kplt-20250331

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-39116

Katapult Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware						84-2704291
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

5360 Legacy Drive, Building 2 Plano, TX						75024
(Address of Principal Executive Offices)						(Zip Code)

(833) 528-2785

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	KPLT	The Nasdaq Stock Market LLC
Redeemable Warrants	KPLTW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares of the registrant’s common stock outstanding as of May 12, 2025: 4,537,568

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this report, including statements regarding our opportunity, our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “assume” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “should,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

•our ability to refinance our indebtedness and continue as a going concern;

•meeting future liquidity requirements and complying with restrictive covenants related to indebtedness;

•executing on our business strategy, including expanding information and technology capabilities;

•our market opportunity, our ability to acquire and retain new and existing merchants and customers;

•customer adoption and continued growth of our mobile app featuring Katapult Pay;

•the timing and impact of our growth initiatives on our future financial performance and the impact of our business growth strategy;

•anticipating the occurrence and timing of prime lending tightening and impact on our results of operations;

•general economic conditions in the markets where we operate, the cyclical nature of consumer spending, and seasonal sales and spending patterns of consumers;

•factors affecting consumer spending that are not under our control, including, among others, levels of employment, disposable consumer income, inflation, prevailing interest rates, consumer debt and availability of credit, pandemics (such as COVID-19), consumer confidence in future economic conditions, political conditions, and consumer perceptions of personal well-being and security and willingness and ability of consumers to pay for the goods they lease through us when due;

•risks relating to uncertainty of our estimates of market opportunity and forecasts of market growth, including the home furnishings and retail environment;

•risks related to the concentration of a significant portion of our transaction volume with a single merchant, or type of merchant or industry;

•the effects of competition on our future business;

•the impact of unstable market and economic conditions such as impact of tariffs, rising inflation and interest rates;

•reliability of our platform and effectiveness of our risk models;

•data security breaches or other information technology incidents or disruptions, including cyber-attacks, and the protection of confidential, proprietary, personal and other information, including personal data of consumers;

•attracting and retaining employees, executive officers or directors;

•obtaining additional capital, including equity or debt financing and servicing our indebtedness;

•enhancing future operating and financial results;

•anticipating rapid technological changes, including artificial intelligence and other new technologies;

•staying abreast of modified or new laws and regulations and complying with laws and regulations applicable to our business, including laws and regulations related to rental purchase transactions, U.S. federal income tax, and data privacy;

•responding to uncertainties associated with product and service developments and market acceptance;

•identifying material weaknesses in our internal controls over financial reporting which, if not remediated, could affect the reliability of our financial statements;

•costs and effects of legal and administrative proceedings, settlements, investigations, and claims;

•litigation, regulatory matters, complaints, adverse publicity and/or misconduct by employees, vendors and/or service providers; and

•our ability to meet the minimum requirements for continued listing on the Nasdaq Global Market ("Nasdaq").

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Form 10-Q. Other sections of this Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.

Given these uncertainties, you should not place undue reliance on any forward-looking statements. Except as required by applicable law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future, and you should not rely upon these forward-looking statements after the date of this Quarterly Report on Form 10-Q.

KATAPULT HOLDINGS, INC.

FORM 10-Q

March 31, 2025

INDEX


		Page
PART 1	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets — March 31, 2025 (unaudited) and December 31, 2024	1
	Condensed Consolidated Statements of Operations (unaudited) — Three Months Ended March 31, 2025 and 2024	2
	Condensed Consolidated Statements of Stockholders’ Deficit (unaudited) — Three Months Ended March 31, 2025 and 2024	3
	Condensed Consolidated Statements of Cash Flows (unaudited) — T hree Months Ended March 31, 2025 and 2024	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	24

PART II	Other Information	24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
	Signatures	52

References in this Quarterly Report on Form 10-Q to “KPLT”, “Katapult”, “we”, “us”, “the Company”, or “our” means Katapult Holdings Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

PART I. Financial Information

Item 1. Financial Statements

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	March 31,		December 31,
	2025		2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,965	$	3,465
Restricted cash	8,346		13,087
Property held for lease, net of accumulated depreciation and impairment (Note 3)	66,913		67,085
Prepaid expenses and other current assets	4,445		6,731

Total current assets	85,669		90,368
Property and equipment, net	244		253
Capitalized software and intangible assets, net	2,155		2,076
Right-of-use assets, non-current	376		383
Security deposits	91		91
Total assets	$	88,535	$	93,171
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	3,040	$	1,491
Accrued liabilities (Note 4)	18,945		17,372
Accrued litigation settlement (Note 9)	2,199		2,199
Unearned revenue	5,711		4,823
Revolving line of credit, net (Note 5)	77,663		82,582
Term loan, net, current (Note 5)	31,490		30,047
Lease liabilities	129		179
Total current liabilities	139,177		138,693


Lease liabilities, non-current	431		444
Other liabilities	614		828
Total liabilities	140,222		139,965
STOCKHOLDERS' DEFICIT
Common stock, $.0001 par value-- 250,000,000 shares authorized; 4,483,544 and 4,446,540 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively	—		—
Additional paid-in capital	102,452		101,657
Accumulated deficit	(154,139)		(148,451)
Total stockholders' deficit	(51,687)		(46,794)
Total liabilities and stockholders' deficit	$	88,535	$	93,171


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2025		2024
Revenue
Rental revenue	$	71,078	$	64,142
Other revenue	868		919
Total revenue	71,946		65,061
Cost of revenue	57,597		48,573
Gross profit	14,349		16,488







Operating expenses	14,885		12,688
Income (loss) from operations	(536)		3,800

Interest expense and other fees	(5,144)		(4,527)
Interest income	57		324
Change in fair value of warrant liability	(36)		(162)
Loss before income taxes	(5,659)		(565)
Provision for income taxes	(29)		(5)
Net loss	$	(5,688)	$	(570)

Weighted average common shares outstanding - basic and diluted	4,618		4,242


Net loss per common share - basic and diluted	$	(1.23)	$	(0.13)


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(amounts in thousands)

(unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount
Balances at December 31, 2024	4,447	$	—	$	101,657	$	(148,451)	$	(46,794)
Net loss	—	—		—		(5,688)		(5,688)
Vesting of restricted stock units	62	—		—		—		—
Repurchases of restricted stock for payroll tax withholding	(25)	—		(271)		—		(271)
Stock-based compensation expense	—	—		1,066		—		1,066

Balances at March 31, 2025	4,484	$	—	$	102,452	$	(154,139)	$	(51,687)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount
Balances at December 31, 2023	4,073	$	—	$	94,544	$	(122,536)	$	(27,992)
Net loss	—	—		—		(570)		(570)

Vesting of restricted stock units	55	—		—		—		—
Repurchases of restricted stock for payroll tax withholding	(22)	—		(312)		—		(312)
Stock-based compensation expense	—	—		1,391		—		1,391
Balances at March 31, 2024	4,106	$	—	$	95,623	$	(123,106)	$	(27,483)


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2025		2024

Cash flows from operating activities:
Net loss	$	(5,688)	$	(570)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	39,392		34,026
Depreciation for early lease purchase options (buyouts)	9,664		7,613
Depreciation for impaired leases	6,632		5,636
Change in fair value of warrants and other non-cash items	36		162
Stock-based compensation	1,066		1,391
Amortization of debt discount	963		669
Amortization of debt issuance costs, net	88		66
Accrued PIK interest expense	480		347
Amortization of right-of-use assets	76		76
Changes in operating assets and liabilities:
Property held for lease	(55,185)		(45,249)
Prepaid expenses and other current assets	2,217		1,029

Accounts payable	1,549		754
Accrued liabilities	1,573		(4,123)
Accrued litigation	(250)		—
Lease liabilities	(63)		(55)
Unearned revenues	888		208
Net cash provided by operating activities	3,438		1,980
Cash flows from investing activities:
Purchases of property and equipment	(24)		—
Additions to capitalized software	(377)		(126)
Net cash used in investing activities	(401)		(126)
Cash flows from financing activities:
Proceeds from revolving line of credit	5,128		10,058
Principal repayments on revolving line of credit	(10,135)		(2,840)


Repurchases of restricted stock	(271)		(312)

Net cash (used in) provided by financing activities	(5,278)		6,906
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,241)		8,760
Cash and cash equivalents and restricted cash at beginning of period	16,552		28,811
Cash and cash equivalents and restricted cash at end of period	$	14,311	$	37,571

Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,661	$	3,382
Cash paid for income taxes	$	—	$	112

Cash paid for operating leases	$	111	$	82


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Business— Katapult Holdings, Inc. (“Katapult” or the “Company”) is a technology driven lease-to-own platform that integrates with omnichannel retailers and e-commerce platforms to power the purchasing of everyday durable goods for underserved U.S. non-prime consumers. Through the Company’s point-of-sale (“POS”) integrations and innovative mobile app featuring Katapult Pay, consumers who may be unable to access traditional financing can shop a growing network of merchant partners.

The Company experiences moderate seasonal fluctuations in our revenue as a result of consumer spending patterns. Historically, our revenue is strongest during the first quarter primarily due to higher gross originations during the fourth quarter holiday season. Our first quarter revenue is also impacted by the federal and state income tax refunds that our customers receive, which in the past, has led to our customers more frequently exercising the early purchase option on their lease agreements. Adverse events that occur could have a disproportionate effect on our financial results throughout the year.

