Dave Inc./DE 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Not required for smaller reporting companies. 70 Ite m 8. Financial Statements and Supplementary Data. DAVE INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 34 ) 72 Consolidated Balance Sheets as of December 31, 2024 and 2023 73 Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 75 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2024 and 2023 76 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 77 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 202 3 78 Notes to Consolidated Financial Statements 80 71 REPORT OF INDEPENDENT REGISTERED 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, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, 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 4, 2025 We have served as the Company's auditor since 2022. 72 Dave Inc. Consolidated Balance Sheets (in thousands; except share data) December 31, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 49,718 $ 41,759 Marketable securities 97 952 ExtraCash receivables, net of allowance for credit losses of $ 22,703 and $ 20,310 as of December 31, 2024 and December 31, 2023, respectively 175,857 112,846 Investments 40,473 113,226 Prepaid income taxes - 148 Prepaid expenses and other current assets 16,127 7,955 Total current assets 282,272 276,886 Property and equipment, net 704 1,118 Lease right-of-use assets (related-party of $ 507 and $ 773 as of December 31, 2024 and December 31, 2023, respectively) 507 773 Intangible assets, net 13,642 13,206 Debt facility commitment fee, long-term 163 318 Restricted cash 1,659 1,319 Other non-current assets 380 403 Total assets $ 299,327 $ 294,023 Liabilities, and stockholders’ equity Current liabilities: Accounts payable 6,767 $ 5,485 Accrued expenses 16,707 12,626 Lease liabilities, short-term (related-party of $ 350 and $ 298 as of December 31, 2024 and December 31, 2023, respectively) 350 298 Legal settlement accrual 7,105 3,330 Other current liabilities 4,132 3,865 Total current liabilities 35,061 25,604 Lease liabilities, long-term (related-party of $ 204 and $ 543 as of December 31, 2024 and December 31, 2023, respectively) 204 543 Debt facility, long-term 75,000 75,000 Convertible debt, long-term - 105,451 Warrant and earnout liabilities 2,928 233 Other non-current liabilities 3,033 129 Total liabilities $ 116,226 $ 206,960 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, 2024 and December 31, 2023 - - Class A common stock, par value per share $ 0.0001 , 500,000,000 shares authorized; 11,551,528 and 10,683,736 shares issued at December 31, 2024 and December 31, 2023, respectively; 11,501,965 and 10,634,173 shares outstanding at December 31, 2024 and December 31, 2023 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, 2024 and December 31, 2023, respectively; - - Additional paid-in capital 335,326 296,733 Accumulated other comprehensive gain 221 649 Accumulated deficit ( 152,447 ) ( 210,320 ) Total stockholders’ equity $ 183,101 $ 87,063 Total liabilities, and stockholders’ equity $ 299,327 $ 294,023 See accompanying notes to the consolidated financial statements. 73 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. As of December 31, 2024 As of December 31, 2023 Assets Cash and cash equivalents $ 46,106 $ 37,684 Investments 19,163 21,264 ExtraCash receivables, net of allowance for credit losses 158,447 95,812 Debt facility commitment fee, current 155 139 Debt facility commitment fee, long-term 163 318 Total assets $ 224,034 $ 155,217 Liabilities Accounts payable 605 661 Long-term debt facility 75,000 75,000 Total liabilities $ 75,605 $ 75,661 See accompanying notes to the consolidated financial statements. 74 Dave Inc. Consolidated Statements of Op erations (in thousands; except share data) For the Year Ended December 31, 2024 2023 Operating revenues: Service based revenue, net $ 311,426 $ 232,241 Transaction based revenue, net 35,650 $ 26,852 Total operating revenues, net 347,076 259,093 Operating expenses: Provision for credit losses 54,626 58,386 Processing and servicing costs 30,377 28,926 Advertising and marketing 44,904 48,392 Compensation and benefits 107,028 94,910 Other operating expenses 75,530 70,679 Total operating expenses 312,465 301,293 Other (income) expenses: Interest income ( 2,984 ) ( 5,295 ) Interest expense 7,989 11,774 Gain on extinguishment of convertible debt ( 33,442 ) - Changes in fair value of earnout liabilities 965 ( 22 ) Changes in fair value of public and private warrant liabilities 1,729 ( 260 ) Total other (income) expense, net ( 25,743 ) 6,197 Net income (loss) before provision for income taxes 60,354 ( 48,397 ) Provision for income taxes 2,481 120 Net income (loss) $ 57,873 $ ( 48,517 ) Net income (loss) per share: Basic $ 4.62 $ ( 4.07 ) Diluted $ 4.19 $ ( 4.07 ) Weighted-average shares used to compute net income (loss) per share Basic 12,520,789 11,934,699 Diluted 13,822,582 11,934,699 See accompanying notes to the consolidated financial statements. 75 Dave Inc. Consolidated Statements of Comprehensive Income (Loss ) (in thousands) For the Year Ended December 31, 2024 2023 Net income (loss) $ 57,873 $ ( 48,517 ) Other comprehensive gain (loss): Unrealized gain (loss) on available-for-sale securities ( 428 ) 2,324 Comprehensive income (loss) $ 57,445 $ ( 46,193 ) See accompanying notes to the consolidated financial statements. 76 Dave Inc. Consolidated Statement of Stockhol ders’ Equity (in thousands, except share data) Common stock Class A Class V Additional paid-in capital Accumulated other comprehensive income (loss) Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Balance at January 1, 2023 10,284,657 $ 1 1,514,082 $ - $ 270,037 $ ( 1,675 ) $ ( 161,803 ) $ 106,560 Issuance of Class A common stock in connection with stock plans 349,516 - - - 34 - - 34 Payment for fractional shares after 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 Issuance of Class A common stock in connection with stock plans 867,792 - - - 1,266 - - 1,266 Stock-based compensation - - - - 37,327 - - 37,327 Unrealized loss on available-for-sale securities - - - - - ( 428 ) - ( 428 ) Net income - - - - - - 57,873 57,873 Balance at December 31, 2024 11,501,965 1 1,514,082 - 335,326 - 221 ( 152,447 ) 183,101 See accompanying notes to the consolidated financial statements. 77 Dave Inc. Consolidated Statemen ts of Cash Flows (in thousands) For the Year Ended December 31, 2024 2023 Operating activities Net income (loss) $ 57,873 $ ( 48,517 ) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 7,681 5,544 Provision for credit losses 54,626 58,386 Changes in fair value of earnout liabilities 965 ( 22 ) Changes in fair value of public and private warrant liabilities 1,729 ( 260 ) Gain on extinguishment of convertible debt ( 33,442 ) - Stock-based compensation 37,327 26,674 Non-cash interest 251 3,114 Non-cash lease expense ( 21 ) ( 20 ) Changes in fair value of marketable securities and investments ( 16 ) 44 Changes in operating assets and liabilities: ExtraCash receivables, service based revenue ( 6,160 ) ( 4,082 ) Prepaid income taxes 148 683 Prepaid expenses and other current assets ( 8,157 ) 3,311 Accounts payable 1,282 ( 5,935 ) Accrued expenses 4,082 1,661 Legal settlement accrual 3,775 ( 6,120 ) Other current liabilities 267 ( 446 ) Other non-current liabilities 2,904 5 Other non-current assets 23 ( 266 ) Net cash provided by operating activities 125,137 33,754 Investing activities Payments for internally developed software costs ( 7,300 ) ( 7,895 ) Purchase of property and equipment ( 262 ) ( 688 ) Net originations and collections of ExtraCash receivables ( 111,477 ) ( 62,967 ) Purchase of investments ( 111,311 ) ( 120,016 ) Sale and maturity of investments 183,652 177,863 Purchase of marketable securities ( 59,274 ) ( 34,399 ) Sale of marketable securities 60,129 33,727 