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 March 31, 2024

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 April 29, 2024, there were 10,872,286 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

3

 

Condensed Consolidated Statements of Operations

4

 

Condensed Consolidated Statements of Comprehensive Income (loss)

5

 

Condensed Consolidated Statement of Stockholders’ Equity

6

 

Condensed Consolidated Statements of Cash Flows

7

 

Notes to Condensed Consolidated Financial Statements

10

Item 2.

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

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

44

Item 4.

Controls and Procedures

44

 

 

 

PART II.

OTHER INFORMATION

46

 

 

 

Item 1.

Legal Proceedings

46

Item 1A.

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3.

Defaults Upon Senior Securities

46

Item 4.

Mine Safety Disclosures

46

Item 5.

Other Information

46

Item 6.

Exhibits

46

Signatures

 

48

 

 


 

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”). 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, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2024 (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 risks associated with providing ExtraCash advances;
the ability of Dave to retain its current members, acquire new members and sell additional functionality and services to its members;
the ability of Dave to protect intellectual property and trade secrets;
the ability of Dave to maintain the integrity of its confidential information and information systems or comply with applicable privacy and data security requirements and regulations;
the ability of Dave to maintain or secure current and future key banking relationships and other third-party service providers;
changes in applicable laws or regulations and extensive and evolving government regulations that impact operations and business;
the ability to attract or maintain a qualified workforce;
the 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 The Nasdaq Stock Market; and
the possibility that Dave may be adversely affected by other economic factors, including rising interest rates, and business, and/or competitive factors; and

other risks and uncertainties described in this Form 10-Q, including those described under Part II Item 1A, “Risk Factors”.

We caution you that the foregoing list of judgments, 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. 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.

 


 

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.

 

You should read this report with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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 to Dave Inc. (f/k/a VPC Impact Acquisition Holdings III, Inc.) and its consolidated subsidiaries, unless otherwise noted or the context otherwise requires.


 

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Dave Inc.

Condensed Consolidated Balance Sheets

(in thousands; except share data)

 

 

 

As of March 31,
2024

 

 

As of December 31,

 

 

 

(unaudited)

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,525

 

 

$

41,759

 

Marketable securities

 

 

1,083

 

 

 

952

 

Member advances, net of allowance for credit losses of $17,328 and $20,310 as of March 31, 2024 and December 31, 2023, respectively

 

 

104,923

 

 

 

112,846

 

Investments

 

 

43,317

 

 

 

113,226

 

Prepaid income taxes

 

 

-

 

 

 

148

 

Prepaid expenses and other current assets

 

 

13,492

 

 

 

7,955

 

Total current assets

 

 

218,340

 

 

 

276,886

 

Property and equipment, net

 

 

996

 

 

 

1,118

 

Lease right-of-use assets (related-party of $707 and $773 as of March 31, 2024 and December 31, 2023, respectively)

 

 

707

 

 

 

773

 

Intangible assets, net

 

 

13,322

 

 

 

13,206

 

Debt facility commitment fee, long-term

 

 

281

 

 

 

318

 

Restricted cash

 

 

1,546

 

 

 

1,319

 

Other non-current assets

 

 

407

 

 

 

403

 

Total assets

 

$

235,599

 

 

$

294,023

 

Liabilities, and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,013

 

 

$

5,485

 

Accrued expenses

 

 

15,069

 

 

 

12,626

 

Lease liabilities, short-term (related-party of $310 and $298  as of March 31, 2024 and December 31, 2023, respectively)

 

 

310

 

 

 

298

 

Legal settlement accrual

 

 

690

 

 

 

3,330

 

Other current liabilities

 

 

4,164

 

 

 

3,865

 

Total current liabilities

 

 

29,246

 

 

 

25,604

 

Lease liabilities, long-term (related-party of $460 and $543 as of March 31, 2024 and December 31, 2023, respectively)

 

 

460

 

 

 

543

 

Debt facility, long-term

 

 

75,000

 

 

 

75,000

 

Convertible debt, long-term

 

 

-

 

 

 

105,451

 

Warrant and earnout liabilities

 

 

907

 

 

 

233

 

Other non-current liabilities

 

 

2,672

 

 

 

129

 

Total liabilities

 

$

108,285

 

 

$

206,960

 

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 March 31, 2024 and December 31, 2023

 

 

-

 

 

 

-

 

Class A common stock, par value per share $0.0001, 500,000,000 shares authorized; 10,869,286 and 10,683,736 shares issued at March 31, 2024 and December 31, 2023, respectively; 10,819,723 and 10,634,173 shares outstanding at March 31, 2024 and December 31, 2023, 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 March 31, 2024 and December 31, 2023, respectively;

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

303,387

 

 

 

296,733

 

Accumulated other comprehensive gain (loss)

 

 

3

 

 

 

649

 

Accumulated deficit

 

 

(176,077

)

 

 

(210,320

)

Total stockholders’ equity

 

$

127,314

 

 

$

87,063

 

Total liabilities, and stockholders’ equity

 

$

235,599

 

 

$

294,023

 

 

1


 

See accompanying notes to the condensed consolidated financial statements.

