Dave Inc./DE

As of the date of this Form 10-Q, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 2, 2026, other than as noted below. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Risks Related to the 2031 Notes

We may not have the ability to raise the funds necessary to settle conversions of the 2031 Notes, repay the 2031 Notes at maturity or repurchase the 2031 Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2031 Notes.

In March 2026, we completed a private offering of $200.0 million aggregate principal amount of 0% Convertible Senior Notes due 2031 (the "2031 Notes"). Holders of the 2031 Notes have the right, subject to certain conditions and limited exceptions, to require us to repurchase all or a portion of their notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2031 Notes to be repurchased, plus accrued and unpaid interest, if any. In addition, upon conversion of the 2031 Notes, we are required to make cash payments in an amount at least equal to the principal amount of such notes (or, if less, the conversion value thereof). Moreover, we are required to repay the 2031 Notes in cash at the maturity date, unless earlier converted, redeemed or repurchased.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefor or pay cash with respect to notes being converted or at their maturity. In addition, our ability to repurchase the 2031 Notes or to pay cash upon conversions of the 2031 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.

Our failure to repurchase notes at a time when the repurchase is required by the indenture or to pay cash upon conversion or at the maturity date of the 2031 Notes as required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2031 Notes or make cash payments upon conversions thereof. We have in the past been, and at any given time and from time to time may be, engaged in discussions or negotiations with respect to acquisitions, dispositions or other strategic transactions. There can be no assurance if or when we will enter into any such transactions, the terms thereof or whether such transactions will constitute a fundamental change.

The conditional conversion feature of the 2031 Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2031 Notes is triggered, holders of notes will be entitled to convert the 2031 Notes at any time during specified periods at their option. If one or more holders elect to convert their notes, we would be required to make cash payments in an amount at least equal to the principal amount of such converted notes (or, if less, the conversion value thereof), which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we will be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2031 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the 2031 Notes, could adversely affect our reported financial results.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 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) (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments to this guidance are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. In accordance with ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. By removing certain of the separation models, the effective interest rate of convertible debt instruments typically will more closely approximate the coupon interest rate when applying the guidance in Topic 835, Interest. Debt issuance costs will be amortized as interest expense over the life of the debt on an effective interest basis, in a manner consistent with the treatment of a debt discount. As a result of this amortization, the interest expense that we expect to recognize for the 2031 Notes for accounting purposes will be greater than the cash special interest payments (if any) we will make on the 2031 Notes, which will result in lower reported income.

In addition, under ASU 2020-06, the dilutive effect of convertible instruments shall be reflected in diluted EPS by application of the if-converted method. Because the principal amount of the 2031 Notes is required to be settled in cash in all circumstances, regardless of when a conversion occurs, with settlement of any in-the-money conversion spread payable in cash or shares at the Company's election, the diluted EPS result under the if-converted method will be similar to the diluted EPS result under previous GAAP of applying the treasury stock method. Under this method, the shares issuable upon conversion of the 2031 Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the 2031 Notes exceeds the principal amount of the 2031 Notes. For diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such in-the-money amount are issued. We cannot be certain that accounting standards will not change in the future, and any future changes in the accounting standards may adversely affect our diluted earnings per share.

Furthermore, if any of the conditions to the convertibility of the 2031 Notes is satisfied, then we will be required under applicable accounting standards to reclassify the liability carrying value of the 2031 Notes as a current, rather than long-term, liability. This reclassification could be required even if no noteholders elect to convert their notes and could materially reduce our reported net working capital.

The Capped Call Transactions may affect the value of the 2031 Notes and our common stock.

In connection with the issuance of the 2031 Notes, we entered into privately negotiated capped call transactions with certain financial institutions (the “Capped Call Transactions”). The Capped Call Transactions are expected generally to reduce potential dilution to our common stock upon any conversion of the 2031 Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted notes, as the case may be, with such reduction and/or offset subject to a cap.

In connection with establishing their initial hedges of the Capped Call Transactions, the option counterparties or their respective affiliates entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the 2031 Notes, and they may unwind these various derivative transactions and purchase our common stock in open market transactions. This activity could increase (or reduce the size of any decrease in) the market price of our common stock or the 2031 Notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the 2031 Notes (and are likely to do so (x) during any observation period related to a conversion of the 2031 Notes on or after January 1, 2031, (y) during any observation period related to a conversion of the 2031 Notes prior to January 1, 2031 or following any repurchase of the 2031 Notes by us on any fundamental change repurchase date, any redemption date or any other date on which we retire any notes, in each case, if we elect to terminate the relevant portion of the Capped Call Transactions, and (z) in connection with any negotiated unwind or modification of the Capped Call Transactions). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the 2031 Notes, which could affect your ability to convert the 2031 Notes and, to the extent the activity occurs during any observation period related to a conversion of the 2031 Notes, it could affect the number of shares, if any, and value and/or amount of the consideration that you will receive upon conversion of the 2031 Notes. The potential effect, if any, of these transactions and activities on the market price of our common stock or the 2031 Notes will depend in part on market conditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock and the value of the 2031 Notes (and as a result, the value of the consideration or the amount of cash and/or the number of shares, if any, that you would receive upon the conversion of any notes) and, under certain circumstances, your ability to convert your notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the 2031 Notes or our common stock. In addition, we do not make any representation that the option counterparties or their respective affiliates will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

The option counterparties are financial institutions, and we are subject to the risk that any or all of them might default under the Capped Call Transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that option counterparty. Our exposure will depend on many factors, but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of any option counterparty.

In addition, the terms of the Capped Call Transactions may be subject to adjustment, modification or, in some cases, renegotiation in the event of certain corporate and other transactions. The Capped Call Transactions may not operate as we intend in the event that we are required to adjust the terms of such instruments as a result of transactions in the future or in the event of other unanticipated developments that may adversely affect the functioning of the Capped Call Transactions.

Conversion of the 2031 Notes may dilute the ownership interest of existing stockholders, including holders who have previously converted their notes.

Upon conversion of the 2031 Notes, at our election, we may settle the portion, if any, of our conversion obligation in excess of the aggregate principal amount of the 2031 Notes being converted entirely or partly in shares of our common stock. As a result, the conversion of some or all of the 2031 Notes may dilute the ownership interests of existing stockholders. Any sales in the public market of the common stock issuable upon such conversion of the 2031 Notes could adversely affect prevailing market prices of our common stock and, in turn, the price of the 2031 Notes. In addition, the existence of the 2031 Notes may encourage short selling by market participants because the conversion of the 2031 Notes could depress the price of our common stock.

Risks Relating to our Indebtedness

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our Debt Facility and the 2031 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.