Dave Inc./DE 10-K

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. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm (PCAOB Firm ID: 34 ) 62 Consolidated Balance Sheets as of December 31, 2023 and 2022 63 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 65 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2023 and 2022 66 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022 67 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 202 2 68 Notes to Consolidated Financial Statements 70 61 REPORT OF INDEPENDENT REG ISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Dave Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Dave Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows, for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). 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. 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. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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. 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. 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. 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. We believe that our audits provide a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Los Angeles, California March 5, 2024 We have served as the Company's auditor since 2022. 62 Dave Inc. Consolidated Balance Sheets (in thousands; except share data) December 31, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 41,759 $ 22,889 Marketable securities 952 285 Member advances, net of allowance for credit losses of $ 20,310 and $ 24,501 as of December 31, 2023 and December 31, 2022, respectively 112,846 104,183 Investments 113,226 168,789 Prepaid income taxes 148 831 Prepaid expenses and other current assets 7,955 11,591 Total current assets 276,886 308,568 Property and equipment, net 1,118 1,026 Lease right-of-use assets (related-party of $ 773 and $ 735 as of December 31, 2023 and December 31, 2022, respectively) 773 735 Intangible assets, net 13,206 10,163 Debt facility commitment fee, long-term 318 75 Restricted cash 1,319 788 Other non-current assets 403 137 Total assets $ 294,023 $ 321,492 Liabilities, and stockholders’ equity Current liabilities: Accounts payable 5,485 $ 11,418 Accrued expenses 12,626 10,965 Lease liabilities, short-term (related-party of $ 298 and $ 273 as of December 31, 2023 and December 31, 2022, respectively) 298 273 Legal settlement accrual 3,330 9,450 Other current liabilities 3,865 4,311 Total current liabilities 25,604 36,417 Lease liabilities, long-term (related-party of $ 543 and $ 550 as of December 31, 2023 and December 31, 2022, respectively) 543 550 Debt facility, long-term 75,000 75,000 Convertible debt, long-term 105,451 102,325 Warrant and earnout liabilities 233 516 Other non-current liabilities 129 124 Total liabilities $ 206,960 $ 214,932 Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock, par value per share $ 0.0001 , 10,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2023 and December 31, 2022 - - Class A common stock, par value per share $ 0.0001 , 500,000,000 shares authorized; 10,683,736 and 10,334,220 shares issued at December 31, 2023 and December 31, 2022, respectively; 10,634,173 and 10,284,657 shares outstanding at December 31, 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 December 31, 2023 and December 31, 2022, respectively; - - Additional paid-in capital 296,733 270,037 Accumulated other comprehensive gain (loss) 649 ( 1,675 ) Accumulated deficit ( 210,320 ) ( 161,803 ) Total stockholders’ equity $ 87,063 $ 106,560 Total liabilities, and stockholders’ equity $ 294,023 $ 321,492 See accompanying notes to the consolidated financial statements. 63 Dave Inc. Consolidated Balance Sheets, Continued (in thousands; except share data) The following table presents the assets and liabilities of a consolidated variable interest entity (“VIE”), which are included in the 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. December 31, 2023 December 31, 2022 Assets Cash and cash equivalents $ 37,684 $ 12,030 Investments 21,264 - Member advances, net of allowance for credit losses 95,812 71,545 Debt facility commitment fee, current 139 62 Debt facility commitment fee, long-term 318 75 Total assets $ 155,217 $ 83,712 Liabilities Accounts payable 661 531 Long-term debt facility 75,000 75,000 Total liabilities $ 75,661 $ 75,531 See accompanying notes to the consolidated financial statements. 64 Dave Inc. Consolidated Statements of Op erations (in thousands; except share data) For the Year Ended December 31, 2023 2022 Operating revenues: Service based revenue, net $ 232,241 $ 188,860 Transaction based revenue, net 26,852 15,978 Total operating revenues, net 259,093 204,838 Operating expenses: Provision for credit losses 58,386 66,266 Processing and servicing costs 28,926 31,946 Advertising and marketing 48,392 69,038 Compensation and benefits 94,910 103,432 Other operating expenses 70,679 68,551 Total operating expenses 301,293 339,233 Other (income) expenses: Interest income ( 5,295 ) ( 2,953 ) Interest expense 11,774 9,197 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 ) Total other expense (income), net 6,197 ( 5,422 ) Net loss before provision for (benefit from) income taxes ( 48,397 ) ( 128,973 ) Provision for (benefit from) income taxes 120 ( 67 ) Net loss $ ( 48,517 ) $ ( 128,906 ) Net loss per share: Basic $ ( 4.07 ) $ ( 11.12 ) Diluted $ ( 4.07 ) $ ( 11.12 ) Weighted-average shares used to compute net loss per share Basic 11,934,699 11,587,901 Diluted 11,934,699 11,587,901 See accompanying notes to the consolidated financial statements. 65 Dave Inc. Consolidated Statements of Comprehensive Loss (in thousands) For the Year Ended December 31, 2023 2022 Net loss $ ( 48,517 ) $ ( 128,906 ) Other comprehensive gain (loss): Unrealized gain (loss) on available-for-sale securities 2,324 ( 1,675 ) Comprehensive loss $ ( 46,193 ) $ ( 130,581 ) See accompanying notes to the consolidated financial statements. 66 Dave Inc. Consolidated Statement of Stockhol ders’ Equity (in thousands, except share data) Common stock Class A Class V Additional paid-in capital Loans to stockholders Treasury stock Accumulated other comprehensive income (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 264,390 - - - 1,658 - - - - 1,658 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 - - - ( 29,852 ) - - - ( 29,852 ) 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 ) - - - ( 44,885 ) 15,204 - - - ( 29,681 ) Extinguishment of liability 42,613 - - - 3,150 - - - - 3,150 Stock-based compensation - - - - 40,639 - - - - 40,639 Unrealized loss on available-for-sale securities - - - - - - - ( 1,675 ) - ( 1,675 ) Net loss - - - - - - - - ( 128,906 ) ( 128,906 ) Balance at December 31, 2022 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 349,516 - - - 34 - - - - 34 Payment for fractional shares on reverse stock split - - - - ( 12 ) - - - - ( 12 ) Stock-based compensation - - - - 26,674 - - - - 26,674 Unrealized gain on available-for-sale securities - - - - - - - 2,324 - 2,324 Net loss - - - - - - - - ( 48,517 ) ( 48,517 ) Balance at December 31, 2023 10,634,173 $ 1 1,514,082 $ - $ 296,733 $ - $ - $ 649 $ ( 210,320 ) $ 87,063 See accompanying notes to the consolidated financial statements. 