2


 

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 March 31, 2024

 

 

As of December 31, 2023

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

47,643

 

 

$

37,684

 

Investments

 

 

18,458

 

 

 

21,264

 

Member advances, net of allowance for credit losses

 

 

93,604

 

 

 

95,812

 

Debt facility commitment fee, current

 

 

143

 

 

 

139

 

Debt facility commitment fee, long-term

 

 

281

 

 

 

318

 

Total assets

 

$

160,129

 

 

$

155,217

 

Liabilities

 

 

 

 

 

 

Accounts payable

 

 

659

 

 

 

661

 

Long-term debt facility

 

 

75,000

 

 

 

75,000

 

Total liabilities

 

$

75,659

 

 

$

75,661

 

 

See accompanying notes to the condensed consolidated financial statements.

3


 

Dave Inc.

Condensed Consolidated Statements of Operations

(in thousands; except per share data)

(unaudited)

 

 

 

For the Three Months Ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Operating revenues:

 

 

 

 

 

 

Service based revenue, net

 

$

65,562

 

 

$

52,576

 

Transaction based revenue, net

 

 

8,068

 

 

 

6,352

 

Total operating revenues, net

 

 

73,630

 

 

 

58,928

 

Operating expenses:

 

 

 

 

 

 

Provision for credit losses

 

 

9,943

 

 

 

11,953

 

Processing and servicing costs

 

 

7,723

 

 

 

7,118

 

Advertising and marketing

 

 

9,097

 

 

 

9,471

 

Compensation and benefits

 

 

24,552

 

 

 

24,367

 

Other operating expenses

 

 

16,916

 

 

 

18,501

 

Total operating expenses

 

 

68,231

 

 

 

71,410

 

Other (income) expenses:

 

 

 

 

 

 

Interest income

 

 

(1,495

)

 

 

(1,192

)

Interest expense

 

 

2,217

 

 

 

2,898

 

Gain on extinguishment of convertible debt

 

 

(33,442

)

 

 

-

 

Changes in fair value of earnout liabilities

 

 

196

 

 

 

(25

)

Changes in fair value of public and private warrant liabilities

 

 

477

 

 

 

(146

)

Total other (income) expense, net

 

 

(32,047

)

 

 

1,535

 

Net income (loss) before provision for income taxes

 

 

37,446

 

 

 

(14,017

)

Provision for income taxes

 

 

3,203

 

 

 

8

 

Net income (loss)

 

$

34,243

 

 

$

(14,025

)

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

    Basic

 

$

2.80

 

 

$

(1.19

)

    Diluted

 

$

2.60

 

 

$

(1.19

)

Weighted-average shares used to compute net income (loss) per share

 

 

 

 

 

 

    Basic

 

 

12,220,199

 

 

 

11,815,448

 

    Diluted

 

 

13,182,517

 

 

 

11,815,448

 

 

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 

 

4


 

Dave Inc.

Condensed Consolidated Statements of Comprehensive Income (loss)

(in thousands)

(unaudited)

 

 

 

For the Three Months Ended,

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Net income (loss)

 

$

34,243

 

 

$

(14,025

)

Other comprehensive (loss) gain:

 

 

 

 

 

 

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

 

 

(646

)

 

 

783

 

Comprehensive income (loss)

 

$

33,597

 

 

$

(13,242

)

 

 

 

 

 

 

 

 

See accompanying notes to the condensed consolidated financial statements.

5


 

Dave Inc.

Condensed Consolidated Statement of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class V

 

Additional paid-in capital

Accumulated other comprehensive income

 

Accumulated deficit

 

Total stockholders’ equity

 

 

Shares

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

Balance at January 1, 2024

 

10,634,173

 

 

1

 

 

 

1,514,082

 

 

-

 

 

296,733

 

 

 

 

649

 

 

(210,320

)

 

87,063

 

Issuance of Class A common stock in connection with stock plans

 

185,550

 

 

-

 

 

 

-

 

 

-

 

 

524

 

 

 

 

-

 

-

 

 

524

 

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

6,130

 

 

 

 

-

 

-

 

 

6,130

 

Unrealized loss on available-for-sale securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

 

(646

)

-

 

 

(646

)

Net income

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

 

-

 

 

34,243

 

 

34,243

 

Balance at March 31, 2024

 

10,819,723

 

$

1

 

 

 

1,514,082

 

$

-

 

$

303,387

 

 

 

$

3

 

$

(176,077

)

$

127,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

Class A

 

 

Class V

 

Additional paid-in capital

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

 

68,311

 

 

-

 

 

 

-

 

 

-

 

 

1

 

 

 

 

-

 

 

-

 

 

1

 

Payment for fractional shares after reverse stock split

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

(13

)

Stock-based compensation

 

-

 

 

-

 

 

 

-

 

 

-

 

 

6,774

 

 

 

 

-

 

 

-

 

 

6,774

 

Unrealized gain on available-for-sale securities

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

 

783

 

 

-

 

 

783

 

Net loss

 

-

 

 

-

 

 

 

-

 

 

-

 

 

-

 

 

 

 

-

 

 

(14,025

)

 

(14,025

)

Balance at March 31, 2023

 

10,352,968

 

$

1

 

 

 

1,514,082

 

$

-

 

$

276,799

 

 

 

$

(892

)

$

(175,828

)

$

100,080

 

 

See accompanying notes to the condensed consolidated financial statements.

 

 

6


 

Dave Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

7


 

 

 

For the Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

Net income (loss)

 

$

34,243

 

 

$

(14,025

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

1,734

 

 

 

1,200

 

Provision for credit losses

 

 

9,943

 

 

 

11,953

 

Changes in fair value of earnout liabilities

 

 

196

 

 

 

(25

)

Changes in fair value of public and private warrant liabilities

 

 

477

 

 

 

(146

)

Gain on extinguishment of convertible debt

 

 

(33,442

)

 

 

-

 

Stock-based compensation

 

 

6,130

 

 

 

6,774

 

Non-cash interest

 

 

251

 

 

 

759

 

Non-cash lease expense

 

 

(5

)

 

 

(6

)

Changes in fair value of marketable securities and investments

 

 

(163

)

 

 

440

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Member advances, service based revenue

 

 

(454

)

 

 

216

 

Prepaid income taxes

 

 

148

 

 

 

7

 

Prepaid expenses and other current assets

 

 

(5,582

)

 

 

(4,061

)

Accounts payable

 

 

2,726

 

 

 

(6,891

)

Accrued expenses

 

 

1,944

 

 

 

2,617

 

Legal settlement accrual

 

 

(2,640

)

 

 

(5,749

)

Other current liabilities

 

 

299

 

 

 

(129

)

Other non-current liabilities

 

 

2,543

 

 

 

-

 

Other non-current assets

 

 

(4

)

 

 

137

 

Net cash provided by (used in) operating activities

 

 

18,344

 

 

 

(6,929

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Payments for internally developed software costs

 

 

(1,592

)

 

 

(1,946

)

Purchase of property and equipment

 

 

(12

)

 

 

(264

)

Net disbursements and collections of Member advances

 

 

(1,566

)

 

 

11,853

 

Purchase of investments

 

 

(20,889

)

 

 

(5,082

)

Sale and maturity of investments

 

 

90,315

 

 

 

65,390

 

Purchase of marketable securities

 

 

(59,165

)

 

 

(34,145

)

Sale of marketable securities

 

 

59,034

 

 

 

-

 

Net cash provided by investing activities

 

 

66,125

 

 

 

35,806

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Payment for fractional shares on reverse stock split

 

 

-

 

 

 

(13

)

Proceeds from issuance of common stock for stock option exercises

 

 

524

 

 

 

1

 

Repayment of borrowings on convertible debt, long-term

 

 

(71,000

)

 

 

-

 

Net cash used in financing activities

 

 

(70,476

)

 

 

(12

)

 

 

 

 

 

 

 

Net increase in cash and cash equivalents and restricted cash

 

 

13,993

 

 

 

28,865

 

Cash and cash equivalents and restricted cash, beginning of the period

 

 

43,078

 

 

 

23,677

 

Cash and cash equivalents and restricted cash, end of the period

 

$

57,071

 

 

$

52,542

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Property and equipment purchases in accounts payable and accrued liabilities

 

$

41

 

 

$

61

 

 

 

 

 

 

 

 

Supplemental disclosure of cash paid for:

 

 

 

 

 

 

Interest

 

$

1,933

 

 

$

2,121

 

 

 

 

 

 

 

 

The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheets with the same as shown in the condensed consolidated statement of cash flows

 

 

 

 

 

 

Cash and cash equivalents

 

$

55,525

 

 

$

51,754

 

8


 

Restricted cash

 

 

1,546

 

 

 

788

 

Total cash, cash equivalents, and restricted cash, end of the period

 

$

57,071

 

 

$

52,542

 

 

See accompanying notes to the condensed consolidated financial statements.

9


 

Note 1 Organization and Nature of Business

Overview:

Dave Inc. (“Dave” or the “Company”), a Delaware corporation, with headquarters located in Los Angeles, California, is a financial services company. Dave offers a suite of innovative financial products aimed at helping Members improve their financial health. To help Members avoid punitive overdraft fees and access short-term liquidity, Dave offers cash advances through its flagship 0% interest ExtraCash product. Through Dave Banking, the Company provides a digital checking account experience with valuable tools for building long-term financial health. Dave also helps Members generate extra income for spending or emergencies through Dave’s Side Hustle product and Surveys, where Dave presents Members with supplemental work and income opportunities.

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. 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, offered through our partnership with Evolve Bank & Trust, a federal reserve member bank and member of the FDIC ("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. 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. 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. Moreover, Dave Banking Members receive features to support their financial health such as 4.00% annual percentage yield ("APY") deposit rates on both checking and savings account balances, Goals savings accounts and opt-in round-up savings on debit transactions in addition to receiving lower ExtraCash instant transfer fees.

Budget:

 

Leveraging our data connections to Members' bank accounts and spending activity, Dave offers a personal financial management tool to support Members with budgeting, wherever someone banks. With Budget, Dave helps Members to manage their income and expenses between paychecks and avoid liquidity jams that may cause them to overdraft. Dave tracks Members’ income and expenses, and we let them know about estimated upcoming bills and other expenses. Budget will monitor their linked bank account held at a depository institution, including a Dave Banking account, and will let them know when they are in danger of having insufficient funds in their account. This helps Members avoid overdrafts, returned transactions and bank fees.

Side Hustle and Surveys:

 

Dave seeks to help Members improve their financial health by offering them opportunities to generate supplemental income through two channels: Side Hustle and Surveys. Through Side Hustle, our Members can quickly submit applications to leading employers, including UberEats, Lyft, and Costco that can lead to increased income with flexible employment. Our Surveys product allows for additional earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application. These channels drive engagement within the Dave ecosystem and deepen our relationship to our Members’ financial wellbeing.

10


 

Note 2 Significant Accounting Policies

 

Basis of Presentation

These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

On January 4, 2023, the Board approved an amendment to the Company’s certificate of incorporation to complete a 1-for-32 reverse stock split effective January 5, 2023. At a special meeting held on December 16, 2022, stockholders approved the reverse stock split. The primary goal of the reverse stock split was to bring the Company’s stock price above the share bid price requirement for continued listing on Nasdaq. The effects of the reverse stock split have been reflected in the condensed consolidated financial statements and the footnotes.

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and a variable interest entity (“VIE”). All intercompany transactions and balances have been eliminated upon consolidation.

 

In accordance with the provisions of Accounting Standards Codification (“ASC”) 810, Consolidation, the Company consolidates any VIE of which the Company is the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when it is not considered the primary beneficiary. The Company evaluates its relationships with its VIEs on an ongoing basis to ensure that the Company continues to be the primary beneficiary. The Company is considered the primary beneficiary of Dave OD Funding I, LLC (“Dave OD”), as it has the power over the activities that most significantly impact the economic performance of Dave OD and has the obligation to absorb expected losses and the right to receive expected benefits that could be significant, in accordance with accounting guidance. 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 may only be used to settle obligations of Dave OD.

 

Use of Estimates

 

The preparation of these consolidated financial statements requires the Company 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 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. The Company’s critical accounting estimates and assumptions are evaluated on an ongoing basis including those related to the:

(i) Allowance for credit losses; and

(ii) Income taxes.

Actual results may differ from these estimates under different assumptions or conditions.

 

 

 

 

 

 

11


 

Revenue Recognition

 

Below is detail of operating revenues (in thousands):

 

 

 

For the Three Months Ended

 

 

 

March 31, 2024

 

 

March 31, 2023

 

Service based revenue, net

 

 

 

 

 

 

     Processing fees, net

 

$

44,596

 

 

$

33,002

 

     Tips

 

 

14,910

 

 

 

13,760

 

     Subscriptions

 

 

5,943

 

 

 

5,619

 

     Other

 

 

113

 

 

 

195

 

Transaction based revenue, net

 

 

 

 

 

 

     Interchange revenue, net

 

 

4,742

 

 

 

3,990

 

     ATM revenue, net

 

 

809

 

 

 

718

 

     Other

 

 

2,517

 

 

 

1,644

 

Total operating revenues, net

 

$

73,630

 

 

$

58,928

 

 

 

 

 

 

 

 

Service Based Revenue, Net

 

Service based revenue, net primarily consists of optional tips, optional processing fees, and subscriptions charged to Members, net of processor costs associated with advance disbursements. Member advances are treated as financial receivables under ASC 310 Receivables (“ASC 310”) and processing fees, net and tips are also accounted for in accordance with ASC 310.

