What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-22 compared with 2022-05-13 · 274 added, 128 removed, 380 unchanged (51% of the section changed)

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

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition and should be read in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this report.

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition and should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this report.

This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of our Annual Report on Form 10-K

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The note bears interest at a fixed rate of 3.00% per year (compounded semi-annually), payable semi-annually in arrears on June 30th and December 31st of each year.

Interest may be paid in-kind or in cash, at our option.

Interest may be paid in-kind

or in cash, at our option.

Forty-eight months (the “Maturity Date”) after the date of the initial issuance of the Note (the “Issuance Date”), we will pay FTX Ventures 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 FTX Ventures (the “Redemption Price”).

Payment of the Redemption Price on the Maturity Date will constitute a redemption of the Note in whole.

The Note will be convertible into shares of our Class A Common Stock at the option of FTX Ventures, upon delivery on one or more occasions of a written notice to us electing to convert the Note or all of any portion of the outstanding principal amount of the Note.

The Note will be convertible into shares of our Class A Common Stock (“Common Stock”) at the option of FTX Ventures, upon delivery on one or more occasions of a written notice to us 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”).

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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 our election to convert the Note, the Note will be convertible into shares of Common Stock, upon delivery of a written notice to FTX Ventures electing to convert the Note or all or any portion of the outstanding principal amount of the Note.

Beginning on the 24-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 our election to convert the Note, the Note will be convertible into shares of Common Stock, upon delivery of a written notice to FTX Ventures 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, we may, in our sole discretion and upon delivery of a written notice to FTX Ventures electing to prepay the Note, prepay the Note without penalty by paying FTX Ventures 100% of the Redemption Price.

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During the four-year term of the Services Agreement, FTX US will be our exclusive provider of such cryptocurrency services.

Restatement of Consolidated Financial Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations gives effect to certain adjustments made to our previously issued condensed consolidated financial statements as of and for the six months ended June 30, 2021.

The determination to restate these condensed consolidated financial statements was made by management after its review of records related to the classification of cash flows to/from Member advances, in connection with its preparation of the Company’s condensed consolidated financial statements for the six months ended June 30, 2022.

See Note 2—Restatement of Previously Issued Financial Statements to our condensed consolidated financial statements.

There are many uncertainties regarding the current global pandemic involving a novel strain of coronavirus (“COVID-19”),

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The duration and magnitude of the continuing effects of COVID-19

on our 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.

on our Members remain uncertain and dependent on various factors, including the 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.

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Currently, we conduct business through one operating segment which constitutes a single reportable segment.

For more information about our basis of presentation, refer to Note 2 in the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

For more information about our basis of presentation, refer to Note 3, Summary of Significant Accounting Policies in the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

Service based revenue, net

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Transaction based revenue, net consists of interchange and ATM revenues from our Checking Product, net of ATM-related

fees, and are recognized at the point in time the transactions occur, as the performance obligation is satisfied.

fees and cashback rewards, and are recognized at the point in time the transactions occur, as the performance obligation is satisfied.

Operating expenses

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Processing and Servicing Fees

Processing and servicing fees consist of fees paid to our processing partners for the recovery of advances, tips, optional express processing fees and subscriptions.

Processing and servicing fees consist of fees paid to our processing partners for the recovery of advances, optional tips, optional express processing fees and subscriptions.

These expenses also include fees paid for services to connect Members’ bank accounts to our application.

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Advertising and marketing expenses consist primarily of fees we pay to our platform partners.

We incur advertising and marketing expenses for online, social media and television advertising and for partnerships and promotional advertising.

Advertising and marketing expenses are expensed as incurred although they typically deliver a benefit over an extended period of time.

We incur advertising, marketing and production-related expenses for online, social media and television advertising and for partnerships and promotional advertising.

Advertising and marketing expenses are expensed as incurred although they typically deliver a benefit over an extended period.

Compensation and Benefits

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Other (Income) Expenses

Other (income) expenses consist of interest income, interest expense, legal settlement and litigation expenses, derivative asset fair value adjustments, other strategic financing and transactional expenses, and warrant liability fair value adjustments.

Provision for Income Taxes

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Results of Operations

Comparison of the Periods Ended March 31, 2022 and 2021

Comparison of the Three Months Ended June 30, 2022 and 2021

For the Three Months Ended

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Processing fees, net

Processing fees, net of processor costs associated with advance disbursements, for the three months ended March 31, 2022 were approximately $21.0 million, an increase from approximately $17.4 million for the three months ended March 31, 2021.

Processing fees, net of processor costs associated with advance disbursements, for the three months ended June 30, 2022 were approximately $23.9 million, an increase from approximately $19.0 million for the three months ended June 30, 2021.

The increase of approximately $4.9 million, or 26%, was primarily attributable to increases in total advance volume from approximately $323.2 million to approximately $561.5 million along with a higher average advance amount period over period.

Processing fees tend to increase as advance volume increases, but may not always trend ratably as processing fees vary depending on the total amount of the advance.

Approximately 99% and 98% of Members chose to pay a processing fee to expedite an advance for the three months ended March 31, 2022 and 2021, respectively.

The average processing fees paid to expedite these advances were approximately $5.42 and $4.78 per advance, respectively.

Tips for the three month ended March 31, 2022 were approximately $13.9 million, an increase from approximately $10.0 million for the three months ended March 31, 2021.

The percentage of Members that chose to pay a processing fee to expedite an advance remained consistent for the three months ended June 30, 2022 and 2021, respectively.

The average processing fees Members paid to expedite these advances increased slightly for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Tips for the three months ended June 30, 2022 were approximately $14.5 million, an increase from approximately $11.1 million for the three months ended June 30, 2021.

The increase of approximately $3.4 million, or 31%, was primarily attributable to increases in total advance volume from approximately $323.2 million to approximately $561.5 million period over period.

Tips tend to increase as advance volume increases, but may not always trend ratably as tips often vary depending on the total amount of the advance.

Approximately 64% and 75% of Members chose to leave a tip for the three months ended March 31, 2022 and 2021, respectively.

The average amount of tip Members chose to leave was approximately $6.93 and $4.07 per advance, respectively.

The percentage of Members that chose to leave a tip decreased slightly for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

For those same periods, the average amount of tip Members chose to leave increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Subscriptions

Subscriptions for the three months ended March 31, 2022 were approximately $4.2 million, a decrease from approximately $4.9 million during the three months ended March 31, 2021.

Subscriptions for the three months ended June 30, 2022 were approximately $4.3 million, an increase from approximately $4.1 million during the three months ended June 30, 2021.

The increase of approximately $0.2 million, or 5%, was primarily attributable to higher subscription engagement with Members on our platform.

Operating expenses

For the Three Months Ended

(in thousands, except for percentages)

Provision for unrecoverable advances

Processing and servicing fees

Advertising and marketing

Compensation and benefits

Other operating expenses

Provision for unrecoverable advances—

The provision for unrecoverable advances totaled approximately $13.9 million for the three months ended June 30, 2022, compared to approximately $7.4 million for the three months ended June 30, 2021.

The increase of approximately $6.5 million, or 87%, was primarily attributable to increases in provision expense related to Member advances aged over 120 days and those that have become uncollectible based on information available to us of approximately $4.8 million in addition to an increase in provision expense related to Member advances aged 120 days and under of approximately $1.7 million.

The increase in provision expense related to Member advances aged over 120 days and those which have become uncollectible based on information available to us, period over period, was driven primarily by aged receivables and the increase in advance volume during the first quarter of 2022.

All impaired advances deemed uncollectible are subsequently written-off

and are a direct reduction to the allowance for unrecoverable advances.

The increase in provision expense related to Member advances aged 120 days and under, was primarily attributed to significant increases in average advance amounts and total advance volume from approximately $323.2 million to approximately $561.5 million for the three months ended June 30, 2021 and 2022, respectively.

This resulted in an increase to the allowance for unrecoverable advances and corresponding higher provision for unrecoverable advances expense during the three months ended June 30, 2022 as compared to June 30, 2021.

We anticipate volatility in Member advances outstanding each period as they are directly correlated with the timing and volume of Member advance activity during the last 120 days prior to the end of the period.

Throughout the first three months of 2022, loss and collections experience of Member advances remained steady, however, historical loss and collections experience utilized in the calculation of the provision for unrecoverable advances decreased slightly when compared to historical rates used in 2021 primarily as a result of underwriting modifications made during early 2020 in response to the onset of COVID-19.

These underwriting modifications primarily consisted of lower advance amounts and stricter eligibility requirements.

Any changes to our historical loss and collections experience directly affects the historical loss rates utilized in the calculation of the allowance for uncollectible advances.

The changes in the allowance for unrecoverable advances, period over period, has a direct impact on the provision for unrecoverable advances.

For information on the aging of Member advances and a rollforward of the allowance for unrecoverable advances, refer to the tables in Note 7 Member Cash Advances, Net in the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

Processing and service fees—

Processing and servicing fees totaled approximately $7.6 million for the three months ended June 30, 2022, compared to approximately $5.5 million for the three months ended June 30, 2021.

The increase of approximately $2.1 million, or 38%, was primarily attributable to the increase in advance volume from $323.2 million to approximately $561.5 million for the three months ended June 30, 2022 and 2021, respectively, offset by volume associated discounts and cost savings due to price reductions from our processors.

Advertising and marketing—

Advertising and marketing totaled approximately $20.8 million for the three months ended June 30, 2022, compared to approximately $11.9 million for the three months ended June 30, 2021.

The increase of approximately $8.9 million, or 75%, was primarily attributable to increased advertising efforts, production costs and promotions across various social media platforms and television.

Compensation and benefits—

Compensation and benefits totaled approximately $39.1 million for the three months ended June 30, 2022, compared to approximately $9.9 million for the three months ended June 30, 2021.

The increase of approximately $29.2 million, or 297%, was primarily attributable to the following:

an increase in payroll and related costs of approximately $6.8 million, primarily due to hiring and increased headcount throughout the business;

an increase in consultants and contractor costs of approximately $0.6 million, primarily due to our need to supplement recruiting efforts, increase IT security, marketing, design and augmenting customer service resources;

an increase in stock-based compensation of approximately $21.8 million, primarily due to restricted stock units granted during the three months ended June 30, 2022 and stock options granted to a certain executive during 2021, which achieved certain performance conditions associated with the close of the Business Combination.

Other operating expenses—

Other operating expenses totaled approximately $17.4 million for the three months ended June 30, 2022, compared to approximately $8.9 million for the three months ended June 30, 2021.

The increase of approximately $8.5 million, or 96%, was primarily attributable to the following:

an increase in insurance related costs of approximately $1.8 million, primarily related to Director and Officer and Cyber Insurance premiums;

an increase in accounting costs of approximately $0.4 million, primarily related to various audit, tax and Sarbanes-Oxley compliance readiness related fees associated with the Business Combination in January 2022;

an increase in technology and infrastructure expenses of approximately $1.4 million, primarily due to increased spending to support the growth of our business and development of new products and features;

an increase in expenses related to our Checking Product of approximately $2.7 million, primarily attributable to processing and fraud related costs associated with the growth in Members and the number of transactions processed;

an increase in legal fees of approximately $0.5 million, primarily due to ongoing litigation, compliance, employment and general corporate related matters;

an increase in various administrative fees of approximately $0.6 million, primarily due to increases in licenses and fees, travel and entertainment, and company meetings;

an increase in depreciation and amortization of approximately $1.0 million, primarily due to accelerated amortization related to the change in useful life of a certain intangible asset, equipment purchases for increased headcount and amortization of internally developed software;

an increase in rent expense of approximately $0.3 million, due to additional leased office space;

offset by a decrease in charitable contribution expenses of approximately $0.2 million, primarily due to decreased amounts pledged to charitable meal donations related to Members’ tips.

Other (income) expense

For the Three Months Ended

(in thousands, except for percentages)

Interest income

Interest expense

Legal settlement and litigation expenses

Other strategic financing and transactional expenses

Gain on extinguishment of liability

Changes in fair value of earnout liabilities

Changes in fair value of derivative asset on loans to stockholders

Changes in fair value of warrant liabilities

Interest income—

Interest income totaled approximately $0.6 million for the three months ended June 30, 2022, compared to approximately $0.1 million for the three months ended June 30, 2021.

The increase of approximately $0.5 million, or 824%, was primarily attributable to interest earned from a higher marketable securities balance and yields from short-term investments during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Interest expense—

Interest expense totaled approximately $2.3 million for the three months ended June 30, 2022, compared to approximately $0.5 million for the three months ended June 30, 2021.

The increase of approximately $1.8 million, or 350%, was primarily attributable to interest related to increased borrowings from the delayed draw senior secured loan facility (the “Debt Facility”) which Dave OD Funding I, LLC (“Dave OD”) entered into during January 2021, and was subsequently amended in November 2021 to include a $20 million line of credit (the “Credit Facility”), along with interest related to the Note with FTX Ventures which was issued in March 2022.

Legal settlement and litigation expenses—

Legal settlement and litigation expenses totaled $0 for the three months ended June 30, 2022, compared to approximately $0.2 million for the three months ended June 30, 2021.