67 Dave Inc. Consolidated Statemen ts of Cash Flows (in thousands) For the Year Ended December 31, 2023 2022 Operating activities Net loss $ ( 48,517 ) $ ( 128,906 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 5,544 7,133 Provision for credit losses 58,386 66,266 Changes in fair value of derivative asset on loans to stockholders - 5,572 Changes in fair value of earnout liabilities ( 22 ) ( 9,629 ) Changes in fair value of public and private warrant liabilities ( 260 ) ( 14,192 ) Gain on extinguishment of liability - ( 4,290 ) Stock-based compensation 26,674 40,639 Non-cash interest 3,114 2,304 Non-cash lease expense ( 20 ) ( 100 ) Changes in fair value of marketable securities and investments 44 ( 578 ) Changes in operating assets and liabilities: Member advances, service based revenue ( 4,082 ) ( 6,842 ) Prepaid income taxes 683 550 Prepaid expenses and other current assets 3,311 ( 6,805 ) Accounts payable ( 5,935 ) 330 Accrued expenses 1,661 ( 1,684 ) Legal settlement accrual ( 6,120 ) 5,749 Other current liabilities ( 446 ) ( 263 ) Other non-current liabilities 5 - Other non-current assets ( 266 ) ( 137 ) Net cash provided by (used in) operating activities 33,754 ( 44,883 ) Investing activities Payments for internally developed software costs ( 7,895 ) ( 8,584 ) Purchase of property and equipment ( 688 ) ( 728 ) Net disbursements and collections of Member advances ( 62,967 ) ( 114,323 ) Purchase of investments ( 120,016 ) ( 202,091 ) Sale and maturity of investments 177,863 32,228 Purchase of marketable securities ( 34,399 ) ( 317,675 ) Sale of marketable securities 33,727 325,594 Net cash used in investing activities ( 14,375 ) ( 285,579 ) 68 Financing activities Proceeds from PIPE offering - 195,000 Proceeds from escrow account - 29,688 Payment of issuance costs - ( 23,005 ) Payment for fractional shares on reverse stock split ( 12 ) - Proceeds from issuance of common stock for stock option exercises 34 620 Repurchase of common stock - ( 536 ) Proceeds from borrowings on convertible debt - 100,000 Proceeds from borrowings on debt and credit facilities 40,000 Repayment of borrowings on credit facility - ( 20,000 ) Net cash provided by financing activities 22 321,767 Net increase (decrease) in cash and cash equivalents and restricted cash 19,401 ( 8,695 ) Cash and cash equivalents and restricted cash, beginning of the period 23,677 32,372 Cash and cash equivalents and restricted cash, end of the period $ 43,078 $ 23,677 Supplemental disclosure of non-cash investing and financing activities: Property and equipment purchases in accounts payable and accrued liabilities $ 2 $ 3 Operating lease right of use assets recognized $ 298 $ - Operating lease liabilities recognized $ 298 $ - Conversion of convertible preferred stock to Class A common stock in connection with the reverse recapitalization $ - $ 72,173 Recapitalization transaction costs liability incurred $ - $ 10,650 Conversion of convertible notes and accrued interest to Class A common stock in connection with the reverse recapitalization $ - $ 720 Conversion of B-1 warrants to Class A common stock in connection with the reverse recapitalization $ - $ 3,365 Discharge of PIPE promissory note in connection with the reverse recapitalization $ - $ 15,000 Supplemental disclosure of cash (received) paid for: Income taxes $ ( 586 ) $ ( 622 ) Interest $ 8,630 $ 5,677 The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the consolidated balance sheets with the same as shown in the consolidated statement of cash flows Cash and cash equivalents $ 41,759 $ 22,889 Restricted cash 1,319 788 Total cash, cash equivalents, and restricted cash, end of the period $ 43,078 $ 23,677 See accompanying notes to the consolidated financial statements. 69 Note 1 Organization and N ature 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 was originally incorporated in the State of Delaware on January 14, 2021 as a special purpose acquisition company under the name VPC Impact Acquisition Holdings III, Inc. (“VPCC”) and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. On January 5, 2022, the Company consummated the transactions contemplated by that certain Agreement and Plan of Merger, dated as of June 7, 2021 among VPCC, Dave Inc., a Delaware corporation (“Legacy Dave”), and other entities. In connection with the closing of the transactions, the Company changed its name from “VPC Impact Acquisition Holdings III, Inc.” to “Dave Inc.” 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 high APY savings rates as well as Dave’s Side Hustle product and Surveys, where Dave presents Members with supplemental work and income opportunities, respectively. ExtraCash: Many Americans are often unable to maintain a positive balance between paychecks, driving a reliance on overdraft, 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, which allows Members to advance funds to their account and avoid a fee altogether. 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. Budget: Dave's automated financial management tool leverages historical bank account data to help Members understand both recurring and commonly occurring charges. Budget also notifies Members when there is a chance of an overdraft. Side Hustle: Dave seeks to help Members improve their financial health by presenting new job opportunities to them. Through Dave’s partnership with leading employers, Members can quickly submit applications and improve their income with flexible employment. Surveys: Dave's Surveys product allows for additional income earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application. This functionality drives engagement within the Dave ecosystem and deepens the Company’s relationship to its Members’ financial wellbeing. Business Combination On January 5, 2022 (the “Closing Date”), the Company consummated the previously announced transaction (pursuant to that certain Agreement and Plan of Merger, dated June 7, 2021 (the “Business Combination Agreement”), by and 70 among Legacy Dave, VPCC, Bear Merger Company I Inc., a Delaware corporation and a direct, wholly owned Subsidiaries of VPCC (“First Merger Sub”), and Bear Merger Company II LLC, a Delaware limited liability company and a direct wholly owned Subsidiaries of VPCC (“Second Merger Sub”). On January 5, 2022, pursuant to the Business Combination Agreement, First Merger Sub merged with and into Legacy Dave (the “First Merger”), with Legacy Dave surviving the First Merger as a wholly owned subsidiary of VPCC (such company, in its capacity as the surviving corporation of the First Merger, the “Surviving Corporation”), immediately followed by the Surviving Corporation merging with and into Second Merger Sub (the “Second Merger”, the Second Merger together with the First Merger, the “Mergers” and the Mergers together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination” or the “Transactions”), with Second Merger Sub (such entity, following the Second Merger, the “Surviving Entity”) surviving the Second Merger as a wholly owned subsidiary of VPCC. Following the Mergers, “VPC Impact Acquisition Holdings III, Inc.” was renamed “Dave Inc.” and the Surviving Entity was renamed “Dave Operating LLC”. On January 5, 2022, the holders of (a) Legacy Dave capital stock and (b) Legacy Dave’s options to purchase Legacy Dave capital stock pursuant to Legacy Dave’s stock plan (the “Legacy Dave Options”), received aggregate merger consideration, consisting of 10,226,738 shares of Class A common stock of the Company, par value $ 0.0001 per share (the “Class A Common Stock”) and 1,514,082 shares of Class V common stock of the Company, par value $ 0.0001 per share (the “Class V Common Stock”, and together with the Class A Common Stock, the “Common Stock”). Note 2 Significant Accounting Policies Basis of Presentation These 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 is 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 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. 71 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. Revenue Recognition Below is detail of operating revenues (in thousands): For the Year Ended December 31, 2023 2022 Service based revenue, net Processing fees, net $ 152,490 $ 106,664 Tips 56,945 61,951 Subscriptions 21,483 19,146 Other 1,323 1,099 Transaction based revenue, net Interchange revenue, net 17,004 10,792 ATM revenue, net 2,605 2,929 Other 7,243 2,257 Total operating revenues, net $ 259,093 $ 204,838 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 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 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 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. 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 r emitted by merchants and represents a percentage of the underlying transaction value processed through a payment network. ATM fees earned from the Member’s usage of out-of-network reduced by related ATM transaction costs during the years ended December 31, 2023 and 2022, were $ 2.6 million and $ 2.9 million, respectively. ATM-related fees recognized as a reduction of transaction based revenue during the years ended December 31, 2023 and 2022, were $ 1.8 million and $ 0.7 million, respectively. Processing and Servicing Costs Processor 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 73 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). 