Subsidiaries— The condensed consolidated financial statements of Katapult include the accounts of the Company and its wholly owned subsidiaries Katapult Intermediate Holdings LLC (formerly known as Keys Merger Sub 2, LLC), a Delaware limited liability company formed in December 2020, Katapult Group, Inc. (formerly known as Cognical, Inc.), a Delaware corporation incorporated in March 2012, Katapult SPV-1 LLC, a Delaware limited liability company formed in 2019, and Katapult SPV-2 LLC, a Delaware limited liability company formed in 2025. Legacy Katapult was incorporated in the state of Delaware in 2016. Katapult Group originates all of the Company's lease agreements with customers.

Basis of Presentation— The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company believes the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Annual Report on Form 10-K for the year ended December 31, 2024. The condensed consolidated financial statements include the accounts of Katapult Holdings, Inc. and its wholly owned subsidiaries. In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair presentation have been included in these condensed consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates— The preparation of the condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of income and expense during the reporting periods. The most significant estimates relate to property held for lease and the related depreciation method, impairments, and the valuation allowance associated with deferred tax assets. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other risk-based factors. Changes in estimates are reflected in reported amounts in the period in which they become known. Actual results could differ from those estimates.

Rental Revenue— Lease-purchase agreements, which comprise the majority of total revenue, fall within the scope of ASC 842, Leases under lessor accounting and revenue is recognized in the period it is earned and cash is collected. Property held for lease is leased to customers pursuant to lease-purchase agreements with an initial term: typically one week, two weeks, or one month, with non-refundable lease payments. Generally, the customer has the right to acquire title either through a 90-day promotional pricing option, an early lease-purchase option (buyout), or by completing all lease renewal payments, generally over 12 or 18 months. On any current lease, customers have the option to terminate the agreement at any time without penalty in accordance with the lease term. Amounts received from customers who elect early lease-purchase options (buyouts) are included in rental revenue. Lease payments received prior to their due dates are deferred and recorded as unearned revenue and are recognized as rental revenue in the period in which the revenue is earned. Services are considered to be rendered and revenue earned over the lease term. Rental revenue also includes an initial agreed-upon amount for executing customer lease-purchase agreements. Payments are received upon submission of the applications and execution of the lease-purchase agreements.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Revenues from leases that originated from merchants are generally recorded net of sales taxes as sales tax is collected from each customer's lease payment and a sales tax payable is recorded for remittance to the respective state. Revenue is recognized for leases in the period it is earned and cash is collected. For Katapult Pay transactions, all sales tax is paid by the Company upon purchase of the goods and is recorded in the cost basis of the capitalized property held for lease.

Property Held for Lease, Net of Accumulated Depreciation and Impairment— Property held for lease consists of furniture, mattresses, customer electronics, appliances, and other durable goods offered for lease-purchase in the normal course of business. Such property is provided to customers pursuant to a lease-purchase agreement with a minimum lease term; typically one week, two weeks, or one month. The renewal periods of the initial lease term of the agreement are typically 12 or 18 months. Customers may terminate a lease agreement at any time without penalty. The average customer continues to lease the property for approximately 8 months because the customer either exercises the early lease-purchase option (buyout) or terminates the lease-purchase agreement prior to the end of the 12 or 18 month renewal periods. As a result, property held for lease is classified as a current asset on the condensed consolidated balance sheets.

Property held for lease is recorded at cost, excluding shipping costs, and is carried at net book value. Depreciation for property held for lease is determined using the income forecasting method and is included within cost of revenue. The Company’s income forecasting method evaluates the patterns of the Company’s historical property held for lease portfolio to apply depreciation rates to the Company’s current property held for lease portfolio. Property held for lease is depreciated in the proportion of expected rents received to total expected rents to be received based on the Company’s historical data of lease performance. The utilization of rental merchandise occurs during periods of rental and coincides with the pattern of rental revenue receipts over the rental purchase agreement period. The Company also considers other qualitative factors, such as current and forecasted customer payment trends, and other risk-based factors as a component of its forecasting methodology.

The Company provides for impairment for the undepreciated balance of the property held for lease assuming no salvage value with a corresponding charge to cost of revenue. The provision for write-offs represents estimated losses based on historical results, which are incurred but not yet identified. Actual write-offs may differ from this estimate.

The Company applies its depreciation to property held for lease as follows: (1) typical depreciation based on historical patterns of customer payments when an item is leased for the full lease duration; (2) accelerated depreciation for impaired leases, based on historical patterns of lease impairment, and (3) accelerated depreciation for leases where an early purchase option (buyout) is exercised, based on historical patterns of lease buyouts.

The Company accelerates depreciation equal to the undepreciated net book value of property buyouts as buyouts occur with a corresponding charge to cost of revenue based on historical trends, such that the recorded amount closely approximates current actual buyouts during the period. The Company periodically evaluates fully depreciated property held for lease, net and when it is determined there is no future economic benefit, the cost of the assets are written off and the related accumulated depreciation is reversed.

There are uncertainties involved when recognizing expenses related to property held for lease due to the subjective nature of the income forecasting method and depreciation method, which could vary from actual results.

Other Revenue— Other revenue consists primarily of the sale of property held for lease (and lease agreements) to third parties and other immaterial sources of income from third party relationships. The sale of property held for lease is considered recurring and ordinary in nature to the Company’s business, and as such, these sales are accounted for within the scope of ASC 606, Revenue from Contracts with Customers. The payment terms require a fixed amount paid upfront by the third-party buyer based on a negotiated percentage of the collectible value of the unpaid balance of the delinquent leases being sold and is not subject to future adjustments or recourse provisions. Revenue from such sales is recognized at the point in time when control of the remaining unpaid delinquent lease balances and lease agreements are transferred to the third party buyer, which occurs upon execution of the sale agreement and receipt of consideration. Other revenue of $0.9 million and $0.9 million was recognized for the three months ended March 31, 2025 and 2024, respectively.

Concentration of Credit Risk— The Company’s concentration of credit risk consists primarily of cash. A portion of the Company’s cash balances exceed those that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances.

Significant customers are those which represent more than 10% of the Company’s total revenue or gross accounts receivable balance at each balance sheet date. As of March 31, 2025 and 2024, the Company did not have any customers that accounted for 10% or more of total revenue during the three months ended March 31, 2025 and 2024. Customer leases originated through

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

the Company's largest merchant, Wayfair Inc., represented more than 10% of our total revenue for the three months ended March 31, 2025 and 2024.

Recent Accounting Pronouncements Not Yet Adopted— In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU will improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. This update is effective for public entities for annual periods beginning after December 15, 2024 with early adoption permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact of this ASU.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarifies the date of adoption for ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2024-03.

3.PROPERTY HELD FOR LEASE, NET OF ACCUMULATED DEPRECIATION AND IMPAIRMENT

Property held for lease, net of accumulated depreciation and impairment consists of the following:


	March 31,		December 31,
	2025		2024
Property held for lease	$	173,540	$	300,603
Less: accumulated depreciation and impairment	(106,627)		(233,518)
Property held for lease, net	$	66,913	$	67,085

The table below details the cost of revenue for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
		2025		2024

Depreciation expense for property held for lease over the lease term		$	39,061	$	33,760
Depreciation for early lease purchase options (buyouts)		9,664		7,613
Depreciation for impaired leases		6,632		5,636
Other (1)		2,240		1,564
Total cost of revenue		$	57,597	$	48,573

(1) Other consists mainly of payment processing fees, incentives and other lease related costs.

4.ACCRUED LIABILITIES

Accrued liabilities consists of the following:


	March 31,		December 31,
	2025		2024
Bonus accrual	$	5,608	$	4,205
Sales tax payable	8,116		8,608
Unfunded lease payable	2,911		2,447
Interest payable	157		248
Other accrued liabilities	2,153		1,864
Total accrued liabilities	$	18,945	$	17,372

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

5.DEBT & LIQUIDITY

Debt

On May 14, 2019, Katapult SPV-1 LLC, as borrower (“Katapult SPV-1” or the “Borrower”), and Katapult Group, Inc. (f/k/a Cognical, Inc.) and the Company (as joined by certain Ninth Amendment and Joinder dated as of December 4, 2020) entered into a Credit Agreement with Midtown Madison Management, LLC as agent for various funds of Atalaya Capital Management (“Atalaya” and the “Lenders”, respectively), for a revolving line of credit (as amended, the “Credit Agreement” and the “RLOC”, respectively). As of September 30, 2024, Atalaya was acquired by Blue Owl Capital Inc (“Blue Owl”). The RLOC had a commitment of $125 million that the lenders had the right to increase to $250 million. Total outstanding principal under the RLOC was $77.8 million and $82.8 million as of March 31, 2025 and December 31, 2024, respectively.

In addition, in connection with a prior amendment to the Credit Agreement entered into on December 4, 2020, Atalaya also provided us with a senior secured term loan (the “Term Loan”) commitment of up to $50 million. We drew down the full $50 million of the Term Loan on December 4, 2020. The Term Loan bore interest at LIBOR plus 8.0% (with a 1% LIBOR floor) and an additional 3% interest per annum accrued to the principal balance as paid-in-kind (“PIK”) interest.

The Credit Agreement contains certain financial covenants, each as defined in the Credit Agreement, including Minimum Adjusted EBITDA levels, Minimum Tangible Net Worth, Minimum Liquidity and compliance with a Total Advance Rate. The Credit Agreement is also subject to certain negative and affirmative covenants. The negative covenants limit our ability to: incur additional indebtedness; pay dividends, redeem stock or make other distributions; amend our material agreements; make investments; create liens; transfer or sell the collateral under the Credit Agreement; make negative pledges; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and enter into certain transactions with affiliates. Early repayments of certain amounts under the Term Loan are subject to prepayment penalties.

On March 6, 2023, the Company entered into the 15th amendment to the Credit Agreement (the “15th Amendment") with the Lenders. As part of the 15th Amendment, the maturity date of the RLOC and the Term Loan were extended from December 4, 2023 to June 4, 2025 and the commitments under the RLOC were reduced from $125 million to $75 million . The interest rate for PIK on the Term Loan is (A) if Liquidity (as defined in the 15th Amendment) greater than $25 million, 4.5% or (B) if Liquidity is less than $25 million, 6%. The spread on the RLOC was increased from 7.5% to 8.5%, while the spread on the Term Loan remained at 8.0%. Additionally, effective as of April 1, 2023, the benchmark rate for the RLOC and the Term Loan was changed from LIBOR to Secured Overnight Financing Rate (“SOFR”), subject in each case to a 3% floor plus applicable credit adjustment spread. which is fixed at 0.10%. As of March 31, 2025, the interest rates for the RLOC and Term Loan, were 12.9% and 18.4%, respectively, (which includes the 6.0% interest rate applicable to PIK with respect to the Term Loan).

In connection with the 15th Amendment, the Company repaid $25 million of outstanding principal amount of the Term Loan and issued a warrant to purchase up to 80,000 shares of its common stock at an exercise price of $0.25 per share, which vested on September 6, 2023. On December 5, 2023, the Company issued a warrant to purchase an additional 80,000 shares of its common stock at an exercise price of $0.25 per share which vested on March 5, 2024.

In addition, the 15th Amendment also updated certain financial covenants, including the Minimum Adjusted EBITDA levels, Minimum Tangible Net Worth, Minimum Liquidity and compliance with a Total Advance Rate.

On April 24, 2024, the Company entered into the 16th amendment to the Credit Agreement with the Lenders (the “16th Amendment”). Pursuant to such 16th Amendment, the Lenders granted the Company a waiver of all Specified Defaults (as defined in the 16th Amendment) related to the accounting errors that resulted in the restatement of the Company’s financial statements for all reporting periods prior to the date of the 16th Amendment. In addition, the 16th Amendment also updated certain financial covenants each as defined in the 16th Amendment, including Minimum Adjusted EBITDA (Trailing 3 Months), Minimum Adjusted EBITDA (YTD) and Minimum Tangible Net Worth.

On November 21, 2024, the Company entered into the 17th amendment to the Credit Agreement with the Lenders (the “17th Amendment”). Commitments under the RLOC were increased from $75 million to $90 million to primarily fund leases and general corporate needs. Additionally, the Lenders may, in its sole and absolute discretion, provide up to $10 million in Revolving Advances, in excess of the Revolving Loan Commitment, following a request from the Borrower and subject to the other terms and conditions set forth within the Credit Agreement.

On February 20, 2025, the Company entered into the 18th amendment to the Credit Agreement with the Lenders (“the 18th Amendment”), which updated certain financial covenants, including the Minimum Liquidity and Total Advance Rate, and

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

waived all Default or Event of Default (as each of these terms is defined in the 18th Amendment) under the Borrowing Base Certificate delivered prior to February 20, 2025.

On May 14, 2025, the Company entered into the 19th Amendment (as defined herein) pursuant to which the Lenders granted the Company a limited waiver through the existing maturity of the Credit Agreement of certain Existing Defaults (as defined in the 19th Amendment). See Note 12, Subsequent Events, for more information.

A reconciliation of the outstanding principal to the carrying amount of the RLOC is as follows:


	March 31,		December 31,
	2025		2024
Principal balance	$	77,751	$	82,758
Less: Unamortized issuance costs	(88)		(176)
Total carrying amount	$	77,663	$	82,582

The issuance costs are amortized over the life of the RLOC and included in interest expense and other fees in the condensed consolidated statements of operations.

A reconciliation of the outstanding principal to the carrying amount of the Term Loan is as follows:


	March 31,		December 31,
	2025		2024
Principal balance	$	25,000	$	25,000
PIK	7,260		6,780
Less: Unamortized debt discount and issuance costs	(770)		(1,733)
Total carrying amount	$	31,490	$	30,047

Amortization expense related to the Term Loan discount and issuance costs of $1.0 million and $0.7 million were recorded for the three months ended March 31, 2025 and 2024, respectively. Amortization of debt discount and issuance costs is included in interest expense and other fees in the condensed consolidated statements of operations.

The RLOC and Term Loan are also subject to certain customary representations, affirmative covenants, which consist of maintaining lease performance metrics, financial ratios related to operating results, and lease delinquency ratios, along with customary negative covenants.

As noted above, the RLOC and Term Loan maturity dates are June 4, 2025. Due to the maturity date being less than one year from the balance sheet dates of March 31, 2025 and December 31, 2024, debt is classified as a current liability in the condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024.

Liquidity & Going Concern

The Company’s financing is generally comprised of cash from leases and borrowings from the RLOC, which is fully collateralized by the Company’s assets. As of May 12, 2025, the Company had a combined principal balance outstanding of approximately $113.3 million related to the RLOC and Term Loan, both of which mature within twelve months of the date that these financial statements are issued. Both loans were previously refinanced on March 6, 2023 to extend the maturity date from December 4, 2023 to June 4, 2025.

As of May 12, 2025, the Company had total cash on hand of $12.8 million, including $7.1 million million of unrestricted cash. The Company anticipates that it will not have sufficient cash available to repay the loans at maturity and is currently seeking to refinance the loans prior to maturity on June 4, 2025, which raises substantial doubt about the Company’s ability to continue as a going concern.

Management plans to address this uncertainty by refinancing the loans. No adjustments have been made to the carrying amounts of assets or liabilities, as the Company intends to refinance the loans prior to the maturity on June 4, 2025. However, there can be no assurance that the Company will be able to secure such financing prior to that date or at all.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

6.STOCK-BASED COMPENSATION

As of March 31, 2025, the Company has two stock incentive plans, the Cognical Holdings, Inc. 2014 Stock Incentive Plan, (the “2014 Plan”) and the Katapult Holdings, Inc. 2021 Stock Incentive Plan, (the “2021 Plan”).

2014 Plan

In accordance with the 2014 Plan, the board of directors of Legacy Katapult may grant equity awards to officers, employees, directors and consultants for common stock. The 2014 Plan has specific vesting for each stock option grant allowing vesting of the options over one to four years. No equity awards have been granted under the 2014 Plan since October 2020 and no new equity awards are expected to be granted under the 2014 Plan.

Stock Options

A summary of the status of the stock options under the 2014 Plan as of March 31, 2025, and changes during the three months then ended is presented below:


	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value
Balance - December 31, 2024	256,689	$	6.96	4.4	$	415
Granted	—	—
Exercised	—	—
Forfeited	—	—
Expired	—	—
Balance - March 31, 2025	256,689	$	6.96	4.1	$	1,129

No stock options were exercised during either the three months ended March 31, 2025 or 2024.

2021 Plan

On June 9, 2021, the approved 2021 Plan became effective.

In accordance with the 2021 Plan, directors may issue equity awards, including restricted stock awards (“RSA”), restricted stock unit awards (“RSU”), performance share awards, performance share unit awards (“PSU”), stock appreciation rights and stock options to officers, employees, directors and consultants to purchase common stock. The Plan also allows for providing cash-based awards and other stock-based awards. The awards granted are subject to either service-based and/or performance-based vesting conditions. Restricted stock units (“RSUs”) are equity awards granted to employees that entitle the holder to shares of common stock when the awards vest. RSUs are measured based on the fair value of the Company’s common stock on the date of grant. Awards granted under the 2021 Plan generally vest over one to four years. As of March 31, 2025, the total number of common stock authorized for issuance under the 2021 Plan is 639,467.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The following table summarizes the Company’s RSA activity under the 2021 Plan during the three months ended March 31, 2025:


	Stock Options						Restricted Stock Units
	Number of Options	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value		Shares	Weighted- Average Grant Date Fair Value
Balance - December 31, 2024	13,865	$	261.25	6.5	$	—	264,812	$	22.83
Granted	—	—					1,330	9.36
Exercised / Vested	—	—					(62,313)	27.69
Forfeited	—	—					(115)	9.73
Balance - March 31, 2025	13,865	$	261.25	6.3	$	—	203,714	$	21.26

Stock-Based Compensation Expense— Stock-based compensation expense of $1.1 million and $1.4 million for the three months ended March 31, 2025 and 2024, respectively. Stock-based compensation expense is included in operating expenses in the condensed consolidated statements of operations.

As of March 31, 2025, there was $3.5 million of unrecognized compensation costs. This amount is expected to be recognized over a weighted-average period of 1.4 years. The total fair value of vested RSUs as of their respective vesting dates were $0.7 million.

7.INCOME TAXES

The income tax provision of $0.03 million and $0.01 million was recorded for the three months ended March 31, 2025 and 2024, respectively. The Company’s effective tax rate was (0.60%) and (0.95%) for the three months ended March 31, 2025 and 2024, respectively. The provision for the three months ended March 31, 2025 relates predominately to state income taxes for states that have net operating loss usage limitations. The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 is different than the statutory rate primarily due to changes in the Company’s valuation allowance.

As of December 31, 2024, the Company had U.S. federal net operating loss carryforward of $124.8 million that expire at various dates from 2033 through 2037 and includes $102.2 million that have an unlimited carryforward period. As of December 31, 2024, the Company has U.S. state and local net operating loss carryforwards of $91.0 million that expire from 2025 to 2043.

In evaluating its ability to realize its net deferred tax assets, the Company considered all available positive and negative evidence, such as past operating results, forecasted earnings, prudent and feasible tax planning strategies, and the future realization of the tax benefits of existing temporary differences. The Company remains in a cumulative tax loss position for the 36 months ended March 31, 2025, and determined that it is more likely than not that its net deferred tax assets will not be realized. The Company continues to maintain a full valuation allowance as of March 31, 2025 and December 31, 2024.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

8.NET LOSS PER SHARE

As discussed in Note 5, Debt & Liquidity, on March 6, 2023, in connection with the 15th Amendment, the Company issued a private warrant to purchase up to 80,000 shares of the Company common stock at an exercise price of $0.25 per share, which vested on September 6, 2023. On December 5, 2023, the Company issued a private warrant to purchase an additional 80,000 shares of our common stock at an exercise price of $0.25 per share which are vested. The warrants are considered exercisable for 160,000 shares for little to no consideration and the shares are therefore included in basic and diluted shares outstanding at their issuance date. In connection with the merger, 500,000 public warrants were originally issued in the initial public offering (“IPO”) and 13,300 private warrants were originally issued in a private placement in connection with the IPO. These warrants can be exercised up to five years after the merger.

The Company’s potentially dilutive securities, which include unvested RSUs, stock options to purchase common stock and warrants to purchase common stock, have been excluded from the computation of diluted net loss per share for certain periods, as the effect would be antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same in periods of a net loss. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended March 31,
	2025	2024
Public warrants	500,000	500,000
Private warrants	13,300	13,300
Stock options	270,554	336,270
Unvested restricted stock units	203,714	222,800
Total common stock equivalents	987,568	1,072,370

9.COMMITMENTS AND CONTINGENCIES

Litigation risk— From time to time, the Company may become involved in various legal actions. The Company is not currently aware of any indemnification or other claims, except as discussed below and has accrued liabilities related to such obligations in the condensed consolidated financial statements when estimable and probable, as of March 31, 2025 and December 31, 2024.

Except as set forth below, the Company and its subsidiaries are not a party to, and their properties are not the subject of, any known material pending legal proceedings.

DCA Litigation

On April 9, 2021, Daiwa Corporate Advisory LLC (“DCA”), filed a complaint in the Supreme Court of the State of New York, New York County. The complaint related to an April 11, 2018 letter agreement (the “Letter Agreement”) entered into by DCA and Legacy Katapult.

On October 7, 2024, the Company reached a settlement with DCA to resolve any and all disputes that exist between the two parties for total consideration of $3.0 million with half paid on October 11, 2024 and the remainder paid over the next two years. On October 14, 2024, the case was formally discontinued, with prejudice. On March 31, 2025, the Company made their next installment payment for $0.3 million. The Company recognized $0.8 million in estimated loss in accrued litigation settlement liability for the payments that are due within one year from March 31, 2025 and $0.5 million in other liabilities for the installment payments that are due after March 31, 2026 in its condensed consolidated balance sheet as of March 31, 2025.

Shareholder Litigation

On August 27, 2021, a putative class action lawsuit, captioned McIntosh v. Katapult Holdings, Inc., et al, was filed in the U.S. District Court for the Southern District of New York (the “New York Action”).

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

On August 25, 2022, a purported Company stockholder filed a putative class action lawsuit, captioned Saunders v. Einbinder, et al., against directors and officers of FinServ Acquisition Corp. (“FinServ”) and FinServ Holdings LLC in the Delaware Court of Chancery (the “Delaware Action”).

On May 20, 2024, the Company reached an agreement in principle to settle the New York Action and Delaware Action for total consideration of $12.0 million, comprised of: (1) a cash component of $8.5 million of which $5.0 million was paid by the insurer; and (2) an additional component of $3.5 million comprised of the Company’s common stock (the “Settlement Shares”) and/or cash. On July 3, 2024, the parties executed Stipulations of Settlement. In agreeing to settle, neither the Company nor any of the individual defendants made any admission of liability.