See “Information About Dave —Legal Proceedings” for more information regarding pending legal actions.

The decrease of approximately $0.2 million, or 100%, was primarily attributable to reduced non-recurring

settlement and litigation expenses as compared to those expenses recorded during the three months ended June 30, 2021.

Other strategic financing and transactional expenses—

Other strategic financing and transactional expenses totaled approximately $1.9 million for the three months ended June 30, 2022, compared to approximately $0.1 million for the three months ended June 30, 2021.

The increase of approximately $1.8 million, or 1512%, was primarily attributable to spend on exploring various strategic financing alternatives and various transactional opportunities.

Gain on extinguishment of liability—

Gain on extinguishment of liability totaled approximately $4.3 million for the three months ended June 30, 2022, compared to $0 for the three months ended June 30, 2021.

The increase of approximately $4.3 million, or 100%, was primarily attributable to the extinguishment of a $7.5 million liability in exchange for shares of Class A Common Stock.

Changes in fair value of earnout liability—Changes in fair value of earnout liabilities totaled a benefit of approximately $7.6 million for the three months ended June 30, 2022, compared to an expense of $0 for the three months ended June 30, 2021.

The increase of approximately $7.6 million, or 100%, was primarily attributable to fair value adjustments associated with certain earnout shares liability due to decreases in our underlying Class A Common Stock price.

Changes in fair value of derivative asset on loans to stockholders—

Changes in fair value of derivative asset on loans to stockholders totaled $0 for the three months ended June 30, 2022, compared to a benefit of approximately $6.9 million for the three months ended June 30, 2021.

The decrease of approximately $6.9 million, or 100%, was primarily attributable to the exercise of the call options and settlement of the derivative asset during the close of the Business Combination in January 2022.

Please refer to Note 3 in the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

Changes in fair value of warrant liability—

Changes in fair value of warrant liability totaled a benefit of approximately $17.5 million for the three months ended June 30, 2022, compared to an expense of approximately $0.7 million for the three months ended June 30, 2021.

The increase of approximately $18.2 million, or 2681%, was primarily attributable to fair value adjustments associated with certain public and private warrant liabilities due to decreases in our underlying Class A Common Stock price, offset by fair value adjustments associated with certain warrants exercised during the Business Combination.

Provision for income taxes

For the Three Months Ended

(in thousands, except for percentages)

Provision (benefit) for income taxes

Provision for income taxes for the three months ended June 30, 2022 increased by approximately $0.009 million, or 69%, compared to the three months ended June 30, 2021.

This increase was primarily attributable to an increase in state taxes, including gross margin state taxes, relative to state taxes recognized for the three months ended June 30, 2021.

Comparison of the Six Months Ended June 30, 2022 and 2021

For the Six Months Ended

(in thousands, except for percentages)

Service based revenue, net

Processing fees, net

Subscriptions

Transaction based revenue, net

Operating revenues

Service based revenue, net—

Processing fees, net

Processing fees, net of processor costs associated with advance disbursements, for the six months ended June 30, 2022 were approximately $44.8 million, an increase from approximately $36.4 million for the six months ended June 30, 2021.

The increase of approximately $8.4 million, or 23%, was primarily attributable to increases in total advance volume from approximately $600.1 million to approximately $1,097.0 million along with a higher average advance amount period over period.

Processing fees tend to increase as advance volume increases, but may not always trend ratably as processing fees vary depending on the total amount of the advance.

The percentage of Members that chose to pay a processing fee to expedite an advance remained consistent for the six months ended June 30, 2022 and 2021, respectively.

The average processing fees Members paid to expedite these advances increased slightly for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Tips for the six months ended June 30, 2022 were approximately $28.5 million, an increase from approximately $21.1 million for the six months ended June 30, 2021.

The increase of approximately $7.4 million, or 35%, was primarily attributable to increases in total advance volume from approximately $600.1 million to approximately $1,097.0 million period over period.

Tips tend to increase as advance volume increases, but may not always trend ratably as tips often vary depending on the total amount of the advance.

The percentage of Members that chose to leave a tip decreased slightly for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

For those same periods, the average amount of tip Members chose to leave increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Subscriptions

Subscriptions for the six months ended June 30, 2022 were approximately $8.5 million, a decrease from approximately $9.0 million during the six months ended June 30, 2021.

The decrease of approximately $0.5 million, or 6%, was primarily attributable to lower subscription engagement with Members on our platform.

Transaction based revenue, net—

Transaction based revenue, net for the three months ended March 31, 2022 were approximately $3.3 million, an increase from approximately $2.0 million, for the three months ended March 31, 2021.

Transaction based revenue, net for the six months ended June 30, 2022 was approximately $6.1 million, an increase from approximately $4.9 million, for the six months ended June 30, 2021.

The increase of approximately $1.2 million, or 26%, was primarily attributable to the growth in Members engaging with our Checking Product and corresponding growth in the number of transactions initiated by Members .

Operating expenses

For the Three Months Ended

For the Six Months Ended

(in thousands, except for percentages)

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Provision for unrecoverable advances—

The provision for unrecoverable advances totaled approximately $13.8 million for the three months ended March 31, 2022, compared to approximately $3.5 million for the three months ended March 31, 2021.

The provision for unrecoverable advances totaled approximately $27.6 million for the six months ended June 30, 2022, compared to approximately $10.9 million for the six months ended June 30, 2021.

The increase of approximately $16.7 million, or 153%, was primarily attributable to increases in provision expense related to Member advances aged over 120 days and those that have become uncollectible based on information available to us of approximately $6.5 million in addition to an increase in provision expense related to Member advances aged 120 days and under of approximately $10.2 million.

All impaired advances deemed uncollectible are subsequently written-off

and are a direct reduction to the allowance for unrecoverable advances.

The increase in provision expense related to Member advances aged 120 days and under, was primarily attributed to significant increases in advance volume from approximately $277.8 million to approximately $545.1 million for the three months ended March 31, 2021 and 2022, respectively.

This resulted in an increase to the allowance for unrecoverable advances and corresponding higher provision for unrecoverable advances expense during the period ended March 31, 2022 as compared to March 31, 2021.

The increase in provision expense related to Member advances aged 120 days and under, was primarily attributed to significant increases in average advance amounts and total advance volume from approximately $600.1 million to approximately $1,097.0 million for the six months ended June 30, 2021 and 2022, respectively.

This resulted in an increase to the allowance for unrecoverable advances and corresponding higher provision for unrecoverable advances expense during the six months ended June 30, 2022 as compared to June 30, 2021.

Throughout the first three months of 2022, loss and collections experience of Member advances remained steady, however, historical loss and collections experience decreased slightly when compared to historical rates used in 2021 primarily as a result of underwriting modifications made during early 2020 in response to the onset of COVID-19.