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 74 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 advance 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 years ended December 31, 2023 and 2022, were $ 7.6 million and $ 8.6 million, respectively . Additionally, $ 7.7 million related to the Company's legacy advance application software asset has been fully amortized and written off as of June 2023. 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 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. 75 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 insured limits were approximately $ 40.9 million and $ 20.7 million at December 31, 2023 and 2022, 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 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. 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 76 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 expense for the years ended December 31, 2023 and 2022, were $ 48.4 million and $ 69.0 million, respectively, and is presented within advertising and marketing in the consolidated statements of operations. 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 consolidated financial statements or tax returns. 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. 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. 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 $ 1.3 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. 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 $ 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. 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 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 December 31, 2023. 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). Diluted net loss per share attributable to holders of common stock adjusts the basic net loss per share attributable to stockholders and the weighted- average number of shares outstanding for the potentially dilutive impact of stock options, warrants, and restricted stock using the treasury stock method and convertible preferred stock using the as-if-converted method. 78 The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to holders of common stock (in thousands, except share data): For the Year Ended December 31, 2023 2022 Numerator Net loss $ ( 48,517 ) $ ( 128,906 ) Net loss attributed to common stockholders—basic ( 48,517 ) ( 128,906 ) Add: undistributed earnings reallocated to common stock - - Net loss attributed to common stockholders—diluted $ ( 48,517 ) $ ( 128,906 ) Denominator Weighted-average shares of common stock—basic 11,934,699 11,587,901 Dilutive effect of equity incentive awards - - Weighted-average shares of common stock—diluted 11,934,699 11,587,901 Net loss per share Basic $ ( 4.07 ) $ ( 11.12 ) Diluted $ ( 4.07 ) $ ( 11.12 ) The following potentially dilutive shares were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive: For the Year Ended December 31, 2023 2022 Equity incentive awards 2,493,468 1,412,726 Convertible debt 312,500 312,500 Total 2,805,968 1,725,226 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 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. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope 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 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, consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its consolidated financial statements and related disclosures. Note 3 Marketable Securities Below is a detail of marketable securities (in thousands): December 31, 2023 December 31, 2022 Marketable securities $ 952 $ 285 Total $ 952 $ 285 At December 31, 2023 and 2022, the Company’s marketable securities consisted of investments in a publicly traded money market mutual fund. 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. 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. The 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 loss in connection with the investment in investments for the year ended December 31, 2022 was insignificant and was recorded as a component of interest income in the consolidated statements of operations. Accrued interest of $ 0.8 million and $ 1.4 million is included in investments within the consolidated balance sheets for the period ended December 31, 2023 and December 31, 2022, respectively. 81 Unrealized losses on the available-for-sale investment securities as of December 31, 2023 and December 31, 2022 are primarily the result of increases in interest rates as a significant portion of the investments were purchased prior to the Federal reserve commenced interest rate increases in 2022. The Company does not intend to sell nor anticipate that it will be required to sell these investments before recovery of the amortized cost basis. As such, unrealized losses were determined not to be related to credit losses and the Company did not record any credit-related impairment losses on the available-for-sale investment securities during the year ended December 31, 2023 and 2022. As of December 31, 2023, the contractual maturities of available-for-sale investment securities were as follows (in thousands): Amortized Cost Fair Value Due in one year or less $ 85,697 $ 86,338 Due after one year through five years $ 26,880 $ 26,888 Total $ 112,577 $ 113,226 Note 5 Member Advances, Net Member advances, net, represent outstanding advances, tips, and processing fees, net of direct origination costs, less an allowance for credit losses. Below is a detail of Member advances, net as of December 31, 2023 (in thousands): Days From Origination Gross Member Advances Allowance for Credit Losses Member Advances, Net 1-10 $ 98,553 $ ( 2,676 ) $ 95,877 11-30 16,442 ( 4,020 ) 12,422 31-60 7,038 ( 4,576 ) 2,462 61-90 5,719 ( 4,470 ) 1,249 91-120 5,404 ( 4,568 ) 836 Total $ 133,156 $ ( 20,310 ) $ 112,846 Below is a detail of Member advances, net as of December 31, 2022 (in thousands): Days From Origination Gross Member Advances Allowance for Credit Losses Member Advances, Net 1-10 $ 91,121 $ ( 2,224 ) $ 88,897 11-30 10,683 ( 2,582 ) 8,101 31-60 9,022 ( 5,529 ) 3,493 61-90 8,865 ( 6,702 ) 2,163 91-120 8,993 ( 7,464 ) 1,529 Total $ 128,684 $ ( 24,501 ) $ 104,183 82 The roll-forward of the allowance for credit losses is as follows (in thousands): Opening allowance balance at January 1, 2023 $ 24,501 Plus: provision for credit losses 58,386 Plus: amounts recovered 12,685 Less: amounts written-off ( 75,262 ) Ending allowance balance at December 31, 2023 $ 20,310 Opening allowance balance at January 1, 2022 $ 11,995 Plus: provision for credit losses 66,266 Plus: amounts recovered 9,494 Less: amounts written-off ( 63,254 ) Ending allowance balance at December 31, 2022 $ 24,501 The provision for credit losses for the year ended December 31, 2023 was lower compared the year ended December 31, 2022, due primarily to improved collections performance throughout the year and lower amounts outstanding 31 days to 120 days from origination. The increase in amounts written-off for the year ended December 31, 2023 compared to the year ended December 31, 2022, was primarily as result of higher member advance disbursements, which increased from $ 2,709 million to $ 3,629 million, offset by improved collections performance year over year. Note 6 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2023 December 31, 2022 Computer equipment $ 1,133 $ 1,027 Leasehold improvements 1,178 707 Furniture and fixtures 93 18 Total property and equipment 2,404 1,752 Less: accumulated depreciation ( 1,286 ) ( 726 ) Property and equipment, net $ 1,118 $ 1,026 Depreciation expense for the years ended December 31, 2023 and 2022, was approximately $ 0.6 million and $ 0.4 million, respectively. Note 7 Intangible Assets, Net The Company’s Intangible assets, net consisted of the following (in thousands): December 31, 2023 December 31, 2022 Weighted Average Useful Lives Gross Carrying Value Accumulated Amortization Net Book Value Gross Carrying Value Accumulated Amortization Net Book Value Internally developed software 3.0 Years $ 21,601 $ ( 8,461 ) $ 13,140 $ 21,694 $ ( 11,605 ) $ 10,089 Domain name 15.0 Years 121 ( 55 ) 66 121 ( 47 ) 74 Intangible assets, net $ 21,722 $ ( 8,516 ) $ 13,206 $ 21,815 $ ( 11,652 ) $ 10,163 83 The future estimated amortization expenses as of December 31, 2023, were as follows (in thousands): 2024 6,184 2025 4,383 2026 2,597 2027 8 Thereafter 34 Total future amortization $ 13,206 Amortization expense for the years ended December 31, 2023 and 2022, was $ 4.9 million and $ 6.3 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. 