Dave (DAVE) risk factors, FY2024 10-K

Other

1. 01The industries in which we operate are highly competitive, which could adversely affect our results of operations
2. 02We may not be able to scale our business on a timely basis to meet our Members’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed
3. 03We receive funds from, and transfer funds to, our Members daily, which in the aggregate comprise substantial sums, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results
4. 04We have limited operating history and experience in managing a public company, and face significant challenges as a new entrant in our industry
5. 05Our business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws, and is subject to regulatory investigations and consumer litigation
6. 06If accounting standards change or if our estimates or assumptions relating to our critical accounting policies prove to be incorrect, our results of operations and financial condition could be adversely affected

Risks Related to Our Business and Industry

1. 07The industries in which we operate are highly competitive, which could adversely affect our results of operations
2. 08Our Members may not view ExtraCash overdrafts facilitated through our platform as having the same significance as other credit obligations arising under more traditional circumstances
3. 09We offer ExtraCash, based on a limited performance history, and therefore we have only limited prepayment, loss and delinquency data with respect to ExtraCash on which to base projections
4. 10If our settlement of ExtraCash overdrafts is ineffective or unsuccessful, the performance of the overdrafts could be adversely affected
5. 11If we are unable to keep pace with the rapid technological developments in our industry and the larger financial services industry necessary to continue providing our Members with new and innovative products and services, the use of our platform and other products and services could decline
6. 12If the prices we charge for our products and services are unacceptable to our Members, our operating results will be harmed
7. 13Use of artificial intelligence in our operations and product offerings could result in reputational or competitive harm, legal or regulatory liability and adverse impacts on our results of operations
8. 14parties, including our Members, and suffer economic and reputational harm that could have an adverse effect on our business
9. 15If we fail to comply with the applicable requirements of our third-party providers, they could seek to suspend or terminate our accounts, which could adversely affect our business
10. 16Our third-party vendor relationships subject us to a variety of risks, and the failure of third parties to comply with legal or regulatory requirements or to provide various services could have an adverse effect on our business, results of operations, financial condition, and future prospects
11. 17manage the risks related to fluctuating interest rates and inflation on our business and operations
12. 18general administration, including increased legal and accounting expenses associated with being a public company
13. 19If we fail to offer high-quality customer support, or if our support is more expensive than anticipated, our business and reputation could suffer
14. 20We may require additional capital to support the growth of our business, and this capital may not be available on acceptable terms, if at all
15. 21If the information provided to us by potential Members or other third parties is incorrect or fraudulent, we may misjudge a Member’s qualifications to receive our products and services and our results of operations may be harmed and could subject us to regulatory scrutiny or penalties
16. 22We are exposed to losses from Dave banking Member accounts
17. 23diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs
18. 24Real or perceived software errors, failures, bugs, defects, or outages could adversely affect our business, results of operations, financial condition, and future prospects
19. 25Cyberattacks and other security breaches or disruptions suffered by us or third parties upon which we rely could have a materially adverse effect on our business, harm our reputation and expose us to public scrutiny and liability
20. 26We strive to deliver simple, transparent, and fair financial products, which may conflict with the short-term interests of our stockholders
21. 27Changes in debit interchange rates could adversely affect our business, financial position and results of operations
22. 28Dave has historically incurred losses in the operation of its business. Although we have recently achieved profitability, there is no guarantee that we will sustain profitability
23. 29implement new and upgraded operational and financial systems, procedures and controls
24. 30Fluctuations in market interest rates have had and could continue to have an adverse effect on our business
25. 31Our operating results may fluctuate in the future
26. 32Negative publicity about us or our industry could adversely affect our business, results of operations, financial condition, and future prospects
27. 33If we cannot maintain our company culture as we grow, our success and our business may be harmed
28. 34If we lose key personnel, or if we are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed
29. 35Misconduct and errors by our employees, contractors and third-party service providers could harm our business and reputation
30. 36If we fail to address any or all of these risks and challenges, our business may be materially and adversely affected
31. 37Our remediation plans are described in Item 9A of this Annual Report on Form 10-K
32. 38If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights
33. 39We use open source software in our products, which could subject us to litigation or other actions
34. 40Natural catastrophic events, pandemics and man-made problems such as power disruptions, political instability, civil unrest, terrorist activity or war may disrupt our business
35. 41Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our financial condition and results of operations
36. 42Our revenue is impacted, to a significant extent, by the general economy, the creditworthiness of the U.S. consumer and the financial performance of our partners
37. 43consumers to pay amounts owed under ExtraCash overdrafts facilitated through our platform, each of which would have an adverse effect on our business, results of operations, financial condition, and future prospects
38. 44Changes in U.S. policies may adversely impact our business, financial condition, and results of operations
39. 45We operate in a cyclical industry. In an economic downturn, default rates may increase, there may be decreased demand for our products, and there may be adverse impacts to our business

Risks Related to Regulatory and Legal Matters

1. 46Our business is subject to extensive regulation and oversight in a variety of areas under federal, state and local laws, and is subject to regulatory investigations and consumer litigation
2. 47Regulatory agencies and consumer advocacy groups are highly focused on potential discrimination resulting from the use of machine learning and “black-box” algorithms
3. 48We are subject to extensive federal, state, and local laws and regulations relating to consumer financial protection
4. 49If ExtraCash overdrafts or other transactions originated through a bank partner are found to violate applicable state usury laws or other lending laws, it could materially adversely affect our business
5. 50consumer finance laws, and the non-applicability of certain state consumer finance laws including state licensing and usury restrictions
6. 51Our use of vendors and our other ongoing third-party business relationships are subject to increasing regulatory requirements and attention
7. 52Due to our bank partnership model, we are and will continue to be subject to third-party risk management obligations, our business model may need to be substantially altered and we may not be able to continue to operate our business as it is currently operated
8. 53If we were found to be operating without having obtained necessary state or local licenses, it could adversely affect our business, results of operations, financial condition, and future prospects
9. 54Laws and regulations relating to memberships and subscriptions may adversely affect our business
10. 55We are required to comply with anti-money laundering and anti-terrorism financing laws, as well as the Bank Secrecy Act, including through obligations imposed by our third-party service providers. Failure to comply with these obligations could have significant adverse consequences for us

Risks Relating to Ownership of our Securities

1. 56Dave’s dual class structure may depress the trading price of our Dave Class A Common Stock
2. 57Our stock price is volatile
3. 58general economic, political and market conditions, including fluctuating interest rates
4. 59Dave has never paid cash dividends on our capital stock and does not anticipate paying dividends in the foreseeable future
5. 60Anti-takeover provisions contained in our certificate of incorporation and bylaws and applicable laws could impair a takeover attempt
6. 61Our amended and restated certificate of incorporation contains exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees
7. 62Dave is subject to risks related to taxation in the United States
8. 63Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect Dave’s business and future profitability
9. 64Dave’s ability to utilize its net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations
10. 65The exercise price for our warrants is $368.00 per share of Dave Class A Common Stock. There is no guarantee that the Public Warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, they may expire worthless
11. 66We may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making their warrants worthless
12. 67We have issued and will continue to issue a substantial number of additional shares of Dave Class A Common Stock under an employee incentive plan. Any such issuances dilute the interest of our stockholders and likely present other risks
13. 68There can be no assurance that Dave Class A Common Stock will be able to comply with the listing standards of Nasdaq
14. 69Sales of a substantial number of shares of Dave Class A Common Stock in the public market could occur at any time. This could cause the market price of the Dave Class A Common Stock to drop significantly, even if our business is doing well
15. 70Pursuant to the Investor Rights Agreement, certain holders are entitled to, among other things, certain registration rights, including the demand of up to three underwritten offerings and customary piggyback registration rights
16. 71If securities or industry analysts do not publish or cease publishing research or reports about Dave, its business or its market, or if they change their recommendations regarding the Dave Class A Common Stock adversely, the price and trading volume of the Dave Class A Common Stock could decline
17. 72The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies

Risks Relating to our Indebtedness

1. 73Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
2. 74As of December 31, 2024 and December 31, 2023, the Company had drawn $75.0 million on the Debt Facility and had made no repayments
3. 75We guarantee certain obligations of one of our wholly-owned subsidiaries, which guarantee contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition