10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to _______

Commission file number: 001-40161

 

DAVE INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

 

Delaware

86-1481509

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

1265 South Cochran Ave

Los Angeles, CA

90019

(Address of principal executive offices)

Zip Code

Registrant's telephone number, including area code: (844) 857-3283

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

 

 

 

Class A common stock, par value $0.0001

DAVE

The Nasdaq Stock Market LLC

Redeemable warrants, each whole warrant exercisable for one share of Class A common stock, each at an exercise price of $368 per share

DAVEW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ☐ NO

 

As of October 25, 2023, there were 10,587,288 shares of Class A common stock, $0.0001 par value and 1,514,082 shares of Class V common stock, $0.0001 par value, issued and outstanding.

 

 


DAVE INC.

TABLE OF CONTENTS

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Balance Sheets, Continued

2

 

Condensed Consolidated Statements of Operations

3

 

Condensed Consolidated Statements of Comprehensive Loss

4

 

Condensed Consolidated Statement of Stockholders’ Equity

5

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

49

Item 4.

Controls and Procedures

49

 

 

 

PART II.

OTHER INFORMATION

51

 

 

 

Item 1.

Legal Proceedings

51

Item 1A.

Risk Factors

51

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

51

Item 3.

Defaults Upon Senior Securities

51

Item 4.

Mine Safety Disclosures

51

Item 5.

Other Information

51

Item 6.

Exhibits

51

Signatures

 

53

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q” or this “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are forward looking and as such are not historical facts. All statements contained in this Form 10-Q other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance, our objectives for future operations, our liquidity, borrowing capacity, our use of cash and cash requirements and the expected effects of new accounting pronouncements, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “should,” “would,” “can,” “expect,” “project,” “outlook,” “forecast,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2023 (the “Annual Report”). Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Forward-looking statements contained in this Form 10-Q involve a number of judgments, risks and uncertainties, including, without limitation, risks related to:

the ability of Dave to compete in its highly competitive industry;

the ability of Dave to keep pace with the rapid technological developments in its industry and the larger financial services industry;

the ability of Dave to manage its growth as a public company;

the ability of Dave to protect intellectual property and trade secrets;

changes in applicable laws or regulations and extensive and evolving government regulations (including laws and regulations related to banking as a service and bank partnerships) that impact operations and business;

the ability to attract or maintain a qualified workforce;

level of product service failures that could lead Dave members (“Members”) to use competitors’ services;

investigations, claims, disputes, enforcement actions, litigation and/or other regulatory or legal proceedings;

the ability to maintain the listing of Dave Class A Common Stock on Nasdaq;

the effects of global conflicts or rising inflation on Dave’s business;

the possibility that Dave may be adversely affected by other economic, business, and/or competitive factors; and

other risks and uncertainties described in this Form 10-Q, including those described under Item 1A, “Risk Factors” of the Annual Report.

We caution you that the foregoing list of risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements may not be complete. You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements and our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 


 

Except as required by law, we do not intend to update any of these forward-looking statements after the date of this report or to conform these statements to actual results or revised expectations.

This report contains estimates, projections and other information concerning our industry, our business and the markets for our products. We obtained the industry, market and similar data set forth in this report from our own internal estimates and research and from industry research, publications, surveys and studies conducted by third parties, including governmental agencies. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe that the data we use from third parties are reliable, we have not separately verified these data. You are cautioned not to give undue weight to any such information, projections and estimates.

As used in this report, the “Company,” “Dave,” “we,” “us,” “our” and similar terms refer Dave Inc. (f/k/a VPC Impact Acquisition Holdings III, Inc. (“VPCC”)) and its consolidated subsidiaries, unless otherwise noted or the context otherwise requires. “Business Combination” refers to the business combination pursuant we consummated on January 5, 2022 pursuant to the Agreement and Plan of Merger, dated as of June 7, 2021 among VPCC, Dave Inc., a Delaware corporation, and other entities.