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. Note 8 Accrued Expenses and Other Current Liabilities Accrued Expenses The Company’s accrued expenses consisted of the following (in thousands): December 31, 2023 December 31, 2022 Accrued charitable contributions $ 2,212 $ 3,067 Accrued compensation 3,605 1,534 Sales tax payable 1,442 1,357 Accrued professional and program fees 4,208 4,008 Other 1,159 999 Total $ 12,626 $ 10,965 Accrued charitable contributions includes amounts the Company has pledged related to charitable meal donations. 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. These costs are expensed as incurred and are presented within other general and administrative expenses in the consolidated statements of operations. Other Current Liabilities The Company’s other current liabilities consisted of the following (dollars in thousands): December 31, 2023 December 31, 2022 Deferred transaction costs $ 3,150 $ 3,150 Other 715 1,161 Total $ 3,865 $ 4,311 Other current liabilities includes deferred transaction costs associated with the Business Combination. These transaction costs were also capitalized and included within APIC in the consolidated balance sheets. 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 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. Forty-eight months (the “Maturity Date”) after the date of the initial issuance of the Note (the “Issuance Date”), the Company will pay the Purchaser the sum of (i) the outstanding principal amount of the Note, plus (ii) all accrued but unpaid interest thereon, plus (iii) all expenses incurred by the Purchaser (the “Redemption Price”). Payment of the Redemption Price on the Maturity Date will constitute a redemption of the Note in whole. During the term of the Note, the Note will be convertible into shares of the Company’s Class A Common Stock, at the option of the Purchaser, upon delivery on one or more occasions of a written notice to the Company electing to convert the Note or all of any portion of the outstanding principal amount of the Note. The initial conversion price of the Note is $ 320.00 per share of Common Stock (t he “Conversion Price”). The Conversion Price of the Note is subject to adjustment for stock splits, dividends or distributions, recapitalizations, spinoffs or similar transactions. The Note and the shares of Common Stock issuable upon conversion of the Note have not been registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from registration requirements. Beginning on the twenty-four-month anniversary of the Issuance Date continuing until the Maturity Date, if the closing price of the Common Stock equals or exceeds 175 % of the Conversion Price for 20 out of the 30 consecutive trading days ending immediately preceding the delivery of the notice of the Company’s election to convert the Note, the Note will be convertible into shares of Common Stock at the option of the Company, upon delivery of a written notice to the Purchaser electing to convert the Note or all or any portion of the outstanding principal amount of the Note. At any time prior to the Maturity Date, the Company may, in its sole discretion and upon delivery of a written notice to the Purchaser electing to prepay the Note, prepay the Note without penalty by paying the Purchaser 100 % of the Redemption Price. 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. On January 29, 2024, the Company repurchased the $ 105.5 million outstanding balance of the Note as of December 31, 2023 for $ 71.0 million. For more information on the Purchase Agreement with FTX Ventures, see Note 21, Subsequent Events. Note 10 Warrant Liabilities As of December 31, 202 3, there were 6,344,021 public warra nts (“Public Warrants”) outstanding and 5,100,214 private placement warrants (“Private Warrants”) outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants were issued upon separation of the units into their component parts upon the closing of the Business Combination and only whole Public Warrants trade. The Public Warrants are exercisable, provided that the Company continues to have an effective registration statement under the Securities Act covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company filed a registration statement covering the shares of Class A Common Stock issuable upon exercise of the Public Warrants and the Private Warrants. 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. 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. The Company will not redeem the Public Warrants as described above unless an effective registration statement under the Securities Act covering the Class A Common Stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A Common Stock is available throughout the 30-day redemption period. 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. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the Public Warrants will not be adjusted for issuance of Class A Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. The Private Warrants are identical to the Public Warrants, except that the Private Placement Warrants will be non-redeemable so long as they are held by VPC Impact Acquisition Holdings Sponsor III, LLC, which was the sponsor of VPCC and an affiliate of certain of VPCC’s officers and directors prior to the Business Combination, (the “Sponsor”) or its permitted transferees. If the Private Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Contemporaneously with the execution of the Debt Facility, the Company issued warrants to the Lenders as consideration for entering into the Debt Facility, representing a loan commitment fee. The warrants vest and become exercisable based on the Company’s aggregated draw on the Debt Facility in incremental $ 10.0 million tranches and terminate upon the earliest to occur of (i) the fifth anniversary of the occurrence of a qualified financing event and (ii) the consummation of a liquidity event. The holders of the warrants have the ability to exercise their right to acquire a number of common shares equal to 0.2 % of the fully diluted equity of the Company as of the closing date (“Equity Closing Date”) of the Company’s next equity financing with proceeds of at least $ 40.0 million (“Qualified Financing Event”) or immediately prior to the consummation of a liquidity event. 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. The warrants meet the definition of a derivative under ASC 815 and will be accounted for as a liability at fair value and subsequently remeasured to fair value at the end of each reporting period with the changes in fair value recorded in the consolidated statement of operations. 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. Determining the fair value of these warrants under this model requires subjective assumptions. These estimates involve inherent uncertainties and the application of management’s judgment. Immediately prior to the close of the Business Combination, all, or 1,664,394 of the vested warrants were exercised and net settled for 14,087 shares of Legacy Dave’s Class A Common Stock after applying the Exchange Ratio. 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 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 Debt Facility contained certain financial covenants, including a requirement to maintain a minimum cash, cash equivalents, or marketable securities balance of $ 8.0 million. On September 13, 2023, the Company executed the Third Amendment to the Debt Facility with the existing Lenders. The Third Amendment, among other things: (i) increases the secured loan facility commitment amount by $ 50 million to a total of $ 150 million; (ii) extends the maturity date of the Debt Facility from January 2025 to December 2026 ; (iii) adds a liquidity trigger threshold, measured as of the last day of any calendar month, equal to the lesser of (a) the trailing six-month EBITDA as of such date, (b) the product of (A) the trailing three-month EBITDA as of such date, multiplied by (B) two (2), and (c) zero ($0); (iv) increases the minimum liquidity threshold, a requirement to maintain a minimum cash, cash equivalents, or marketable securities balance, from $ 8.0 million to $ 15 million (v) replaces LIBOR with the secured overnight financing rate ("SOFR") and updates interest rates to the base rate (or if greater, SOFR for such date for a 3-month tenor and 3.00 %) plus 5.00 % per annum on that portion of the aggregate outstanding principal balance that is less than or equal to $75 million, plus the base rate plus 4.50 % per annum on that portion of the aggregate outstanding principal balance, if any, that is greater than $75 million; (vi) updates prepayment premiums for early or voluntary principal repayments and (vii) the Company's guaranty (the limited guaranty was secured by a first-priority lien against substantially all of the Company's assets) of up to $ 25 million of the Borrower's obligations under the Debt Facility has been terminated. 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. As of December 31, 2023 and December 31, 2022, the Company had drawn $ 75.0 million on the Debt Facility and had made no repayments. 87 The Third Amendment was accounted for as a debt modification and, accordingly, the Company capitalized $ 0.4 million of financing costs, which will be recognized within the statement of operations evenly through maturity date of the Debt Facility, and no gain or loss was recognized. As of December 31, 2023, the Company was in compliance with all covenants. Note 12 Commitments and Contingencies From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. 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. (filed January 9, 2020 in the California Superior Court for the County of Los Angeles) In January 2020, a former employee of the Company filed a complaint in the California Superior Court for the County of Los Angeles against the Company and the Company’s Chief Executive Officer, asserting claims for, among other things, breach of contract, breach of fiduciary duty, conversion, and breach of the implied covenant of good faith and fair dealing. 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. (filed September 16, 2020 in LA County Superior Court) This is a purported class action lawsuit filed in connection with a July 2020 data breach, asserting consumer protection and contract claims and seeking compensatory damages, punitive damages, injunctive relief and attorney's fees on behalf of a California class. 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. The Company has recorded an estimated legal settlement expense of $ 4.1 million relating to individual claims arising from the July 2020 data breach. During 2023, the Company paid $ 3.9 million of the estimated $ 4.1 million in legal settlement expense. The Company plans on settling the remaining amounts in Q1 2024. Legal settlement amounts of approximately $ 0.2 million are included in the Legal settlement accrual within the consolidated balance sheets for the years ended December 31, 2023 and 2022. Note 13 Leases In January 2019, the Company entered into a lease agreement with PCJW Properties LLC (“PCJW”) for office space located in Los Angeles, California. The lease term is seven years , beginning January 1, 2019 and ending December 31, 2025. Monthly rent is $ 0.02 million, subject to an annual escalation of 5 %. In December 2018, the Company entered into a sublease agreement with PCJW, controlled by Company’s founders (including the Company’s CEO), for general office space next to the aforementioned leased property in Los Angeles, California. The lease term was five years subject to early termination by either party, beginning November 2018 and ending October 2023. In November 2023, the Company extended the sublease for five more years ending October 2028. Under the terms of the sublease, the current monthly rent is $ 0.006 million, subject to an annual escalation of 4 %. In May 2020, the Company entered into a sublease with Whalerock for general office space in West Hollywood, California. Under the terms of the sublease, the lease term is approximately 12 months and the monthly rent is $ 0.14 million. The Company began utilizing the office space in June 2021. 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. The Company’s leasing activities are as follows (in thousands): Year Ended December 31 2023 2022 Operating lease cost $ 331 $ 2,140 Short-term lease cost - 39 Total lease cost $ 331 $ 2,179 Year Ended December 31 2023 2022 Other information: Cash paid for operating leases $ 351 $ 1,554 Weighted-average remaining lease term - operating lease 298 2.85 Weighted-average discount rate - operating lease 10 % The future minimum lease payments as of December 31, 2023, were as follows (in thousands): Year Related-Party Commitment 2024 $ 366 2025 383 2026 76 Thereafter 148 Total minimum lease payments $ 973 Less: imputed interest ( 132 ) Total lease liabilities $ 841 Note 14 Fair Value of Financial Instruments The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022, using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3) (in thousands): December 31, 2023 Level 1 Level 2 Level 3 Total Assets Marketable securities $ 952 $ — $ — $ 952 Investments — 113,226 — 113,226 Total assets $ 952 $ 113,226 $ — $ 114,178 Liabilities Warrant liabilities - public warrants $ 97 $ — $ — $ 97 Warrant liabilities - private warrants - — 105 105 Earnout liabilities - — 31 31 Total liabilities $ 97 $ — $ 136 $ 233 The Company had no assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2023 and 2022. The Company also has financial instruments not measured at fair value. The Company has evaluated cash (Level 1), restricted cash (Level 1), accounts payable (Level 2), accrued expenses (Level 2) and Member advances (Level 3) and believes the carrying value approximates the fair value due to the short-term nature of these balances. The fair value of the debt facility (Level 2) and convertible note payable (Level 2) approximates their carrying values. 89 Marketable Securities: The Company evaluated the quoted market prices in active markets for its marketable securities and has classified its securities as Level 1. The Company’s investments in marketable securities are exposed to price fluctuations. 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. Government Securities The fair value of U.S. government securities is estimated by independent pricing services who use computerized valuation formulas to calculate current values. U.S. government securities are categorized in Level 2 of the fair value hierarchy. Corporate Bonds and Notes The fair value of corporate bonds and notes is estimated by independent pricing services who use computerized valuation formulas to calculate current values. These securities are generally categorized in Level 2 of the fair value hierarchy or in Level 3 when market-based transaction activity is unavailable and significant unobservable inputs are used. Asset-Backed Securities The fair value of these asset-backed securities is estimated by independent pricing services who use computerized valuation formulas to calculate current values. These securities are generally categorized in Level 2 of the fair value hierarchy or in Level 3 when market-based transaction activity is unavailable and significant unobservable inputs are used. 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. 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. The gain related to the change in fair value of the public warrant liability for year ended December 31, 2023 , was $ 0.1 mill ion, which is presented within changes in fair value of public warrant liability in the consolidated statements of operations. A roll-forward of the Level 1 public warrant liability is as follows (dollars in thousands): Opening value at January 1, 2023 $ 209 Change in fair value during the period ( 112 ) Ending value at December 31, 2023 $ 97 Private Warrants: As discussed further in Note 10, 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. 