Dave Inc./DE 10-Q

Item 1. Financial Statements Dave Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in thousands; except share data) As of March 31, 2022 As of December 31, 2021 (unaudited) Assets Current assets: Cash and cash equivalents $ 23,569 $ 32,009 Marketable securities 278,265 8,226 Member advances, net of allowance for unrecoverable advances of $ 16,340 and $ 11,995 as of March 31, 2022 and December 31, 2021, respectively 61,813 49,013 Prepaid income taxes 1,359 1,381 Deferred issuance costs — 5,131 Prepaid expenses and other current assets 10,002 4,443 Total current assets 375,008 100,203 Property and equipment, net 849 685 Lease right-of-use assets (related-party of $ 914 and $ 970 as of March 31, 2022 and December 31, 2021, respectively) 2,263 2,702 Intangible assets, net 9,090 7,849 Derivative asset on loans to stockholders — 35,253 Debt facility commitment fee, long-term 117 131 Restricted cash, net of current portion 447 363 Total assets $ 387,774 $ 147,186 Liabilities, and stockholders’ equity Current liabilities: Accounts payable $ 13,599 $ 13,044 Accrued expenses 11,609 13,045 Lease liabilities, short-term (related-party of $ 253 and $ 243 as of March 31, 2022 and December 31, 2021, respectively) 1,674 1,920 Legal settlement accrual 3,576 3,701 Note payable — 15,051 Credit facility 20,000 20,000 Convertible debt, current — 695 Interest payable, convertible notes, current — 25 Other current liabilities 8,332 1,153 Total current liabilities 58,790 68,634 Lease liabilities, long-term (related-party of $ 754 and $ 822 as of March 31, 2022 and December 31, 2021, respectively) 754 970 Debt facility, long-term 35,000 35,000 Convertible debt, long-term 99,949 — Warrant liabilities 18,720 3,726 Other non-current liabilities 121 119 Total liabilities 213,334 108,449 Commitments and contingencies (Note 13) Stockholders’ equity: Preferred stock, par value per share $ 0.0001 , 10,000,000 shares authorized; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021 — — Class A common stock, par value per share $ 0.0001 , 500,000,000 shares authorized; 324,245,822 and 297,094,254 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 32 30 Class V common stock, par value per share $ 0.0001 , 100,000,000 shares authorized; 48,450,639 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively; 5 5 Treasury stock –— ( 5 ) Additional paid-in capital 242,135 86,796 Loans to stockholders –— ( 15,192 ) Accumulated deficit ( 67,732 ) ( 32,897 ) Total stockholders’ equity 174,440 38,737 Total liabilities, and stockholders’ equity $ 387,774 $ 147,186 See accompanying notes to the condensed consolidated financial statements. 5 Table of Contents Dave Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in thousands) (unaudited) For the Three Months Ended March 31, 2022 March 31, 2021 Operating revenues: Service based revenue, net $ 39,268 $ 32,418 Transaction based revenue, net 3,283 2,008 Total operating revenues, net 42,551 34,426 Operating expenses: Provision for unrecoverable advances 13,785 3,538 Processing and servicing fees 6,543 5,220 Advertising and marketing 12,204 14,040 Compensation and benefits 17,894 9,384 Other operating expenses 14,798 12,577 Total operating expenses 65,224 44,759 Other (income) expenses: Interest income ( 13 ) ( 70 ) Interest expense 1,555 277 Legal settlement and litigation expenses — 368 Other strategic financing and transactional expenses 961 108 Changes in fair value of derivative asset on loans to stockholders 5,572 ( 17,146 ) Changes in fair value of warrant liabilities 4,065 2,186 Total other (income) expense, net 12,140 ( 14,277 ) Net (loss) income before provision (benefit) for income taxes ( 34,813 ) 3,944 Provision (benefit) for income taxes 22 ( 8 ) Net (loss) income $ ( 34,835 ) $ 3,952 Net (loss) income per share: Basic $ ( 0.10 ) $ 0.00 Diluted $ ( 0.10 ) $ 0.00 Weighted-average shares used to compute net (loss) income per share Basic 361,939,372 133,243,614 Diluted 361,939,372 340,910,349 See accompanying notes to the condensed consolidated financial statements. 6 Table of Contents Dave Inc. and Subsidiaries Condensed Consolidated Statement of Stockholders’ Equity (in thousands, except share data) (unaudited) Common stock Series A convertible preferred stock Series B-1 convertible preferred stock Series B-2 convertible preferred stock Common stock Class A Class V Additional paid-in capital Loans to stockholders Treasury stock Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at January 1, 2022 (as previously reported) 133,216,940 $ 9,881 13,326,050 $ 49,675 3,991,610 $ 12,617 104,022,678 $ 0.1 — $ — — $ — $ 14,658 $ ( 15,192 ) ( 5 ) $ ( 32,897 ) $ ( 33,436 ) Retroactive application of recapitalization ( 133,216,940 ) ( 9,881 ) ( 13,326,050 ) ( 49,675 ) ( 3,991,610 ) ( 12,617 ) ( 104,022,678 ) ( 0.1 ) 297,094,254 30 48,450,639 5 72,138 — — — 72,173 Balance at January 1, 2022 (as adjusted) — — — — — — — — 297,094,254 30 48,450,639 5 86,796 ( 15,192 ) ( 5 ) ( 32,897 ) 38,737 Issuance of Class A common stock for stock option exercises — — — — — — — — 3,336,683 — — — 1,558 — — — 1,558 Issuance of Class A common stock pursuant to the PIPE financing — — — — — — — — 21,000,000 2 — — 209,999 — — — 210,001 Issuance of Class A common stock pursuant to the Merger Agreement — — — — — — — — 8,351,359 1 — — ( 17,020 ) — — — ( 17,019 ) Exercise of Series B-1 preferred stock warrants, net of settlement — — — — — — — — 450,841 — — — 3,365 — — — 3,365 Conversion of 2019 convertible notes and accrued interest to Class A common stock — — — — — — — — 225,330 — — — 720 — — — 720 Repurchase of Class A common stock — — — — — — — — ( 198,505 ) — — — ( 1,588 ) — 5 — ( 1,583 ) Exercise of warrant for Class A common stock — — — — — — — — 110 — — — — — — — — Stockholder loans interest — — — — — — — — — — — — — ( 12 ) — — ( 12 ) Exercise of derivative asset and paydown of stockholder loans — — — — — — — — ( 6,014,250 ) ( 1 ) — — ( 44,885 ) 15,204 — — ( 29,682 ) Stock-based compensation — — — — — — — — — — — — 3,190 — — — 3,190 Net loss — — — — — — — — — — — — — — — ( 34,835 ) ( 34,835 ) Balance at March 31, 2022 — $ — — $ — — $ — — $ — 324,245,822 32 48,450,639 5 $ 242,135 $ — $ — $ ( 67,732 ) $ 174,440 Common stock Series A convertible preferred stock Series B-1 convertible preferred stock Series B-2 convertible preferred stock Common stock Class A Class V Additional paid-in capital Loans to stockholders Treasury stock Accumulated deficit Total stockholders’ equity Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Balance at January 1, 2021 (as previously reported) 133,216,940 $ 9,881 13,326,050 $ 49,675 3,991,610 $ 12,617 100,223,194 $ 0.1 — $ — $ — — $ 5,493 $ ( 14,764 ) $ ( 154 ) $ ( 12,904 ) $ ( 22,329 ) Retroactive application of recapitalization ( 133,216,940 ) ( 9,881 ) ( 13,326,050 ) ( 49,675 ) ( 3,991,610 ) ( 12,617 ) ( 100,223,194 ) ( 0.1 ) 291,948,352 29 48,450,639 5 72,139 — — — 72,173 Balance at January 1, 2021 (as adjusted) — — — — — — — — 291,948,352 29 48,450,639 5 77,632 ( 14,764 ) ( 154 ) ( 12,904 ) 49,844 Issuance of common stock for stock option exercises — — — — — — — — 1,427,875 — — — 599 — — — 599 Stockholder loans interest — — — — — — — — — — — — — ( 68 ) — — ( 68 ) Stock-based compensation — — — — — — — — — — — — 1,690 — — — 1,690 Net income — — — — — — — — — — — — — — — 3,952 3,952 Balance at March 31, 2021 — $ — — $ — — $ — — $ — 293,376,227 $ 29 48,450,639 $ 5 $ 79,921 $ ( 14,832 ) $ ( 154 ) $ ( 8,952 ) $ 56,017 See accompanying notes to the condensed consolidated financial statements. 7 Table of Contents Dave Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) For the Three Months Ended March 31, 2022 2021 Operating activities Net (loss) income $ ( 34,835 ) $ 3,952 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 1,158 2,812 Provision for unrecoverable advances 13,785 3,538 Changes in fair value of derivative assets 5,572 ( 17,146 ) Changes in fair value of warrant liabilities 4,065 2,186 Stock-based compensation 3,190 1,694 Non-cash interest ( 63 ) ( 68 ) Non-cash lease expense ( 23 ) ( 2 ) Changes in fair value of marketable securities 76 ( 2 ) Changes in operating assets and liabilities: Member advances ( 26,585 ) 4,987 Prepaid income taxes 22 788 Prepaid expenses and other current assets ( 4,847 ) ( 497 ) Accounts payable 2,489 238 Accrued expenses ( 1,039 ) 1,609 Income taxes payable — — Legal settlement accrual ( 125 ) — Other current liabilities ( 321 ) ( 1,450 ) Other non-current liabilities 2 ( 23 ) Interest payable, convertible notes — 3 Net cash (used in) provided by operating activities ( 37,479 ) 2,619 Investing activities Payments for internally developed software costs ( 2,258 ) ( 3,298 ) Purchase of property and equipment ( 228 ) ( 5 ) Purchase of marketable securities ( 302,115 ) ( 2 ) Sale of marketable securities 32,000 3,915 Net cash (used in) provided by investing activities ( 272,601 ) 610 Financing activities Repayment on line of credit — ( 3,910 ) Proceeds from PIPE offering 195,000 — Proceeds from escrow account, net of redemptions 29,688 — Payment of issuance costs ( 22,944 ) ( 120 ) Proceeds from issuance of common stock for stock option exercises 1,563 599 Repurchase of common stock ( 1,583 ) — Proceeds from borrowings on convertible debt 100,000 — Proceeds from borrowings on debt and credit facilities — 19,000 Net cash provided by financing activities 301,724 15,569 Net (decrease) increase in cash and cash equivalents and restricted cash ( 8,356 ) 18,798 Cash and cash equivalents and restricted cash, beginning of the period 32,372 5,069 Cash and cash equivalents and restricted cash, end of the period $ 24,016 $ 23,867 Supplemental disclosure of non-cash investing and financing activities: Conversion of convertible preferred stock to Class A common stock in connection with the reverse recapitalization $ 72,173 $ — Recapitalization transaction costs liability incurred $ 7,500 $ — Conversion of convertible notes and accrued interest to Class A common stock in connection with the reverse recapitalization $ 720 $ — Conversion of B-1 Warrants to Class A common stock in connection with the reverse recapitalization $ 3,365 $ — Discharge of PIPE promissory note in connection with the reverse recapitalization $ 15,000 $ — Supplemental disclosure of cash (received) paid for: Income taxes $ ( 2 ) $ ( 776 ) Interest $ 1,392 $ 269 The following table provides a reconciliation of cash and cash equivalents, and restricted cash reported within the condensed consolidated balance sheet with the same as shown in the condensed consolidated statement of cash flows. Cash and cash equivalents $ 23,569 $ 23,438 Restricted cash 447 429 Total cash, cash equivalents, and restricted cash, end of period $ 24,016 $ 23,867 See accompanying notes to the condensed consolidated financial statements. 8 Table of Contents Note 1 Organization and Nature of Business Overview Dave Inc. (“Dave” or the “Company”), a Delaware corporation, with headquarters located in West Hollywood, California, is a financial services company. Dave was originally incorporated in the State of Delaware on January 14, 2021 as a special purpose acquisition company under the name VPC Impact Acquisition Holdings III, Inc. (“VPCC”) and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more business. Dave offers a suite of innovative financial products aimed at helping Members improve their financial health. The Company’s budgeting tool helps Members manage their upcoming bills to avoid overspending. To help Members avoid punitive overdraft fees and access short-term liquidity, Dave offers cash advances through its flagship 0% interest ExtraCash product. Dave also helps Members generate extra income for spending or emergencies through Dave’s Side Hustle product, where Dave presents Members with supplemental work opportunities. Through Dave Banking, the Company provides a modern checking account experience with valuable tools for building long-term financial health. Insights: As spending and earning dynamics have become more complex over time, the Company offers a personal financial management tool to support Members with budgeting, wherever someone banks. These insights help people to manage their income and expenses between paychecks, helping them to spend and save in a smarter way and avoid liquidity jams that may cause them to overdraft. ExtraCash: Many Americans are often unable to maintain a positive balance between paychecks, driving a reliance on overdraft, payday loans, auto title loans and other forms of expensive credit to put food on the table, gas in their car or pay for unexpected emergencies. For example, traditional banks charge up to $ 34 for access to as little as $ 5 of overdraft, whereas many others in the financial services sector don’t allow for overdraft at all. Dave invented a free overdraft and short-term credit alternative called ExtraCash, which allows Members to advance funds to their account and avoid a fee altogether. Members may receive an advance of up to $ 250 . Side Hustle: Dave seeks to help Members improve their financial health by presenting new job opportunities to them. Through Dave’s partnership with leading employers Members can quickly submit applications and improve their income with flexible employment. Members have generated more than $ 157 million of new income through applications submitted using Dave’s Side Hustle product since it was launched in 2018. Dave Banking: Dave offers a full-service digital checking account through its partnership with Evolve Bank and Trust. (“Evolve”), an Arkansas-based, nationally chartered bank owned by Evolve Bancorp Inc. The Company does not have overdraft and minimum balance fees, we allow for early paycheck payment and help Members build credit with their rent and utility payments. Dave Banking Members also have access to Insights and higher ExtraCash limits. 