 

Processing Fees, Net:

 

Processing fees apply when a Member requests an expedited cash advance. 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 accounted for as nonrefundable loan origination fees and are recognized as revenues over the average expected contractual term of its advances.

Costs incurred by the Company to fund cash advances are treated as direct loan origination costs. These direct loan origination costs are netted against advance-related income over the average expected contractual term of its advances. Direct origination costs recognized as a reduction of advance-related income during the three months ended March 31, 2024 and 2023 were approximately $0.7 million and $1.3 million, respectively.

 

Tips:

 

The Company encourages, but does not contractually require its Members who receive a cash advance to leave a discretionary tip. For accounting purposes, the Company treats tips as an adjustment of yield to the advances and are recognized over the average expected contractual term of its advances.

 

Subscriptions:

 

The Company accounts for subscriptions in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company must identify the contract with a Member, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the Company satisfies the performance obligations. For revenue sources that are within the scope of Topic 606, the Company fully satisfies its performance obligations and recognizes revenue in the period it is earned as services are rendered. Transaction prices are typically fixed, charged on a periodic basis or based on activity. Because performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying ASC 606 that significantly affects the determination of the amount and timing of revenue from contracts with the Company’s Members.

 

Subscription fees of $1 are received on a monthly basis from Members who subscribe to the Company’s application. The Company continually fulfills its obligation to each Member over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. The Company recognizes revenue ratably as the Member receives and consumes the benefits of the platform throughout the monthly contract period.

 

12


 

Price concessions granted to Members who have insufficient funds when subscription fees are due and not collected are forms of variable consideration under the Company’s contracts with Members. For price concessions, the Company has elected, as an accounting policy, to account for price concessions for the month at the end of the reporting month based on the actual amounts collected from Members.

 

Other service based revenue consists of lead generation fees from the Company’s Side Hustle advertising partners and revenue share from its survey partners.

Transaction Based Revenue, Net:

 

Transaction based revenue, net primarily consists of interchange and ATM revenues from the Company’s Checking Product, net of certain interchange and ATM-related fees, fees earned from funding and withdrawal-related transactions, volume support from a certain co-branded agreement, fees earned related to the Rewards Product for Members who make debit card spending transactions at participating merchants, and deposit referrals and are recognized at the point in time the transactions occur, as the performance obligations are satisfied and the variable consideration is not constrained. 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 remitted by merchants and represents a percentage of the underlying transaction value processed through a payment network. ATM fees earned from the Member’s usage out-of-network reduced by related ATM transaction costs during the three months ended March 31, 2024 and 2023, were $1.3 million and $1.1 million, respectively. ATM-related fees recognized as a reduction of transaction based revenue during the three months ended March 31, 2024 and 2023 were $0.5 million and $0.3 million, respectively.

Processing and Servicing Costs

 

Processing costs consist of amounts paid to third party processors for the recovery of advances, tips, processing fees, and subscriptions. These expenses also include fees paid for services to connect Member’s bank accounts to the Company’s application. Except for processing and service fees associated with advance disbursements, which are recorded net against revenue, all other processing and service fees are expensed as incurred.

Cash and Cash Equivalents

The Company classifies all highly liquid instruments with an original maturity of three months or less as cash equivalents.

Restricted Cash

Restricted cash primarily represents cash held at financial institutions that is pledged as collateral for specific accounts that may become overdrawn.

Marketable Securities

 

Marketable securities consist of a money market mutual fund. The fair value of marketable securities is determined by quoted prices in active markets and changes in fair value are recorded in other (income) expense in the consolidated statements of operations.

 

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. 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. 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. Any related amounts recorded in accumulated other comprehensive income are reclassified to earnings (on a pretax basis).

 

 

 

13


 

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. 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.