 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Dave Inc.

Condensed Consolidated Balance Sheets

(in thousands; except share data)

 

 

 

As of September 30, 2023

 

 

As of December 31,
2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

43,608

 

 

$

22,889

 

Marketable securities

 

 

1,638

 

 

 

285

 

Member advances, net of allowance for credit losses of $19,758 and $24,501 as of September 30, 2023 and December 31, 2022, respectively

 

 

97,124

 

 

 

104,183

 

Short-term investments

 

 

124,581

 

 

 

168,789

 

Prepaid income taxes

 

 

813

 

 

 

831

 

Prepaid expenses and other current assets

 

 

10,605

 

 

 

11,591

 

Total current assets

 

 

278,369

 

 

 

308,568

 

Property and equipment, net

 

 

1,266

 

 

 

1,026

 

Lease right-of-use assets (related-party of $541 and $735 as of September 30, 2023 and December 31, 2022, respectively)

 

 

541

 

 

 

735

 

Intangible assets, net

 

 

12,725

 

 

 

10,163

 

Debt facility commitment fee, long-term

 

 

355

 

 

 

75

 

Restricted cash

 

 

1,191

 

 

 

788

 

Other non-current assets

 

 

-

 

 

 

137

 

Total assets

 

$

294,447

 

 

$

321,492

 

Liabilities, and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,091

 

 

$

11,418

 

Accrued expenses

 

 

14,426

 

 

 

10,965

 

Lease liabilities, short-term (related-party of $250 and $273 as of September 30, 2023 and December 31, 2022, respectively)

 

 

250

 

 

 

273

 

Legal settlement accrual

 

 

7,415

 

 

 

9,450

 

Other current liabilities

 

 

3,699

 

 

 

4,311

 

Total current liabilities

 

 

34,881

 

 

 

36,417

 

Lease liabilities, long-term (related-party of $362 and $550 as of September 30, 2023 and December 31, 2022, respectively)

 

 

362

 

 

 

550

 

Debt facility, long-term

 

 

75,000

 

 

 

75,000

 

Convertible debt, long-term

 

 

104,654

 

 

 

102,325

 

Warrant and earnout liabilities

 

 

241

 

 

 

516

 

Other non-current liabilities

 

 

128

 

 

 

124

 

Total liabilities

 

$

215,266

 

 

$

214,932

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, par value per share $0.0001, 10,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

-

 

 

 

-

 

Class A common stock, par value per share $0.0001, 500,000,000 shares authorized; 10,587,288 and 10,334,220 shares issued at September 30, 2023 and December 31, 2022, respectively; 10,537,725 and 10,284,657 shares outstanding at September 30, 2023 and December 31, 2022, respectively;

 

 

1

 

 

 

1

 

Class V common stock, par value per share $0.0001, 100,000,000 shares authorized; 1,514,082 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively;

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

290,187

 

 

 

270,037

 

Accumulated other comprehensive loss

 

 

(508

)

 

 

(1,675

)

Accumulated deficit

 

 

(210,499

)

 

 

(161,803

)

Total stockholders’ equity

 

$

79,181

 

 

$

106,560

 

Total liabilities, and stockholders’ equity

 

$

294,447

 

 

$

321,492

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 

 

 

1


 

Dave Inc.

Condensed Consolidated Balance Sheets, Continued

(in thousands)

 

The following table presents the assets and liabilities of a consolidated variable interest entity (“VIE”), which are included in the condensed consolidated balance sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. All intercompany accounts have been eliminated.