9 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Business Combination On January 5, 2022 (the “Closing Date”), the Company consummated the previously announced transaction (pursuant to that certain Agreement and Plan of Merger, dated June 7, 2021 (the “Business Combination Agreement”), by and among Dave Inc. (prior to the Mergers (as defined below), hereinafter referred to as “Legacy Dave”), VPCC, Bear Merger Company I Inc., a Delaware corporation and a direct, wholly owned Subsidiaries of VPCC (“First Merger Sub”), and Bear Merger Company II LLC, a Delaware limited liability company and a direct wholly owned Subsidiaries of VPCC (“Second Merger Sub”). On January 5, 2022, pursuant to the Business Combination Agreement, First Merger Sub merged with and into Legacy Dave (the “First Merger”), with Legacy Dave surviving the First Merger as a wholly owned subsidiary of VPCC (such company, in its capacity as the surviving corporation of the First Merger, the “Surviving Corporation”), immediately followed by the Surviving Corporation merging with and into Second Merger Sub (the “Second Merger”, the Second Merger together with the First Merger, the “Mergers” and the Mergers together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination” or the “Transactions”), with Second Merger Sub (such entity, following the Second Merger, the “Surviving Entity”) surviving the Second Merger as a wholly owned subsidiary of VPCC. Following the Mergers, “VPC Impact Acquisition Holdings III, Inc.” was renamed “Dave Inc.” and the Surviving Entity was renamed “Dave Operating LLC”. On January 5, 2022, the holders of (a) Legacy Dave capital stock and (b) Legacy Dave’s options to purchase Legacy Dave capital stock pursuant to Legacy Dave’s stock plan (the “Legacy Dave Options”), received aggregate merger consideration, consisting o f 327,255,618 shares of Class A common stock of the Company, par value $ 0.0001 per share (the “Class A Common Stock”) and 48,450,639 shares of Class V common stock of the Company, par value $ 0.0001 per share (the “Class V Common Stock”, and together with the Class A Common Stock, the “Common Stock”). The Company’s Class A Common Stock is now listed on the Nasdaq Global Market under the symbol “DAVE”, and warrants to purchase the Class A Common Stock at an exercise price of $ 11.50 per share are listed on Nasdaq under the symbol “DAVEW”. The audited financial statements included in Dave’s Annual Report on Form 10-K filed with the SEC on March 25, 2022 are those of VPCC prior to the consummation of the Business Combination and the name change. The audited financial statements of Legacy Dave are included in Form 8-K/A filed with the SEC on March 25, 2022 prior to the consummation of the Business Combination and the name change. Prior to the Business Combination, VPCC neither engaged in any operations nor generated any revenue. Until the Business Combination, based on VPCC’s business activities, VPCC was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The audited Consolidated Financial Statements as of and for the years ended December 31, 2021 and 2020 for Legacy Dave were included in Exhibit 99.3 of Amendment No. 1 to the Current Report on Form 8-K (the “Form 8-K/A”) filed with the Securities and Exchange Commission (“SEC”) on March 25, 2022. COVID-19 There are many uncertainties regarding the current global pandemic involving a novel strain of coronavirus (“COVID-19”), and the Company continues to closely monitor the impact of the pandemic on all aspects of the business, including how it has and may in the future impact Members, employees, suppliers, vendors, and business partners. The duration and magnitude of the continuing effects of COVID-19 on Members remain uncertain and dependent on various factors, including the continued severity and transmission rate of the virus, new variants of the virus, the nature of and duration for which preventive measures remain in place, the extent and effectiveness of containment and mitigation efforts, including vaccination programs, and the type of stimulus measures and other policy responses that the U.S. government may further adopt. Beginning in March 2020, Dave’s business and operations were disrupted by the conditions caused by COVID-19, which adversely affected Members’ spending levels and disposable income. Governmental actions such as the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) helped mitigate the effects of COVID-19 on Members. In particular, stimulus funds and enhanced unemployment benefits provided under the CARES Act created additional financial support for Members; however, the overall economic conditions and increased levels of unemployment may negatively impact the creditworthiness of Members and could impact the credit risk on the Company’s Advance business. The Company actively monitors the performance of its Advance portfolio and will continue to assess the impact of the COVID-19 pandemic. At the onset of the pandemic, the Company made some underwriting modifications in response and intend to make additional adjustments to the Company’s risk management policies as necessary. 10 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 2 Summary of Significant Accounting Policies Basis of Presentation These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and are unaudited. These unaudited condensed consolidated financial statements do not include all disclosures that are normally included in annual audited financial statements prepared in accordance with U.S. GAAP and should be read in conjunction with the Company’s consolidated financial statements. The accompanying unaudited (a) condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements, and (b) the unaudited interim condensed financial statements have been prepared in accordance pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Therefore, it is suggested that these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Current Report on Forms 10-K and 8-K/A, both dated March 24, 2022, that were filed with the Securities and Exchange Commission. In the opinion of the Company, in addition to the adjustments to record the business combination (the “Business Combination”) between VPCC and Legacy Dave, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, cash flows, and stockholders’ equity for the interim periods, but are not necessarily indicative of the results to be anticipated for the full year 2022 or any future period. Subsequent events are events or transactions that occur after the condensed consolidated balance sheet date, but before condensed consolidated financial statements are available to be issued. The Company recognizes in the condensed consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the condensed consolidated balance sheet, including the estimates inherent in the process of preparing the condensed consolidated financial statements. The Company’s condensed consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the condensed consolidated balance sheet but arose after the condensed consolidated balance sheet date and before the condensed consolidated financial statements were available to be issued. Retroactive Application of Reverse Recapitalization As discussed further in Note 3, The Reverse Recapitalization and Related Transactions , the Business Combination is accounted for as a reverse recapitalization of equity structure. Pursuant to U.S. GAAP, the Company recasts its Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity from December 31, 2020 to the Closing Date, the total stockholder’s equity (deficit) within the Company’s Consolidated Balance Sheet as of December 31, 2021 and the weighted average outstanding shares basic and diluted for the year ended December 31, 2021 by applying the recapitalization retroactively. In addition, the Company recasts the stock class and issued and outstanding number of shares, exercise prices of options and warrants for each balance sheet period presented in these Condensed Consolidated Financial Statements and the accompanying notes. Retroactive Application of Reverse Recapitalization to the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) Pursuant to the terms of the Business Combination Agreement, as part of the Closing, all of the issued and outstanding Series A preferred stock Legacy Dave were automatically converted into Legacy Dave common stoc k at a 1: 1 ratio and Series B-1 and Series B-2 convertible preferred stock of Legacy Dave were automatically converted into Legacy Dave common stock at a 1: 1.033076 ratio, which were all converted again, along with all other issued and outstanding common stock of Legacy Dave, into 342,649,141 shares of Class A Common Stock and Class V Common Stock at an exchange ratio of 1.354387513 (the “Exchange Ratio”). Additionally, each of the Company’s options that were outstanding immediately prior to the closing of the Business Combination remained outstanding and converted into options for Class A Common Stock and Class V Common Stock equal to the number of the Company’s Common Stock, subject to such options multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such options divided by the Exchange Ratio, with the aggregate amount of shares of Class A Common Stock and Class V Common Stock issuable upon exercise of such options to be 32,078,481 . 11 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Retroactive Application of Reverse Recapitalization to the Condensed Consolidated Statements of Operations Furthermore, based on the retroactive application of the reverse recapitalization to the Company’s Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity, the Company recalculated the weighted average shares for the year ended December 31, 2021. The basic and diluted weighted-average Legacy Dave Common Stock were retroactively converted to Class A Common Stock and Class V Common Stock using the Exchange Ratio to conform to the recast period (see Note 2, Net (Loss) Income Per Share Attributable to Stockholders, for additional information). Retroactive Application of Reverse Recapitalization to the Condensed Consolidated Balance Sheets Finally, to conform to the retroactive application of recapitalization to the Company’s Condensed Consolidated Statements of Stockholders’ Equity, the Company reclassified the $ 9,881 of Legacy Dave Series A convertible preferred stock, $ 49,675 of Legacy Dave Series B-1 convertible preferred stock, and the $ 12,617 of Legacy Dave Series B-2 convertible preferred stock to the additional paid-in capital (“APIC”), less amounts attributable to the par value of the common stock as recast, as of December 31, 2021. Principles of Consolidation The Company consolidates financial statements of all entities in which the Company has a controlling financial interest, including the accounts of any Variable Interest Entity in which the Company has a controlling financial interest and for which it is the primary beneficiary. All intercompany transactions and balances have been eliminated upon consolidation. Variable Interest Entities The Company is considered the primary beneficiary of 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, in the unaudited condensed consolidated balance sheet as of March 31, 2022, are as follows: Assets Cash and cash equivalents $ 15,484 Member advances, net of allowance for unrecoverable advances of $ 1,827 as of March 31, 2022 46,977 Debt and credit facility commitment fee, current 358 Debt facility commitment fee, long-term 117 Total assets $ 62,936 Liabilities Credit facility 20,000 Debt facility $ 35,000 Total liabilities $ 55,000 12 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Use of Estimates The preparation of these condensed 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 condensed 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 on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The Company’s critical accounting estimates and assumptions are evaluated on an ongoing basis including those related to the: (i) allowance for unrecoverable advances; (ii) realization of tax assets and estimates of tax liabilities; (iii) valuation of equity securities; (iv) fair value of derivatives; (v) valuation of note payable and (vi) fair value of warrant liabilities. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition Service Based Revenue, Net: Service based revenue, net primarily consists of tips, express processing fees, and subscriptions charged to Members, net of processor costs associated with advance disbursements. Member advances are treated as financial receivables under Accounting Standards Codification (“ASC”) 310 Receivables (“ASC 310”). The Company encourages but does not contractually require its Members who receive a cash advance to leave a discretionary tip. The Company treats tips as an adjustment of yield to the advances and are recognized over the average term of advances. Express processing fees apply when a Member requests an expedited cash advance. At the Member’s election, the Company expedites the funding of advance funds within eight hours, as opposed to the customary three business days, of the advance request. Express fees are nonrefundable loan origination fees and are recognized as revenues over the expected contractual term of the advance. Costs incurred by the Company to fund cash advances are treated as direct loan origination costs. These direct loan origination costs are netted against advance-related income over the expected contractual term of the advance. Direct origination costs recognized as a reduction of advance-related income during the periods ended March 31, 2022 and 2021, was $ 0.9 million and $ 0.9 million, respectively. 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. The Company’s primary sources of revenue are derived from fees earned on advances, and other financial instruments that are not within the scope of ASC 606. The Company has evaluated the nature of its contracts with Members and determined that further disaggregation of revenue from contracts with Members into categories beyond what is presented in the condensed consolidated statements of operations was not necessary. 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. Sources of revenue from contracts with Members that are in the scope of ASC 606 include subscription fees, lead generation fees, and reward program fees. Subscription fees of $ 1 are received on a monthly basis from Members who subscribe to the Company’s application. The Company continually fulfills its obligation to each Member over the subscription term. The series of distinct services represents a single performance obligation that is satisfied over time. The Company recognizes revenue ratably as the Member receives and consumes the benefits of the platform throughout the contract period. Price concessions granted to Members who have insufficient funds when subscription fees are due 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 of concessions granted as the impact. 13 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Service based revenue also consists of lead generation fees from the Company’s Side Hustle advertising partners. The Company is entitled to receive these lead generation fees when Members use the application to sign up for jobs with the Company’s various partners. Lead generation contracts contain a single performance obligation. Lead generation revenue is recognized at a point in time upon satisfaction and completion of the single performance obligation. The Company also receives cash monthly as part of a rewards program for those Dave debit card Members who choose to spend funds with selected vendors. The cash received by the Company is recorded as unearned revenue and recognized as revenue as the subscription credits are earned by the Members. Transaction Based Revenue, Net: Transaction based revenue, net primarily consists of interchange and ATM revenues from Dave’s Checking Product, net of ATM-related fees, and are recognized at the point in time the transactions occur, as the performance obligation is satisfied. ATM-related fees recognized as a reduction of transaction based revenue during the periods ended March 31, 2022 and 2021, w ere $ 0.1 million and $ 0.2 million, respectively. Processing and Servicing Fees Processor fees consist of fees paid to the Company’s processors for the recovery of advances, tips, processing fees, and subscriptions. These expenses also include fees paid for services to connect Member’s bank accounts to the Company’s application. Except for processing and service fees associated with advance disbursements, which are recorded net against revenue, all other processing and service fees are expensed as incurred. Cash and Cash Equivalents The Company classifies all highly liquid instruments with an original maturity of three months or less as cash equivalents. Restricted Cash Restricted cash primarily represents cash held at financial institutions that is pledged as collateral for specific accounts that may become overdrawn. Marketable Securities Marketable securities consist of a money market mutual fund. The fair value of marketable securities is determined by quoted prices in active markets and changes in fair value are recorded in other (income) expense in the consolidated statements of operations. Member Advances Member advances include non-recourse cash advances, fees, and tips, net of certain direct origination costs and allowance for unrecoverable advances. Management’s intent is to hold advances until maturity or payoff. Members’ cash advances are treated as financial receivables under ASC 310. Advances to Members are not interest-bearing. The Company recognizes these advances at the advanced amount and does not use discounting techniques to determine present value of advances due to their short-term average maturity. The consequent discount impact under the imputed interest rate method does not result in a significant impact to the consolidated financial statements. The Company does not provide modifications to advances. Allowance for Unrecoverable Advances The Company maintains an allowance for unrecoverable advances at a level estimated to be adequate to absorb credit losses inherent in outstanding Member advances. Management currently estimates the allowance balance required using historical loss and collections experience, and, if relevant, the nature and volume of the portfolio, economic conditions, and other factors. Interpretations of past cash recovery patterns and projections of future economic conditions involve a high degree of subjectivity. Changes to the allowance have a direct impact on the provision for unrecoverable advances in the condensed consolidated statements of operations. The Company considers advances over 120 days past due or which become uncollectible based on information available to the Company as impaired. All impaired advances are deemed uncollectible and subsequently written-off and are a direct reduction to the allowance for unrecoverable advances. Subsequent recoveries of Member advances written-off, if any, are recorded as a reduction to Member advances when collected, resulting in a reduction to the allowance for unrecoverable advances and a corresponding reduction to the provision for unrecoverable advances expense in the condensed consolidated statements of operations. 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 condensed consolidated balance sheets as intangible assets, net. Other costs are expensed as incurred and included within Other general and administrative expenses in the condensed consolidated statements of operations. Capitalized costs for the three month periods ended March 31, 2022 and 2021, w ere approximately $ 2.3 million and $ 1.1 million, respectively. 14 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements 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. Amortization expense for the three month periods ended March 31, 2022 and 2021, was approximately $ 1.0 and $ 0.6 million, respectively. 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. Warrants The Company reviewed the terms of warrants to purchase its Common Stock to determine whether warrants should be classified as liabilities or stockholders’ equity in its condensed consolidated balance sheet. In order for a warrant to be classified in stockholders’ equity, the warrant must be (a) indexed to the Company’s equity and (b) meet the conditions for equity classification in Accounting Standards Codification (“ASC”) Subtopic 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Equity. As the warrants do not meet the conditions for equity classification, they are carried on the consolidated balance sheet as warrant liabilities measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants in other income (expense). 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 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. 15 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Following are the major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, 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): March 31, 2022 Level 1 Level 2 Level 3 Total Assets Marketable securities $ 278,265 $ — $ — $ 278,265 Total assets $ 278,265 $ — $ — $ 278,265 Liabilities Warrant liabilities—public warrants $ 9,294 $ — $ — $ 9,294 Warrant liabilities—private placement warrants $ — $ — $ 9,426 $ 9,426 Total liabilities $ 9,294 $ — $ 9,426 $ 18,720 December 31, 2021 Level 1 Level 2 Level 3 Total Assets Marketable securities $ 8,226 $ — $ — $ 8,226 Derivative asset on loans to stockholders — — 35,253 35,253 Total assets $ 8,226 $ — $ 35,253 $ 43,479 Liabilities Warrant liability $ — $ — $ 3,726 $ 3,726 Note payable — — 15,051 15,051 Total liabilities $ — $ — $ 18,777 $ 18,777 The Company had no assets and liabilities measured at fair value on a non-recurring basis as of March 31, 2022 and December 31, 2021. The Company also has financial instruments not measured at fair value. The Company has evaluated cash and cash equivalents, Member advances, net, restricted cash, accounts payable, and accrued expenses, 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, convertible debt, and line of credit approximate their carrying values. 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. Derivative Asset Related to Loans to Stockholders: In relation to certain loans to stockholders, the Company purchased call options which grant the Company the right to acquire a fixed number of the Company’s Common Stock, held by such stockholders over the exercise period (four years). However, the exercise price per share is not fixed. The approximate $ 3.273 exercise price per share increases by a nominal amount of approximately $ 0.005 for each month that lapses from the call option issuance date. As of the date of the Business Combination, the exercise price per share was approximately $ 3.42 . The Company understands that this variability in the exercise price of the call option is tied to the passage of time, which is not an input to the fair value of the Company’s shares per ASC 815, Derivatives and Hedging (“ASC 815”). Therefore, the Company does not believe the call option meets the scope exception under ASC 815. As the scope exception is not met, the call option is accounted for as a derivative instrument. Accordingly, the call option was measured at fair value and presented as a derivative asset on loans to stockholders on the Company’s condensed consolidated balance sheets. Interest earned on the non-recourse promissory notes was reported as interest income and changes in the fair value of the call option were reported as other income or expense in the period incurred. The call option was measured at fair value at the end of each reporting period with change in fair value recorded in earnings. The fair value of the call option as of March 31, 2022 and December 31, 2021, was approximately $ 0 and $ 35.3 million, respectively. Upon consummation of the business combination in January 2022, all of the call options related to the Loans to Stockholders were exercised, settling the derivative asset on Loans to Stockholders of $ 29.7 million and the contra-equity Loans to Stockholders of $ 15.2 million with APIC being the offsetting entry. 