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. The gain 90 related to the change in fair value of the private warrant liability for year ended December 31, 2023 was $ 0.1 million, which is presented within changes in fair value of private warrant liability in the consolidated statements of operations. A roll-forward of the Level 3 private warrant liability is as follows (in thousands): Opening value at January 1, 2023 $ 253 Change in fair value during the period ( 148 ) Ending value at December 31, 2023 $ 105 The Company used a Black-Scholes option pricing model to determine the fair value of the private warrant liability. 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”). These Founder Holder Earnout Shares were initially recorded as a liability at fair value and subsequently recorded at fair value at each reporting period, with changes in fair value reflected in earnings. The gain re lated to the change in fair value of the Founder Holder Earnout Shares liabilities for year ended December 31, 2023, was $ 0.02 million, which is presented within changes in fair value of earnout liabilities in the consolidated statements of operations. A roll-forward of the Level 3 Founder Holder Earnout Shares liability is as follows (in thousands): Opening value at January 1, 2023 $ 53 Change in fair value during the period ( 22 ) Ending value at December 31, 2023 $ 31 The Company used a Monte Carlo Simulation Method to determine the fair value of the Founder Holder Earnout Shares liability. 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. Note 15 Stockholders’ Equity As of December 31, 2023, no shares of preferred stock were outstanding, and the Company has no present plans to issue any shares of preferred stock. 91 Pursuant to the terms of the Company’s amended and restated certificate of incorporation, shares of preferred stock may be issued from time to time in one or more series. The Company’s Board of Directors are authorized to fix the voting rights, if any, designations, powers and preferences, the relative, participating, optional or other special rights, and any qualifications, limitations and restrictions thereof, applicable to the shares of each series of preferred stock. The Company’s Board of Directors are able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of the Company’s Board of Directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control or the removal of existing management. Class A and Class V Common Stock: The Company’s Board of Directors has authorized two classes of common stock, Class A Common Stock and Class V Common Stock. The Company had authoriz ed 500,000,000 and 100,000,000 sh ares of Class A Common Stock and Class V Common Stock, respectively. Shares of Class V Common Stock have 10 votes per share , while shares of Class A Common Stock have one vote per share . The holders of shares of Class A Common Stock and Class V Common Stock shall at all times vote together as a single class on all matters (including the election of directors) submitted to a vote of the Company’s stockholders. Class V Common Stock a re convertible into shares of Class A Common Stock on a one -to-one basis at the option of the holders of Class V Common Stock at any time upon written notice to the Company. As of December 31, 2023, the Company had 10,683,736 and 1,514,082 of Class A Common Stock and Class V Common Stock issued, respectively. As of December 31, 2023, the Company had 10,634,173 and 1,514,082 of Class A Common Stock and Class V Common Stock outstanding, respectively. Note 16 Stock-Based Compensation In 2017, the Company’s Board of Directors adopted the Dave Inc. 2017 Stock Plan (the “2017 Plan”). The 2017 Plan authorized the award of stock options, restricted stock, and restricted stock units. 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 maximum term of stock options granted under the 2021 Plan is 10 years and the awards generally vest over a four-year period. 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. The 2021 Plan became effective immediately upon the completion of the business combination with VPCC. 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. Stock Option Repricing: In April 2023, the Company’s Board of Directors approved a repricing of certain previously granted and still outstanding vested and unvested stock option awards held by eligible employees, which was approved by stockholders on June 9, 2023. As a result, the exercise price for these awards was lowered to $ 5.18 per share, which was the average per share closing price of the Company’s Class A Common Stock as reported on the Nasdaq Global Stock Market for the 30 trading days ending on and including June 9, 2023. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 134,931 vested and unvested stock options outstanding as of June 9, 2023, with original exercise prices ranging from $ 22.09 to $ 23.18 , were repriced. The repricing on June 9, 2023 resulted in incremental stock-based compensation expense of $ 0.2 million, of which $ 0.14 million related to vested stock option awards was expensed on the repricing date. The remaining $ 0.06 million related to unvested stock option awards is being amortized on a straight-line basis over the weighted-average vesting period of those awards of approximately 1.3 years as of June 9, 2023. 92 In September 2023, the Company’s Board of Directors approved a repricing of certain previously granted and still outstanding vested and unvested stock option awards held by eight remaining eligible employees excluded from the aforementioned June 9 repricing. As a result, the exercise price for these awards was lowered to $ 7.23 per share, which was the average per share closing price of the Company’s Class A Common Stock as reported on the Nasdaq Global Stock Market for the 30 trading days ending on and including September 13, 2023. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 200,571 vested and unvested stock options outstanding as of September 13, 2023, with original exercise prices ranging from $ 22.09 to $ 23.18 , were repriced. The repricing on September 13, 2023 resulted in incremental stock-based compensation expense of $ 0.2 million, of which $ 0.17 million related to vested stock option awards was expensed on the repricing date. The remaining $ 0.07 million related to unvested stock option awards is being amortized on a straight-line basis over the weighted-average vesting period of those awards of approximately 1.0 years as of September 13, 2023. Stock Options: Management has valued stock options at their date of grant utilizing the Black-Scholes option pricing model. The fair value of the underlying shares was estimated by using a number of inputs, including recent arm’s length transactions involving the sale of the Company’s common stock. Expected term —The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. Risk free interest rate —The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options. Expected dividend yield —The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends. Expected volatility —Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The Company identified a group of peer companies and considered their historical stock prices. In identifying peer companies, the Company considered the industry, stage of life cycle, size, and financial leverage of such other entities. 