Allowance for Credit Losses

 

Member advances from contracts with Members as of the balance sheet dates are recorded at their original advance amounts, inclusive of outstanding processing fees and tips, and reduced by an allowance for expected credit losses. The Company pools its Member advances, all of which are short-term (average term of approximately 11 days) in nature and arise from contracts with Members, based on shared risk characteristics to assess their risk of loss, even when that risk is remote. The Company uses an aging method and historical loss rates as a basis for estimating the percentage of current and delinquent Member advances balances that will result in credit losses to derive the allowance for credit losses. The Company considers whether the conditions at the measurement date and reasonable and supportable forecasts about future conditions warrant an adjustment to its historical loss experience. In assessing such adjustments, the Company primarily evaluates current economic conditions, expectations of near-term economic trends and changes in customer payment terms, collection trends and cash collections subsequent to the balance sheet date. For the measurement dates presented herein, given its methods of collecting funds, and that the Company has not observed meaningful changes in its customers’ payment behavior, it determined that its historical loss rates remained most indicative of its lifetime expected losses. The Company immediately recognizes an allowance for expected credit losses upon the origination of the advance. Adjustments to the allowance each period for changes in the estimate of lifetime expected credit losses are recognized in operating expenses—provision for credit losses in the consolidated statements of operations.

When the Company determines that a Member advance is not collectible, or after 120 days from origination has passed, the uncollectible amount is written-off as a reduction to both the allowance and the gross asset balance. Based on the average outstanding Member advance term of approximately 11 days, advances outstanding 12 or more days from origination may be considered past due. Subsequent recoveries are recorded when received and are recorded as a recovery of the allowance for expected credit losses. Any change in circumstances related to a specific Member advance may result in an additional allowance for expected credit losses being recognized in the period in which the change occurs.

Internally Developed Software

Internally developed software is capitalized when preliminary development efforts are successfully completed, management has authorized and committed project funding, it is probable that the project will be completed, and the software will be used as intended. Capitalized costs consist of salaries and other compensation costs for employees incurred for time spent on upgrades and enhancements to add functionality to the software and fees paid to third-party consultants who are directly involved in development efforts. These capitalized costs are included on the consolidated balance sheets as intangible assets, net. Other costs are expensed as incurred and included within other operating expenses in the consolidated statements of operations. Capitalized costs for the three months ended March 31, 2024 and 2023, were $1.6 million and $1.9 million, respectively.

 

Amortization of internally developed software commences when the software is ready for its intended use (i.e., after all substantial testing is complete). 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. If any impairment indicators are present, the Company will perform a recoverability test by comparing the sum of the estimated undiscounted cash flows attributed to the asset group to their carrying value. If the undiscounted cash flows expected to result from the remaining use of the asset (i.e., cash flows when testing recoverability) are less than the asset group’s carrying value, the Company will determine the fair value of the asset group and recognize an impairment loss as the amount by which the carrying value of the asset group exceeds its fair value. If based on the results of the recoverability test, no impairment is indicated as the remaining undiscounted cash flows exceed the carrying value of the software asset group, the carrying value of the asset group as of the assessment date is deemed fully recoverable. In addition, the Company evaluates the remaining useful life of an intangible asset that is being amortized each reporting period to determine whether events and circumstances warrant a revision to the remaining

14


 

period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying value of the intangible asset shall be amortized prospectively over that revised remaining useful life.

Property and Equipment

 

Property and equipment are stated at cost less accumulated depreciation. 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.

Impairment of Long-Lived Assets

 

The Company assesses the impairment of long-lived assets, primarily property and equipment and amortizable intangible assets, whenever events or changes in business circumstances indicate that carrying amounts of the assets may not be fully recoverable. If the sum of the expected undiscounted future cash flows from an asset is less than the carrying amount of the asset, the Company estimates the fair value of the assets. The Company measures the loss as the amount by which the carrying amount exceeds its fair value calculated using the present value of estimated net future cash flows.

Fair Value of Financial Instruments

 

ASC 820, Fair Value Measurement (“ASC 820”), provides a single definition of fair value and a common framework for measuring fair value as well as disclosure requirements for fair value measurements used in the consolidated financial statements. Under ASC 820, fair value is determined based upon the exit price that would be received by a company to sell an asset or paid by a company to transfer a liability in an orderly transaction between market participants, exclusive of any transaction costs. Fair value measurements are determined by either the principal market or the most advantageous market. The principal market is the market with the greatest level of activity and volume for the asset or liability. Absent a principal market to measure fair value, the Company uses the most advantageous market, which is the market from which the Company would receive the highest selling price for the asset or pay the lowest price to settle the liability, after considering transaction costs. However, when using the most advantageous market, transaction costs are only considered to determine which market is the most advantageous and these costs are then excluded when applying a fair value measurement. ASC 820 creates a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below, with Level 1 having the highest priority and Level 3 having the lowest.

 

Level 1—Quoted prices in active markets for identical assets or liabilities.