Net cash used in investing activities ( 45,843 ) ( 14,375 ) Financing activities Payment for fractional shares on reverse stock split - ( 12 ) Proceeds from issuance of common stock for stock option exercises 1,266 34 Payment of costs for extinguishment of convertible debt ( 1,261 ) - Repayment of borrowings on convertible debt, long-term ( 71,000 ) - Net cash (used in) provided by financing activities ( 70,995 ) 22 Net increase in cash and cash equivalents and restricted cash 8,299 19,401 Cash and cash equivalents and restricted cash, beginning of the period 43,078 23,677 Cash and cash equivalents and restricted cash, end of the period $ 51,377 $ 43,078 78 Supplemental disclosure of non-cash investing and financing activities: Property and equipment purchases in accounts payable and accrued liabilities $ - $ 2 Operating lease right of use assets recognized $ - $ 298 Operating lease liabilities recognized $ - $ 298 Supplemental disclosure of cash paid for: Income taxes $ ( 109 ) $ ( 586 ) Interest $ 7,652 $ 8,630 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 $ 49,718 $ 41,759 Restricted cash 1,659 1,319 Total cash, cash equivalents, and restricted cash, end of the period $ 51,377 $ 43,078 See accompanying notes to the consolidated financial statements. 79 Note 1 Organization and N ature of Business Company Overview Dave ("the Company") was launched in 2017 to provide a faster, more transparent, and lower-cost alternative to traditional financial institutions, particularly for those living paycheck to paycheck. Inspired by the story of David vs. Goliath, the Company set out to challenge legacy banking by leveraging technology to expand financial access and improve consumer financial health. Through its fully integrated, mobile-first platform, the Company delivers innovative financial products designed to help underserved consumers manage their money more effectively. The Company's mission is to level the financial playing field by providing intuitive, transparent, and accessible solutions that empower its Members to navigate life’s financial challenges with confidence. Platform and Products ExtraCash ExtraCash is a 0 % interest overdraft product offered through the Company's bank partner that provides Members with up to $ 500 of credit to bridge liquidity gaps between paychecks. Using its proprietary AI-powered underwriting system, CashAI, the Company analyzes a Member’s checking account transaction data to determine eligibility and set the credit amount. This fully automated process requires no credit check and does not rely on FICO or credit bureau data. Once an ExtraCash transaction is initiated, repayment is scheduled based on the Member’s forecasted next paycheck or deposit date. The Company designs and manages the complete risk management value chain—including underwriting, fraud and risk mitigation, payment processing, servicing, and collections. Each ExtraCash transaction is underwritten by CashAI when a Member accesses the Dave App, enabling near real-time evaluation of transaction data. This approach determines the optimal amount a Member can responsibly repay, delivering benefits for both the Member and the business. Dave Checking: Dave Checking is a digital demand deposit account offered through its bank partner with premium features, no account minimums or corresponding fees, and FDIC pass-through insurance. Members can open a Dave Checking account in minutes through the Dave mobile application, add funds to their account, and begin spending using a Dave Checking virtual debit card. Dave Checking accounts also include a physical Dave branded debit Mastercard (“Dave Card”) that can be used for everyday purchases and spending transactions as well as at any of the approximately 40,000 MoneyPass ATM network locations to make no-fee withdrawals at these in-network ATMs. Dave Checking revenues are primarily driven by merchant interchange, incentives from Mastercard, interest on deposits paid by our partner banks, and other ancillary fees paid by customers (e.g. out of network ATM fees, instant withdrawal fees). Personal Financial Management Budget: The Budget tool utilizes historical bank account data to identify recurring and common charges, enabling Members to anticipate upcoming transactions that may affect their account balances. It also provides timely notifications when there is a risk of an overdraft. Side Hustle: Side Hustle is a streamlined job application portal for Dave Members to find supplemental or temporary work. The portal focuses on “gig economy,” part-time, seasonal, remote and other flexible types of employment opportunities. Members can apply to dozens of jobs in-app using saved information and credentials. A side hustle can be an important part of a Member’s long-term financial health, as it allows Members to quickly address unexpected expenses or cash needs with incremental income. Surveys: The Company's Surveys product allows for additional earning opportunities, allowing Members to take paid surveys anytime within the Dave mobile application. This functionality drives engagement within the Dave ecosystem and deepens its relationship to its Members’ financial wellbeing. 80 The Company generates monthly subscription revenue from Members enrolled in the Company's Personal Financial Management service. 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 13, 2022, stockholders approved the reverse stock split. The primary goal of the reverse stock split was to bring the Company’s stock price above the share bid price requirement for continued listing on Nasdaq. The effects of the reverse stock split have been reflected in the 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 help ensure that the Company continues to be the primary beneficiary. The Company is considered the primary beneficiary of Dave OD Funding I, LLC (“Dave OD”), as it has the power over the activities that most significantly impact the economic performance of Dave OD and has the obligation to absorb expected losses and the right to receive expected benefits that could be significant, in accordance with accounting guidance. As a result, the Company consolidated Dave OD and all intercompany accounts have been eliminated. The carrying value of Dave OD’s assets and liabilities, after elimination of any intercompany transactions and balances are shown in the consolidated balance sheets. The assets of Dave OD are restricted and may only be used to settle obligations of Dave OD. Use of Estimates The preparation of these consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, as well as the reported revenues and expenses incurred during the reporting periods. The Company’s estimates are based on its historical experience and various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The Company’s critical accounting estimates and assumptions are evaluated on an ongoing basis including those related to the: (i) Allowance for credit losses; and (ii) Income taxes. Actual results may differ from these estimates under different assumptions or conditions. 81 Revenue Recognition Below is detail of operating revenues (in thousands): For the Year Ended December 31, 2024 2023 Service based revenue, net Processing fees, net $ 218,802 $ 152,490 Tips 67,563 56,945 Subscriptions 24,599 21,483 Other 462 1,323 Transaction based revenue, net Interchange revenue, net 19,990 17,004 ATM revenue, net 3,087 2,605 Other 12,573 7,243 Total operating revenues, net $ 347,076 $ 259,093 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 ExtraCash originations. ExtraCas h receivables 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 and overdraft service fees apply when a Member requests expedited ExtraCash. At the Member’s election, the Company expedites the funding of ExtraCash funds within hours of the ExtraCash approval, as opposed to the customary two or three business days for ExtraCash that is transferring via the ACH network. Processing fees are accounted for as non-refundable loan origination fees and are recognized as revenues over the average expected contractual term of its ExtraCash transactions. Costs incurred by the Company to originate ExtraCash are treated as direct loan origination costs. These direct loan origination costs are netted against ExtraCash-related income over the average expected contractual term of an ExtraCash. Direct origination costs recognized as a reduction of ExtraCash-related income during the years ended December 31, 2024 and 2023 , were $ 3.5 million and $ 3.3 million, respectively. Tips The Company encourages, but does not contractually require its Members who receive ExtraCash to leave a discretionary tip. For accounting purposes, the Company treats tips as an adjustment of yield to ExtraCash and are recognized over the average expected contractual term of its ExtraCash receivables. 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 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 82 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 the Company's Surveys partners. Transaction Based Revenue, Net: Transaction based revenue, net primarily consists of interchange and ATM revenues from the Company’s Checking Product, net of certain interchange and ATM-related fees, fees earned from funding and withdrawal-related transactions, volume support from a certain co-branded agreement, fees earned related to the Rewards Product for Members who make debit card spending transactions at participating merchants and deposit referrals and are recognized at the point in time the transactions occur, as the performance obligations are satisfied and the variable consideration is not constrained. The Company earns interchange fees from Members spend on Dave-branded debit cards, which are reduced by interchange-related costs payable to fulfillment partners. Interchange revenue is remitted by merchants and represents a percentage of the underlying transaction value processed through a payment network. ATM fees earned from the Member’s usage of out-of-network reduced by related ATM transaction costs during the years ended December 31, 2024 and 2023 , were $ 3.1 million and $ 2.6 million, respectively. ATM-related fees recognized as a reduction of transaction based revenue during the years ended December 31, 2024 and 2023 , were $ 2.1 million and $ 1.8 million, respectively. Processing and Servicing Costs Processing costs consist of amounts paid to third party processors for the recovery of ExtraCash, tips, processing fees and subscriptions. These expenses also include fees paid for services to connect Member’s bank accounts to the Company’s application. Except for processing and service fees associated with ExtraCash originations, whi ch 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 publicly traded money market mutual fund. The underlying money market instruments are primarily comprised of certificates of deposit and financial company asset backed commercial paper. 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 (loss). 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 income (loss). Any related amounts recorded in accumulated other comprehensive income (loss) are reclassified to earnings (on a pretax basis). 83 ExtraCash Receivables ExtraCash Receivables include ExtraCash, fees, and tips, net of certain direct origination costs and allowance for credit losses. Management’s intent is to hold ExtraCash Receivables until the earlier of repayment or payoff date. Members’ ExtraCash Receivables are treated as financial receivables under ASC 310 . ExtraCash Receivables to Members are not interest-bearing. The Company recognizes these ExtraCash Receivables at the origination amount and does not use discounting techniques to determine present value of originations due to their short-term nature. The Company does not provide modifications to ExtraCash and does not charge late fees. Allowance for Credit Losses ExtraCash receivables from contracts with Members as of the balance sheet dates are recorded at their original origination amounts, inclusive of outstanding processing fees and tips, and reduced by an allowance for expected credit losses. The Company pools its ExtraCash receivables, 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 ExtraCash receivables 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 remain most indicative of its lifetime expected losses. The Company immediately recognizes an allowance for expected credit losses at the time of the ExtraCash origination. Adjustments to the allowance each period for changes in the estimate of lifetime expected credit losses are recognized in operating expenses—provision for credit losses in the consolidated statements of operations. When the Company determines that an ExtraCash receivable 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 ExtraCash outstanding term of approximately 11 days, ExtraCash receivables 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 ExtraCash receivables 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, 2024 and 2023 , were $ 7.3 million and $ 7.6 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 and $ 1.4 million related to internally developed software no longer in service was fully amortized and written off as of December 31, 2024. 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 84 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. 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, ExtraCash receivables, and accounts receivable. The Company’s cash and cash equivalents 85 and restricted cash in excess of the Federal Deposit Insurance Corporation insured limits were approximately $ 61.1 million and $ 40.9 million at December 31, 2024 and 2023, respectively. The Company’s payment processors also collect cash on the Company’s behalf and will hold these cash balances temporarily until they are settled the next business day. Also, the Company does not believe its marketable securities are exposed to any significant credit risk due to the quality and nature of the securities in which the money is held. The Company relies on agreements with Evolve, currently its only active bank partner, to provide ExtraCash and other deposit accounts, debit card services and other transaction services to them and their Members. Given the size and consistent growth of the Company's Member base as well as how its product capabilities have been expanding, the Company recently announced an additional financial institution with which it will partner. Refer to Note 21, Subsequent Events for further details regarding the Program Agreement entered into with Coastal Community Bank to become a sponsor for the Company's banking and ExtraCash products. No Member individually exceeded 10% or more of the Company’s ExtraCash receivables balance as of December 31, 2024 and December 31, 2023 . Leases ASC 842, Leases (“ASC 842”) requires lessees to recognize most leases on the consolidated balance sheet with a corresponding right-of-use asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. Leases are classified as financing or operating which will drive the expense recognition pattern. Lease payments on short-term leases are recognized as expense on a straight-line basis over the lease term. At the time of a lease abandonment, the operating lease right-of-use asset is derecognized, while the corresponding lease liability is evaluated by the Company based any remaining contractual obligations as of the lease abandonment date. The Company leases office space under two separate leases, both of which are considered operating leases. Options to extend or terminate a lease are considered as part of calculating the lease term to the extent that the option is reasonably certain of exercise. The leases do not include the options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Covenants imposed by the leases include letters of credit required to be obtained by the lessee. The incremental borrowing rate (“IBR”) represents the rate of interest the Company would expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. When determinable, the Company uses the rate implicit in the lease to determine the present value of lease payments. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Stock-Based Compensation Stock Option Awards: ASC 718, Compensation-Stock Compensation (“ASC 718”), requires the estimate of the fair value of all stock-based payments to employees, including grants of stock options, to be recognized in the statement of operations over the requisite service period. Under ASC 718, employee option grants are generally valued at the grant date and those valuations do not change once they have been established. The fair value of each option award is estimated on the grant date using the Black-Scholes Option Pricing Model. As allowed by ASC 718, the Company’s estimate of expected volatility is based on its peer company average volatilities, including industry, stage of life cycle, size, and financial leverage. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant valuation. The Company recognizes forfeitures as they occur. Subsequent modifications to outstanding awards result in incremental cost if the fair value is increased as a result of the modification. Restricted Stock Unit Awards: Restricted stock units (“RSUs”) are valued on the grant date. The fair value of the RSUs that vest based solely on a service condition is equal to the estimated fair value of the Company’s Class A common stock on the grant date. This compensation 86 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. Performance-Based Restricted Stock Unit Awards: Performance-based RSUs are valued on the grant date and the compensation cost is recognized over the requisite service period if and when the Company concludes it is probable that the performance metrics will be satisfied. The grant-date fair value of the awards are not subsequently remeasured; however, the Company reassesses the probability of vesting at each reporting period and records a cumulative adjustment to compensation expense based on the likelihood the performance metric will be achieved. 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. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2024 and 2023 , were $ 44.9 million and $ 48.4 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. 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 $ 2.0 million and $ 1.3 million of uncertain tax positions as of December 31, 2024 and 2023, respectively, related to state income taxes. and federal and state research and development 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 $ 0.036 million and $ 0.005 million of interest expense and penalties as a component of income tax expense during the year ended December 31, 2024 and 2023, respectively. There were $ 0.052 million and $ 0.016 million of accrued interest expense and penalties as of December 31, 2024 and 2023, respectively. Segment Information The Company determines its operating segment 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 operations of the Company constitutes a single operating segment and reportable segment. Refer to Note 20 Segment Information in the accompanying notes to the consolidated financial statements for further details. 87 Net Income (Loss) Per Share Attributable to Stockholders The Company has two classes of participating securities (Class A common stock, par value $ 0.0001 per share, and Class V common stock, par value $ 0.0001 per share) issued and outstanding as of December 31, 2024 and December 31, 2023 (the Class V common stock and together with the Class A common stock, the “Common Stock”). The rights, including the liquidation and dividend rights, of the holders of the Class A common stock and Class V common stock are identical, except with respect to voting. Basic net income (loss) attributable to holders of Common Stock per share is calculated by dividing net income (loss) attributable to holders of Common Stock by the weighted-average number of shares outstanding. Diluted net income (loss) per share attributable to holders of common stock is computed by dividing net income (loss) per share attributable to stockholders and the weighted-average number of shares outstanding and the effect of potentially dilutive stock options, warrants, and restricted stock using the treasury stock method. The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share attributable to holders of common stock ( in thousands, except share data ): For the Year ended December 31, 2024 2023 Numerator Net income (loss) attributed to common stockholders—basic and diluted $ 57,873 $ ( 48,517 ) Denominator Weighted-average shares of common stock—basic 12,520,789 11,934,699 Dilutive effect of stock options 298,088 - Dilutive effect of RSU 1,003,705 - Weighted-average shares of common stock—diluted 13,822,582 11,934,699 Net income (loss) per share Basic $ 4.62 $ ( 4.07 ) Diluted $ 4.19 $ ( 4.07 ) The following potentially dilutive shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been antidilutive: For the Year ended December 31, 2024 2023 Equity incentive awards 475,520 2,493,468 Convertible debt - 312,500 Total 475,520 2,805,968 The Company also excluded 11,444,235 public and private warrants and 49,563 earnout shares that were potentially dilutive from the computation of diluted net income (loss) for the years ended December 31, 2024 and 2023 , respectively, as including them would have been antidilutive. Refer to Note 10 Warrant Liabilities and Note 14 Fair Value of Financial Instruments for further details. 88 Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted: 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 is currently evaluating the impact of this amendment on its financial statement disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses and in January 2025, the FASB issued ASU No. 2025-01, Clarifying the Effective Date. The amendments requires entities to disclose the following amounts in each relevant income statement expense captions: purchases of inventory, employee compensation, depreciation and intangible asset amortization. Entities are also required to disclose the total amount of selling expense and the entities definition of selling expenses . The amendments, as clarified by ASU No. 2025-01, are effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its financial statement disclosures. Recently Adopted Accounting Pronouncements: 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. While the adoption has no impact on the Company's financial statements, it has resulted in incremental disclosures within the footnotes to its consolidated financial statements. Refer to Note 20 Segment Information in the accompanying notes to the consolidated financial statements for further details. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) . ASU 2016-13 introduced a new credit loss methodology, the Current Expected Credit Losses (“CECL”) methodology, which requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to maturity debt securities, trade receivables and other receivables measured at amortized cost at the time the financial asset is originated or acquired. Subsequent to the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify implementation guidance, provide narrow-scope 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. 89 Note 3 Marketable Securities Below is a detail of marketable securities (in thousands): December 31, 2024 December 31, 2023 Marketable securities $ 97 $ 952 Total $ 97 $ 952 At December 31, 2024 and 2023, 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, 2024 and 2023 , the investment portfolio had a weighted-average maturity of 18 days and 40 days, respectively. The gain recognized in connection with the investment in marketable securities for the year ended December 31, 2024 , was approximately $ 0.08 million and recorded as a component of interest income in the consolidated statements of operations. The gain recognized in connection with the investment in marketable securities for the year ended December 31, 2023 , was $ 0.4 million and was recorded as a component of interest income in the consolidated statements of operations. 90 Note 4 Investments Below is a summary of investments, which are measured at fair value as of December 31, 2024 (in thousands): Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds $ 4,249 $ 1 $ ( 38 ) $ 4,212 Government securities 36,003 258 - 36,261 Total $ 40,252 $ 259 $ ( 38 ) $ 40,473 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 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, 2024 Corporate bonds $ 2,257 $ ( 19 ) $ 1,043 $ ( 19 ) $ 3,300 $ ( 38 ) Total $ 2,257 $ ( 19 ) $ 1,043 $ ( 19 ) $ 3,300 $ ( 38 ) 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 ) The net realized gain recorded in connection with the sale of investments for the year ended December 31, 2024 , was $ 0.8 million, and was recorded as a component of interest income in the consolidated statements of operations. The net realized gain recorded in connection with the sale of investments for the year ended December 31, 2023 , was $ 0.9 million, and was recorded as a component of interest income in the consolidated statements of operations. Accrued interest of $ 0.09 million and $ 0.8 million is included in investments within the consolidated balance sheets for the years ended December 31, 2024 and December 31, 2023, respectively. Unrealized losses on the available-for-sale investment securities as of December 31, 2024 and December 31, 2023 are primarily the result of increases in interest rates as a significant portion of the investments were purchased prior to the 91 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, 2024 and 2023. As of December 31, 2024, the contractual maturities of available-for-sale investment securities were as follows (in thousands): Amortized Cost Fair Value Due in one year or less $ 39,191 $ 39,430 Due after one year through five years 1,061 1,043 Total $ 40,252 $ 40,473 Note 5 ExtraCash Receivables, Net ExtraCash receivables, net, represent outstanding originations, tips, and processing fees, net of direct origination costs, less an allowance for credit losses. Below is a detail of ExtraCash receivables, net as of December 31, 2024 (in thousands): Days From Origination Gross ExtraCash Receivables Allowance for Credit Losses ExtraCash Receivables, Net 1-10 $ 142,623 $ ( 2,112 ) $ 140,511 11-30 36,198 ( 6,223 ) 29,975 31-60 7,882 ( 4,937 ) 2,945 61-90 6,140 ( 4,712 ) 1,428 91-120 5,717 ( 4,719 ) 998 Total $ 198,560 $ ( 22,703 ) $ 175,857 Below is a detail of ExtraCash receivables, net as of December 31, 2023 (in thousands): Days From Origination Gross ExtraCash Receivables Allowance for Credit Losses ExtraCash Receivables, 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 92 The roll-forward of the allowance for credit losses is as follows (in thousands): Opening allowance balance at January 1, 2024 $ 20,310 Plus: provision for credit losses 54,626 Plus: amounts recovered 12,438 Less: amounts written-off ( 64,671 ) Ending allowance balance at December 31, 2024 $ 22,703 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 The provision for credit losses for the year ended December 31, 2024 was lower compared the year ended December 31, 2023, due primarily to improved collections performance throughout the year, offset by increased provision expense due to higher amounts outstanding 120 days and under. The decrease in amounts written-off for the year ended December 31, 2024 compared to the year ended December 31, 2023 , were also primarily as result of improved collections performance year over year despite higher ExtraCash originations, which increased to $ 5.1 billion from $ 3.6 billion year over year. Note 6 Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2024 December 31, 2023 Computer equipment $ 1,094 $ 1,133 Leasehold improvements 1,189 1,178 Furniture and fixtures 92 93 Total property and equipment 2,375 2,404 Less: accumulated depreciation ( 1,671 ) ( 1,286 ) Property and equipment, net $ 704 $ 1,118 Depreciation expense for the years ended December 31, 2024 and 2023 , was approximately $ 0.7 million and $ 0.6 million, respectively. Note 7 Intangible Assets, Net The Company’s Intangible assets, net consisted of the following (in thousands): December 31, 2024 December 31, 2023 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 $ 27,501 $ ( 13,917 ) $ 13,584 $ 21,601 $ ( 8,461 ) $ 13,140 Domain name 15.0 Years 121 ( 63 ) 58 121 ( 55 ) 66 Intangible assets, net $ 27,622 $ ( 13,980 ) $ 13,642 $ 21,722 $ ( 8,516 ) $ 13,206 93 The future estimated amortization expenses as of December 31, 2024, were as follows (in thousands): 2025 4,375 2026 4,719 2027 2,853 Thereafter 1,695 Total future amortization $ 13,642 Amortization expense for the years ended December 31, 2024 and 2023 , was $ 6.9 million and $ 4.9 million, respectively. No impairment charges were recognized related to long-lived assets for the years ended December 31, 2024 and 2023. Amortization expense related to change in useful life of a certain definite-lived intangible asset for the year ended December 31, 2024 was $ 0.8 million. 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. Note 8 Accrued Expenses and Other Current Liabilities Accrued Expenses The Company’s accrued expenses consisted of the following (in thousands): December 31, 2024 December 31, 2023 Accrued compensation 5,166 3,605 Accrued professional and program fees $ 4,718 $ 4,208 Accrued charitable contributions 2,223 2,212 Accrued negative account balances 1,786 831 Income taxes payable 1,476 - Sales tax payable 1,021 1,442 Other 317 328 Total $ 16,707 $ 12,626 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, 2024 and 2023 , the Company pledged $ 4.3 million and $ 5.1 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, 2024 December 31, 2023 Deferred transaction costs $ 3,150 $ 3,150 Other 982 715 Total $ 4,132 $ 3,865 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 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 bore interest at a rate of 3.00 % 94 per year (compounded semiannually), payable semi-annually in arrears on June 30th and December 31st of each year. Interest may be paid in-kind or in cash, at the Company’s option. Forty-eight months (the “Maturity Date”) after the date of the initial issuance of the Note (the “Issuance Date”), the Company would 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. On January 29, 2024, the Company repurchased the $ 105.7 million outstanding balance of the Note as of January 29, 2024 for $ 71.0 million. The Company reduced the net carrying amount of debt by unamortized debt issuance costs of $ 0.03 million at the extinguishment date. The Company also incurred third-party costs totaling $ 1.3 million in conjunction with the settlement of the Note. The third-party costs are included in the reacquisition price and the gain on extinguishment of $ 33.4 million was calculated as the difference between the net carrying amount of debt and the reacquisition price. Note 10 Warrant Liabilities As of December 31, 2024 , 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. 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 : 95 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 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. 96 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 $ 15.0 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. On October 18, 2024, the Company executed the Fourth Amendment to the Debt Facility with the existing Lenders to expand the Company's borrowing capacity. The amendment also updates interest rates to the sum of the base rate plus 5.00 % per annum on the aggregate outstanding principal balance and updates prepayment premiums for early or voluntary principal repayments, among other administrative terms. The Fourth Amendment was accounted for as a debt modification and, accordingly, the Company incurred $ 0.03 million in associated costs which will be recognized within the consolidated statement of operations evenly through maturity date of the Debt Facility, and no gain or loss was recognized. As of December 31, 2024, the Company was not in compliance with a specific debt covenant under its existing Debt Facility. In particular, a breach existed relating to the Minimum Receivable Loan-to-Value ("LTV Ratio"), which exceeded the allowable limits set forth in the covenant. The Agent, on behalf of the Lenders, provided a one-time limited waiver of this covenant, effective from October 18, 2024 until June 30, 2025. This waiver is solely for that period and for addressing this specific breach, and does not constitute a waiver of any default or event of default under the Debt Facility. As of December 31, 2024 and December 31, 2023 , the Company had drawn $ 75.0 million on the Debt Facility and had made no repayments. 97 Note 12 Commitments and Contingencies From time to time, the Company is subject to various other legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Other than as described below, 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. However, legal proceedings and claims are subject to many factors that are difficult to predict, so there can be no assurance that, in the event of a material unfavorable result in one or more claims, the Company will not incur material costs. 1. United States of America v. Dave, Inc. and Jason Wilk (filed December 30, 2024 in the United States District Court for the Central District of California) In January 2023, the Company received a Civil Investigative Demand from the Federal Trade Commission (the “FTC”) staff seeking information in connection with the sale, offering, advertising, marketing or other promotion of cash advance products and online financial services. In response, the Company cooperated with the FTC staff while seeking to engage constructively with the FTC to resolve this matter. On August 21, 2024, the FTC staff sent the Company a proposed consent order and draft complaint, alleging that the Company had violated Section 5(a) of the Federal Trade Commission Act ("FTC Act") which prohibits "unfair or deceptive acts or practices in or affecting commerce" and certain provisions of the Restore Online Shoppers’ Confidence Act related to the Company’s platform and offering of the ExtraCash Product (the “Complaint”), and advising that it would recommend the filing of an enforcement action if the Company did not settle the FTC’s claims. The Company engaged in good faith negotiations with the FTC staff to settle the claims but these negotiations were unsuccessful, and on November 5, 2024, the FTC filed the Complaint in the United States District Court for the Central District of California against the Company. The Complaint sought a permanent injunction, monetary relief for an unspecified amount and “other relief as the court determines to be just and proper.” The FTC then referred the case to the Department of Justice (the “DOJ”), and on December 30, 2024, the DOJ filed an amended civil complaint in the United States District Court for the Central District of California, naming the Company and our Chief Executive Officer, Jason Wilk as defendants (the "Amended Complaint"). The Amended Complaint alleges that Dave violated Section 5(a) of the FTC Act as well as the Restore Online Shoppers' Confidence Act. The DOJ is seeking injunctive relief, civil penalties, monetary relief and other relief. On February 28, 2025, we filed a motion to dismiss the DOJ’s Amended Complaint. Although the Company believes that its practices have at all times been in compliance with applicable law, the outcome of any case in litigation is uncertain. Therefore, for the year ended December 31, 2024, the Company recorded a $ 7 million litigation and settlement accrual for this matter. Significant changes in the accrual may be required in future periods as the case progresses and additional information becomes available. At this time, the Company is unable to reasonably predict the possible outcome of this matter due to, among other things, the fact that it raises difficult factual and legal issues and is subject to many uncertainties and complexities. There can be no assurance that the Company will be successful in the litigation, and the Company may incur a loss in excess of the amount accrued. The defense or resolution of this matter could involve significant monetary costs and have a material impact on the Company’s business, financial results and operations. 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 98 2028. Under the terms of the sublease, the current monthly rent is $ 0.006 million, subject to an annual escalation of 4 %. 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): For the Year Ended December 31, 2024 2023 Operating lease cost $ 347 $ 331 Short-term lease cost - - Total lease cost $ 347 $ 331 For the Year Ended December 31, 2024 2023 Other information: Cash paid for operating leases $ 369 $ 351 Weighted-average remaining lease term - operating lease 2.32 2.98 Weighted-average discount rate - operating lease 10 % 10 % The future minimum lease payments as of December 31, 2024, were as follows (in thousands): Year Related-Party Commitment 2025 $ 386 2026 79 2027 83 2028 72 Total minimum lease payments $ 620 Less: imputed interest ( 66 ) Total lease liabilities $ 554 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, 2024 and 2023, 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, 2024 Level 1 Level 2 Level 3 Total Assets Marketable securities $ 97 $ — $ — $ 97 Investments — 40,473 — 40,473 Total assets $ 97 $ 40,473 $ — $ 40,570 Liabilities Warrant liabilities - public warrants $ 1,016 $ — $ — $ 1,016 Warrant liabilities - private warrants — — 916 916 Earnout liabilities — — 996 996 Total liabilities $ 1,016 $ — $ 1,912 $ 2,928 The Company had no assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2024 and 2023. 99 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 ExtraCash receivables (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) approximates its carrying value. 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, 2024 and December 31, 2023. 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 loss related to the change in fair value of the public warrant liability for year ended December 31, 2024 , was $ 0.9 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, 2024 $ 97 Change in fair value during the period 919 Ending value at December 31, 2024 $ 1,016 100 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 loss related to the change in fair value of the private warrant liability for year ended December 31, 2024 was $ 0.8 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, 2024 $ 105 Change in fair value during the period 811 Ending value at December 31, 2024 $ 916 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, 2024: Exercise price $ 368 Expected volatility 66.9 % Risk-free interest rate 4.25 % Remaining term 2.01 years Dividend yield 0 % Earnout Shares Liability: As part of the recapitalization and business combination in January 2022, 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 v alue at each reporting period, with changes in fair value reflected in earnings. The loss related to the change in fair value of the Founder Holder Earnout Shares liabilities for year ended December 31, 2024 , was $ 1.0 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, 2024 $ 31 Change in fair value during the period 965 Ending value at December 31, 2024 $ 996 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, 2024: Exercise price $ 400 -$ 480 Expected volatility 73.4 % Risk-free interest rate 4.3 % Remaining term 2.01 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, 2024 and December 31, 2023 . 101 Note 15 Stockholders’ Equity As of December 31, 2024 , no shares of preferred stock were outstanding, and the Company has no present plans to issue any shares of preferred stock. 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, 2024, the Company had 11,551,528 and 1,514,082 of Class A Common Stock and Class V Common Stock issued, respectively. As of December 31, 2024, the Company had 11,501,965 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. The Company recognized $ 37.3 million and $ 26.7 million of stock-based compensation expense arising from stock options, restricted stock unit grants and performance-based 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, 2024 and 2023, respectively. 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. 102 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. 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, 2023 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 Granted - $ - Exercised ( 195,060 ) $ 6.49 Forfeited ( 9,050 ) $ 6.60 Expired ( 4,340 ) $ 8.08 Options outstanding, December 31, 2024 558,379 $ 16.92 5.6 $ 39,085 Nonvested options, December 31, 2024 359,517 $ 23.08 6.2 $ 22,951 Vested and exercisable, December 31, 2024 198,862 $ 5.79 4.6 $ 16,134 At December 31, 2024 , total estimated unrecognized stock-based compensation cost related to unvested stock options prior to that date was $ 1.9 million, which is expected to be recognized over a weighted-average remaining period of 3.3 years. 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. 103 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 % 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. 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. Restricted Stock Units: Activity with respect to RSUs is summarized as follows: Shares Weighted-Average Grant-Date Fair Value Outstanding shares at January 1, 2024 1,726,639 $ 23.10 Granted 568,363 $ 28.63 Vested and Released ( 527,024 ) $ 34.75 Forfeited ( 567,110 ) $ 13.43 Outstanding shares at December 31, 2024 1,200,868 $ 27.21 At December 31, 2024 , total estimated unrecognized stock-based compensation cost related to nonvested RSUs was $ 30.3 million, which is expected to be recognized over a weighted-average period of 2.4 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 104 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 em ployees 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 % During the quarter ended June 30, 2024, the Company's Board of Directors approved a modification to the price targets in the market conditions and the addition of alternative performance conditions for 333,275 unvested RSUs. The modification of the unvested RSUs resulted in an incremental stock-based compensation expense of $ 1.0 million, which will be expensed monthly over the derived service period. The weighted average modification-date fair value of the RSUs was $ 5.36 per award. T he Company determined the fair value of the RSUs on the modification date 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 range from approximately one year to approximately two years . The RSUs 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 will be expensed in the period in which the vesting conditions were met. As a result of the modification, the RSUs are now classified as performance-based RSUs and included in the activity table below. The following table presents the key inputs and assumptions used to value the RSUs modified during the quarter ended June 30, 2024: Remaining term 3.7 years Risk-free interest rate 4.7 % Expected volatility 71.7 % During the quarter ended September 30, 2024, the Company's Board of Directors approved a modification to the price targets in the market conditions and the addition of alternative performance conditions for 50,000 unvested RSUs and during the quarter the Company achieved the performance conditions. The modification and achievement of the performance conditions resulted in an incremental cumulative stock-based compensation expense of approximately $ 0.4 million. As a result of the modification, the RSUs are now classified as performance-based RSUs and included in the activity table below. The 50,000 performance-based RSUs were subject to vesting as of December 31, 2024 and will be 105 considered vested and subsequently issued based upon the achievement of the remaining service requirement as outlined in the award agreements. Performance-Based Restricted Stock Units: The Company grants performance-based RSUs to certain executives and employees as part of its long-term incentive plan. The performance-based RSUs are subject to the attainment of defined performance and service conditions, such as the Company's trailing twelve month adjusted EBITDA and specific share price targets, both subject to continued employment with the Company through certain dates. The actual number of shares subject to the award is determined at the end of the performance period and may range from 0 % to 150 % of the target shares granted depending upon the terms of the award. Activity with respect to Performance-Based RSUs is summarized as follows: Shares Weighted-Average Grant-Date Fair Value Outstanding shares at January 1, 2024 - $ - Granted 516,316 $ 34.14 Vested and Released ( 145,708 ) $ 33.90 Forfeited ( 32,556 ) $ 33.90 Outstanding shares at December 31, 2024 338,052 $ 34.26 During the year ended December 31, 2024 , the Company achieved certain performance conditions as outlined in its grant agreements and recorded a cumulative stock-based compensation expense of approximately $ 5.6 million. Additionally, a total of 160,453 performance-based RSUs were subject to vesting as of December 31, 2024 and will be considered vested and subsequently issued to participants based upon the achievement of the remaining service requirements as outlined in the award agreements. At December 31, 2024 , total estimated unrecognized stock-based compensation cost related to nonvested performance-based RSUs was approximately $ 4.9 million, which is expected to be recognized over a weighted-average period of 1.5 years. 106 Note 17 Related-Party Transactions Leasing Arrangements: For each of the years ended December 31, 2024 and 2023 , the Company paid $ 0.4 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, 2024, under Company’s sublease for the properties located in Los Angeles, California signed with PCJW (in thousands): Year Related-Party Commitment 2025 386 2026 79 2027 83 2028 72 Total minimum lease payments $ 620 Less: imputed interest ( 66 ) Total lease liabilities $ 554 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. 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 $ 7.7 million for the year ended December 31, 2024. 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 $ 1.3 million for the year ended December 31, 2024 . 107 Note 18 Income Taxes The components of income tax (benefit) expense for the years ended December 31, 2024, and 2023 were as follows (dollars in thousands): 2024 2023 Current: Federal $ 1,244 $ - State 1,237 120 Total current 2,481 120 Deferred: Federal - - State - - Total deferred - - Provision for (benefit from) income taxes $ 2,481 $ 120 A reconciliation between the Company’s federal statutory tax rate and its effective tax rate for the years ended December 31, 2024 and 2023 is as follows: 2024 2023 Federal statutory tax rate 21.0 % 21.0 % State taxes, net of federal benefit 5.8 % 23.3 % Non-deductible excess compensation 5.3 % - 2.4 % Warrant liability 0.6 % 0.1 % Earnout liability 0.3 % 0.0 % Stock-based compensation - 6.5 % - 9.1 % Other 1.2 % - 1.0 % Research and development tax credit - federal - 8.2 % 5.6 % Return to provision - 0.6 % 3.9 % Change in valuation allowance - 14.9 % - 41.6 % Effective tax rate 4.0 % - 0.2 % 108 The major components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023, consists of the following (dollars in thousands): 2024 2023 Deferred tax assets: Net operating loss carryforward $ 13,653 $ 32,616 Allowance for credit losses 6,530 5,839 Research and development tax credit 10,477 9,453 Accrued expenses 2,857 1,777 Accrued compensation 1,267 891 Lease liability 159 242 Stock-based compensation 1,102 926 Excess interest expense carryforward - 3,304 Section 174 research and development expenditures 21,721 11,664 Other 1,881 1,863 Total deferred tax assets 59,647 68,575 Deferred tax liabilities: Prepaid expenses ( 756 ) ( 529 ) Other ( 233 ) ( 529 ) Total deferred tax liabilities ( 989 ) ( 1,058 ) Total net deferred tax assets before valuation allowance 58,658 67,517 Less: valuation allowance ( 58,658 ) ( 67,517 ) Total net deferred taxes $ - $ - As of December 31, 2024 , the Company had $ 32.7 million of federal and $ 86.7 million of combined state net operating loss (“NOL”) carryforwards available to offset future taxable income. The federal NOLs do not expire; however, they are subject to a utilization limit of 80 % of taxable income in any given year. The state NOLs begin to expire in 2031 , except for $ 7.3 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 started, but 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, 2024 and 2023 . 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 $ 58.7 million and $ 67.5 million, as of December 31, 2024 and 2023, respectively. A reconciliation of the Company’s gross unrecognized tax benefits as of December 31, 2024 and 2023 is as follows (dollars in thousands): 2024 2023 Balance at beginning of year $ 1,325 $ 849 Increases to prior positions 95 - Decreases to prior positions - - Increases for current year positions 606 476 Balance at end of year $ 2,026 $ 1,325 As of December 31, 2024, the Company had $ 2.0 million of gross unrecognized tax benefits related to state income taxes and federal and state research and development tax credits. The unrecognized tax benefits of $ 0.8 million as of December 31, 2024, would, if recognized, affect the effective tax rate. Although it is possible that the amount of 109 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, 2024 and 2023. The income tax related accrued interest amounts were also insignificant as of December 31, 2024 and 2023, respectively. 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, 2021 and thereafter. The statute of limitations for California and various other state jurisdictions remains open for the tax periods December 31, 2020 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 $ 2.1 million and $ 2.2 million for the years ended December 31, 2024 and 2023 , respectively. Note 20 Segment Information In accordance with ASC 280, Segment Reporting , the operations of the Company constitute a single operating and reportable segment. This conclusion reflects the manner in which the Chief Operating Decision Maker ("CODM"), a joint responsibility, shared by the Chief Executive Officer and Chief Financial Officer , reviews financial information and makes operating decisions. The determination of the reportable segment is based on the nature of the Company’s products and services, as well as the financial performance, on a consolidated entity-wide basis, that are regularly reviewed by the CODM to guide resource allocation and assess performance. The Company’s operations, all of which are located in the United States, collectively support this single-segment structure. No Member individually contributed to 10 % or more of the Company’s revenues for the years ended December 31, 2024 and 2023. For further information regarding the Company’s products, services, and the accounting policies applied to its reportable segment, refer to Note 2 Significant Accounting Policies. The key performance measure used by the CODM to make key operating decisions is consolidated net income (loss), as reported in the Consolidated Statement of Operations. This measure to assess overall financial performance, identify areas for operation improvement, resource allocation and the allocation of budget between the provision for credit losses, processing and servicing costs, advertising and marketing, compensation and benefits and other operating expenses. This measure helps to ensure alignment with the Company’s long-term financial objectives and supports consistent evaluation across all business activities. The segment assets and liabilities reviewed by the CODM are those reported on the Company’s consolidated balance sheets, with particular focus on available liquidity, including cash, cash equivalents, investments, restricted cash, and ExtraCash receivables, offset by current liabilities and outstanding debt. The following table presents selected financial information with respect to the Company’s single operating and reportable segment for the years ended December 31, 2024 and 2023: 110 Dave Inc. Consolidated Statements of Operations (in thousands) For the Year Ended December 31, 2024 2023 Operating revenues: Service based revenue, net $ 311,426 $ 232,241 Transaction based revenue, net 35,650 26,852 Total operating revenues, net 347,076 259,093 Operating expenses: Provision for credit losses 54,626 58,386 Processing and servicing costs 30,377 28,926 Advertising and marketing 44,904 48,392 Employee salaries 52,333 51,308 Stock-based compensation 37,327 26,674 Other compensation and benefits 17,368 16,928 Technology and infrastructure 11,923 11,440 Other operating expenses 63,607 59,239 Total operating expenses 312,465 301,293 Other (income) expenses: Interest income ( 2,984 ) ( 5,295 ) Interest expense 7,989 11,774 Gain on extinguishment of convertible debt ( 33,442 ) - Changes in fair value of earnout liabilities 965 ( 22 ) Changes in fair value of public and private warrant liabilities 1,729 ( 260 ) Total other (income) expense, net ( 25,743 ) 6,197 Net income (loss) before provision for income taxes 60,354 ( 48,397 ) Provision for income taxes 2,481 120 Net income (loss) $ 57,873 $ ( 48,517 ) Other operating expenses consist primarily of commitments to charity, checking product costs (program expenses, association fees, processor fees, losses from Member-disputed transactions, bank card fees and fraud), depreciation and amortization of property and equipment and intangible assets, legal fees, rent, certain sales tax related costs, office related expenses, public relations costs, professional services fees, travel and entertainment, and insurance. Significant noncash items that impact net income (loss) include depreciation expense (see Note 6, Property and Equipment, Net), amortization expense (see Note 7, Intangible Assets, Net), changes in fair value of earnout liabilities (see Note 14, Fair Value of Financial Instruments), and changes in fair value of public and private warrant liabilities (see Note 14, Fair Value of Financial Instruments). 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. 111 On March 3, 2025, the Company announced that its subsidiary had entered into a Program Agreement with Coastal Community Bank to become a sponsor for Dave’s banking and ExtraCash products. Dave Members will begin onboarding to Coastal Community Bank as soon as Q2 2025. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.