 

 

 

As of September 30, 2023

 

 

As of December 31, 2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

39,657

 

 

$

12,030

 

Short-term investments

 

 

26,305

 

 

 

-

 

Member advances, net of allowance for credit losses

 

 

80,407

 

 

 

71,545

 

Debt facility commitment fee, current

 

 

135

 

 

 

62

 

Debt facility commitment fee, long-term

 

 

354

 

 

 

75

 

Total assets

 

$

146,858

 

 

$

83,712

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

 

748

 

 

 

531

 

Long-term debt facility

 

 

75,000

 

 

 

75,000

 

Total liabilities

 

$

75,748

 

 

$

75,531

 

 

 

See accompanying notes to the condensed consolidated financial statements.

2


 

Dave Inc.

Condensed Consolidated Statements of Operations

(in thousands; except share data)

(unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Service based revenue, net

 

$

59,179

 

 

$

52,795

 

 

$

166,740

 

 

$

135,054

 

Transaction based revenue, net

 

 

6,632

 

 

 

4,012

 

 

 

19,234

 

 

 

10,109

 

Total operating revenues, net

 

 

65,811

 

 

 

56,807

 

 

 

185,974

 

 

 

145,163

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Provision for credit losses

 

 

15,983

 

 

 

18,353

 

 

 

43,861

 

 

 

45,995

 

Processing and servicing costs

 

 

7,064

 

 

 

9,494

 

 

 

21,414

 

 

 

23,627

 

Advertising and marketing

 

 

13,914

 

 

 

24,090

 

 

 

38,370

 

 

 

57,087

 

Compensation and benefits

 

 

23,081

 

 

 

24,294

 

 

 

71,380

 

 

 

81,326

 

Other operating expenses

 

 

16,343

 

 

 

18,498

 

 

 

54,922

 

 

 

50,738

 

Total operating expenses

 

 

76,385

 

 

 

94,729

 

 

 

229,947

 

 

 

258,773

 

Other (income) expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,332

)

 

 

(1,171

)

 

 

(4,009

)

 

 

(1,831

)

Interest expense

 

 

3,057

 

 

 

2,403

 

 

 

8,982

 

 

 

6,246

 

Legal settlement and litigation expenses

 

 

-

 

 

 

6,845

 

 

 

-

 

 

 

6,845

 

Other strategic financing and transactional expenses

 

 

-

 

 

 

2,209

 

 

 

-

 

 

 

5,040

 

Changes in fair value of earnout liabilities

 

 

2

 

 

 

18

 

 

 

(35

)

 

 

(9,616

)

Gain on extinguishment of liability

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,290

)

Changes in fair value of derivative asset on loans to stockholders

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,572

 

Changes in fair value of public and private warrant liabilities

 

 

(257

)

 

 

(748

)

 

 

(239

)

 

 

(14,232

)

Total other expense (income), net

 

 

1,470

 

 

 

9,556

 

 

 

4,699

 

 

 

(6,266

)

Net loss before provision for income taxes

 

 

(12,044

)

 

 

(47,478

)

 

 

(48,672

)

 

 

(107,344

)

Provision for income taxes

 

 

9

 

 

 

26

 

 

 

24

 

 

 

70

 

Net loss

 

$

(12,053

)

 

$

(47,504

)

 

$

(48,696

)

 

$

(107,414

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

$

(1.01

)

 

$

(4.06

)

 

$

(4.10

)

 

$

(9.32

)

    Diluted

 

$

(1.01

)

 

$

(4.06

)

 

$

(4.10

)

 

$

(9.32

)

Weighted-average shares used to compute net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

    Basic

 

 

11,960,078

 

 

 

11,702,147

 

 

 

11,887,199

 

 

 

11,525,164

 

    Diluted

 

 

11,960,078

 

 

 

11,702,147

 

 

 

11,887,199

 

 

 

11,525,164

 

 

 

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 

 

3


 

Dave Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

 

 

For the Three Months Ended September 30,

 

 

For the Nine Months Ended September 30,

 

 

 

 

2023

 

 

2022

 

 

 

2023

 

 

2022

 

Net loss

 

$

(12,053

)

$

(47,504

)

 

$

(48,696

)

$

(107,414

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities

 

 

362

 

 

(596

)

 

 

1,167

 

 

(3,026

)

Comprehensive loss

 

$

(11,691

)

$

(48,100

)

 

$

(47,529

)

$

(110,440

)

 

See accompanying notes to the condensed consolidated financial statements.

4


 

Dave Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class V

 

Additional paid-in capital

Loans to stockholders

 

Treasury stock

 

Accumulated other comprehensive loss

 

Accumulated deficit

 

Total stockholders’ equity

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2023

 

10,284,657

 

$

1

 

 

 

1,514,082

 

$

-

 

$

270,037

 

 

$

-

 

$

-

 

$

(1,675

)

$

(161,803

)

$

106,560

 

Issuance of Class A common stock in connection with stock plans

 

253,068

 

 

-

 

 

 

-

 

 

-

 

 

17

 

 

 

-

 

 

-

 

 

-

 

-

 

 

17

 

Payment for fractional shares after reverse stock split

 

-

 

 

-

 

 

 

-

 

 

-

 

 

(13

)

 

 

-

 

 

-

 

 

-

 

-

 

 

(13

)

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

20,146

 

 

 

-

 

 

-

 

 

-

 

-

 

 

20,146

 

Unrealized gain on available-for-sale securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

1,167

 

-

 

 

1,167

 

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

(48,696

)

 

(48,696

)

Balance at September 30, 2023

 

10,537,725

 

$

1

 

 

 

1,514,082

 

$

-

 

$

290,187

 

 

$

-

 

$

-

 

$

(508

)

$

(210,499

)

$

79,181

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class V

 

Additional paid-in capital

Loans to stockholders

 

Treasury stock

 

Accumulated other comprehensive loss

 

Accumulated deficit

 

Total stockholders’ equity

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

9,283,010

 

$

1

 

 

 

1,514,082

 

$

-

 

$

86,830

 

 

$

(15,192

)

$

(5

)

$

-

 

$

(32,897

)

$

38,737

 

Issuance of Class A common stock in connection with stock plans

 

228,879

 

 

-

 

 

 

-

 

 

-

 

 

1,655

 

 

 

-

 

 

-

 

 

-

 

-

 

 

1,655

 

Issuance of Class A common stock pursuant to the PIPE financing

 

656,247

 

 

-

 

 

 

-

 

 

-

 

 

210,000

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

210,000

 

Issuance of Class A common stock pursuant to the Merger Agreement

 

211,415

 

 

-

 

 

 

-

 

 

-

 

 

(26,701

)

 

 

 

 

-

 

 

-

 

 

-

 

 

(26,701

)

Exercise of Series B-1 preferred stock warrants, net of settlement

 

14,087

 

 

-

 

 

 

-

 

 

-

 

 

3,365

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

3,365

 

Conversion of 2019 convertible notes and accrued interest to Class A common stock

 

7,040

 

 

-

 

 

 

-

 

 

-

 

 

720

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

720

 

Repurchase of Class A common stock

 

(6,203

)

 

-

 

 

 

-

 

 

-

 

 

(1,588

)

 

 

-

 

 

5

 

 

-

 

 

-

 

 

(1,583

)

Exercise of warrant for Class A common stock

 

3

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Stockholder loans interest

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

(12

)

 

-

 

 

-

 

 

-

 

 

(12

)

Exercise of derivative asset and paydown of stockholder loans

 

(187,945

)

 

-

 

 

 

-

 

 

-

 

 

(44,886

)

 

 

15,204

 

 

-

 

 

-

 

 

-

 

 

(29,682

)

Extinguishment of liability

 

42,613

 

 

-

 

 

 

-

 

 

-

 

 

3,150

 

 

 

-

 

 

-

 

 

-

 

-

 

 

3,150

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

34,016

 

 

 

-

 

 

-

 

 

-

 

-

 

 

34,016

 

Unrealized loss on available-for-sale securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-