16 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements A roll-forward of the Level 3 derivative asset on loans to stockholders is as follows (dollars in thousands): Opening value at January 1, 2021 $ 457 Amendment to loan to stockholder 5 Change in fair value during the year 34,791 Ending value at December 31, 2021 35,253 Change in fair value during the period ( 5,572 ) Exercise of call option ( 29,681 ) Ending value at March 31, 2022 $ — The Company used a probability-weighted expected return method (“PWERM”) to weight the indicated call options value determined under the binomial option pricing model to determine the fair value of the call options. The following table presents the assumptions used to value the call options for the year ended December 31, 2021: Expected volatility 61.5 % Risk-free interest rate 0.2 % Remaining term 3.0 Years Warrant Liability Related to Debt Facility: As discussed further in Note 12, Debit and Credit Facility , in January 2021, the Company issued warrants contemporaneously with a debt facility that met the definition of a derivative under ASC 815. This warrant liability was initially recorded as a liability at fair value, with the offsetting entry recorded as a loan commitment fees asset. The derivative liability was subsequently recorded at fair value at each reporting period, with changes in fair value reflected in earnings. The gain related to the change in fair value of the warrant liability in the three months ended March 31, 2022, was $ 0.4 million, which is presented within changes in fair value of warrant liability in the condensed consolidated statements of operations. Immediately prior to the close of the Business Combination, all , or 1,664,394 of the vested warrants were exercised and net settled for 450,841 shares of Legacy Dave’s Class A Common Stock pursuant to the terms of the Business Combination. A roll-forward of the Level 3 warrant liability is as follows (dollars in thousands): Opening value at January 1, 2021 $ — Initial fair value at the original issuance date 106 Change in fair value during the year 3,620 Ending value at December 31, 2021 3,726 Change in fair value during the year ( 361 ) Exercise of warrant ( 3,365 ) Ending value at March 31, 2022 $ — 17 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements The Company used a PWERM to weight the indicated warrant liability value determined under the binomial option pricing model to determine the fair value of the warrant liability. T he following table presents the assumptions used to value the warrant liability for the year ended December 31, 2021: Expected volatility 57.0 % Risk-free interest rate 0.1 - 0.6 % Remaining term 0.0 - 1.5 Years Note Payable: As discussed in Note 10 , Notes Payable , the Company has elected to measure the note payable at fair value using the fair value option of ASC 825-10. The Company identified an embedded derivative related to a convertible feature in its promissory note and in accordance with ASC 815-15-25-1 criterion (b), since the Company has elected to apply the fair value option to the debt embedded features will not be separated from the debt host. The note payable is carried on the Company’s unaudited condensed consolidated balance sheet as a current liability estimated at fair value with changes in fair value reflected in earnings. The Company recorded an unrealized gain of approximately $ 0.1 million related to the change in fair value of the promissory note for the three months ended March 31, 2022. Upon the Closing of the Business Combination, the p romissory n ote was automatically discharged upon the Company’s issuance of 1,500,000 shares of Class A Common Stock to Alameda Research. The closing of the note payable occurred immediately prior to the closing date of the Business Combination. Refer to Note 3 , The Reverse Recapitalization and Related Transactions for further details on the closing of the note payable . A roll-forward of the Level 3 promissory note is as follows (dollars in thousands): Opening value at January 1, 2021 $ — Fair value at issuance 14,608 Change in fair value during the year 443 Ending value at December 31, 2021 15,051 Change in fair value during the year ( 51 ) Discharge of obligation through the issuance of Common Stock ( 15,000 ) Ending value at March 31, 2022 $ — Public Warrants: As discussed further in Note 11 , 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 earnin gs. The loss related to the change in fair value of the public warrant liability in the three months ended March 31, 2022, was approximately $ 1.7 million, which is presented within changes in fair value of public warrant liability in the condensed consolidated statements of operations. A rollfoward table is not necessary here as these Level 1 public warrants have quoted prices in active markets for identical assets or liabilities. 18 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Private Warrants: As discussed further in Note 11 , 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 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 in the three months ended March 31, 2022, was approxima tely $ 2.8 million, which is presented within changes in fair value of private warrant liability in the condensed consolidated statements of operations. A roll-forward of the Level 3 private warrant liability is as follows (dollars in thousands): Opening value at January 1, 2022 $ — Initial fair value at the merger date 6,681 Change in fair value during the period 2,745 Ending value at March 31, 2022 $ 9,426 March 31, 2022 Exercise Price $ 11.50 Expected Volatility 43.8 % Risk-free interest rate 2.4 % Remaining term 4.76 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 March 31, 2022 and December 31, 2021. Fair Value of Common Stock Up until the Closing of the Business Combination in which the Company became publicly traded on Nasdaq, the Company was required to estimate the fair value of the Common Stock underlying the Company’s share-based awards. The fair value of the Common Stock underlying the Company’s stock-based awards was determined, in each case, based on a valuation model as discussed further below, and was approved by the Company’s Board of Directors. The Company’s Board of Directors intends all stock options granted to be exercisable at a price per share not less than the fair value per share of the ordinary share underlying those stock options on the date of grant. In the absence of a public market for the Common Stock prior to the date of the Business Combination, the valuation of the Common Stock was determined using a market approach, income approach, and subject company transaction method. The allocation of equity value was determined using the option pricing method. The valuation was performed in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation. The Company considered various objective and subjective factors to determine the fair value of its Common Stock as of each grant date, including: • Historical financial performance; • The Company’s business strategy; • Industry information, such as external market conditions and trends; • Lack of marketability of the Common Stock; • Likelihood of achieving a liquidity event, such as an initial public offering, special-purpose acquisition company (“SPAC”) merger, or strategic sale given prevailing market conditions and the nature and history of the Company’s business; 19 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements • Prices, privileges, powers, preferences, and rights of the convertible preferred stock relative to those of the Common Stock; • Forecasted cash flow projections for the Company; • Publicly traded price of the SPAC; • Primary preferred stock financings and secondary common stock transactions of the Company’s equity securities; • Lack of marketability/illiquidity of the common stock underlying the Company’s stock-based awards involving securities in a private company; and • Macroeconomic conditions. The assumptions underlying these valuations represented management’s best estimate, which involved inherent uncertainties and the application of management’s judgment. The probability of a liquidity event and the derived discount rate are significant assumptions used to estimate the fair value of the Common Stock. If the Company had used different assumptions or estimates, the fair value of the Common Stock and the Company’s stock-based compensation expense could have been materially different. During 2019 and 2020, the Company’s estimated fair value of its Common Stock remained relatively consistent, fluctuating between $ 0.935 per share as of August 5, 2019 (“August 2019 Valuation”), and $ 0.981 per share as of August 30, 2020 (“August 2020 Valuation”). The August 2019 Valuation and August 2020 Valuation utilized the income and market approaches in estimating the fair value. The fair value of the Company’s common stock was estimated to be $ 0.935 per share as of August 5, 2019 (“August 2019 Valuation”) and $ 0.981 per share as of August 30, 2020 (“August 2020 Valuation”). In 2021, the Company’s management team first contemplated a SPAC Transaction, which was incorporated in the June 7, 2021 valuation that resulted in a fair value for Dave’s common stock o f $ 8.67 per share (“June 2021 Valuation”). The SPAC Transaction was considered in the subsequent valuation performed as of October 6, 2021 that resulted in a fair value for Dave’s common stock of $ 10.80 per share (“October 2021 Valuation”). The August 2019 Valuation and August 2020 Valuations were completed prior to the contemplation of the Business Combination, and at the time of these valuations management did not expect a near-term exit. The August 2019 Valuation was performed at the time of the close of Dave’s Series B-1 and B-2 preferred equity financings (“Series B Financing”). Since no near-term exit was expected, the August 2019 Valuation was performed using the market approach, specifically the subject company transaction method was performed using a single option pricing model (“OPM”) as the allocation method. As a result, the fair value of the Company’s common stock was inferred from the Series B Financing. The August 2020 Valuation was performed using the market approach, specifically the guideline public company method (“GPCM”) and used a single OPM as the allocation methodology. The GPCM was performed by first considering the Series B Financing’s implied revenue multiple from the August 2019 valuation report, and then was adjusted based on changes in the guideline public company’s multiples since the Series B Financing occurred, with consideration for adjustments based on the Company’s comparative operational performance between the periods. The June 2021 Valuation and October 2021 Valuation both used the hybrid method, wherein a PWERM incorporated an expected near-term SPAC exit scenario as well as an OPM. The OPM was used to model the value of common stock in a delayed exit/stay private scenario. Total equity values for each scenario management identified were estimated as of the measurement date. The delayed exit/stay private scenario total equity value was estimated using the discounted cash flow method under the income approach and the GPCM under the market approach. The total equity value in the SPAC Transaction scenario included in the June 2021 Valuation was determined based on the expected Business Combination pre-money valuation. The common stock price per share in the SPAC Transaction scenario included in the October 2021 Valuation was determined based on the publicly traded price of the SPAC as of the valuation date. Management’s estimated probability for each scenario occurring at each valuation date was applied to the respective scenario’s indicated common stock value to arrive at the estimated fair value of common stock. 20 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements The increase in the fair value of the Company’s common stock between the August 2019 and August 2020 Valuations, and the June 2021 Valuation and the October 2021 Valuation was predominantly due to the Company’s progress towards completing the Business Combination that was not known or knowable at the earlier valuation dates. As previously discussed, the August 2019 Valuation utilized the Series B financing to determine the value of common stock in a single OPM. The August 2020 Valuation relied upon the GPCM with valuation multiples selected considering the implied multiples at the time of the Series B Financing, with appropriate adjustments to the multiples to account for changes in the Company’s financial and operational performance as well as to reflect changes in the guideline public companies’ multiples and comparative performance, from the close of the Series B financing to the August 2020 valuation date. In early 2021, the Company first contemplated a SPAC Transaction and began taking the necessary steps to prepare for a business combination with VPCC. The necessary steps undertaken to prepare for the Business Combination included meeting with VPCC and investment bankers, discussing timing expectations, and negotiating the preliminary letter of intent with VPCC. As ongoing negotiations related to the Business Combination reflected an increased likelihood of a near-term exit transaction and/or liquidity event, the valuation of Dave’s equity as of the June 2021 Valuation took into consideration the indicated equity value implied by the negotiations as well as the uncertainty inherent in the future key milestones including execution of the Business Combination Agreement and VPCC’s shareholder vote. Similarly, the increase in the common stock value t o $ 10.80 per share in the October 2021 Valuation resulted primarily from an increase in the probability of the near-term SPAC Transaction closing and an increase in the value of common stock in that scenario due to the passage of time and an increase in the SPAC’s publicly traded price as compared to the SPAC Transaction’s negotiated pre-money valuation. As a result, the increase in Dave’s common stock fair value between the valuation dates resulted directly from both the increase in the pre-money valuation and acceleration of the timing of an exit, from the Series B Financing to the Business Combination. Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash and cash equivalents, restricted cash, Member cash advances, and accounts receivable. The Company’s cash and cash equivalents and restricted cash in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limits were approximately $ 23.5 million at March 31, 2022 and $ 31.9 million at December 31, 2021, 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. Pursuant to the Company’s internal investment policy, investments must be rated A-1/P-1 or better by Standard and Poor’s Rating Service and Moody’s Investors Service at the time of purchase. No Member individually exceeded 10% or more of the Company’s Member cash advances balances as of December 31, 2021 and 2020. 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. The Company leases office space under three separate leases, all of which are considered operating leases. One lease includes the option to renew and the exercise of the renewal option is at the Company’s sole discretion. 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. Loans to Stockholders In 2019, the Company entered into loan, pledge, and option agreements with various employees, who are also stockholders, to provide those employees cash in exchange for non-recourse promissory notes and call options, which allow the Company to acquire shares held by these stockholders. Following ASC 310, the Company recorded the note as a reduction to shareholders’ equity and will do so until it is repaid, or the associated call option is exercised and the Company reacquires the collateralized shares. Interest earned and accrued on the notes also increases this contra-equity account balance. Upon consummation of the Business Combination in January 2022, all of the call options related to the Loans to Stockholders were exercised and the related loans were settled. 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. Restricted Stock Awards: Restricted stock awards (“RSAs”) are valued on the grant date and the fair value of the RSAs is equal to the estimated fair value of the Company’s Common Stock on the grant date. This compensation cost is recognized over the requisite service period. When the requisite service period begins prior to the grant date (because the service inception date occurs prior to the grant date), the Company is required to begin recognizing compensation cost before there is a measurement date (i.e., the grant date). The service inception date is the beginning of the requisite service period. If the service inception date precedes the grant date, accrual of compensation cost for periods before the grant date shall be based on the fair value of the award at the reporting date. In the period in which the grant is approved, cumulative compensation cost is adjusted to reflect the cumulative effect of the compensation cost based on fair value at the grant date rather than the service inception date. The Company recognizes forfeitures as they occur. RSAs Issued to Non-Employees: The Company issues shares of restricted stock to consultants for various advisory and consulting-related services. The Company recognized this expense, measured as the estimated value of the shares issued, as a component of stock-based compensation expense, presented within compensation and benefits in the consolidated statements of operations. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the three months ended March 31, 2022 and 2021, was approximately $ 12.2 million and $ 14.0 million, respectively, and is presented within advertising and marketing in the condensed 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 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 approximately $ 0.5 million of uncertain tax positions as of both March 31, 2022 and December 31, 2021, related to state income taxes and research tax credits. 21 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements 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 approximately $ 0.001 million and $ 0.002 million of interest expense and penalties as a component of income tax expense during the three months ended March 31, 2022 and 2021, respectively. There was approximately $ 0.008 million and $ 0.007 million of accrued interest expense and penalties as of March 31, 2022 and December 31, 2021, respectively. Segment Information The Company determines its operating segments based on how its chief operating decision makers manage operations, make operating decisions, and evaluate operating performance. The Company has determined that the Chief Operating Decision Maker (“CODM”) is a joint role shared by the Chief Executive Officer and Chief Financial Officer. Based upon the way the CODM reviews financial information and makes operating decisions and considering that the CODM reviews financial information on a consolidated basis for purposes of allocating resources and evaluating financial performance, the service-based and transaction-based operations constitute a single operating segment and one reportable segment. Net (Loss) Income Per Share Attributable to Stockholders The Company has two classes of participating securities (Class A Common Stock and Class V Common Stock) issued and outstanding as of March 31, 2022. Prior to the consummation of the Business Combination, the Company had five classes of participating securities (Series A preferred stock, par value $ 0.000001 per share (“Series A Preferred Shares”), Series B-1 preferred stock, par value $ 0.000001 per share (“Series B-1 Preferred Shares”), and Series B-2 preferred stock, par value $ 0.000001 per share (“Series B-2 Preferred Shares”) and, together with the Series A Preferred Shares and the Series B-1 Preferred Shares, the “Preferred Stock”), unvested Restricted Stock Awards (“RSA”) and early exercised stock options) issued and outstanding as of March 31, 2022 and 2021. The Company used the two-class method to compute net (loss) income per common share, because it had issued multiple classes of participating securities. The two-class method requires earnings for the period to be allocated between multiple classes of participating securities based upon their respective rights to receive distributed and undistributed earnings. The Company used the two-class method to compute net (loss) income per common share. Losses are not attributed to participating securities as holders of Preferred Stock, unvested RSAs, and early exercise stock options are not contractually obligated to share in the Company’s losses. Basic net (loss) income attributable to holders of Common Stock per share is calculated by dividing net (loss) income attributable to holders of Common Stock by the weighted-average number of shares outstanding, excluding shares issued in relation to unvested RSAs and vested early exercise options funded by non-recourse notes (refer to Note 1 7 Related-Party Transactions for further details on the Company’s Loans to Stockholders). Diluted net (loss) income per share attributable to holders of Common Stock adjusts the basic net (loss) income per share attributable to stockholders and the weighted-average number of shares outstanding for the potentially dilutive impact of stock options, warrants, and restricted stock using the treasury stock method and convertible preferred stock using the as-if-converted method. 22 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements The following table sets forth the computation of the Company’s basic and diluted net (loss) income per share attributable to holders of Common Stock (in thousands, except share data): For the Three Months Ended March 31, 2022 2021 Numerator Net (loss) income $ ( 34,835 ) $ 3,952 Less: noncumulative dividend to convertible preferred stockholders — ( 3,952 ) Less: undistributed earnings to participating securities — — Net (loss) income attributed to common stockholders—basic ( 34,835 ) — Add: undistributed earnings reallocated to common stockholders — — Net (loss) income attributed to common stockholders—diluted $ ( 34,835 ) $ — Denominator Weighted-average shares of common stock—basic 361,939,372 133,243,614 Dilutive effect of convertible preferred stock 185,833,546 Dilutive effect of equity incentive awards — 21,833,189 Weighted-average shares of common stock—diluted 361,939,372 340,910,349 Net (loss) income per share Basic $ ( 0.10 ) $ — Diluted $ ( 0.10 ) $ — The following potentially dilutive shares were excluded from the computation of diluted net (loss) income per share for the periods presented because including them would have been antidilutive: For the Three Months Ended March 31, 2022 2021 Equity incentive awards 58,275 — Convertible deb t 10,000,000 — Convertible preferred stock — 18,048,635 Series B-1 warrants — 2,333,122 Total 10,058,275 20,381,757 Recent Accounting Pronouncements Recently Issued Accounting Pronouncements Not Yet Adopted: 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. In November 2019, the FASB issued an amendment making this ASU effective for public companies for the fiscal year beginning after December 15, 2019. In February 2020, the FASB issued an amendment providing a description of the measurement process for current expected credit losses. Early adoption is permitted. The Company plans to adopt the standard on January 1, 2023, provided it remains an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures. 23 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by reference rate reform, if certain criteria are met. The provisions of this standard are available for election for all companies through December 31, 2022. The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statements and related disclosures. Recently Adopted Accounting Pronouncements: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. The amendments in ASU 2019-12 remove certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S. GAAP. This ASU is effective for public companies for annual periods beginning after December 15, 2020. Early adoption is permitted. The Company adopted the standard effective January 1, 2022. The Company has evaluated the effect that the updated standard had on its internal processes, condensed consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its condensed consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity , by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments in ASU 2020-06 are effective for public companies for fiscal years beginning after December 15, 2021. The Company adopted the standard effective January 1, 2022 on a modified retrospective approach. The Company has evaluated the effect that the updated standard had on its internal processes, condensed consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its condensed consolidated financial statements and related disclosures. In October 2020, the FASB issued ASU 2020-10, Codification Improvements (“Codification”). The update provides incremental improvements on various topics in the Codification to provide clarification, correct errors in, and simplification on a variety of topics. Among other things, the guidance includes presentation disclosures for the amount of income tax expense or benefit related to other comprehensive income. The amendments are effective for public entities in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted the standard effective January 1, 2021. The Company has evaluated the effect that the updated standard had on its internal processes, condensed consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its condensed consolidated financial statements and related disclosures. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), which addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. The amendments in this update are effective for all companies for annual periods beginning after December 15, 2021. The Company adopted the standard effective January 1, 2022. The Company has evaluated the effect that the updated standard had on its internal processes, condensed consolidated financial statements, and related disclosures, and has determined that the adoption did not have a significant impact on its condensed consolidated financial statements and related disclosures. 24 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 3 The Reverse Recapitalization and Related Transactions On the Closing Date, the Company consummated the previously announced mergers contemplated by the Business Combination Agreement. In connection with the closing of the Business Combination, the Company changed the name from “VPC Impact Acquisition Holdings III, Inc.” to “Dave Inc.,” and the Surviving Entity operates under the name “Dave Operating LLC.” Upon the consummation of the Business Combination, in accordance with the terms and conditions of the Business Combination Agreement, all issued and outstanding Legacy Dave common stock was converted into shares of Common Stock at the Exchange Ratio. At closing, VPCC transaction costs of $ 22.6 million were paid, which reduced the proceeds from VPCC and reduced APIC. Additionally, $ 5.1 million of the costs were capitalized and included within deferred issuance costs in the consolidated balance sheet for the years ended December 31, 2021, and reduced APIC at closing. The remaining $ 7.5 million in transaction costs were accrued for at closing. Upon closing the Business Combination, Legacy Dave receiv ed $ 7.0 million in cash proceeds after transactions costs of $ 22.6 million were paid and released from VPCC’ trust account, net of redemptions of $ 224.2 million. At closing, each non-redeemed outstanding share of Legacy Dave Class A common stock was converted into one share of Class A Common Stock. Upon consummation of the Business Combination, the shares of Legacy Dave held by Legacy Dave shareholders converted into 342,638,866 shares of Common Stock, including 294,188,227 shares of Class A Common Stock and 48,450,639 shares of Class V Common Stock. While the legal acquirer in the Business Combination was VPCC, for accounting and financial reporting purposes under U.S. GAAP, Legacy Dave is the accounting acquirer and the Business Combination was accounted for as a “reverse recapitalization.” A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of Legacy Dave in many respects. Under this method of accounting, VPCC was treated as the “acquired” company. Accordingly, the consolidated assets, liabilities, and results of operations of Legacy Dave became the historical consolidated financial statements of Dave, and VPCC’s assets and liabilities were consolidated with Legacy Dave’s on the Closing Date. Operations prior to the Business Combination are presented as those of Dave in reports subsequent to the Closing Date. The net assets of VPCC were recognized at their carrying value immediately prior to the closing with no goodwill or other intangible assets recorded and were as follows, net of transaction costs (in millions): Cash $ 202.0 Other assets 0.7 Accrued expenses ( 0.2 ) Warrant liability - public ( 7.6 ) Warrant liability - private ( 6.7 ) Net assets acquired $ 188.3 Additionally, as part of the recapitalization, 5,392,528 shares of VPCC Class A common stock held by founders of VPCC (the “Founder Holders”) were exchanged with 5,392,528 shares of Dave Class A Common Stock; 1,586,037 (or “Founder Holder Earnout Shares”) of which will be subject to forfeiture if the vesting condition is not met over th e five year term following the Closing Date as follows: 25 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Sixty percent ( 60 %) of the Founder Holder Earnout Shares ( 951,622 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Triggering Event I, which is defined as the first date on which the Common Share Price is equal to or greater than twelve dollars and fifty cents ($ 12.50 ) after the Closing Date, but within the Earnout Period (as defined in the Business Combination Agreement); provided, that (i) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least twelve dollars and fifty cents ($12.50) to each share of Class A Common Stock (as agreed in good faith by the Sponsor and the Board), then Triggering Event I shall be deemed to have occurred and; (ii) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price (as defined in the Business C ombination Agreement) threshold (i.e., twelve dollars and fifty cents ($ 12.50 )) will, for all purposes of the Business Combination Agreement (and the Founder Holder Agreement), in each case be equitably adjusted to reflect such change; and The remaining Founder Holder Earnout Shares ( 634,415 Founder Holder Earnout Shares) shall immediately become fully vested and no longer subject to forfeiture upon the occurrence of Triggering Event II, which is defined as the first date on which the Common Share Price is equal to or greater than fifteen dollars ($ 15.00 ) after the Closing Date, but within the Earnout Period; provided that (iii) in the event of a change of control pursuant to which Dave Stockholders receive, or have the right to receive, cash, securities or other property attributing a value of at least fifteen dollars ($15.00) to each share of Class A Common Stock (as agreed in good faith by Sponsor and the Board), then Triggering Event II shall be deemed to have occurred and; (iv) in the event that, and as often as, the number of outstanding shares of Class A Common Stock is changed by reason of any dividend, subdivision, reclassification, recapitalization, split, combination, exchange or any similar event, then the applicable Common Share Price threshold (i.e., fifteen dollars ($ 15.00 )) will, for all purposes of the Business Combination Agreement (and the Founder Holder Agreement), in each case be equitably adjusted to reflect such change. The earnout shares were recognized at fair value upon the closing of the Business Combination and classified in stockholders’ equity. Because the Business Combination is accounted for as a reverse recapitalization, the issuance of the Founder Holder Earnout Shares will be treated as a deemed dividend and since Dave does not have retained earnings, the issuance will be recorded within APIC and have a net nil impact on APIC. Pursuant to the terms of the Business Combination Agreement, all of the issued and outstanding Series A, Series B-1 and Series B-2 redeemable convertible preferred stock and series A redeemable convertible preferred stock converted into 204,657,950 shares of Legacy Dave common stock immediately prior to the Business Combination. Then, as of the closing of the Business Combination, all outstanding shares of Legacy Dave common stock converted into 342,638,866 shares of Class A Common Stock and Class V Common Stock. Additionally, each of Legacy Dave options and warrants that were outstanding immediately prior to the closing of the Business Combination remained outstanding and converted into options and warrants for Dave Class A and Class V Common Stock equal to the number of the Company’s common stock, subject to such options or warrants, multiplied by the Exchange Ratio at an exercise price per share equal to the current exercise price per share for such option or warrant divided by the Exchange Ratio, with the aggregate amount of shares of Class A Common Stock and Class V Common Stock issuable upon exercise of such options and warrants to be 32,078,481 . Concurrently with the execution of the Business Combinati on Agreement, VPCC entered into Subscription Agreements (the “Subscription Agreement”) with certain investors (the “Subscription Investors”) pursuant to which the Subscription Investors agreed to purchase, and the Company agreed to sell to the Subscription Investors, an aggregate of 21,000,000 shares of the Class A Common Stock for a purchase price of $ 10 per share, or an aggregate of $ 210 26 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements million in gross cash proceeds (the “PIPE Financing”). On August 17, 2021 Alameda Research, a Subscription Investor agreed to pre-fund its obligation under the original Subscription Agreement to subscribe for 1,500,000 shares of Class A Common Stock for $ 15.0 million of the aggregate PIPE Financing subscription amount. On August 17, 2021, Legacy Dave issued a promissory note with a principal amount of $ 15.0 million to Alameda Research and amended the Subscription Agreement to satisfy Alameda Research’s obligation to pay the $ 15.0 million purchase price under the Alameda Subscription Agreement by way of a full discharge of Legacy Dave’s obligations to pay the principal under the promissory note. Upon the closing of the Business Combination, the promissory note was automatically discharged upon the Company’s issuance of 1,500,000 shares of Class A Common Stock to Alameda Research. The closing of the private placement occurred immediately prior to the closing date. The number of shares of Common Stock issued immediately following the consummation of the Business Combination were as follows: Class A Class V Common stock outstanding on December 31, 2021 92,436,304 48,450,639 Common stock activity between December 31, 2021 and January 5, 2022 Exercise of derivative asset and paydown of stockholder loans ( 6,014,250 ) — Issuance of Class A common stock for stock option exercises 2,630,557 — Repurchase of Class A common stock ( 198,505 ) — Common stock outstanding prior to the Business Combination 88,854,106 48,450,639 Conversion of preferred stock to Class A common stock 204,657,950 — Common stock attributable to VPCC 2,958,831 — Adjustment related to Reverse Recapitalization* 207,616,781 — Founder Holder s hares 5,392,528 — Conversion of 2019 convertible notes and accrued interest to Class A common stock 225,330 — Exercise of Series B-1 preferred stock warrants, net of settlement 450,841 — Issuance of Class A common stock pursuant to the PIPE financing 21,000,000 — Total shares of common stock as of closing of Business Combination and related transactions 323,539,586 48,450,639 * The corresponding adjustment to APIC related to the reverse recapitalization was comprised of (i) $ 188.3 million which represents the fair value of the consideration transferred in the Business Combination, less the excess of the fair value of the shares issued over the value of the net monetary assets of VPCC, net of transaction costs and (ii) $ 72.2 million which represents the conversion of the convertible preferred stock into Dave Class A Common Stock. There were 32,078,481 New Dave options outstanding immediately after the Business Combination. Following the Business Combination, New Dave warrants to purcha se 11,444,235 shares of Class A common stock, consisting of (i) 6,344,131 public warrants listed on the Nasdaq and (ii) 5,100,214 private warrants, each with an exercise price of $ 11.50 per share, remained outstanding. 27 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 4 Marketable Securities Below is a detail of marketable securities (in thousands): March 31, 2022 December 31, 2021 Marketable securities $ 278,265 $ 8,226 Total $ 278,265 $ 8,226 The Company’s marketable securities consisted of investments in a money market mutual fund. At March 31, 2022 and December 31, 2021, the money market instruments were comprised of primarily certificates of deposit and financial company/asset backed commercial paper. At March 31, 2022, the investment portfolio had a weighted-average maturity of 16 days. The fund is publicly traded with a ticker symbol SSPXX and the money market instruments were measured at fair market value at March 31, 2022. At December 31, 2021, the investment portfolio had a weighted-average maturity of 46 days. The fund is publicly traded with a ticker symbol SPPXX and the money market instruments were measured at fair market value at December 31, 2021. Proceeds from sales and purchases of marketable securities during the three months ended March 31, 2022, were approximately $ 32.0 million and $ 302.1 million, respectively. Proceeds from sales and purchases of marketable securities during the three months ended March 31, 2021, were approximately $ 3.9 million and $ 0.002 million, respectively. The amount of loss recorded in connection with the investment in marketable securities for the three months ended March 31, 2022, was approximately $ 0.076 million and was recorded as a component of interest expense in the condensed consolidated statements of operations. The amount of gain recorded in connection with the investment in marketable securities for the three months ended March 31, 2022, was approximately $ 0.002 million and was recorded as a component of interest income in the condensed consolidated statements of operations. Note 5 Member Cash Advances, Net Below is a detail of Member cash advances, net as of March 31, 2022 (in thousands): Days From Origination Gross Member Advances Allowance for Unrecoverable Advances Member Advances, Net 1-10 $ 48,659 $ ( 1,658 ) $ 47,001 11-30 14,400 ( 3,812 ) 10,588 31-60 5,715 ( 3,554 ) 2,161 61-90 5,438 ( 4,086 ) 1,352 91-120 3,941 ( 3,230 ) 711 Total $ 78,153 $ ( 16,340 ) $ 61,813 Below is a detail of Member cash advances, net as of December 31, 2021 (in thousands): Days From Origination Gross Member Advances Allowance for Unrecoverable Advances Member Advances, Net 1-10 $ 39,910 $ ( 1,313 ) $ 38,597 11-30 8,111 ( 2,084 ) 6,027 31-60 4,781 ( 2,652 ) 2,129 61-90 3,986 ( 2,735 ) 1,251 91-120 4,220 ( 3,211 ) 1,009 Total $ 61,008 $ ( 11,995 ) $ 49,013 Member advances, net, represent outstanding advances, tips, and processing fees, net of direct origination costs, less an allowance for unrecoverable advances. The roll-forward of the allowance for unrecoverable advances is as follows (dollars in thousands): Opening allowance balance at January 1, 2022 $ 11,995 Plus: provision for unrecoverable advances 13,785 Less: amounts written-off ( 9,440 ) Ending allowance balance at March 31, 2022 $ 16,340 Opening allowance balance at January 1. 