3 million, or 12%, from $19.1 million for the year ended December 31, 2022.
These changes were offset primarily by an increase in legal settlement accrual of $5.7 million, a decrease in prepaid income taxes of $0.6 million, and an increase in accounts payable of $0.3 million.
These changes were offset primarily by an increase in legal settlement accrual of $5.7 million, a decrease in prepaid income taxes of $0.6 million, and an increase in accounts payable of $0.3 million. Cash Flows From Investing Activities During the year ended December 31, 2023, net cash used in investing activities was $14.4 million.
This resulted in an increase to the allowance for unrecoverable advances and corresponding higher provision for unrecoverable advances expense during the year ended December 31, 2022 as compared to December 31, 2021.
This resulted in a decrease to the allowance for credit losses and corresponding lower provision for credit losses expense during the year ended December 31, 2023 as compared to December 31, 2022.
This decrease was primarily due to a decrease in state taxes, including gross margin state taxes, resulting from a favorable ruling by the Texas Supreme Court regarding the determination of state sourced service income.
This increase was primarily due to an increase in state taxes, including gross margin state taxes, because a favorable ruling by the Texas Supreme Court regarding the determination of state sourced service income had a more significant impact on the year ended December 31, 2022.
The increase in provision expense related to Member advances aged 120 days and under was primarily attributed to significant increases in average advance amounts and total advance volume during the last 4 months for the year ended December 31, 2022 and compared to the last four months of the year ended December 31, 2021.
The decrease in provision expense of $16.7 million related to Member advances aged 120 days and under was primarily attributed to improved collections performance and lower advances outstanding, despite a 27% increase in advance volume during the last four months for the year ended December 31, 2023 compared to the last four months of the year ended December 31, 2022.
The increase in benefit of $17.8 million, or 492%, was primarily attributable to fair value adjustments associated with certain public and private warrant liabilities due to decreases in our underlying Class A Common Stock price, offset by fair value adjustments associated with certain warrants issued in connection with the Debt Facility.
The decrease in benefit of $13.9 million, or 98.2%, was primarily attributable to fair value adjustments associated with certain public and private warrant liabilities due to decreases in our underlying Class A Common Stock price over the last 12 months.
The increase was primarily attributable to increases in total advance volume from approximately $1,413 49 million to approximately $2,709 million year over year along with average advance amounts that increased from $104 to $144 as of the years ended December 31, 2021 and 2022, respectively.
The decrease was primarily attributable to lower tip engagement from Members despite increases in transacting Members, increases in total advance volume from approximately $2,709 million to approximately $3,629 million year over year and average advance amounts that increased from $134 to $152 as of the years ended December 31, 2022 and 2023, respectively.
Other (income) expense For Year Ended Change (in thousands, except for percentages) December 31, $ % 2022 2021 2022/2021 2022/2021 Interest income $ (2,953 ) $ (287 ) $ (2,666 ) 929 % Interest expense 9,197 2,545 6,652 261 % Legal settlement and litigation expenses 6,282 1,667 4,615 277 % Other strategic financing and transactional expenses 4,591 264 4,327 1639 % Gain on extinguishment of liability (4,290 ) - (4,290 ) -100 % Changes in fair value of earnout liabilities (9,629 ) - (9,629 ) -100 % Changes in fair value of derivative asset on loans to stockholders 5,572 (34,791 ) 40,363 -116 % Changes in fair value of warrant liabilities (14,192 ) 3,620 (17,812 ) -492 % Total $ (5,422 ) $ (26,982 ) $ 21,560 -80 % Interest income — Interest income totaled $3.0 million for the year ended December 31, 2022, compared to $0.3 million for the year ended December 31, 2021.
Other (income) expense For the Year Ended Change (in thousands, except for percentages) December 31, $ % 2023 2022 2023/2022 2023/2022 Interest income $ (5,295 ) $ (2,953 ) $ (2,342 ) 79 % Interest expense 11,774 9,197 2,577 28 % Legal settlement and litigation expenses - 6,282 (6,282 ) -100 % Other strategic financing and transactional expenses - 4,591 (4,591 ) -100 % Gain on extinguishment of liability - (4,290 ) 4,290 -100 % Changes in fair value of earnout liabilities (22 ) (9,629 ) 9,607 -100 % Changes in fair value of derivative asset on loans to stockholders - 5,572 (5,572 ) -100 % Changes in fair value of public and private warrant liabilities (260 ) (14,192 ) 13,932 -98 % Total $ 6,197 $ (5,422 ) $ 11,619 -214 % Interest income — Interest income totaled $5.3 million for the year ended December 31, 2023, compared to $3.0 million for the year ended December 31, 2022.
This included an increase in net disbursements and collections of Member advances of $40.2 million the capitalization of internally developed software costs of $6.1 million, and the purchase of property and equipment of $0.4 million, partially offset by the sale of marketable securities of $9.4 million.
This amount included payments for internally developed software costs of $7.9 million, the purchase of property and equipment of $0.7 million, net disbursements and collections of Member advances of $63.0 million, the purchase of investments of $120.0 million, and the purchase of marketable securities of $34.4 million, offset by the sale of marketable securities of $33.7 million and the sale and maturity of investments of $177.9 million.
If we are unable to raise additional capital, we may significantly curtail our operations, modify existing strategic plans and/or dispose of certain operations or assets.
If we are unable to raise additional capital, we may significantly curtail our operations, modify existing strategic plans and/or dispose of certain operations or assets. Material Cash Requirements In the normal course of business, we enter into various agreements with our vendors that may subject us to minimum annual requirements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeNote 5 Short-Term Investments Below is a summary of short-term investments, which are measured at fair value as of December 31, 2022 (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 151,245 $ - $ ( 1,669 ) $ 149,576 Asset-backed securities 16,269 - ( 15 ) 16,254 Government securities 2,950 9 - 2,959 Total $ 170,464 $ 9 $ ( 1,684 ) $ 168,789 At December 31, 2022, the Company’s short-term investments consisted of investments in corporate bonds and notes, asset backed securities, and government securities with varying maturity dates between 2023 through 2027.