 

Level 2—Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active for identical or similar assets and liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3—Valuations are based on inputs that are unobservable and significant to the overall fair value measurement of the assets or liabilities. Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. 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. The Company’s cash and cash equivalents and restricted cash in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits were $54.7 million at March 31, 2024 and $40.9 million at December 31, 2023, respectively. The Company’s payment processors also collect cash on the Company’s behalf and will hold these cash balances temporarily until they are settled the next business day. Also, the Company does not believe its marketable securities are exposed to any significant credit risk due to the quality and nature of the securities in which the money is held.

No Member individually exceeded 10% or more of the Company’s Member advances balances as of March 31, 2024 and December 31, 2023.

15


 

Leases

 

ASC 842, Leases (“ASC 842”) requires lessees to recognize most leases on the consolidated balance sheet with a corresponding right-of-use asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. Leases are classified as financing or operating which will drive the expense recognition pattern. Lease payments on short-term leases are recognized as expense on a straight-line basis over the lease term. At the time of a lease abandonment, the operating lease right-of-use asset is derecognized, while the corresponding lease liability is evaluated by the Company based any remaining contractual obligations as of the lease abandonment date.

 

The Company leases office space under two separate leases, both of which are considered operating leases. 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. Covenants imposed by the leases include letters of credit required to be obtained by the lessee.

 

The incremental borrowing rate (“IBR”) represents the rate of interest the Company would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. When determinable, the Company uses the rate implicit in the lease to determine the present value of lease payments. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

 

Stock-Based Compensation

Stock Option Awards:

 

ASC 718, Compensation-Stock Compensation (“ASC 718”), requires the estimate of the fair value of all stock-based payments to employees, including grants of stock options, to be recognized in the statement of operations over the requisite service period. Under ASC 718, employee option grants are generally valued at the grant date and those valuations do not change once they have been established. The fair value of each option award is estimated on the grant date using the Black-Scholes Option Pricing Model. As allowed by ASC 718, the Company’s estimate of expected volatility is based on its peer company average volatilities, including industry, stage of life cycle, size, and financial leverage. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant valuation. The Company recognizes forfeitures as they occur. Subsequent modifications to outstanding awards result in incremental cost if the fair value is increased as a result of the modification.

 

Restricted Stock Unit Awards:

Restricted stock units (“RSUs”) are valued on the grant date. The fair value of the RSUs that vest based solely on a service condition is equal to the estimated fair value of the Company’s Common Stock on the grant date. This compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. For RSUs that contain both a market condition and a service condition, market volatility and other factors are taken into consideration in determining the grant date fair value and the related compensation expense is recognized on a straight-line basis over the requisite service period of each separately vesting tranche, regardless of whether the market condition is satisfied, provided that the requisite service has been provided. These costs are a component of stock-based compensation expense, presented within compensation and benefits in the consolidated statements of operations. The Company recognizes forfeitures as they occur.

 

Restricted Stock Awards:

 

Restricted stock awards (“RSAs”) are valued on the grant date. The fair value of the RSAs is equal to the estimated fair value of the Company’s Common Stock on the grant date. This compensation cost is recognized over the requisite service period as a component of stock-based compensation expense, presented within compensation and benefits in the consolidated statements of operations. The Company recognizes forfeitures as they occur.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs for the three months ended March 31, 2024 and 2023, were $9.1 million and $9.5 million, respectively, and are presented within advertising and marketing within the condensed consolidated statements of operations.

 

 

16


 

Income Taxes

The Company follows 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 condensed consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the condensed 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. 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.

 

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except that those taxes related to specific discrete events, if any, are recorded in the interim period in which they occur. The annual effective tax rate is based upon several significant estimates and judgments, including the estimated annual pre-tax income of the Company in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

 

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. If more-likely-than-not, the amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination, including compromise settlements. For tax positions not meeting the more-likely-than-not threshold, no tax benefit is recorded. The Company has estimated $1.7 million and $1.3 million of uncertain tax positions as of March 31, 2024 and December 31, 2023, respectively, related to state income taxes. and federal and state research tax credits.

 

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 $0.002 million of interest expense and penalties as a component of income tax expense during the three months ended March 31, 2024 and 2023, 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. The Company has determined that the Chief Operating Decision Maker (“CODM”) is a joint role shared by the Chief Executive Officer and Chief Financial Officer. Based upon the way the CODM reviews financial information and makes operating decisions and considering that the CODM reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance, the service-based and transaction-based operations constitute a single operating segment and reportable segment.

Net Income (Loss) Per Share Attributable to Stockholders

The Company has two classes of participating securities (Class A Common Stock and Class V Common Stock) issued and outstanding as of March 31, 2024. The rights, including the liquidation and dividend rights, of the holders of the Class A Common Stock and Class V Common Stock are identical, except with respect to voting.

 

Basic net income (loss) attributable to holders of Common Stock per share is calculated by dividing net income (loss) attributable to holders of Common Stock by the weighted-average number of shares outstanding.

Diluted net income (loss) per share attributable to holders of common stock is computed by dividing net income (loss) per share attributable to stockholders and the weighted-average number of shares outstanding and the effect of potentially dilutive stock options, warrants, and restricted stock using the treasury stock method.

17


 

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share attributable to holders of common stock (in thousands, except share data):

 

 

 

For the Three Months Ended

 

 

 

March 31, 2024

 

March 31, 2023

 

Numerator

 

 

 

 

 

Net income (loss) attributed to common stockholders—basic and diluted

 

$

34,243

 

$

(14,025

)

 

 

 

 

 

 

Denominator

 

 

 

 

 

Weighted-average shares of common stock—basic

 

 

12,220,199

 

 

11,815,448

 

Dilutive effect of stock options

 

 

225,904

 

 

-

 

Dilutive effect of RSU

 

 

736,414

 

 

-

 

Weighted-average shares of common stock—diluted

 

 

13,182,517

 

 

11,815,448

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

Basic

 

$

2.80

 

$

(1.19

)

Diluted

 

$

2.60

 

$

(1.19

)

 

The following potentially dilutive shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been antidilutive:

 

 

 

For the Three Months Ended

 

 

 

March 31, 2024

 

March 31, 2023

 

Equity incentive awards

 

 

1,090,941

 

 

2,552,474

 

Convertible debt

 

 

-

 

 

312,500

 

Total

 

 

1,090,941

 

 

2,864,974

 

 

 

 

 

 

 

The Company also excluded 11,444,235 public and private warrants and 49,653 earnout shares that were potentially dilutive from the computation of diluted net income (loss) for the periods ended March 31, 2024 and 2023, respectively, as including them would have been antidilutive. Refer to Note 9 Warrant Liabilities and Note 13 Fair Value of Financial Instruments for further details.

Recent Accounting Pronouncements

 

Recently Issued Accounting Pronouncements Not Yet Adopted:

 

In November 2023, the FASB issued Accounting Standards Update No. 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures. The amendments require disclosure of incremental segment information on an annual and interim basis. The amendments also require companies with a single reportable segment to provide all disclosures required by this amendment and all existing segment disclosures in Accounting Standards Codification 280, Segment Reporting. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company expects the adoption of the standard to result in additional segment footnote disclosures.

 

In December 2023, the FASB issued Accounting Standards Update No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures. The amendments require enhanced disclosures in connection with an entity's effective tax rate reconciliation, income taxes paid disaggregated by jurisdiction, and clarification on uncertain tax positions and related financial statement impacts. The amendments are effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of the amendments to have a significant impact on its financial statements.

 

Recently Adopted Accounting Pronouncements:

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. 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. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope

18


 

improvements and provide additional disclosure guidance. The Company adopted this ASU on January 1, 2023 and determined that ASU 2016-13 had no material impact on the Company’s condensed consolidated financial statements and related disclosures.

 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848. The amendments in this Update defer the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. The Company has evaluated the effect that the updated standard had on its internal processes, condensed consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its condensed consolidated financial statements and related disclosures.

 

Note 3 Marketable Securities

 

Below is a detail of marketable securities (in thousands):

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Marketable securities

 

$

1,083

 

 

$

952

 

Total

 

$

1,083

 

 

$

952

 

 

At March 31, 2024 and December 31, 2023, the Company’s marketable securities consisted of investments in a publicly traded money market mutual fund with a ticker symbol SSPXX. The underlying money market instruments were primarily comprised of certificates of deposit and financial company asset backed commercial paper. At March 31, 2024, the investment portfolio had a weighted-average maturity of 22 days. At December 31, 2023 the investment portfolio had a weighted-average maturity of 40 days. The gain recognized in connection with the investment in marketable securities for the three months ended March 31, 2024 and 2023 were $0.07 million and $0.1 million, respectively, and recorded as a component of interest income in the condensed consolidated statements of operations.

Note 4 Investments

Below is a summary of investments, which are measured at fair value as of March 31, 2024 (in thousands):

 

 

 

Cost

 

 

Gross Unrealized Gains

 

 

Gross Unrealized Losses

 

 

Fair Value

 

Corporate bonds

 

$

14,761

 

 

$

7

 

 

$

(194

)

 

$

14,574

 

Asset-backed securities

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Government securities

 

 

28,554

 

 

 

202

 

 

 

(13

)

 

 

28,743

 

Total

 

$

43,315

 

 

$

209

 

 

$

(207

)

 

$

43,317

 

 

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

 

 

 

-