2021 $ 12,580 Plus: provision for unrecoverable advances 3,538 Less: amounts written-off ( 7,675 ) Ending allowance balance at March 31, 2021 $ 8,443 Note 6 Property and Equipment, n et Property and Equipment, Net consisted of the following (dollars in thousands): March 31, 2022 December 31, 2021 Computer equipment $ 916 $ 664 Leasehold improvements 384 384 Furniture and fixtures 14 14 Total property and equipment 1,314 1,062 Less: accumulated depreciation ( 465 ) ( 377 ) Property and equipment, net $ 849 $ 685 Depreciation expense for the three months ended March 31, 2022 and 2021, was approximately $ 0.04 million and $ 0.09 million, respectively. As of March 31, 2022 the Company had no outstanding commitments for the purchase of property and equipment and as of December 31, 2021, the Company had outstanding commitments for the purchase of property and equipment totaling approximately $ 0.03 million. Note 6 Intangible Assets, Net The Company’s Intangible assets, net consisted of the following (in thousands): March 31, 2022 December 31, 2021 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 $ 15,367 $ ( 6,357 ) $ 9,010 $ 13,109 $ ( 5,342 ) $ 7,767 Domain name 15.0 Years 121 ( 41 ) 80 121 ( 39 ) 82 Intangible assets, net $ 15,488 $ ( 6,398 ) $ 9,090 $ 13,230 $ ( 5,381 ) $ 7,849 The future estimated amortization expenses as of March 31, 2022, were as follows (in thousands): 2022 (remaining) $ 3,269 2023 3,604 2024 2,034 2025 133 2026 8 Thereafter 42 Total future amortization $ 9,090 Amortization expense for the three months ended March 31, 2022 and 2021, was approximately $ 1.0 million and $ 0.6 million, respectively. No impairment charges were recognized related to long-lived assets for the three months ended March 31, 2022 and 2021. Note 7 Accrued Expenses Accrued expenses consisted of the following (dollars in thousands): March 31, 2022 December 31, 2021 Accrued charitable contributions 5,868 $ 7,164 Accrued compensation 2,282 1,522 Sales tax payable 1,088 1,208 Accrued professional and program fees 1,494 2,163 Other 877 988 Total $ 11,609 $ 13,045 28 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Accrued charitable contributions include 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 three month periods ended March 31, 2022 and 2021, the Company pledged approximately $ 1.0 million (unaudited) and $ 1.2 million (unaudited) related to charitable donations, respectively. These costs are expensed as incurred and are presented within other general and administrative expenses in the condensed consolidated statements of operations. Accrued compensation includes accrued bonuses and one half of the portion of employer Social Security payroll taxes deferred under the CARES Act. Other accrued expenses include accrued professional fees, legal fees, and accrued banking and program fees. Note 8 Line of Credit In November 2017, the Company entered into a line of credit agreement with UBS (the “UBS Agreement”). Issuance costs related to this transaction were no t significant. There is no stated maturity date, there are no financial covenants and the amount of line of credit is solely dependent upon the total amount of assets the Company holds with UBS at any given point. During 2021, the Company repaid $ 3.9 million and the UBS Agreement was terminated in March 2021 . Note 9 Convertible Note Payable On March 21, 2022, the Company entered into a Convertible Note Purchase Agreement (“Purchase Agreement”) with FTX Ventures Ltd., (the “Purchaser”) owner of FTX US (“FTX”), providing for the purchase and sale of a Convertible Note in the initial principal amount of $ 100.0 million (the “Note”). The Note bears interest at a rate of 3.00 % per year (compounded semiannually), payable semi-annually in arrears on June 30 th and December 31 st 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 will pay the Purchaser the sum of (i) the outstanding principal amount of the Note, plus (ii) all accrued but unpaid interest thereon, plus (iii) all expenses incurred by the Purchaser (the “Redemption Price”). Payment of the Redemption Price on the Maturity Date will constitute a redemption of the Note in whole. During the term of the Note, the Note will be convertible into shares of the Company’s Class A Common Stock, at the option of the Purchaser, upon delivery on one or more occasions of a written notice to the Company electing to convert the Note or all of any portion of the outstanding principal amount of the Note. The initial conversion price of the Note is $ 10.00 per share of Common Stock (the “Conversion Price”). The Conversion Price of the Note is subject to adjustment for stock splits, dividends or distributions, recapitalizations, spinoffs or similar transactions. The Note and the shares of Common Stock issuable upon conversion of the Note have not been registered under the Securities Act and may not be offered or sold absent registration or an applicable exemption from registration requirements. Beginning on the twenty-four-month anniversary of the Issuance Date continuing until the Maturity Date, if the closing price of the Common Stock equals or exceeds 175 % of the Conversion Price for 20 out of the 30 consecutive trading days ending immediately preceding the delivery of the notice of the Company’s election to convert the Note, the Note will be convertible into shares of Common Stock at the option of the Company, upon delivery of a written notice to the Purchaser electing to convert the Note or all or any portion of the outstanding principal amount of the Note. At any time prior to the Maturity Date, the Company may, in its sole discretion and upon delivery of a written notice to the Purchaser electing to prepay the Note, prepay the Note without penalty by paying the Purchaser 100 % of the Redemption Price. Once the Redemption Price has been delivered to the Purchaser, the Note will be cancelled and retired. 29 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 10 Note Payable In August 2021, VPCC entered into an amendment to the private investment in public equity (“PIPE”) subscription agreement (“PIPE Amendment”) it previously entered into with Alameda Research Ventures LLC (“Alameda Research”) in connection with the proposed business combination with the Company (refer to Note 1, Organization and Nature of Business ). The PIPE Amendment called for a $ 15.0 million pre-funding, which was facilitated through the issuance of an unsecured promissory note by the Company to Alameda Research during November 2021. The Company’s obligations to repay the principal amount of the promissory note were discharged through the issuance of 1.5 million shares of VPCC to Alameda Research at the closing of the Business Combination. The promissory note bore an interest rate of the applicable short-term federal rate and was due at the earlier of (i) the one-year anniversary of the promissory note or (ii) an event of default. The Company has elected to measure the note payable debt instrument at fair value using the fair value option of ASC 825-10. The Company determined that the feature to settle the promissory note with shares at the closing of the Business Combination was a contingently exercisable share settled put option that represented an embedded derivative instrument that required bifurcation from the host promissory note. Additionally, the feature to redeem the promissory note upon a default event was a contingently exercisable call option and represented an embedded derivative instrument that required bifurcation from the host promissory note. However, in accordance with ASC 815-15-25-1 criterion (b), since the Company has elected to apply the fair value option to the debt, the embedded features will not be separated from the debt host. The fair value of the P romissory N ote was $ 0 million (unaudited) and $ 15.0 million as of March 31, 2022 and December 31, 2021, respectively. Upon the closing of the Business Combination, the p romissory n ote was automatically discharged upon the Company’s issuance of 1,500,000 shares of Class A Common Stock to Alameda Research. The closing of the note payable occurred immediately prior to the closing date of the Business Combination. Refer to Note 3 , The Reverse Recapitalization and Related Transactions for further details on the closing of the note payable . Note 11 Warrant Liabilities As of March 31, 2022, there were 6,344,021 public warrants (“Public Warrants”) outstanding an d 5,100,214 private placement warrants (“Private Warrants”) outstanding. The Company determined the warrants do not meet the conditions for equity classification in accordance with ASC 815-40. The Company recorded the Public Warrants and Private Warrants on the condensed consolidated balance sheet as warrant liabilities measured at fair value, with subsequent changes in the fair value of the warrant recorded in the statement of operations as change in fair value of warrants in other income (expense). 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 o f $ 11.50 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 $ 18.00 :—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 $ 18.00 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. 30 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements 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 exceed s $ 10.00 : — Once the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants: • in whole and not in part; • at $ 0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” (as defined below) of the Class A Common Stock; and • if, and only if, the closing price of Class A Common Stock equals or exceeds $ 10.00 per Public Share (as adjusted) for any 20 trading days within the 30 -trading day period ending three trading days before 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) $ 3.752050 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 condensed 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 450,841 shares of Legacy Dave’s Class A Common Stock after applying an exchange ratio of 1.354387513 pursuant to the terms of the Business Combination. Note 12 Debt and Credit Facility In January 2021, Dave OD Funding I, LLC (“Borrower”) entered into a Senior Secured Loan Facility (the “Debt Facility”) with Victory Park Management, LLC (“Agent”), allowing the Borrower to draw up to $ 100 million from various lenders associated with Victory Park Management, LLC (the “Lenders”). The Debt Facility has an interest rate of 6.95 % annually plus a base rate defined as the greater of three-month LIBOR (as of the last business day of each calendar month) and 2.55 % . Interest is payable monthly in arrears. The Debt Facility has certain financial covenants, including a requirement to maintain a minimum cash, cash equivalents, or marketable securities balance of $ 10.0 million and as of March 31, 2022, the Company was in compliance with all covenants. Payments of the loan draws are due at the following dates: (i) within five business days after the date of receipt by the Borrower and the Company (“Credit Party”) or any of their subsidiaries of any net cash proceeds in excess of $ 250 thousand in the aggregate during any fiscal year from any asset sales (other than certain permitted dispositions), the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; (ii) within five business days after the date of receipt by any Credit Party or any of their subsidiaries, or the Agent as 31 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements loss payee, of any net cash proceeds from any destruction or taking, the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; (iii) within three business days after the date of receipt by any Credit Party or any of their subsidiaries of any net cash proceeds from the incurrence of any indebtedness of any Credit Party or any of their subsidiaries (other than with respect to permitted indebtedness), the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to 100 % of such net cash proceeds; and (iv) (a) if extraordinary receipts are received by any Credit Party in the aggregate amount in any fiscal year in excess of $ 250 thousand or (b) if an event of default has occurred and is continuing at any time when any extraordinary receipts are received by any Credit Party, then within five business days of the receipt by any Credit Party of any such extraordinary receipts, the Borrower shall prepay the loans or remit such net cash proceeds in an aggregate amount equal to (x) 100 % of such extraordinary receipts in excess of $ 250 thousand in respect of clause (a) above and (y) 100 % of such extraordinary receipts in respect of clause (b) above. As of March 31, 2022 and December 31, 2021, respectively, the Company had drawn $ 35 million (unaudited) on the Debt Facility and has made no repayments. In November 2021, Dave OD entered into an amendment of the Debt Facility which added a $ 20 million credit line (as amended, the “Credit Facility”) which has an interest rate of 8.95 % annually plus a base rate defined as the greater of three-month LIBOR (as of the last business day of each calendar month) and 2.55 % . As of March 31, 2022 and December 31, 2021, respectively, the Company has drawn $ 20 million (unaudited) on the Credit Facility and has made no repayments. Note 13 Commitments and Contingencies Litigation: From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Although the outcome of the various legal proceedings and claims cannot be predicted with certainty, management does not believe that any of these proceedings or claims will have a significant adverse effect on the Company’s business, financial condition, results of operations, or cash flows. 32 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Stoffers v. Dave Inc. (filed September 16, 2020 in the California Superior Court for the County of Los Angeles) This is a purported class action lawsuit filed in connection with a July 2020 data breach. The Company is in the process of settling this matter; it estimates the settlement to be approximately $ 3.2 million and is included with Legal settlement accrual within the condensed consolidated balance sheets for the period ended March 31, 2022 and December 31, 2021. Martinsek v. Dave Inc (filed January 9, 2020 in the California Superior Court for the County of Los Angeles). In January 2020, a former employee of the Company filed a complaint in the California Superior Court for the County of Los Angeles against the Company and the Company’s Chief Executive Officer, asserting claims for, among other things, breach of contract, breach of fiduciary duty, conversion, and breach of the implied covenant of good faith and fair dealing. The complaint alleges that the Company and the Chief Executive Officer misappropriated approximately 6.8 million shares (as adjusted for a 10:1 forward stock split in November 2020) by rescinding a stock option agreement and a restricted stock purchase agreement between the Company and the former employee under which such shares were issued and repurchasing the shares. The Company rescinded the agreements for failure of consideration. The Company and the Chief Executive Officer answered, denying all claims and asserting defenses. Discovery has commenced, but no trial date has been set. The Company is vigorously defending against this claim. Whalerock v. Dave Inc. (filed April 4, 2020 in the California Superior Court for the County of Los Angeles) Whalerock Industries Holding Company, LLC (“Whalerock”) filed an unlawful detainer action against the Company on or about August 4, 2020, which was dismissed by Whalerock on March 18, 2021. On or about March 29, 2021, Whalerock initiated new litigation against the Company seeking declaratory relief. The Company and Whalerock entered into a sublease in May 2020 whereby the Company would sublease certain space from Whalerock located in West Hollywood, California. This matter involves a dispute between the Company and Whalerock over whether the 18-month sublease has commenced, and if so, when. The Company is actively litigating this matter and cannot estimate the likely outcome at this time. Note 14 Leases In November 2018, the Company entered into a sublease agreement with PCJW Properties LLC (“PCJW”), controlled by Company’s founders (including the Company’s current CEO), for general office space next to the aforementioned leased property in Los Angeles, California. The lease term is five years subject to early termination by either party. Under the terms of the sublease, monthly rent is approximately $ 0.006 million, subject to an annual escalation of 4 %. In January 2019, the Company entered into a lease agreement with 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 approximately $ 0.02 million, subject to an annual escalation of 5 %. In May 2020, the Company entered into a sublease with Whalerock for general office space in West Hollywood, California. Under the terms of the sublease, the lease term is approximately 18 months and the monthly rent is approximately $ 0.14 million. The Company began utilizing the office space in June 2021. 33 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements All leases were classified as operating and operating lease expenses are presented within other general and administrative expenses in the unaudited condensed 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 (dollars in thousands): For the Three Months Ended March 31, 2022 March 31, 2021 (unaudited) (unaudited) Operating lease cost $ 503 $ 137 Short-term lease cost 6 — Variable lease cost — — Total lease cost $ 509 $ 137 (unaudited) For the Three Months Ended March 31, 2022 Other information: Cash paid for operating leases $ 532 Right-of-use assets obtained in exchange for new operating lease liability $ — Weighted-average remaining lease term - operating lease 1.96 Weighted-average discount rate - operating lease 10 % The future minimum lease payments as of March 31, 2022, were as follows (in thousands): Year (unaudited) Third-Party Commitment (unaudited) Related-Party Commitment (unaudited) Total 2022 (remaining) $ 1,328 $ 252 $ 1,580 2023 148 339 487 2024 — 295 295 2025 — 309 309 Thereafter — — — Total minimum lease payments $ 1,476 $ 1,195 $ 2,671 Less: imputed interest ( 54 ) ( 189 ) ( 243 ) Total lease liabilities $ 1,422 $ 1,006 $ 2,428 34 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 15 Convertible Preferred Stock and Stockholders’ Equity As of March 31, 2022, 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 our amended and restated certificate of incorporation, shares of preferred stock may be issued from time to time in one or more series. The board of directors is 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 board of directors is 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 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. 35 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Class A and Class V Common Stock: The Company’s Board of Directors has authorized two classes of common stock, Class A and Class V. As of March 31, 2022, the Company had authorized 500,000,000 and 100,000,000 shares of Class A and Class V Common Stock. As of March 31, 2022, the Company had 324,245,822 and 48,450,639 shares of Class A and Class V Common Stock issued and 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 Plan authorizes the award of stock options, restricted stock, and restricted stock units. The Company has reserved shares of common stock for issuance under the Plan. 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. On January 4, 2022, the stockholders of the Company considered and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The ESPP was previously approved, subject to stockholder approval, by the Company’s Board of Directors on January 4, 2022. The ESPP became effective immediately upon the completion of the Business Combination with VPCC. The Company recognized approximately $ 3.2 million and $ 1.7 million of stock-based compensation expense arising from stock option and restricted stock grants which is recorded as a component of compensation and benefits in the condensed consolidated statements of operations for the three months ended March 31, 2022 and 2021, 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. The following table presents the weighted-average assumptions used to value options granted during the three months ended March 31, 2020: 2022: Expected term 6.0 years Risk-free interest rate 0.9 % Expected dividend yield 0.0 % Expected volatility 60.7 % The Company had no stock options granted during the three months ended March 31, 2022. Expected term —The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. Risk free interest rate —The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options. Expected dividend yield —The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends. Expected volatility —Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The Company identified a group of peer companies and considered their historical stock prices. In identifying peer companies, the Company considered the industry, stage of life cycle, size, and financial leverage of such other entities. Activity with respect to stock options is summarized as follows: Shares Weighted- Average Exercise Price Options outstanding, January 1, 2022 34,709,027 $ 0.64 Granted — $ — Exercised ( 3,336,683 ) $ 0.45 Forfeited ( 459,787 ) $ 0.66 Expired ( 2,595 ) $ 0.69 Options outstanding, March 31, 2022 30,909,962 $ 0.66 Nonvested options, March 31, 2022 22,213,714 $ 0.71 Vested and exercisable, March 31, 2022 9,140,656 $ 0.53 The Company allowed certain stock option holders to exercise unvested options to purchase shares of Common Stock. Shares received from such early exercises are subject to repurchase in the event of the optionee’s employment termination, at the original issuance price, until the options are fully vested. As of March 31, 2022 and 2021, 444,408 and 1,009,279 shares of Common Stock were subject to repurchase at weighted-average exercise prices of $ 0.69 and $ 0.62 , respectively. The shares issued pursuant to unvested options have been included in shares issued and outstanding on the condensed consolidated balance sheets as such shares are considered legally outstanding. On March 3, 2021, the Company granted the Chief Executive Officer stock options to purchase up to 11,456,061 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, market, and performance conditions 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 a business combination with VPCC, the performance condition was met and the Company recorded a cumulative stock-based compensation expense as of approximately $ 1.9 million. The options have a strike price of $ 0.72 per share. The Company determined the fair value of the options on the grant date to be approximately $ 10.5 million (unaudited) using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free interest rate, and volatility. Each tranche will vest monthly over a derived service period. 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 % 36 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements Note 17 Related-Party Transactions Leasing Arrangements: During the three months ended March 31, 2022 and 2021, the Company paid approximate ly $ 0.08 million and $ 0.08 million, respectively, under lease agreements with PCJW for general office space in Los Angeles, California. The following is a schedule of future minimum rental payments as of March 31, 2022, under the Company’s sub-lease for the properties located in Los Angeles, California signed with PCJW (in thousands): Year Related-Party Commitment 2022 (remaining) $ 252 2023 339 2024 295 2025 309 Thereafter — Total minimum lease payments $ 1,195 Less: imputed interest ( 189 ) Total lease liabilities $ 1,006 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 condensed consolidated balance sheets. Related-Party Exercise Receivable Promissory Notes: During 2018, the Company received non-recourse promissory notes from certain employees, which allowed for the early exercise of stock options, with the exercise price to be paid back to the Company at a later date. The notes for approximatel y $ 0.1 thousand were secured by a pledge of 1,942,250 shares. During 2020, the Company received a non-recourse promissory note from a certain executive, which allowed for the early exercise of stock options, with the exercise price to be paid back to the Company at a later date. The note for approximatel y $ 1.0 million was secured by a pledge of 1,050,000 shares. The promissory notes have a term of five years and carry stated interest rates between 1.5 % and 2.0 %, which are compounded annually. The amounts due as of March 31, 2022 and December 31, 2021, were approximately $ 0 and $ 1.1 million, respectively. Prior to the consummation of the Business Combination in January 2022, the promissory notes were repaid. On January 3, 2022, Legacy Dave entered into an agreement with a certain executive to transfer and sell shares of Legacy Dave common stock to Legacy Dave. A total of 146,565 shares of Legacy Dave’s common stock were repurchased for an aggregate purchase amount of $ 1.6 million, which resulted in an extinguishment of the related-party exercise receivable promissory notes. Loans to Stockholders: In 2019, the Company entered into loan, pledge, and option agreements (“Loans to Stockholders”) with various employees, who are also stockholders, to provide those employees cash in exchange for non-recourse promissory notes and call options, which allow the Company to acquire shares held by these stockholders. The entire unpaid principal balance of these Loans to Stockholders, together with all accrued but unpaid interest, is due and payable upon the earlier (i) o f August 12, 2026 ; (ii) a liquidity event; or (iii) upon the exercise of the call option by the Company. These Loans to Stockholders carry stated interest rates of 1.87 %, which are compounded annually. Please refer to Note 2, Significant Account Policies Summary of Significant Accounting Policies, for further details on the fair value of the derivative asset related to the Loans to Stockholders. Upon consummation of the B usiness C ombination in January 2022, all of the call options related to the Loans to Stockholders were exercised and the related loans were settled. The Loans to Stockholders, inclusive of interest, were approximately $ 0 (unaudited) and $ 15.2 million as of March 31, 2022 and December 31, 2021, respectively Note 18 401(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) 37 Table of Contents Dave Inc. Notes to the Unaudited Condensed Consolidated Financial Statements 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 approximately $ 0.4 million (unaudited) and $ 0.2 million for the three months ended March 31, 2022 and 2021, respectively. 38 Table of Contents