93 Activity with respect to stock options is summarized as follows: Shares Weighted-Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Options outstanding, January 1, 2022 1,084,586 $ 20.35 8.5 $ 288,784 Granted - $ - Exercised ( 115,113 ) $ 14.10 Forfeited ( 44,517 ) $ 21.76 Expired ( 20,736 ) $ 22.28 Options outstanding, December 31, 2022 904,220 $ 21.04 7.3 $ 655 Granted 335,502 $ 6.41 Exercised ( 13,099 ) $ 2.13 Forfeited ( 143,068 ) $ 21.67 Expired ( 316,726 ) $ 22.84 Options outstanding, December 31, 2023 766,829 $ 14.10 6.3 $ 1,148 Nonvested options, December 31, 2023 410,075 $ 21.03 7.2 $ 100 Vested and exercisable, December 31, 2023 356,754 $ 6.12 5.3 $ 1,047 At December 31, 2023, total estimated unrecognized stock-based compensation cost related to unvested stock options prior to that date was $ 6.5 million, which is expected to be recognized over a weighted-average remaining period of 3.1 years. The Company allowed certain stock option holders to exercise unvested options to purchase shares of Common Stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s employment termination, at the original issuance price, until the options are fully vested. As of December 31, 2023 and 2022, 0 and 5,555 shares of Common Stock were subject to repurchase at weighted-average prices of $ 22.09 per share, respectively. The shares issued pursuant to unvested options have been included in shares issued and outstanding on the consolidated balance sheets as such shares are considered legally outstanding. On March 3, 2021, the Company granted the Chief Executive Officer stock options to purchase up to 358,001 shares of Common Stock in nine tranches. Each of the nine tranches contain service, market and performance conditions. The market conditions relate to the achievement of certain specified price targets. Vesting commences on the grant date; however, no compensation charges are recognized until the service and performance condition are probable, which is upon the completion of a liquidity event, the achievement of specified price targets for each tranche of shares, and continuous employment. Upon the completion of the business combination with VPCC, the performance condition was met and the Company recorded a cumulative stock-based compensation expense of $ 1.9 million. The options have a strike price of $ 23.18 per share. The Company determined the fair value of the options on the grant date to be $ 10.5 million using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free interest rate, and volatility. The derived service periods determined by the valuation for each of the nine tranches range from approximately 3 years to approximately 7 years . 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. The following table presents the key inputs and assumptions used to value the options granted to the Chief Executive Officer on the grant date: Remaining term 10.0 years Risk-free interest rate 1.5 % Expected dividend yield 0.0 % Expected volatility 40.0 % 94 Restricted Stock Units: Activity with respect to RSUs is summarized as follows: Shares Weighted-Average Grant-Date Fair Value Nonvested shares at January 1, 2023 508,506 $ 122.27 Granted 1,980,437 $ 4.94 Vested ( 336,417 ) $ 62.25 Forfeited ( 425,887 ) $ 26.11 Nonvested shares at December 31, 2023 1,726,639 $ 23.10 At December 31, 2023, total estimated unrecognized stock-based compensation cost related to nonvested RSUs was $ 38.1 million, which is expected to be recognized over a weighted-average period of 2.0 years. During the quarter ended March 31, 2023, th e Company granted 629,454 RSUs to certain employees in six tranches. Each of the six tranches contain service and market conditions. The market conditions relate to the achievement of certain specified price targets. Vesting commences on the grant date and the Company determined the fair value of the RSUs on the grant date to be approximately $ 3.0 million using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, risk-free interest rate, and volatility. The derived service periods determined by the valuation for each of the six tranches range from approximately two years to approximately three years . 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. The following table presents the key inputs and assumptions used to value the RSUs granted during January 2023 that contain service and market conditions on the grant date: Remaining term 5.0 years Risk-free interest rate 3.5 % Expected volatility 79.7 % During October 2023, the Company granted 71,844 RSUs to c ertain employees in six tranches. Each of the six tranches contain service and market conditions. The market conditions relate to the achievement of certain specified price targets. Vesting commences on the grant date and the Company determined the fair value of the RSUs on the grant date to b e approximately $ 0.2 milli on using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, risk-free interest rate, and volatility. The derived service periods determined by the valuation ranges from approximately two years to approximately three years . Each grant will be expensed monthly over the derived service period unless vesting conditions for a particular grant are met, at which point all remaining compensation charges related to that particular grant will be expensed in the period in which the vesting conditions were met. The following table presents the key inputs and assumptions used to value the RSUs granted during October 2023 that contain service and market conditions on the grant date: Remaining term 4.2 years Risk-free interest rate 4.9 % Expected volatility 87.6 % 95 Note 17 Related-Party Transactions Leasing Arrangements: For each of the years ended December 31, 2023 and 2022, the Company paid $ 0.3 million under lease agreements with PCJW, which is controlled by the Company's founders (including the Company's CEO) for general office space in Los Angeles, California. The following is a schedule of future minimum rental payments as of December 31, 2023, under Company’s sublease for the properties located in Los Angeles, California signed with PCJW (in thousands): Year Related-Party Commitment 2024 $ 366 2025 $ 383 2026 $ 76 Thereafter 148 Total minimum lease payments $ 973 Less: imputed interest ( 132 ) Total lease liabilities $ 841 The related-party components of the lease right-of-use assets, lease liabilities, short-term, and lease liabilities, long-term are presented as part of the right-of-use asset and lease liability on the consolidated balance sheets. 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. A total of 4,580 shares of Legacy Dave’s common stock were repurchased for an aggregate purchase amount of $ 1.6 million, which resulted in an extinguishment of the related-party exercise receivable promissory notes. Debt Facility Brendan Carroll, a Senior Partner at Victory Park Capital Advisors, LLC ("VPC") joined the board of directors of the Company upon closing of the Business Combi nation. Interest expense related to the Debt Facility totaled $ 8.6 million for the year ended December 31, 2023. For more information about the Debt Facility with VPC, refer to Note 11, Debt Facility. Legal Services The law firm of Mitchell Sandler LLC, of which the Company's director Andrea Mitchell is a partner, provided legal services to the Company, which totaled $ 0.8 million for the year ended December 31, 2023. Note 18 Income Taxes The components of income tax (benefit) expense for the years ended December 31, 2023, and 2022 were as follows (dollars in thousands): 96 2023 2022 Current: Federal $ - $ ( 6 ) State 120 ( 61 ) Total current 120 ( 67 ) Deferred: Federal - - State - - Total deferred - - Provision for (benefit from) income taxes $ 120 $ ( 67 ) A reconciliation between the Company’s federal statutory tax rate and its effective tax rate for the years ended December 31, 2023 and 2022 is as follows: 2023 2022 Federal statutory tax rate 21.0 % 21.0 % State taxes, net of federal benefit 23.3 % 1.3 % Non-deductible excess compensation - 2.4 % 0.0 % Warrant liability 0.1 % 2.3 % Earnout liability 0.0 % 1.6 % Stock-based compensation - 9.1 % - 4.7 % Other - 1.0 % - 2.0 % Research and development tax credit - federal 5.6 % 1.7 % Return to provision 3.9 % 0.4 % Change in valuation allowance - 41.6 % - 21.5 % Effective tax rate - 0.2 % 0.1 % The major components of the Company’s deferred tax assets and liabilities as of December 31, 2023 and 2022, consists of the following (dollars in thousands): 2023 2022 Deferred tax assets: Net operating loss carryforward $ 32,616 $ 22,858 Allowance for credit losses 5,839 5,911 Research and development tax credit 9,453 5,410 Accrued expenses 1,777 2,726 Accrued compensation 891 282 Lease liability 242 198 Stock-based compensation 926 1,535 Excess interest expense carryforward 3,304 1,806 Section 174 R&E expenditures 11,664 7,411 Other 1,863 663 Total deferred tax assets 68,575 48,800 Deferred tax liabilities: Property and equipment ( 120 ) ( 101 ) Right of use asset ( 222 ) ( 177 ) Other ( 716 ) ( 491 ) Total deferred tax liabilities ( 1,058 ) ( 769 ) Total net deferred tax assets before valuation allowance 67,517 48,031 Less: valuation allowance ( 67,517 ) ( 48,031 ) Total net deferred taxes $ - $ - As of December 31, 2023, the Company had $ 106.8 million of federal and $ 144.3 million of combined state net operating loss (“NOL”) carryforwards available to offset future taxable income. 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. Internal Revenue Code Section 382 imposes limitations on the utilization of NOLs in the event of certain changes in ownership of the Company. The Company has not yet completed a comprehensive analysis of its past ownership changes. Depending upon the degree of those past ownership changes, and any future ownership changes, annual limits may impair the Company’s ability to utilize NOLs and could cause federal and state income taxes to be due sooner than if no such limitations applied. The realization of deferred tax assets is dependent upon future sources of taxable income. 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. 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. 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. 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. 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. 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. On August 16, 2022, the President signed into law the Inflation Reduction Act of 2022 which contained provisions effective January 1, 2023, including a 15 % corporate minimum tax and a 1 % excise tax on stock buybacks, both of which we expect to be immaterial to our financial results, financial position and cash flows. 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. The statute of limitations for California and various other state jurisdictions remains open for the tax periods December 31, 2019 and thereafter. Note 19 401(k) Savings Plan The Company maintains a 401(k) savings plan for the benefit of its employees. Employees can defer up to 90 % of their compensation subject to fixed annual limits. All current employees are eligible to participate in the 401(k) savings plan. Beginning January 2021, the Company began matching contributions to the 401(k) savings plan equal to 100 % of the first 4 % of wages deferred by each participating employee. The Company incurred expenses for employer matching contributions of $ 2.2 million and $ 2.1 million for the years ended December 31, 2023 and 2022, respectively. Note 20 The Reverse Recapitalization and Related Transactions On the Closing Date, the Company consummated the previously announced mergers contemplated by the Business Combination Agreement. 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. At closing, VPCC transaction costs of $ 22.6 million were paid, which reduced the proceeds from VPCC and reduced APIC. Additionally, $ 5.1 million of the costs were capitalized and included within deferred issuance costs in the consolidated balance sheet for the years ended December 31, 2021, and reduced APIC at closing. The remaining $ 10.7 million in transaction costs were accrued for at closing. Upon closing the Business Combination, Legacy Dave received $ 7.0 million in cash proceeds after transactions costs of $ 22.6 million were paid and released from VPCC’s trust account, net of redemptions of $ 224.2 million. At closing, each non-redeemed outstanding share of Legacy Dave Class A common stock was converted into one share of Class A Common Stock. Upon consummation of the Business Combination, the shares of Legacy Dave held by Legacy Dave shareholders converted into 10,707,440 shares of Common Stock, including 9,193,358 shares of Class A Common Stock and 1,514,082 shares of Class V Common Stock. While the legal acquirer in the Business Combination was VPCC, for accounting and financial reporting purposes under U.S. GAAP, Legacy Dave is the accounting acquirer and the Business Combination was accounted for as a “reverse recapitalization.” A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of Legacy Dave in many respects. 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. Operations prior to the Business Combination are presented as those of Dave in reports subsequent to the Closing Date. 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 Founder Holder Earnout Shares were recognized at fair value upon the closing of the Business Combination and classified as a liability. The issuance of the Founder Holder Earnout Shares were recorded as a liability with the offsetting amount within APIC because the Business Combination is accounted for as a reverse recapitalization. The Founder Holder Earnout Shares will be remeasured to fair value at each reporting period end with changes in fair value going through the statements of operations. Pursuant to the terms of the Business Combination Agreement, all of the issued and outstanding Series A, Series B-1 and Series B-2 redeemable convertible preferred stock and series A redeemable convertible preferred stock converted into 6,395,542 shares of Legacy Dave common stock immediately prior to the Business Combination. Then, as of the closing of the Business Combination, all outstanding shares of Legacy Dave common stock converted into 10,707,440 shares of Class A Common Stock and Class V Common Stock. 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 . Concurrently with the execution of the Business Combination Agreement, VPCC entered into Subscription Agreements (the “Subscription Agreement”) with certain investors (the “Subscription Investors”) pursuant to which the Subscription Investors agreed to purchase, and the Company agreed to sell to the Subscription Investors, an aggregate of 656,247 shares of the Class A Common Stock for a purchase price of $ 320 per share, or an aggregate of $ 210 million in gross cash proceeds (the “PIPE Financing”). 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. On August 17, 2021, Legacy Dave issued a promissory note with a principal amount of $ 15.0 million to Alameda Research and amended the Subscription Agreement to satisfy Alameda Research’s obligation to pay the $ 15.0 million purchase price under the Alameda Subscription Agreement by way of a full discharge of Legacy Dave’s obligations to pay the principal under the promissory note. 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 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. 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. Note 21 Subsequent Events Subsequent events are events or transactions that occur after the consolidated balance sheet date, but before the consolidated financial statements are available to be issued. The Company recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the consolidated balance sheet, including the estimates inherent in the process of preparing the consolidated financial statements. The Company’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the consolidated balance sheet but arose after the consolidated balance sheet date and before the consolidated financial statements were available to be issued. On January 4, 2024, the Company entered into a purchase and sale agreement (the “Purchase Agreement”), pursuant to which the Company agreed to purchase a convertible promissory note in the original principal amount of $ 100.0 million previously issued by the Company to FTX Ventures Ltd. (“FTX”) on March 21, 2022 (the “Note”) for consideration of $ 71.0 million in cash, subject to potential adjustments pursuant to certain change in control provisions specified in the Purchase Agreement (the “Transaction”). The closing of the Transaction was conditioned upon the Bankruptcy Court’s approval of the Purchase Agreement and upon FTX not entering into an alternative transaction for the sale of the Note. The Bankruptcy Court approved this transaction on January 26, 2024 and the Transaction was closed for consideration of $ 71 million in cash on January 29, 2024. 101 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.