Throughout the first six months of 2022, loss and collections experience of Member advances remained steady, however, historical loss and collections experience utilized in the calculation of the provision for unrecoverable advances decreased slightly when compared to historical rates used in 2021, primarily as a result of underwriting modifications made during early 2020 in response to the onset of COVID-19.

These underwriting modifications primarily consisted of lower advance amounts and stricter eligibility requirements.

1 unchanged sentence

The changes in the allowance for unrecoverable advances, period over period, has a direct impact on the provision for unrecoverable advances.

For information on the aging of Member advances and a rollforward of the allowance for unrecoverable advances, refer to the tables in Note 5 to our unaudited consolidated financial statements included in this Form 10-Q.

For information on the aging of Member advances and a rollforward of the allowance for unrecoverable advances, refer to the tables in Note 7 to Member Cash Advances, Net to the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

Processing and service fees—

Processing and servicing fees totaled approximately $6.5 million for the period ended March 31, 2022, compared to approximately $5.2 million for the period ended March 31, 2021.

The increase of approximately $1.3 million, or 25%, was primarily attributable to the increase in advance volume from $277.8 million to $545.1 million for the three months ended March 31, 2022 and 2021, respectively, offset by volume associated discounts and cost savings due to price reductions from our processors.

Processing and servicing fees totaled approximately $14.1 million for the six months ended June 30, 2022, compared to approximately $10.7 million for the six months ended June 30, 2021.

The increase of approximately $3.4 million, or 32%, was primarily attributable to the increase in advance volume from $600.1 million to approximately $1,097.0 million for the six months ended June 30, 2022 and 2021, respectively, offset by volume associated discounts and cost savings due to price reductions from our processors.

Advertising and marketing—

Advertising and marketing totaled approximately $12.2 million for the period ended March 31, 2022, compared to approximately $14.0 million for the period ended March 31, 2021.

The decrease of approximately $1.8 million or 13% was primarily attributable to decreased marketing efforts and promotions across various social media platforms and television.

Advertising and marketing totaled approximately $33.0 million for the six months ended June 30, 2022, compared to approximately $25.9 million for the six months ended June 30, 2021.

The increase of approximately $7.1 million or 27% was primarily attributable to increased marketing efforts, production costs and promotions across various social media platforms and television.

Compensation and benefits—

Compensation and benefits totaled approximately $17.9 million for the period ended March 31, 2022, compared to approximately $9.4 million for the period ended March 31, 2021.

Compensation and benefits totaled approximately $57.0 million for the six months ended June 30, 2022, compared to approximately $19.3 million for the six months ended June 30, 2021.

The increase of approximately $37.7 million, or 196%, was primarily attributable to the following:

an increase in payroll and related costs of approximately $12.4 million, primarily due to hiring and increased headcount throughout the business;

an increase in consultants and contractor costs of approximately $1.4 million, primarily due to our need to supplement recruiting efforts, increase IT security, marketing, and augmenting customer service resources;

an increase in stock-based compensation of approximately $1.5 million, primarily due to the cumulative expense related to stock options granted to a certain executive during 2021which achieved certain performance conditions associated with the close of the Business Combination.

an increase in consultants and contractor costs of approximately $2.0 million, primarily due to our need to supplement recruiting efforts, increase IT security, marketing, design and augmenting customer service resources;

an increase in stock-based compensation of approximately $23.3 million, primarily due to restricted stock units granted during the six months ended June 30, 2022 and to the expenses related to stock options granted to a certain executive during 2021, which achieved certain performance conditions associated with the close of the Business Combination.

Other operating expenses—

Other operating expenses totaled approximately $14.8 million for the period ended March 31, 2022, compared to approximately $12.6 million for the period ended March 31, 2021.

Other operating expenses totaled approximately $32.2 million for the six months ended June 30, 2022, compared to approximately $21.5 million for the six months ended June 30, 2021.

The increase of approximately $10.7 million, or 50%, was primarily attributable to the following:

an increase in insurance related costs of $1.8 million, primarily related to Director and Officer Insurance premiums;

an increase in insurance related costs of approximately $3.6 million, primarily related to director and officer insurance premiums;

an increase in accounting costs of approximately $0.9 million, primarily related to various audit, tax and Sarbanes Oxley compliance readiness related fees associated with the Business Combination in January 2022;

an increase in technology and infrastructure expenses of approximately $2.6 million, primarily due to increased spending to support the growth of our business and development of new products and features;

an increase in expenses related to our Checking Product of approximately $1.0 million, primarily attributable to the growth in Members and the number of transactions processed;

an increase in expenses related to our Checking Product of approximately $3.7 million, primarily attributable to processing and fraud related costs associated with the growth in Members and the number of transactions processed;

an increase in legal fees of approximately $1.1 million, primarily due to ongoing litigation, compliance, employment and general corporate related matters;

an increase in various administrative fees of approximately $0.5 million primarily due to increases license and fees, travel and entertainment, and company meetings;

an increase in depreciation and amortization of $0.5 million, primarily due to equipment purchases for increased headcount and amortization of internally developed software;

an increase in rent expense of $0.4 million, due to additional leased office space;

an increase in various administrative fees of approximately $1.2 million primarily due to increases license and fees, travel and entertainment, investor relations and Company meetings;

an increase in depreciation and amortization of approximately $1.4 million, primarily due to accelerated amortization related to the change in useful life of a certain intangible asset, equipment purchases for increased headcount and amortization of internally developed software;

an increase in rent expense of approximately $0.7 million, due to additional leased office space;

a decrease in chargeback related expenses of approximately $4.0 million, primarily due to non-recurring

fraudulent activity in relation to our Checking Product (see “Risk Factors—Risks related to our Business and Industry—Fraudulent and other illegal activity involving our products and services could lead to reputational damage to us, reduce the use of our platform and services and may adversely affect our financial position and results of operations.”);

a decrease in charitable contribution expenses of approximately $0.2 million, primarily due to decreased amounts pledged to charitable meal donations related to increased Members’ tips.

a decrease in charitable contribution expenses of approximately $0.4 million, primarily due to decreased amounts pledged to charitable meal donations related to Members’ tips.

Other (income) expense

For the Three Months Ended

For the Six Months Ended

(in thousands, except for percentages)

3 unchanged sentences

Other strategic financing and transactional expenses

Gain on extinguishment of liability

Changes in fair value of earnout liabilities

Changes in fair value of derivative asset on loans to stockholders

Changes in fair value of warrant liability

Changes in fair value of warrant liabilities

Interest income—

Interest income totaled approximately $0.7 million for the six months ended June 30, 2022, compared to approximately $0.1 million for the six months ended June 30, 2021.

The increase of approximately $0.6 million, or 371%, was primarily attributable to interest earned from a higher marketable securities balance and yields from short-term investments during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Interest expense—

Interest expense totaled approximately $1.6 million for the period ended March 31, 2022, compared to approximately $0.3 million for the period ended March 31, 2021.

The increase of approximately $1.3 million, or 461%, was primarily attributable to interest related to the Debt Facility which we entered into during January 2021, and was subsequently amended in November 2021 to include the Credit Facility, along with interest related to the convertible note with FTX Ventures entered into during March 2022.

Interest expense totaled approximately $3.8 million for the six months ended June 30, 2022, compared to approximately $0.8 million for the six months ended June 30, 2021.

The increase of approximately $3.0 million, or 390%, was primarily attributable to interest related to increased borrowings under the Debt Facility and the Credit Facility, along with interest related to the Note with FTX Ventures.

Legal settlement and litigation expenses—

Legal settlement and litigation expenses totaled approximately $0 for the period ended March 31, 2022, compared to approximately $0.4 million for the period ended March 31, 2021.

Legal settlement and litigation expenses totaled $0 for the six months ended June 30, 2022, compared to approximately $0.6 million for the six months ended June 30, 2021.

See “Information About Dave —Legal Proceedings” for more information regarding pending legal actions.

The decrease of approximately $0.4 million, or 100%, was primarily attributable to reduced non-recurring settlement and litigation expenses as compared to those expenses recorded during the three months ended March 31, 2021.

The decrease of approximately $0.6 million, or 100%, was primarily attributable to reduced non-recurring

settlement and litigation expenses as compared to those expenses recorded during the six months ended June 30, 2021.

Other strategic financing and transactional expenses—

Other strategic financing and transactional expenses totaled approximately $1.0 million for the period ended March 31, 2022, compared to approximately $0.1 million for the period ended March 31, 2021.

The increase of approximately $0.9 million, or 790%, was primarily attributable to spending on legal, audit and compliance related expenses associated with the Business Combination during the three months ended March 31, 2022.

Other strategic financing and transactional expenses totaled approximately $2.8 million for the six months ended June 30, 2022, compared to approximately $0.2 million for the six months ended June 30, 2021.

The increase of approximately $2.6 million, or 1164%, was primarily attributable to spending on exploring various strategic financing alternatives and various transactional opportunities.

Gain on extinguishment of liability—

Gain on extinguishment of liability totaled approximately $4.3 million for the six months ended June 30, 2022, compared to $0 for the six months ended June 30, 2021.

The increase of approximately $4.3 million, or 100%, was primarily attributable to the extinguishment of a $7.5 million liability in exchange for shares of our Class A Common Stock.

Changes in fair value of earnout liability

—Changes in fair value of earnout liabilities totaled a benefit of approximately $9.6 million for the six months ended June 30, 2022, compared to an expense of $0 for the six months ended June 30, 2021.

The increase of approximately $9.6 million, or 100%, was primarily attributable to fair value adjustments associated with certain earnout shares liability due to decreases in our underlying Class A Common Stock price.

Changes in fair value of derivative asset on loans to stockholders—

Changes in fair value of derivative asset on loans to stockholders totaled a charge of approximately $5.6 million for the period ended March 31, 2022, compared to a benefit of $17.1 million for the period ended March 31, 2021.

The increase of approximately $22.7 million, or 132%, was primarily attributable to fair value adjustments associated with options issued in connection with loans to stockholders resulting from a decrease in the underlying fair value of our common stock as of the settlement date of the derivative asset compared to the benefit received from the increase in the fair value of our common stock during the three months ended March 31, 2021.

Changes in fair value of derivative asset on loans to stockholders totaled an expense of approximately $5.6 million for the six months ended June 30, 2022, compared to a benefit of approximately $24.0 million for the six months ended June 30, 2021.

The increase of approximately $29.6 million, or 123%, was primarily attributable to fair value adjustments associated with options issued in connection with loans to stockholders resulting from a decrease in the underlying fair value of our Common Stock as of the settlement date of the derivative asset compared to the benefit received from the increase in the fair value of our Common Stock during the six months ended June 30, 2021.

Please refer to Note 3 in the accompanying unaudited condensed consolidated financial statements of Dave included in this Form 10-Q.

Changes in fair value of warrant liability—

Changes in fair value of warrant liability totaled approximately $4.1 million for the period ended March 31, 2022, compared to $2.2 for the three months ended March 31, 2021.

The increase of approximately $1.9 million, or 86%, was primarily attributable to fair value adjustments associated with certain public and private warrant liabilities due to decreases in our underlying common stock price, offset by fair value adjustments associated with certain warrants exercised during the Business Combination.

Changes in fair value of warrant liability totaled a benefit of approximately $13.5 million for the six months ended June 30, 2022, compared to an expense of approximately $2.9 million for the six months ended June 30, 2021.

The increase of approximately $16.4 million, or 570%, was primarily attributable to fair value adjustments associated with certain public and private warrant liabilities due to decreases in our underlying Class A Common Stock price, offset by fair value adjustments associated with certain warrants exercised during the Business Combination.

Provision for income taxes

For the Three Months Ended

For the Six Months Ended

(in thousands, except for percentages)

Provision (benefit) for income taxes

Provision (benefit) for income taxes for the period ended March 31, 2022 increased by approximately $0.03 million or -375%,

compared to the period ended March 31, 2021.

This increase was primarily attributable to a decrease in the federal deferred tax benefit relative to the benefit recognized for the three months ended March 31, 2021.

Provision for income taxes for the six months ended June 30, 2022 increased by approximately $0.039 million, or 766%, compared to the six months ended June 30, 2021.

This increase was primarily attributable to an increase in state taxes, including gross margin state taxes, relative to state taxes recognized for the six months ended June 30, 2021.

Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP

measures are useful in evaluating our operational performance.

measure is useful in evaluating our operational performance.

We use the following non-GAAP

measures to evaluate our ongoing operations and for internal planning and forecasting purposes.

We believe that non-GAAP

financial information, when taken collectively, may be helpful in assessing our operating performance and are more indicative of our operational performance and facilitate an alternative comparison among fiscal periods.

These non-GAAP

financial measures are not, and should not be viewed as, substitutes for GAAP reporting measures.

measure to evaluate our ongoing operations and for internal planning and forecasting purposes.

We believe that the non-GAAP

financial information may be helpful in assessing our operating performance and is more indicative of our operational performance and facilitates an alternative comparison among fiscal periods.

financial measure is not, and should not be viewed as, a substitute for GAAP reporting measures.

Adjusted EBITDA

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We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA on a supplemental basis.

The reconciliation of net loss to Adjusted EBITDA below should be reviewed and no single financial measure should be relied upon to evaluate our business.

The following table reconciles net (loss) income to Adjusted EBITDA for the three months ended March 31, 2022 and 2021, respectively:

(in thousands)

The following table reconciles net loss to Adjusted EBITDA for the three months ended June 30, 2022 and 2021, respectively:

For the Three Months Ended

(in thousands)

Interest expense

Provision for income taxes

Depreciation and amortization

Stock-based compensation

Legal settlement and litigation expenses

Other strategic financing and transactional expenses

Gain on extinguishment of liability

Changes in fair value of earnout liabilities

Changes in fair value of derivative asset on loans to stockholders

Changes in fair value of warrant liabilities

The following table reconciles net (loss) income to Adjusted EBITDA for the six months ended June 30, 2022 and 2021, respectively:

For the Six Months Ended

(in thousands)

Net (loss) income

Interest expense

Provision (benefit) for income taxes

Provision for income taxes

Depreciation and amortization

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Other strategic financing and transactional expenses

Gain on extinguishment of liability

Changes in fair value of earnout liabilities

Changes in fair value of derivative asset on loans to stockholders

Changes in fair value of warrant liability

Changes in fair value of warrant liabilities

Liquidity and Capital Resources

Since inception, we have financed our operations primarily from the issuance of preferred stock through our Series A and Series B funding rounds, issuances of convertible notes, funds from borrowings under a Senior Secured Loan Facility (the “Debt Facility”) with Victory Park Management, LLC, (as amended in November 2021 to include a $20 million credit line, the “Credit Agreement”), and funds as a result of the Business Combination that took place as on January 5, 2022.

As of March 31, 2022 and 2021, our cash and marketable securities balances were approximately $302.3 million and $37.6 million, respectively.

As of June 30, 2022 and December 31, 2021, our cash and cash equivalents, marketable securities and short-term investments balance was approximately $256.8 million and approximately $40.2 million, respectively.

As an early-stage company, the expenses we have incurred since inception are consistent with our strategy and approach to capital allocation.

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public offerings or debt financings.

The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our research and development efforts.

The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our product development efforts.

No assurances can be provided that additional funding will be available at terms acceptable to us, if at all.

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While the effect of COVID-19

has created economic uncertainty and impacted how we manage our liquidity and capital resources, we intend to continue to invest in people, marketing and user acquisition, technology and infrastructure, and new and existing financial products and programs we believe are critical to meeting our strategic objectives.

and other macro-economic factors have created economic uncertainty and impacted how we manage our liquidity and capital resources, we intend to continue to invest in people, marketing and user acquisition, technology and infrastructure, and new and existing financial products and programs we believe are critical to meeting our strategic objectives.

As growth of our ExtraCash product scales, material cash will be required to fund advances until the point at which those advances are subsequently collected.

The amount and timing of these related cash outflows in future periods is difficult to predict and is

dependent on a number of factors including the hiring of new employees, the rate of change in technology used in our business and our business outlook as a result of the COVID-19

The amount and timing of these related cash outflows in future periods is difficult to predict and is dependent on a number of factors including the hiring of new employees, the rate of change in technology used in our business and our business outlook as a result of the COVID-19

While we expect certain cash outflows for these expenditures will exceed amounts spent in 2021, we expect to fund these cash outflows primarily through our cash flows provided by operating, investing and financing activities.

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We are required to continue making our contractual payments until our operating leases are formally terminated or expire.

Our remaining leases have terms of less than 1 year to approximately 4 years, subject to renewal options of varying terms, and as of March 31, 2022, we had a total lease liability of approximately $2.4 million.

See Note 14—Leases of the Notes to our Unaudited Condensed Consolidated Financial Statements for additional information regarding our lease liabilities as of March 31, 2022.

We also have certain contractual payment obligations for principal and interest owed under the $100 million delayed draw credit facility of the Credit Facility.

Our remaining leases have terms of less than 1 year to approximately 4 years, subject to renewal options of varying terms, and as of June 30, 2022, we had a total lease liability of approximately $2.0 million.

See Note 17, Leases in the notes to our unaudited condensed consolidated financial statements for additional information regarding our lease liabilities as of June 30, 2022.

We also have certain contractual payment obligations for principal and interest owed under the Debt Facility and Credit Facility.

Interest payments are required to be made on a monthly basis.

At March 31, 2022, $35.0 million of term loans under the Credit Agreement were outstanding and $20.0 million has been drawn on the credit line under the Credit Facility.

Additionally, we also have certain contractual payment obligations for interest owed under our Purchase Agreement entered into with FTX Ventures.

Interest payments relating to the $100 million convertible note are required to be made on a semi-annual basis.

At March 31, 2022, approximately $0.8 million of interest was accrued.

For more information on the Purchase Agreement with FTX Ventures, see “ —Recent Developments.”

At June 30, 2022, $35.0 million of term loans under the Debt Facility were outstanding and $20.0 million had been drawn on under the Credit Facility.

See Note 15, Credit and Debt Facility in the notes to our unaudited condensed consolidated financial statements.

Additionally, we also have certain contractual payment obligations for interest owed under the $100 million Note we issued and sold pursuant to the Purchase Agreement entered into with FTX Ventures.

Interest payments relating to the Note are required to be made or added to the outstanding principal on a semi-annual basis.

At June 30, 2022, approximately $0.8 million of interest was added to the outstanding principal.

For more information on the Purchase Agreement with FTX Ventures, see Note 12, Convertible Note Payable.

Cash Flows Summary

Total cash (used in) provided by:

For the Three Months Ended March 31,

(in thousands)

For the Six Months Ended June 30,

Total cash (used in) provided by:

Operating activities

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Cash Flows from Operating Activities

We recorded a net loss of approximately $34.8 million for the period ended March 31, 2022, and net income of approximately $4.0 million for the period ended March 31, 2021.

We reported negative cash flows from operating activities of approximately $37.5 million and cash flows from operating activities of approximately $2.6 million for the periods ended March 31, 2022 and 2021, respectively.

Net cash used in operating activities for the period ended March 31, 2022 included a net loss of approximately $34.8 million, adjusted for non-cash

items of approximately $1.1 million for depreciation and amortization, approximately $13.8 million for provision for unrecoverable advances, approximately $4.1 million for an increase in warrant liability fair value, approximately $3.2 million for stock-based compensation expense, and approximately $5.6 million for a decrease in derivative asset fair value.

Further changes in cash flows from operations included an increase in Member advances of approximately $26.6 million, an increase in prepaid expenses and other current assets of approximately $4.8 million, an increase in accrued expenses of approximately $1.0 million, and a decrease in other current liabilities of approximately $0.3 million.

