Dave Inc. current report, 05 January 2022

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Dave Inc. Form 8-K Summary

Business context and reporting period

Dave Inc. filed this Form 8-K on January 11, 2022, reporting events occurring primarily on January 5, 2022. The filing documents the closing of Dave’s business combination with VPC Impact Acquisition Holdings III, Inc. and the transition from a special-purpose acquisition company to the operating company Dave Inc. The filing includes historical financial information for Legacy Dave through September 30, 2021 and fiscal years 2020 and 2019, incorporated by reference from the proxy statement/prospectus.

Transaction, capitalization, and key financial metrics

  • Legacy Dave was acquired through a two-step merger and became a wholly owned operating subsidiary, renamed Dave Operating LLC.
  • The implied equity value attributed to Legacy Dave holders was $3.5 billion, based on an assumed value of $10.00 per share.
  • The PIPE investment comprised 21.0 million shares of Class A common stock at $10.00 per share, implying gross proceeds of approximately $210 million.
  • Public holders redeemed 22,417,767 shares for approximately $224.2 million, or about $10.00 per share. The trust account balance immediately before closing was approximately $29.6 million.
  • Immediately after closing, 372,000,732 common shares were outstanding: 323,550,093 Class A shares and 48,450,639 Class V shares. There were also warrants exercisable for 11,444,364 Class A shares.
  • Class A common stock and warrants began trading on Nasdaq under DAVE and DAVEW, respectively. The former VPCC securities were delisted from the NYSE, and the units separated into their component securities.
  • The filing text does not provide clear consolidated revenue, net income, operating cash flow, cash balance after closing, margins, or total debt for Dave as of the transaction date. Historical financial statements and pro forma information are incorporated by reference or included in Exhibit 99.2.

Material changes versus the prior comparable period

  • The registrant changed from VPC Impact Acquisition Holdings III, Inc. to Dave Inc. and ceased to be a shell company.
  • Dave adopted a dual-class common stock structure. Jason Wilk holds all 48,450,639 Class V shares and 60.0% of total voting power; the directors and executive officers as a group hold 62.5% of total voting power.
  • Management changed: Jason Wilk became Chairman and Chief Executive Officer, Kyle Beilman became Chief Financial Officer and Secretary, and Brendan Carroll became lead independent director. Several prior VPCC directors and officers resigned.
  • Dave adopted a new 2021 Equity Incentive Plan and Employee Stock Purchase Plan. The Legacy Dave 2017 Stock Plan was terminated for new grants, while existing awards continue under their original terms as modified in connection with the merger.
  • The planned repurchase of shares from Jason Wilk and Kyle Beilman did not occur because available cash was below the $300 million contractual threshold.
  • WithumSmith+Brown was dismissed after completing the audit of VPCC for the year ended December 31, 2021. Moss Adams was engaged to audit Dave for the year ended December 31, 2022. The filing reports no disagreements or reportable events with WithumSmith.

Guidance, outlook, risks, contingencies, and unusual items

  • No formal revenue, earnings, cash flow, or other operating guidance is provided in this filing.
  • Management’s forward-looking statements address potential benefits of the combination, future operations, growth, capital resources, market expansion, and financial performance, but are subject to substantial uncertainty.
  • Key risks include maintaining the Nasdaq listing, realizing the expected benefits of the combination, competition, managing growth, regulatory and legal developments, intellectual property protection, workforce retention, service failures, COVID-19 effects, litigation, transaction costs, and broader economic conditions.
  • Jason Wilk’s January 3, 2022 employment agreement provides for a $425,000 annual base salary and a target annual cash incentive equal to 100% of base salary. It also includes severance and change-in-control provisions, including potential equity acceleration.
  • Wilk holds an option covering 11,456,061 Class A shares after adjustment, with an exercise price of $0.72 per share and performance-based vesting tied to stock-price milestones ranging from $7.26 to $36.30.
  • Related-party arrangements include office leases with an entity associated with Jason Wilk. Legacy Dave paid approximately $320,000 under those leases during 2021.
  • Legacy Dave loans related to option exercises and share repurchase arrangements had an outstanding balance of approximately $9.7 million, including interest, as of September 30, 2021. The related notes were cancelled in connection with the January 2022 repurchase transactions.
  • The company has not paid cash dividends and states that future dividends will depend on revenues, earnings, capital requirements, and financial condition.

Important facts for investors to verify

  • Review Exhibit 99.2 and the incorporated Legacy Dave financial statements for actual revenue, profitability, cash flow, liquidity, debt, and pro forma effects of the transaction.
  • Verify the final post-closing share count, warrant dilution, lock-up provisions, and the voting implications of the Class V shares.
  • Assess whether the approximately $29.6 million remaining trust account and approximately $210 million PIPE investment provide sufficient liquidity after redemptions and transaction costs.
  • Review the terms and potential dilution from Wilk’s performance-based option and the 2021 equity plans.
  • Evaluate related-party leases, executive severance and change-in-control obligations, and other contingencies incorporated from the proxy statement/prospectus.
  • Confirm subsequent operating results and whether Dave achieved the expected benefits of the business combination, as this filing provides no post-closing operating guidance or results.