Biggest changeThe gain recognized in connection with the investment in marketable securities for the year ended December 31, 2022, was $ 0.4 million and was recorded as a component of interest income in the consolidated statements of operations. 80 Note 4 Investments Below is a summary of investments, which are measured at fair value as of December 31, 2023 (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 69,087 $ 670 $ ( 345 ) $ 69,412 Asset-backed securities 313 - ( 1 ) 312 Government securities 43,177 338 ( 13 ) 43,502 Total $ 112,577 $ 1,008 $ ( 359 ) $ 113,226 Below is a summary of investments, which are measured at fair value as of December 31, 2022 (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 151,245 $ 100 $ ( 1,769 ) $ 149,576 Asset-backed securities 16,269 31 ( 46 ) 16,254 Government securities 2,950 9 - 2,959 Total $ 170,464 $ 140 $ ( 1,815 ) $ 168,789 The gross unrealized losses and fair values of available-for-sale investment securities that were in unrealized loss positions were as follows (in thousands): Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss December 31, 2023 Corporate bonds $ 9,271 $ ( 50 ) $ 14,989 $ ( 295 ) $ 24,261 $ ( 345 ) Asset-backed securities - - 274 ( 1 ) 274 ( 1 ) Government securities 3,813 ( 13 ) - - 3,813 ( 13 ) Total $ 13,084 $ ( 63 ) $ 15,263 $ ( 296 ) $ 28,348 $ ( 359 ) Less Than 12 Months 12 Months or More Total Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss December 31, 2022 Corporate bonds $ 129,573 $ ( 1,769 ) $ - $ - $ 129,573 $ ( 1,769 ) Asset-backed securities 11,000 ( 46 ) - - 11,000 ( 46 ) Government securities - - - - - - Total $ 140,573 $ ( 1,815 ) $ - $ - $ 140,573 $ ( 1,815 ) The gain recorded in connection with investments for the year ended December 31, 2023, was $ 1.0 million, and was recorded as a component of interest income in the consolidated statements of operations.
The Company’s estimates are based on its historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
The Company’s estimates are based on its historical experience and various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash and cash equivalents, restricted cash, Member cash advances, and accounts receivable.
Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash and cash equivalents, restricted cash, Member advances, and accounts receivable.
In connection with the closing of the Business Combination, the Company changed the name from “VPC Impact Acquisition Holdings III, Inc.” to “Dave Inc.,” and the Surviving Entity operates under the name “Dave Operating LLC.” Upon the consummation of the Business Combination, in accordance with the terms and conditions of the Business Combination Agreement, all issued and outstanding Legacy Dave common stock was converted into shares of Common Stock at the Exchange Ratio.
In connection with the closing of the Business Combination, the Company changed the name 98 from “VPC Impact Acquisition Holdings III, Inc.” to “Dave Inc.,” and the Surviving Entity operates under the name “Dave Operating LLC.” Upon the consummation of the Business Combination, in accordance with the terms and conditions of the Business Combination Agreement, all issued and outstanding Legacy Dave common stock was converted into shares of Common Stock at the Exchange Ratio.
Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the asset will not be realized. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained in a court of last resort, based on the technical merits.
Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the asset will not be realized. 77 ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained in a court of last resort, based on the technical merits.
Members may now receive an advance of up to $ 500 and may only have one advance outstanding at any given time. Dave Banking: Dave offers a full-service digital checking account through its partnership with Evolve Bank and Trust (“Evolve”). The Dave Spending Account does not have overdraft or minimum balance fees.
Members may receive an advance of up to $ 500 and may only have one advance outstanding at any given time. Dave Banking: Dave offers a full-service digital checking account through its partnership with Evolve Bank and Trust (“Evolve”). The Dave Spending Account does not have overdraft or minimum balance fees.
If it is more likely than not that the Company will be unable or does not intend to hold the security to recovery of the non-credit related unrealized loss, the loss is recognized in earnings. Realized gains and losses are determined using the specific identification method and recognized in the consolidated statements of comprehensive income.
If it is more likely than not that the Company will be unable or does not intend to hold the security to recovery of the non-credit related unrealized loss, the loss is recognized in earnings. Realized gains and losses are determined using the specific identification method and recognized in the consolidated statements of comprehensive loss.
Members’ cash advances are treated as financial receivables under ASC 310. Advances to Members are not interest-bearing. The Company recognizes these advances at the advanced amount and does not use discounting techniques to determine present value of advances due to their short-term nature. 78 The Company does not provide modifications to advances and does not charge late fees.
Members’ cash advances are treated as financial receivables under ASC 310. Advances to Members are not interest-bearing. The Company recognizes these advances at the advanced amount and does not use discounting techniques to determine present value of advances due to their short-term nature. The Company does not provide modifications to advances and does not charge late fees.
The 93 initial offsetting entry to the warrant liability was an asset recorded to reflect the loan commitment fee. The loan commitment fee asset will be amortized to interest expense over the commitment period of four years. The Company estimated the fair value of the warrants at the issuance date to be $ 0.1 million using the Black-Scholes option-pricing model.
The initial offsetting entry to the warrant liability was an asset recorded to reflect the loan commitment fee. The loan commitment fee asset will be amortized to interest expense over the commitment period of four years. The Company estimated the fair value of the warrants at the issuance date to be $ 0.1 million using the Black-Scholes option-pricing model.
Property and equipment are recorded at cost and depreciated over the estimated useful lives ranging from 3 to 7 years using the straight-line method. 79 Maintenance and repair costs are charged to operations as incurred and included within other operating expenses in the consolidated statements of operations.
Property and equipment are recorded at cost and depreciated over the estimated useful lives ranging from 3 to 7 years using the straight-line method. Maintenance and repair costs are charged to operations as incurred and included within other operating expenses in the consolidated statements of operations.
Options to extend or terminate a lease are considered as part of calculating the lease term to the extent that the option is reasonably certain of exercise. The leases do not include the options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term.
Options to extend or terminate a lease are considered as part of calculating the lease term to the extent that the option is reasonably certain of exercise. The leases do not include the options to purchase the leased property. The depreciable life of assets 76 and leasehold improvements are limited by the expected lease term.
The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired.
The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the 79 recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
The Note bears interest at a rate of 3.00 % per year (compounded semiannually), payable semi-annually in arrears on June 30th and December 31st of each year. Interest may be paid in-kind or in cash, at the Company’s option.
The Note bears interest at a rate of 3.00 % per year (compounded semiannually), payable semi-annually in arrears on June 30th and December 31st of each year. 84 Interest may be paid in-kind or in cash, at the Company’s option.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Under this method of accounting, VPCC was treated as the “acquired” company. Accordingly, the consolidated assets, liabilities, and results of operations of Legacy Dave became the historical consolidated financial 85 statements of Dave, and VPCC’s assets and liabilities were consolidated with Legacy Dave’s on the Closing Date.
Under this method of accounting, VPCC was treated as the “acquired” company. Accordingly, the consolidated assets, liabilities, and results of operations of Legacy Dave became the historical consolidated financial statements of Dave, and VPCC’s assets and liabilities were consolidated with Legacy Dave’s on the Closing Date.
The exercise price of the warrants is the greater of (i) 80 % of the fair market value of each share of Common Stock at the Equity Closing Date and (ii) $ 120.0656 per share, subject to certain down-round adjustments.
The exercise price of the warrants is the greater of (i) 80 % of the fair market value of each share of Common Stock at the Equity Closing Date and (ii) $ 120.0656 per 86 share, subject to certain down-round adjustments.
This warrant liability was initially recorded as a liability at fair value, with the offsetting entry recorded as a non-cash expense within the consolidated statement of operations. The derivative liability was subsequently recorded at fair value at each reporting period, with changes in fair value reflected in earnings.
This warrant liability was initially recorded as a liability at fair value, with the offsetting entry recorded as a non-cash expense within the statement of operations. The derivative liability was subsequently recorded at fair value at each reporting period, with changes in fair value reflected in earnings.
Each tranche will be expensed monthly over the derived service period unless vesting conditions for a particular tranche are met, at which point all 104 remaining compensation charges related to that particular tranche will be expensed in the period in which the vesting conditions were met.
Each tranche will be expensed monthly over the derived service period unless vesting conditions for a particular tranche are met, at which point all remaining compensation charges related to that particular tranche will be expensed in the period in which the vesting conditions were met.
Available positive and negative evidence is considered in making this determination. Due to a history of losses and uncertainty as to future taxable income, realization of the deferred tax assets is limited to the anticipated reversal of certain deferred tax liabilities.
Available positive and negative evidence is considered in making this determination. Due to a history of losses and uncertainty as to future taxable income, realization of the deferred tax assets is limited to the anticipated reversal of deferred tax liabilities.
Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
Additionally, each of Legacy Dave options and warrants that were outstanding immediately prior to the closing of the Business Combination remained outstanding and converted into options and warrants for Dave Class A and Class V Common Stock equal to the number of the Company’s common stock, subject to such options or warrants, multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option or warrant divided by the Exchange Ratio, with the aggregate amount of shares of Class A Common Stock and Class V Common Stock issuable upon exercise of such options and warran ts to be 1,002,383 .
Additionally, each of Legacy Dave options and warrants that were outstanding immediately prior to the closing of the Business Combination remained outstanding and converted into options and warrants for Dave Class A and Class V Common Stock equal to the number of the Company’s common stock, subject to such options or warrants, multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option or warrant divided by the Exchange Ratio, with the aggregate amount of shares of Class A Common Stock and Class V Common Stock issuable upon exercise of such options and warrants to be 1,002,383 .
Redemption of Public Warrants for when the price per share of Class A Common Stock equals or exceeds $ 320.00 : Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants: • in whole and not in part; • at $ 3.20 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of the Class A Common Stock; and • if, and only if, the closing price of Class A Common Stock equals or exceeds $ 320.00 per Public Share (as adjusted) for any 20 trading days within the 30 -trading day period ending three trading days bef ore the Company sends notice of redemption to the warrant holders.
Redemption of Public Warrants for when the price per share of Class A Common Stock equals or exceeds $ 320.00 : Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants: • in whole and not in part; • at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of the Class A Common Stock; and • if, and only if, the closing price of Class A Common Stock equals or exceeds $ 320.00 per Public Share (as adjusted) for any 20 trading days within the 30 -trading day period ending three trading days bef ore the Company sends notice of redemption to the warrant holders.
The number of shares of Common Stock issued immediately following the consummation of the Business Combination were as follows: Class A Class V Common stock outstanding on December 31, 2021 2,888,634 1,514,082 Common stock activity between December 31, 2021 and January 5, 2022 Exercise of derivative asset and paydown of stockholder loans ( 187,945 ) - Issuance of Class A common stock for stock option exercises 82,203 - Repurchase of Class A common stock ( 6,203 ) - Common stock outstanding prior to the Business Combination 2,776,689 1,514,082 Conversion of preferred stock to Class A common stock 6,395,542 - Common stock attributable to VPCC 92,463 - Adjustment related to Reverse Recapitalization* 6,488,005 - Founder Holder shares 118,953 - Conversion of 2019 convertible notes and accrued interest to Class A common stock 7,040 - Exercise of Series B-1 preferred stock warrants, net of settlement 14,087 - Issuance of Class A common stock pursuant to the PIPE financing 656,247 - Total shares of common stock as of closing of Business Combination and related transactions 10,061,021 1,514,082 The corresponding adjustment to APIC related to the reverse recapitalization was comprised of (i) $ 175.3 million which represents the fair value of the consideration transferred in the Business Combination, less the excess of the fair value of the shares issued over the value of the net monetary assets of VPCC, net of transaction costs and (ii) $ 72.2 million which represents the conversion of the convertible preferred stock into Dave Class A Common Stock.
The closing of the private placement occurred immediately prior to the closing date. 100 The number of shares of Common Stock issued immediately following the consummation of the Business Combination were as follows: Class A Class V Common stock outstanding on December 31, 2021 2,888,634 1,514,082 Common stock activity between December 31, 2021 and January 5, 2022 Exercise of derivative asset and paydown of stockholder loans ( 187,945 ) - Issuance of Class A common stock for stock option exercises 82,203 - Repurchase of Class A common stock ( 6,203 ) - Common stock outstanding prior to the Business Combination 2,776,689 1,514,082 Conversion of preferred stock to Class A common stock 6,395,542 - Common stock attributable to VPCC 92,463 - Adjustment related to Reverse Recapitalization* 6,488,005 - Founder Holder shares 118,953 - Conversion of 2019 convertible notes and accrued interest to Class A common stock 7,040 - Exercise of Series B-1 preferred stock warrants, net of settlement 14,087 - Issuance of Class A common stock pursuant to the PIPE financing 656,247 - Total shares of common stock as of closing of Business Combination and related transactions 10,061,021 1,514,082 The corresponding adjustment to APIC related to the reverse recapitalization was comprised of (i) $ 175.3 million which represents the fair value of the consideration transferred in the Business Combination, less the excess of the fair value of the shares issued over the value of the net monetary assets of VPCC, net of transaction costs and (ii) $ 72.2 million which represents the conversion of the convertible preferred stock into Dave Class A Common Stock.
Basic net loss attributable to holders of Common Stock per share is calculated by dividing net loss attributable to holders of Common Stock by the weighted-average number of shares outstanding, excluding shares issued in relation to unvested restricted stock awards and vested early exercise options funded by non-recourse notes (refer to Note 19, Related-Party Transactions for further details on the Company’s Loans to Stockholders).
Basic net loss attributable to holders of Common Stock per share is calculated by dividing net loss attributable to holders of Common Stock by the weighted-average number of shares outstanding, excluding shares issued in relation to unvested restricted stock awards and vested early exercise options funded by non-recourse notes (refer to Note 17, Related-Party Transactions for further details on the Company’s Loans to Stockholders).
The unrecognized tax benefits of $ 0.1 million as of December 31, 2022, would, if recognized, affect the effective tax rate. Although it is possible that the amount of unrecognized tax benefits with respect to the uncertain tax positions will increase or decrease in the next 12 months, the Company does not expect material changes.
The unrecognized tax benefits of $ 0.1 million as of December 31, 2023, would, if recognized, affect the effective tax rate. Although it is possible that the amount of unrecognized tax benefits with respect to the uncertain tax positions will increase or decrease in the next 12 months, the Company does not expect material changes.
Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or claims will have a significant adverse effect on the Company’s business, financial condition, results of operations, or cash flows. 94 Martinsek v. Dave Inc.
Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or claims will have a significant adverse effect on the Company’s business, financial condition, results of operations, or cash flows. 1. Martinsek v. Dave Inc.
Redemption of Public Warrants when the price per share of Class A Common Stock equals or exceeds $ 576.00 : Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants for cash: • in whole and not in part; 92 • at a price of $ 0.32 per warrant; • upon a minimum of 30 days prior written notice of redemption; and if, and only if, the closing price of Class A Common Stock equals or exceeds $ 576.00 per share (as adjusted) for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
Redemption of Public Warrants when the price per share of Class A Common Stock equals or exceeds $ 576.00 : Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants for cash: • in whole and not in part; • at a price of $ 0.01 per warrant; • upon a minimum of 30 days prior written notice of redemption; and if, and only if, the closing price of Class A Common Stock equals or exceeds $ 576.00 per share (as adjusted) for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
At the Member’s election, the Company expedites the funding of advance funds within eight hours, as opposed to the customary three business days, of the advance approval. Processing fees are nonrefundable loan origination fees and are recognized as revenues over the average expected contractual term of its advances.
At the Member’s election, the Company expedites the funding of advance funds within eight hours of the advance approval, as opposed to the customary two or three business days. Processing fees are nonrefundable loan origination fees and are recognized as revenues over the average expected contractual term of its advances.
The fair value of short-term investments is determined by quoted prices in active markets with unrealized gains and losses (other than credit related impairment) reported as a separate component of other comprehensive income. For securities with unrealized losses, any credit related portion of the loss is recognized in earnings.
The fair value of investments is determined by quoted prices in active markets with unrealized gains and losses (other than credit related impairment) reported as a separate component of other comprehensive income. For securities with unrealized losses, any credit related portion of the loss is recognized in earnings.
On August 17, 2021 Alameda Research, a Subscription Investor agreed to pre-fund its obligation under the original Subscription Agreement to subscribe for 46,875 shares of Class A Common Stock for $ 15.0 million of th e aggregate PIPE Financing subscription amount.
On August 17, 2021 Alameda Research, a Subscription Investor agreed to pre-fund its obligation under the original Subscription Agreement to subscribe for 46,875 shares of Class A Common Stock for $ 15.0 million of the aggregate PIPE Financing subscription amount.
For example, traditional banks charge up to $ 34 for access to as little as $ 5 of overdraft, whereas many others in the financial services sector do not allow for overdraft at all. Dave invented a short-term liquidity alternative called ExtraCash, which allows Members to advance funds to their account and avoid a fee altogether.
For example, traditional banks charge up to $ 35 for access to as little as $ 5 of overdraft, and many others in the financial services sector do not allow for overdraft at all. Dave invented a short-term liquidity alternative called ExtraCash, which allows Members to advance funds to their account and avoid a fee altogether.
The gain recognized in connection with the investment in marketable securities for the year ended December 31, 2022, was approximately $ 0.4 million and recorded as a component of interest income in the consolidated statements of operations.
The gain recognized in connection with the investment in marketable securities for the year ended December 31, 2023, was approximately $ 0.4 million and recorded as a component of interest income in the consolidated statements of operations.
Short-Term Investments Short-term investments consist of corporate bonds and notes, asset backed securities, and government securities and are classified as “available-for-sale”, as the sale of such securities may be required prior to maturity to implement the Company’s strategies.
Investments Investments consist of corporate bonds and notes, asset backed securities, and government securities and are classified as “available-for-sale”, as the sale of such securities may be required prior to maturity to implement the Company’s strategies.
Any related amounts recorded in accumulated other comprehensive income are reclassified to earnings (on a pretax basis). Member Advances Member advances include ExtraCash advances, fees, and tips, net of certain direct origination costs and allowance for unrecoverable advances. Management’s intent is to hold advances until the earlier of repayment or payoff date.
Any related amounts recorded in accumulated other comprehensive income are reclassified to earnings (on a pretax basis). Member Advances Member advances include ExtraCash advances, fees, and tips, net of certain direct origination costs and allowance for credit losses. Management’s intent is to hold advances until the earlier of repayment or payoff date.
These public warrants met the definition of a derivative under ASC 815, and due to the terms of the warrants, were required to be liability classified. This warrant liability was initially recorded as a liability at fair value, with the offsetting entry recorded as a non-cash expense within the statement of operations.
These private warrants met the definition of a derivative under ASC 815, and due to the terms of the warrants, were required to be liability classified. This warrant liability was initially recorded as a liability at fair value, with the offsetting entry recorded as a non-cash expense within the consolidated statement of operations.
The Company recognized insignificant amounts of interest expense as a component of income tax expense during the years ended December 31, 2022 and 2021. The income tax related accrued interest amounts were also insignificant as of December 31, 2022 and 2021, respectively.
The Company recognized insignificant amounts of interest expense as a component of income tax expense during the years ended December 31, 2023 and 2022. The income tax related accrued interest amounts were also insignificant as of December 31, 2023 and 2022, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for smaller reporting companies. 62 Ite m 8. Financial Statements and Supplementary Data. DAVE INC.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for smaller reporting companies. 60 Ite m 8. Financial Statements and Supplementary Data. DAVE INC.
The Company’s policy is to recognize interest expense and penalties accrued on any unrecognized tax benefits as a component of income tax expense within the statement of operations. The Company recognized $ 0.005 million and $ 0.004 million of interest expense and penalties as a component of income tax expense during the year ended December 31, 2022 and 2021, respectively.
The Company’s policy is to recognize interest expense and penalties accrued on any unrecognized tax benefits as a component of income tax expense within the statement of operations. The Company recognized $ 0.005 million and $ 0.005 million of interest expense and penalties as a component of income tax expense during the year ended December 31, 2023 and 2022, respectively.
There were 1,002,383 Dave options outstanding immediately after the Business Combination. 87 Following the Business Combination, Dave warrants to purchase 357,635 shares of Class A Common Stock, consisted of (i) 198,254 public warrants listed on the Nasdaq and (ii) 159,381 private warrants, each with an exercise price of $ 368 per share, re mained outstanding.
There were 1,002,383 Dave options outstanding immediately after the Business Combination. Following the Business Combination, Dave warrants to purchase 357,635 shares of Class A Common Stock, consisted of (i) 198,254 public warrants listed on the Nasdaq and (ii) 159,381 private warrants, each with an exercise price of $ 368 per share, remained outstanding.
Management determined that there were insufficient federal and state deferred tax liabilities to offset all of the federal and state deferred tax assets at December 31, 2022 and 2021.
Management determined that there were insufficient federal and state deferred tax liabilities to offset all of the federal and state deferred tax assets at December 31, 2023 and 2022.
The Company is subject to examination by taxing authorities in the jurisdictions in which it files tax returns, including federal, California, and various other state jurisdictions. The federal statute of limitations remains open for the tax periods December 31, 2019 and thereafter. The California statute of limitations remains open for the tax periods December 31, 2018 and thereafter.
The Company is subject to examination by taxing authorities in the jurisdictions in which it files tax returns, including federal, California, and various other state jurisdictions. The federal statute of limitations remains open for the tax periods December 31, 2020 and thereafter.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
Direct origination costs recognized as a reduction of advance-related income during the years ended December 31, 2022 and 2021, were $ 5.5 million and $ 3.8 million, respectively. Tips The Company encourages, but does not contractually require its Members who receive a cash advance to leave a discretionary tip.
Direct origination costs recognized as a reduction of advance-related income during the years ended December 31, 2023 and 2022, were $ 3.3 million and $ 5.5 million, respectively. 72 Tips The Company encourages, but does not contractually require its Members who receive a cash advance to leave a discretionary tip.
The federal NOLs do not expire; however, they are subject to a utilization limit of 80 % of taxable income in any given year. The State NOLs begin to expire in 2031 , except for $ 13.9 million of state NOLs that do not expire.
The federal NOLs do not expire; 97 however, they are subject to a utilization limit of 80 % of taxable income in any given year. The State NOLs begin to expire in 2031 , except for $ 20.9 million of state NOLs that do not expire.
Private Warrants: As discussed further in Note 12, Warrant Liabilities, in January 2022, upon completion of the Business Combination, private warrants were automatically converted to warrants to purchase Common Stock of the Company. These private warrants met the definition of a derivative under ASC 815, and due to the terms of the warrants, were required to be liability classified.
Public Warrants: As discussed further in Note 10, Warrant Liabilities, in January 2022, upon completion of the Business Combination, public warrants were automatically converted to warrants to purchase Common Stock of the Company. These public warrants met the definition of a derivative under ASC 815, and due to the terms of the warrants, were required to be liability classified.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit.
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
No Member individually exceeded 10% or more of the Company’s Member cash advances balances as of December 31, 2022 and December 31, 2021. 80 Leases ASC 842, Leases (“ASC 842”) requires lessees to recognize most leases on the consolidated balance sheet with a corresponding right-of-use asset.
No Member individually exceeded 10% or more of the Company’s Member advances balances as of December 31, 2023 and December 31, 2022. Leases ASC 842, Leases (“ASC 842”) requires lessees to recognize most leases on the consolidated balance sheet with a corresponding right-of-use asset.
The Company recognized $ 40.6 million and $ 7.4 million of stock-based compensation expense arising from stock option and restricted stock unit grants which is recorded as a component of compensation and benefits in the consolidated statements of operations for the years ended December 31, 2022 and 2021, respectively.
The Company recognized $ 26.7 million and $ 40.6 million of stock-based compensation expense arising from stock option and restricted stock unit grants which is recorded as a component of compensation and benefits in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.
There were $ 0.012 million and $ 0.007 million of accrued interest expense and penalties as of December 31, 2022 and 2021, respectively. Segment Information The Company determines its operating segments based on how its chief operating decision makers manage operations, make operating decisions, and evaluate operating performance.
There were $ 0.016 million and $ 0.012 million of accrued interest expense and penalties as of December 31, 2023 and 2022, respectively. Segment Information The Company determines its operating segments based on how its chief operating decision makers manage operations, make operating decisions, and evaluate operating performance.
Note 10 Convertible Note Payable On March 21, 2022, the Company entered into a Convertible Note Purchase Agreement (“Purchase Agreement”) with FTX Ventures Ltd., (the “Purchaser”) owner of FTX US (“FTX”), providing for the purchase and sale of a convertible note in the initial principal amount of $ 100.0 million (the “Note”).
Note 9 Convertible Note Payable On March 21, 2022, the Company entered into a Convertible Note Purchase Agreement (“Note Purchase Agreement”) with FTX Ventures Ltd., (the “Purchaser”) owner of FTX US (“FTX”), providing for the purchase and sale of a convertible note in the initial principal amount of $ 100.0 million (the “Note”).
The net assets of VPCC were recognized at their carrying value immediately prior to the closing with no goodw ill or other intangible assets recorded and were as follows, net of transaction costs (in millions): Cash $ 202.0 Other assets 0.7 Other current liabilities ( 3.2 ) Accrued expenses ( 0.2 ) Earned liabilities ( 9.7 ) Warrant liability - public ( 7.6 ) Warrant liability - private ( 6.7 ) Net assets acquired $ 175.3 Additionally, as part of the recap italization, 168,515 shares o f VPCC Class A common stock held by founders of VPCC (the “Founder Holders”) were exchanged with 168,515 shares of Dave Class A Common Stoc k, 49,563 (or “Founder Holder Earnout Shares”) of which will be subject to forfeiture if the vesting condition is not met over the five year term following the Closing Date as follows: Sixty percent ( 60 %) of the Founder Holder Earnout Shares ( 29,737 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Triggering Event I, which is defined as the first date on which the Common Share Price is equal to or greater than $ 400 afte r the Closing Date, but within the Earnout Period (as defined in the Business Combination Agreement); provided, that (i) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other pr operty attributing a value of at least $ 400 to each share of Class A Common Stock (as agreed in good faith by the Sponsor and the Board), then Triggering Event I shall be deemed to have occurred and; (ii) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price (as defined in the Business Combination Agreement) threshold (i.e., $ 400 ) will, for all purpo ses of the Business Combination Agreement (and an agreement with the Founder Holders (the “Founder Holder Agreement”)), in each case be equitably adjusted to reflect such change; and The remaining Founder Holder Earnout Shares ( 19,825 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Tr iggering Event II, which is defined as the first date on which the Common Share Price is equal to or greater than $ 480.00 after the Closing Date, but within the Earnout Period; provided that (iii) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least $ 480.00 to each share of Class A Common Stock (as agreed in good faith by Sponsor and the Board), then Triggering Event II shall be deemed to have occurred and; (iv) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price threshold (i.e., $ 480.00 ) wi ll, for all purposes of the Business Combination Agreement (and the Founder Holder Agreement), in each case be equitably adjusted to reflect such change.
The net assets of VPCC were recognized at their carrying value immediately prior to the closing with no goodwill or other intangible assets recorded and were as follows, net of transaction costs (in millions): Cash $ 202.0 Other assets 0.7 Other current liabilities ( 3.2 ) Accrued expenses ( 0.2 ) Earned liabilities ( 9.7 ) Warrant liability - public ( 7.6 ) Warrant liability - private ( 6.7 ) Net assets acquired $ 175.3 Additionally, as part of the recapitalization, 168,515 shares of VPCC Class A common stock held by founders of VPCC (the “Founder Holders”) were exchanged with 168,515 shares of Dave Class A Common Stock, 49,563 (or “Founder Holder Earnout Shares”) of which will be subject to forfeiture if the vesting condition is not met over the five year term following the Closing Date as follows: Sixty percent ( 60 %) of the Founder Holder Earnout Shares ( 29,737 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Triggering Event I, which is defined as the first date on which the Common Share Price is equal to or greater than $ 400 after the Closing Date, but within the Earnout Period (as defined in the Business Combination Agreement); provided, that (i) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least $ 400 to each share of Class A Common Stock (as agreed in good faith by the Sponsor and the Board), then Triggering Event I shall be deemed to have occurred and; (ii) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price (as defined in the Business Combination 99 Agreement) threshold (i.e., $ 400 ) will, for all purposes of the Business Combination Agreement (and an agreement with the Founder Holders (the “Founder Holder Agreement”)), in each case be equitably adjusted to reflect such change; and The remaining Founder Holder Earnout Shares ( 19,825 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Triggering Event II, which is defined as the first date on which the Common Share Price is equal to or greater than $ 480.00 after the Closing Date, but within the Earnout Period; provided that (iii) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least $ 480.00 to each share of Class A Common Stock (as agreed in good faith by Sponsor and the Board), then Triggering Event II shall be deemed to have occurred and; (iv) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price threshold (i.e., $ 480.00 ) will, for all purposes of the Business Combination Agreement (and the Founder Holder Agreement), in each case be equitably adjusted to reflect such change.
The following table presents the assumptions used to value the private warrant liability for the year ended December 31, 2022: 99 Exercise price $ 368.00 Expected volatility 106.8 % Risk-free interest rate 4.1 % Remaining term 4.01 years Dividend yield 0 % Earnout Shares Liability: As discussed further in Note 3, The Reverse Recapitalization and Related Transactions, as part of the recapitalization, 49,563 shares of C lass A Common Stock held by founders of VPCC are subject to forfeiture if the vesting condition is not met over the five year term following the Closing Date (“Founder Holder Earnout Shares”).
The following table presents the assumptions used to value the private warrant liability for the year ended December 31, 2023: Exercise price $ 368.00 Expected volatility 107.7 % Risk-free interest rate 4.01 % Remaining term 3.01 years Dividend yield 0 % Earnout Shares Liability: As discussed further in Note 20, The Reverse Recapitalization and Related Transactions, as part of the recapitalization, 49,563 shares of C lass A Common Stock held by founders of VPCC are subject to forfeiture if the vesting condition is not met over the five year term following the Closing Date (“Founder Holder Earnout Shares”).
The underlying money market instruments were primarily comprised of certificates of deposit and financial company asset backed commercial paper. At December 31, 2022 and 2021, the investment portfolio had a weighted-average maturity of 48 days and 46 days, respectively.
The underlying money market instruments were primarily comprised of certificates of deposit and financial company asset backed commercial paper. At December 31, 2023 and 2022, the investment portfolio had a weighted-average maturity of 40 days and 48 days, respectively.
Note 13 Debt and Credit Facility In January 2021, Dave OD Funding I, LLC (“Borrower”) entered into a delayed draw senior secured loan facility (the “Debt Facility”) with Victory Park Management, LLC (“Agent”), allowing the Borrower to draw up to $ 100 million from various lenders associated with Victory Park Management, LLC (the “Lenders”).
Note 11 Debt Facility In January 2021, Dave OD Funding I, LLC (“Borrower”) entered into a delayed draw senior secured loan facility (the “Debt Facility”) with Victory Park Management, LLC (“Agent”), and allowed the Borrower to draw up to $ 100 million from various lenders (the “Lenders”) associated with Victory Park Management, LLC.
The Company’s cash and cash equivalents and restricted cash in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits were approximately $ 20.7 million and $ 31.9 million at December 31, 2022 and 2021, respectively.
The Company’s cash and cash equivalents and restricted cash in excess of the Federal Deposit Insurance Corporation insured limits were approximately $ 40.9 million and $ 20.7 million at December 31, 2023 and 2022, respectively.
The Debt Facility has an interest rate of 6.95 % annually plus a base rate defined as the greater of three-month LIBOR (as of the last business day of each calendar month) and 2.55 % . Interest is payable monthly in arrears.
The Debt Facility had an interest rate of 6.95 % annually plus a base rate defined as the greater of the three-month London interbank offered rate ("LIBOR") as of the last business day of each calendar month and 2.55 % . Interest is payable monthly in arrears.
The Company uses a portion of tips received to make a charitable cash donation to third parties who use the funds to provide meals to those in need. For the years ended December 31, 2022 and 2021, the Company pledged $ 3.2 million and $ 4.7 million related to charitable donations, respectively.
The Company uses a portion of tips received to make a charitable cash donation to third parties who use the funds to provide meals to those in need. For the years ended December 31, 2023 and 2022, the Company pledged $ 5.1 million and $ 3.2 million related to charitable donations, respectively.
The Company settled this matter in January 2023 for approximately $ 6.0 million and is included in the Legal settlement accrual within the consolidated balance sheet for the period ended December 31, 2022. Stoffers v. Dave Inc.
The Company settled this matter in January 2023 for approximately $ 6.0 million which is included in the Legal settlement accrual within the consolidated balance sheet for the year ended December 31, 2022. 2. Stoffers v. Dave Inc.
Therefore, management believes it is more-likely-than-not that the net federal and state deferred assets will not be fully realized and has recorded valuation allowances in the amounts of $ 48.0 million and $ 19.9 million, as of December 31, 2022 and 2021, respectively.
Therefore, management believes it is more-likely-than-not that the net federal and state deferred assets will not be fully realized and has recorded valuation allowances in the amounts of $ 67.5 million and $ 48.0 million, as of December 31, 2023 and 2022, respectively.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
The fair value measurements for the securities are based upon the quoted prices of similar items in active markets multiplied by the number of securities owned. Short-Term Investments: The following describes the valuation techniques used by the Company to measure the fair value of short-term investments held as of December 31, 2022.
The fair value measurements for the securities are based upon the quoted prices of similar items in active markets multiplied by the number of securities owned. Investments: The following describes the valuation techniques used by the Company to measure the fair value of investments held as of December 31, 2023 and December 31, 2022. U.S.
No impairment charges were recognized related to long-lived assets for the years ended December 31, 2022 and 2021. Amortization expense related to change in useful life of a certain definite-lived intangible asset for the year ended December 31, 2022 was $ 2.7 million, respectively.
No impairment charges were recognized related to long-lived assets for the years ended December 31, 2023 and 2022. Amortization expense related to change in useful life of a certain definite-lived intangible asset for the year ended December 31, 2023 was $ 0.3 million, respectively.
Once the Redemption Price has been delivered to the Purchaser, the Note will be canceled and retired. The effective interest rate as of December 31, 2022 was 3.01 %. As of December 31, 2022, the outstanding balance of the Note, including paid in-kind interest, was $ 102.4 million.
Once the Redemption Price has been delivered to the Purchaser, the Note will be canceled and retired. The effective interest rate as of December 31, 2023 was 3.01 %. As of December 31, 2023, the outstanding balance of the Note, including paid in-kind interest, was $ 105.5 million.
Each of the nine tranches contain service, market and performance conditions. The market conditions relate to the achievement of certain specified price targets.
Each of the six tranches contain service and market conditions. The market conditions relate to the achievement of certain specified price targets.
T he Company earns interchange fees from Members spend on Dave-branded debit cards, which are reduced by interchange-related costs payable to fulfillment partners. Interchange revenue is remitted by merchants and represent a percentage of the underlying transaction value processed through a payment network.
The Company earns interchange fees from Members spend on Dave-branded debit cards, which are reduced by interchange-related costs payable to fulfillment partners. Interchange revenue is r emitted by merchants and represents a percentage of the underlying transaction value processed through a payment network.
The Company has estimated $ 0.9 million and $ 0.5 million of uncertain tax positions as of December 31, 2022 and 2021, respectively, related to state income taxes. and federal and state R&D tax credits.
The Company has estimated $ 1.3 million and $ 0.9 million of uncertain tax positions as of December 31, 2023 and 2022, respectively, related to state income taxes. and federal and state R&D tax credits.
Payments of the loan draws are due at the following dates: (i) within five business days after the date of receipt by the Borrower and the Company (each, a “Credit Party”) or any of their subsidiaries of any net cash proceeds in excess of $ 250 thousand in the aggregate during any fiscal year from any asset sales (other than certain permitted dispositions), the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; (ii) within five business days after the date of receipt by any Credit Party or any of their subsidiaries, or the Agent as loss payee, of any net cash proceeds from any destruction or taking, the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; (iii) within three business days after the date of receipt by any Credit Party or any of their subsidiaries of any net cash proceeds from the incurrence of any indebtedness of any Credit Party or any of their subsidiaries (other than with respect to permitted indebtedness), the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; and (iv) (a) if extraordinary receipts are received by any Credit Party in the aggregate amount in any fiscal year in excess of $ 250 thousand or (b) if an event of default has occurred and is continuing at any time when any extraordinary receipts are received by any Credit Party, then within five business days of the receipt by any Credit Party of any such extraordinary receipts, the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to (x) 100 % of such extraordinary receipts in excess of $ 250 thousand in respect of clause (a) above and (y) 100 % of such extraordinary receipts in respect of clause (b) above.
Payments of the loan draws are due at the following dates: (i) within five business days after the date of receipt by the Borrower of any net cash proceeds in excess of $ 0.25 million in the aggregate during any fiscal year from any asset sales (other than certain permitted dispositions), Borrower must prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; (ii) within five business days after the date of receipt by Borrower, or the Agent as loss payee, of any net cash proceeds from any destruction or taking, the Borrower must prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100% of such net cash proceeds; (iii) within three business days after the date of receipt by Borrower of any net cash proceeds from the incurrence of any indebtedness of Borrower (other than with respect to permitted borrower indebtedness), the Borrower will prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; and (iv) (a) if extraordinary receipts are received by Borrower in the aggregate amount in any fiscal year in excess of $ 0.25 million or (b) if an event of default has occurred and is continuing at any time when any extraordinary receipts are received by Borrower, then within five business days of the receipt by Borrower of any such extraordinary receipts, the Borrower must prepay the loans or remit such net cash proceeds in an aggregate amount equal to (x) 100 % of such extraordinary receipts in excess of $ 0.25 million in respect of clause (a) above and (y) 100 % of such extraordinary receipts in respect of clause (b) above.
The Company began utilizing the office space in June 2021. The lease was abandoned in August of 2022. All leases were classified as operating and operating lease expenses are presented within Other operating expenses in the consolidated statements of operations. The Company does not have any finance leases or sublease arrangements where the Company is the sublessor.
The lease was abandoned in August of 2022. 88 All leases were classified as operating and operating lease expenses are presented within Other operating expenses in the consolidated statements of operations. The Company does not have any finance leases or sublease arrangements where the Company is the sublessor.
On January 4, 2022, the stockholders of the Company approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan was previously approved, subject to stockholder approval, by the Company’s Board of Directors on January 4, 2022. Upon the consummation of the Business Combination with VPCC, the 2017 Plan was terminated and replaced by the 2021 Plan.
The 2021 Plan was previously approved, subject to stockholder approval, by the Company’s Board of Directors on January 4, 2022. Upon the consummation of the Business Combination with VPCC, the 2017 Plan was terminated and replaced by the 2021 Plan.
Amortization expense related to change in useful life of a certain definite-lived intangible asset for the year ended December 31, 2021 was $ 0 million.
Amortization expense related to change in useful life of a certain definite-lived intangible asset for the year ended December 31, 2022 was $ 2.7 million.
Upon the closing of the Business Combination, the promissory note was automatically discharged upon the Company’s issuance of 46,875 shares of Class A Common Stock to Alameda Research. The closing of the note payable occurred immediately prior to the closing date of the Business Combination.
Upon the closing of the Business Combination, the promissory note was automatically discharged upon the Company’s issuance of 46,875 shares of Class A Common Stock to Alameda Research.
As a result, the Company consolidated Dave OD and all intercompany accounts have been eliminated. The carrying value of Dave OD’s assets and liabilities, after elimination of any intercompany transactions and balances are shown in the consolidated balance sheets. The assets of Dave OD are restricted and its creditors have full recourse against the Company for its liabilities.
As a result, the Company consolidated Dave OD and all intercompany accounts have been eliminated. The carrying value of Dave OD’s assets and liabilities, after elimination of any intercompany transactions and balances are shown in the consolidated balance sheets.
Internally developed software is amortized over its estimated useful life of 3 years. The Company’s accounting policy is to perform annual reviews of capitalized internally developed software projects to determine whether any impairment indicators are present as of December 31, or whenever a change in circumstances suggests an impairment indicator is present.
The Company’s accounting policy is to perform annual reviews of capitalized internally developed software projects to determine whether any impairment indicators are present as of December 31, or whenever a change in circumstances suggests an impairment indicator is present.
The following table presents the assumptions used to value the Founder Holder Earnout Shares liability for the year ended December 31, 2022: Exercise price $ 400.00 Expected volatility 83.9 % Risk-free interest rate 4.1 % Remaining term 4.0100 Dividend yield 0 % There were no other assets or liabilities that were required to be measured at fair value on a recurring basis as of December 31, 2022 and December 31, 2021.
The following table presents the assumptions used to value the Founder Holder Earnout Shares liability for the year ended December 31, 2023: Exercise price $ 400 -$ 480 Expected volatility 92.5 % Risk-free interest rate 4.0 % Remaining term 3.01 years Dividend yield 0 % There were no other assets or liabilities that were required to be measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022.
If the Company’s shares of Class A Common Stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
If the Company’s shares of Class A Common Stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. 85 The Public Warrants and the Private Warrants have an exercise price of $ 368.00 per share, subject to adjustments and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.
A reconciliation of the Company’s gross unrecognized tax benefits as of December 31, 2022 and 2021 is as follows (dollars in thousands): 2022 2021 Balance at beginning of year $ 456 $ 111 Increases to prior positions - 204 Decreases to prior positions - ( 0 ) Increases for current year positions 393 141 Balance at end of year $ 849 $ 456 108 As of December 31, 2022, the Company had $ 0.9 million of gross unrecognized tax benefits related to state income taxes and federal and state R&D tax credits.
A reconciliation of the Company’s gross unrecognized tax benefits as of December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 Balance at beginning of year $ 849 $ 456 Increases to prior positions - - Decreases to prior positions - - Increases for current year positions 476 393 Balance at end of year $ 1,325 $ 849 As of December 31, 2023, the Company had $ 1.3 million of gross unrecognized tax benefits related to state income taxes and federal and state R&D tax credits.
On January 3, 2022, Legacy Dave entered into an agreement with a certain executive to transfer and sell shares of Legacy Dave common stock to Legacy Dave.
Related-Party Exercise Receivable Promissory Notes: On January 3, 2022, Legacy Dave entered into an agreement with a certain executive to transfer and sell shares of Legacy Dave common stock to Legacy Dave.
The Company is in the process of settling this matter and the estimated settlement amount of approximately $ 3.2 million is included in the Legal settlement accrual within the consolidated balance sheets for the period ended December 31, 2022 and December 31, 2021.
The Company is in the process of settling this matter on a classwide basis, and the estimated settlement amount of approximately $ 3.2 million is included in the Legal settlement accrual within the consolidated balance sheets for the years ended December 31, 2023 and December 31, 2022.

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