These changes were offset primarily by an increase in accounts payable of approximately $2.5 million.

Net cash used in operating activities for the period ended March 31, 2021 included net income of approximately $4.0 million, adjusted for non-cash

items of approximately $2.8 million for depreciation and amortization, approximately $3.5 million for the provision for unrecoverable advances, approximately $17.1 million for an increase in derivative asset fair value, approximately $2.2 million for an increase in warrant liability fair value, and approximately $1.7 million for stock-based compensation expense.

Further changes in cash flows from operations included a decrease in Member advances of approximately $5.0 million, a decrease in prepaid income taxes of approximately $0.8 million, a

decrease in accrued expenses of approximately $1.6 million and a decrease in accounts payable of approximately $0.2 million.

These changes were offset primarily by a decrease in other current liabilities of approximately $1.5 million and an increase in prepaid expenses and other current assets of approximately $0.5 million.

We recorded a net loss of approximately $59.9 million for the six months ended June 30, 2022, and net income of approximately $3.1 million for the six months ended June 30, 2021.

We reported negative cash flows from operating activities of approximately $26.6 million and $16.1 million for the three months ended June 30, 2022 and 2021, respectively.

Net cash used in operating activities for the six months ended June 30, 2022 included a net loss of approximately $59.9 million, adjusted for non-cash

items of approximately $3.0 million for depreciation and amortization, approximately $27.6 million for provision for unrecoverable advances, approximately $5.6 million for a decrease in derivative asset fair value, approximately $26.0 million for stock-based compensation expense, and $0.8 million for non-cash interest, offset by changes in the fair value of warrant liabilities of approximately $13.5 million, changes in the fair value of earnout liabilities of approximately $9.6 million, and approximately $4.3 million related to a gain on extinguishment of a liability.

Further changes in cash flows from operations included an increase in receivables related to revenue from to Member advances of approximately $3.5 million, an increase in prepaid expenses and other current assets of approximately $7.0 million, a decrease in accrued expenses of approximately $1.9 million, and a decrease in legal settlement accrual and other current liabilities of approximately $0.5 million.

These changes were offset primarily by an increase in accounts payable of approximately $9.9 million and a decrease in prepaid income taxes of approximately $0.7 million.

Net cash used in operating activities for the six months ended June 30, 2021 was approximately $26.6 million.

This included net income of approximately $3.1 million, adjusted for non-cash

items of approximately $1.3 million for depreciation and amortization, approximately $10.9 million for the provision for unrecoverable advances, approximately $24.0 related to the decrease in fair value of derivative assets, approximately $2.9 million for an decrease in the fair value of warrant liabilities, approximately $2.8 million for stock-based compensation expense and approximately $0.7 million related to non-cash

interest and lease expenses.

Further changes in cash flows from operations included an increase in receivables related to revenue from Member advances of approximately $1.0 million, approximately $0.3 million related to an increase in prepaid expenses and other current assets and a decrease of approximately $2.1 million in other current and non-current

These changes were offset primarily by a decrease in prepaid income taxes of approximately $0.7 million and an increase in prepaid expenses, an increase of approximately $3.6 million in accrued expenses and approximately $1.3 million in accounts payable.

Cash Flows from Investing Activities

During the period ended March 31, 2022, net cash used in investing activities was approximately $272.6 million.

This included the purchase of marketable securities of approximately $302.1 million, the capitalization of internally developed software costs of approximately $2.3 million and the purchase of property and equipment of approximately $0.2 million, offset by the sale of marketable securities of approximately $32.0 million.

During the period ended March 31, 2021, net cash provided by investing activities was approximately $0.6 million.

This included the sale of marketable securities of approximately $3.9 million, partially offset by the capitalization of internally developed software costs of approximately $3.3 million.

During the six months ended June 30, 2022, net cash used in investing activities was approximately $280.6 million.

This included the purchase of marketable securities of approximately $302.4 million, the purchase of short-term investments of approximately $196.8 million, net disbursements and the increase in receivables related of Member advances of approximately $51.2 million, payments for internally developed software costs of approximately $4.4 million and the purchase of property and equipment of approximately $0.3 million, offset by the sale of marketable securities of approximately $274.5 million.

During the six months ended June 30, 2021, net cash provided by investing activities was approximately $13.6 million.

This included the sale of marketable securities of approximately $3.9 million, partially offset by the increase in receivables related to Member advances of approximately $15.2 million and payments for internally developed software costs of approximately $2.3 million.

Cash Flows from Financing Activities

During the period ended March 31, 2022, net cash provided by financing activities was approximately $301.7 million, which consisted of $195.0 million in proceeds from PIPE offering, $100.0 million in proceeds from borrowings related to the Purchase Agreement with FTX Ventures, approximately $29.7 million in proceeds from the Business Combination, net of redemptions and approximately $1.6 million in proceeds from stock option exercises, partially offset by approximately $22.9 million for the payment of costs related to the Business Combination and approximately $1.6 million related to the repurchase of common stock.

During the six months ended June 30, 2022, net cash provided by financing activities was approximately $301.7 million, which consisted of approximately $195.0 million in proceeds from PIPE Financing, approximately $100.0 million in proceeds from borrowings related to the Purchase Agreement with FTX Ventures, approximately $29.7 million in proceeds from the Business Combination, net of redemptions and approximately $1.6 million in proceeds from stock option exercises, partially offset by approximately $23.0 million for the payment of costs related to the Business Combination and approximately $1.6 million related to the repurchase of Class A Common Stock.

For more information on the Business Combination and Purchase Agreement with FTX Ventures, see “— Business Combination and Public Company Costs” and “—Recent Developments”, respectively

During the period ended March 31, 2021, net cash provided by financing activities was approximately $15.6 million, which consisted of $19.0 million in debt and credit facility borrowings, offset against approximately $3.9 million of repayments on a line of credit.

During the six months ended June 30, 2021, net cash provided by financing activities was approximately $18.0 million, which consisted of approximately $23.0 million in proceeds from debt and credit facility borrowings, approximately $0.9 million in proceeds from stock option exercises, partially offset by approximately $3.9 million of repayments on a line of credit and approximately $2.0 million for the payment of deferred issuance costs related to the Business Combination.

Critical Accounting Policies and Estimates

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(v) fair value of warrant liabilities;

and (vi) allowance for unrecoverable advances.

(vi) allowance for unrecoverable advances and (vii) fair value of the earnout liability.

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

We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Please refer to Note 2 in our accompanying unaudited condensed consolidated financial statements for the period ended March 31, 2022 included in this Form 10-Q.