Pursuant to the settlement, on August 7, 2024, the Company paid $1.7 million into an escrow account for the Delaware plaintiffs. On October 10, 2024, the Delaware Court of Chancery approved the settlement of the Delaware Action, dismissing all claims asserted with prejudice. At that time, the Company determined the number of Settlement Shares for the Delaware Action (the “Delaware Settlement Shares”) is 275,845 shares which was calculated by dividing $2.8 million by the volume-weighted average per share price (“VWAP”) of the Company’s common stock for the 10 consecutive trading days immediately preceding the hearing held on October 10, 2024 for the final approval for the Delaware Action (the “Delaware Settlement Hearing VWAP”). 167,797 of the Delaware Settlement Shares were released to the Delaware plaintiffs on October 24, 2024. 108,048 of the Delaware Settlement Shares are considered the “Delaware Excess Settlement Shares.” The Company may either deliver the Delaware Excess Settlement Shares or pay in cash the full value of the Delaware Excess Settlement Shares, calculated by multiplying the number of Delaware Excess Settlement Shares by the Delaware Settlement Hearing VWAP. The Delaware Excess Settlement Shares or cash are due in two equal installments. On April 10, 2025, the Company delivered 54,024 shares to the Delaware plaintiffs, which represents one-half of the remaining Delaware Excess Settlement Shares and the second equal installment will be made on October 10, 2025.

Pursuant to the settlement, on August 20, 2024, the Company paid $1.8 million into an escrow account for the New York plaintiffs. On December 13, 2024, the District Court of the Southern District of New York approved the settlement of the New York Action, dismissing all claims asserted with prejudice. At that time, the Company determined the number of Settlement Shares for the New York Action (the “New York Settlement Shares”) is 103,424 shares which was calculated by dividing $0.8 million by the VWAP of the Company’s common stock for the ten (10) consecutive trading days immediately preceding the hearing held on December 13, 2024 for the final approval for the New York Action (the “New York Settlement Hearing VWAP”). 43,839 of the New York Settlement Shares were released to the New York plaintiffs on December 20, 2024. 59,585 of the New York Settlement Shares are considered the “New York Excess Settlement Shares.” The Company may either deliver the New York Excess Settlement Shares or pay in cash the full value of the New York Excess Settlement Shares, calculated by multiplying the number of New York Excess Settlement Shares by the New York Settlement Hearing VWAP. The New York Excess Settlement Shares or cash are due in two equal installments to be made on June 13, 2025 and December 13, 2025.

The Company recognized $1.45 million in estimated loss in accrued litigation settlement liability for the payments that are due within one year from March 31, 2025.

FlexShopper Litigation

On September 30, 2024, FlexShopper, Inc. (“FlexShopper”) filed a complaint against Katapult in the U.S. District Court for the Eastern District of Texas, Marshall Division. The complaint alleges patent infringement and seeks an injunction as well as damages for alleged lost profits and willfulness. On December 20, 2024, the Company filed a Motion to Dismiss all claims. The Company has not recorded any loss contingencies associated with this litigation as loss is not probable and the amount is not reasonably estimable as of March 31, 2025. The Company intends to vigorously defend this case.

10.FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of cash, accounts payable, accrued expenses, warrant liability, the RLOC, and the Term Loan. The Company believes that the carrying amounts of its financial instruments including cash, accounts payable and accrued expenses approximate their fair values due to the short-time maturities of these instruments. The condensed consolidated financial statements also include level 3 fair value measurements of private common stock warrants. The Company uses a third-party valuation firm to determine the fair value of certain of the Company's financial instruments.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

RLOC and Term Loan


	March 31, 2025				December 31, 2024
	Carrying amount		Fair value		Carrying amount		Fair value
RLOC	$	77,663	$	77,964	$	82,582	$	84,422
Term Loan	31,490		32,659		30,047		33,151
	$	109,153	$	110,623	$	112,629	$	117,573

The estimated fair values of the Company’s RLOC and Term Loan were determined using Level 2 inputs based on an estimated credit rating for the Company and the trading value of debt for similar debt instruments with similar credit ratings.

Warrant Liability


	Warrant liability - Public (Level 1) & Private Warrants (Level 3)
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total
Balance at December 31, 2024	$	76	$	—	$	2	$	78
Change in fair value	35		—		1		36
Balance at March 31, 2025	$	111	$	—	$	3	$	114

During the three months ended March 31, 2025 and 2024, there were no transfers between Level 1 and Level 2, nor into or out of Level 3.

11.SEGMENT REPORTING

The Company is a U.S. domiciled business, with operations in 46 states and the District of Columbia, providing lease payment options to consumers to obtain durable goods from omnichannel and e-commerce partners. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment. The accounting policies for this segment are the same as those described in the summary of significant accounting policies and the measure of segment assets is reported on the condensed consolidated balance sheet as total assets. There have been no changes in the Company’s organizational structure or reporting practices during the three months ended

SEC Form 10-Q filed by Katapult Holdings Inc.