Please refer to Note 3 in our accompanying unaudited condensed consolidated financial statements as of June 30, 2022 and for the three and six months ended June 30, 2022 included in this Form 10-Q.

While our significant accounting policies are described in the notes to our unaudited condensed consolidated financial statements, we believe that the following accounting policies require a greater degree of judgment and complexity and are the most critical to understanding our financial condition and historical and future results of operations.

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We are required to account for certain financial instruments at fair value with changes in fair value reported in earnings and may elect fair value accounting for certain other financial instruments in accordance with U.S.

Financial instruments carried at fair value include marketable securities, derivative assets related to loans to stockholders, and warrant liabilities.

Financial instruments carried at fair value include marketable securities, short-term investments, derivative assets related to loans to stockholders, earnout liability and warrant liabilities.

We apply the provisions of Financial Accounting Standards Board (“ FASB

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The Black-Scholes pricing model includes subjective input assumptions that can materially affect the fair value estimates.

Earnout Liabilities

We recorded earnout liabilities associated with the Business Combination.

The earnout liabilities are carried on our unaudited condensed consolidated balance sheets as a long-term liability estimated at fair value.

Changes in the estimated fair value of the earnout liabilities are reported as a loss (gain) in the accompanying unaudited condensed consolidated statements of operations.

We utilized a Monte Carlo Simulation Method to compute the fair value and to mark to market the fair value of the earnout liabilities at each unaudited condensed consolidated balance sheet date.

The Monte Carlo Simulation Method considers a range of assumptions such as stock price, volatility, and risk-free interest rate.

The Monte Carlo Simulation Method includes subjective input assumptions that can materially affect the fair value estimates.

The Company has elected to measure the note payable debt instrument at fair value using the fair value option of ASC 825-10.

We identified an embedded derivative related to a convertible feature in our promissory note with Alameda Research and in accordance with ASC 815-15-25-1

criterion (b), since we have elected to apply the fair value option to the

debt, the Contingently Exercisable Share Settled Put/Call Option and any other embedded features were not be separated from the debt host.

criterion (b), since we have elected to apply the fair value option to the debt, the Contingently Exercisable Share Settled Put/Call Option and any other embedded features were not separated from the debt host.

The note payable was carried on our consolidated balance sheets as a current liability estimated at fair value with changes in fair value reflected in earnings.

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Industry information, such as external market conditions and trends;

Likelihood of achieving a liquidity event, such as an initial public offering, SPAC merger, or strategic sale given prevailing market conditions and the nature and history of our business;

Likelihood of achieving a liquidity event, such as an initial public offering, merger with a special purpose acquisition company (“SPAC”), or strategic sale given prevailing market conditions and the nature and history of our business;

Prices, privileges, powers, preferences and rights of our convertible preferred stock relative to those of Dave Common Stock;

Forecasted cash flow projections for Dave’s business;

Publicly traded price of the special purpose acquisition company (“SPAC”);

Publicly traded price of the SPAC;

Primary preferred stock financings and secondary common stock transactions of our equity securities;

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If we had used different assumptions or estimates, the fair value of our common stock and our stock-based compensation expense could have been materially different.

During 2019 and 2020, our estimated fair value of our common stock remained relatively consistent before a potential public listing through a business combination with a special purpose acquisition company was first considered in 2021 (“SPAC Transaction”).

During 2019 and 2020, our estimated fair value of our common stock remained relatively consistent before a potential public listing through a business combination with a SPAC (“SPAC Transaction”) was first considered in 2021.

The fair value for our 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”).

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valuation and acceleration of the timing of an exit, from the Series B Financing to the Business Combination.

Please refer to Note 2 in our accompanying unaudited condensed consolidated financial statements for the period ended March 31, 2022 included in this Form 10-Q.

Please refer to Note 3 in our accompanying unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 included in this Form 10-Q.

Allowance for Unrecoverable Advances

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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 period 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 upon examination, including compromise settlements.

For tax positions not meeting the more-likely-than-not

threshold, no tax benefit is recorded.

We have estimated approximately $0.5 million of uncertain tax positions as of both March 31, 2022 and 2021, related to state income taxes and research tax credits.

Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more-likely-than-not that the asset will not be realized.

The effective tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except that taxes related to specific discrete events, if any, are recorded in the interim period in which they occur.

The annual effective tax rate is based upon several significant estimates and judgments, including the estimated annual pre-tax income of the Company in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year.

In addition, the Company’s tax expense can be impacted by changes in tax rates or laws and other factors that cannot be predicted with certainty.

As such, there can be significant volatility in interim tax provisions.

ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained in a court of last resort, based on the technical merits.

If more-likely-than-not, the amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized upon examination, including compromise settlements.

For tax positions not meeting the more-likely-than-not threshold, no tax benefit is recorded.

We have estimated approximately $0.5 million and $0.1 million of uncertain tax positions as of June 30, 2022 and 2021, respectively, related to state income taxes and research tax credits.

Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense within the statement of operations.

We recognized approximately $0.001 million and $0.002 million of interest expense and penalties as a component of income tax expense during the periods ended March 31, 2022 and 2021, respectively.

There was approximately $0.008 million and $0.007 million of accrued interest and penalties as of March 31, 2022 and December 31, 2021, respectively.

We are subject to income tax in jurisdictions in which we operate, including the United States.

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We recognize deferred taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.

We recorded a valuation allowance against our deferred tax assets, net of certain deferred tax liabilities, at March 31, 2022 and December 31, 2021.

Based upon management’s assessment of all available evidence, we have concluded that it is more-likely-than-not

that the deferred tax assets, net of certain deferred tax liabilities, will not be realized.

We recorded a valuation allowance against our deferred tax assets, net of certain deferred tax liabilities, at June 31, 2022 and December 31, 2021.

Based upon management’s assessment of all available evidence, we have concluded that it is more-likely-than-not that the deferred tax assets, net of certain deferred tax liabilities, will not be realized.

Emerging Growth Company Status

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See Note 3 of our accompanying unaudited condensed consolidated financial statements included in this Form 10-Q

for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the periods ended March 31, 2022 and 2021.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act.

Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, we intend to rely on such exemptions, we are not required to, among other things:

for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the six months ended June 30, 2022 and 2021.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act for emerging growth companies.

Subject to certain conditions set forth in the JOBS Act, if we intend to rely on such exemptions, we are not required to, among other things:

(a) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

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Recently Issued Accounting Standards

Refer to Note 2, “Significant Accounting Policies,” of our unaudited condensed consolidated financial statements included in this Form 10-Q

Refer to Note 3, “Summary of Significant Accounting Policies,” of our unaudited condensed consolidated financial statements included in this Form 10-Q

for a discussion of the impact of recent accounting pronouncements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis