kplt-20260331

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, 2026


☐			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 4, 2026: 4,765,058

CERTAIN DEFINITIONS

In this report, unless otherwise stated or the context otherwise indicates, the terms "we," "us," "our," the "Company," or "Katapult" refer to Katapult Holdings, Inc. and its subsidiaries. Certain abbreviations and terms used in this Quarterly Report on Form 10-Q are defined as follows:

“2019 Loan Agreement” means the Loan and Security Agreement, dated May 14, 2019, by and among the Credit Parties, Midtown Madison Management LLC and the other lenders party thereto (as amended, amended and restated, supplemented, revised or otherwise modified from time to time prior to June 12, 2025).

“2025 Loan Agreement” means that certain Amended and Restated Loan and Security Agreement, dated June 12, 2025, by and among the Credit Parties, Midtown Madison Management LLC, and the lenders party thereto, which amended and restated the 2019 Loan Agreement in its entirety.

“Aaron’s” means Aaron’s Intermediate Holdco, Inc., a Delaware corporation.

“Aaron’s Merger” means the merger of Merger Sub 1 with and into Aaron’s at the time as of which the Aaron’s Merger becomes effective.

“Aaron’s MIP” means Aaron’s MIP Holdings, LLC, a Delaware limited liability company and management incentive plan entity adopted by The Aaron’s Company to align the interests of the Aaron’s management team with IQV Holdco.

“Aaron’s MIP Exchange” means the exchange of Aaron’s MIP Units for Aaron’s MIP Rollover Interests.

“Aaron’s MIP Holders” means the holders of Aaron’s MIP Units.

“Aaron’s MIP Rollover Interests” means 943,580 shares of Katapult common stock issued to the Aaron’s MIP Holders pursuant to the Aaron’s MIP Exchange.

“Aaron’s MIP Units” means the Class A Unit and Class B membership interests of Aaron’s MIP.

“CCFI” means CCFI Holdings, LLC, a Delaware limited liability company.

“CCFI Merger” means the merger of Merger Sub 2 with and into CCFI at the time as of which the CCFI Merger becomes effective.

“CCFI MIP” shall mean CCFI MIP Holdings LLC, a Delaware limited liability company and management incentive plan entity adopted by CCFI to align the interests of the CCFI management team with CCFI equityholders.

“CCFI MIP Equity” means the equity interests of CCFI MIP.

“CCFI MIP Exchange” means the exchange of CCFI MIP Equity for CCFI MIP Rollover Interests.

“CCFI MIP Holders” means the holders of CCFI MIP Equity.

“CCFI MIP Rollover Interests” means 11,011,927 shares of Katapult common stock issued to the CCFI MIP Holders pursuant to the CCFI MIP Exchange.

“Closing” means the consummation of the Mergers.

“Credit Parties” means Katapult SPV-1 LLC, Katapult Group, Inc., and Katapult.

“First Amendment” means that certain Limited Waiver and First Amendment to Amended and Restated Loan and Security Agreement, dated November 2, 2025, among the Credit Parties, Midtown Madison Management LLC, and the lenders party thereto.

“Hawthorn Preferred Stock Exchange” means Katapult’s repurchase of all outstanding shares of Katapult Convertible Preferred Stock issued to Hawthorn immediately prior to the consummation of the Mergers pursuant to the Hawthorn Side Letter.

“Hawthorn Side Letter” means that certain side letter, dated December 11, 2025, by and among Katapult, Aaron’s, CCFI and Hawthorn to effectuate the Hawthorn Preferred Stock Exchange.

“Hawthorn Warrant Exercise” means Hawthorn’s exercise of the warrants to purchase 160,000 shares of Katapult common stock at $0.25 per share and 486,264 Katapult common stock at an exercise price of $0.01 per share, held by Hawthorn on a cashless basis in full for shares of Katapult common stock pursuant to the Hawthorn Side Letter.

“IQV Holdco” means IQV Holdco, LLC, a Delaware limited liability company.

“Katapult 2014 Plan” means the Cognical Holdings, Inc. 2014 Stock Incentive Plan.

“Katapult 2021 Plan” means the Katapult Holdings, Inc. 2021 Equity Incentive Plan, as amended.

“Katapult common stock” means shares of common stock of Katapult, par value $0.0001 per share.

“Katapult Convertible Preferred Stock” means the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock.

“Katapult Stock Issuance” means the issuance of shares of Katapult common stock to the stockholders of Aaron’s, the Aaron’s MIP Holders, the unitholders of CCFI and the CCFI MIP Holders, pursuant to the terms of the Merger Agreement.

“Loan Agreement” means the 2025 Loan Agreement (as amended by the Limited Waiver dated September 15, 2025), that certain Limited Waiver dated September 29, 2025, that certain Limited Waiver dated October 13, 2025, that certain Limited Waiver dated October 20, 2025, that certain Limited Waiver dated October 27, 2025, that certain Limited Waiver dated October 29, 2025, the First Amendment, the Second Amendment, that certain Limited Waiver dated January 15, 2026, that certain Limited Waiver dated February 13, 2026, that certain Limited Waiver dated March 9, 2026, that certain Limited Waiver dated April 15, 2026, that certain Limited Waiver dated May 5, 2026 and as further amended, amended and restated, supplemented, revised, or otherwise modified from time to time prior to the date hereof).

“Merger Agreement” means that certain Agreement and Plan of Merger, dated December 11, 2025, by and among Merger Sub 1, Merger Sub 2, CCFI, and Aaron’s (as it may be amended, restated, supplemented or otherwise modified from time to time).

“Merger Sub 1” means Katapult Merger Sub 1, Inc., a Delaware corporation and wholly owned indirect subsidiary of Katapult.

“Merger Sub 2” means Katapult Merger Sub 2, LLC, a Delaware limited liability company and wholly owned indirect subsidiary of Katapult.

“Mergers” means the CCFI Merger, together with the Aaron’s Merger.

“New Revolving Facility” means the amended and upsized revolving credit facility provided for by the Loan Agreement.

“Ownership Limitation” means that, pursuant to the terms of those certain Certificates of Designations dated November 3, 2025, no holder of Katapult Convertible Preferred Stock may convert shares of Katapult Convertible Preferred Stock, pursuant to either an optional or a mandatory conversion, into shares of Katapult common stock if and to the extent that such conversion would result in such holder beneficially owning in excess of 19.99% of all outstanding shares of Katapult common stock as of November 3, 2025.

“Preferred Stock Investment Approval” means the approval of Katapult’s stockholders to remove the Ownership Limitation as contemplated by the Nasdaq rules to effectuate the Hawthorn Preferred Stock Exchange.

“Second Amendment” means that certain Limited Waiver and Second Amendment to Amended and Restated Loan and Security Agreement, dated December 11, 2025, among the Credit Parties, Midtown Madison Management LLC, and the lenders party thereto.

“SEC” means the Securities and Exchange Commission.

“Series A Convertible Preferred Stock” means the 35,000 shares of Katapult Preferred Stock designated as “Series A Convertible Preferred Stock.”

“Series B Convertible Preferred Stock” means the 30,000 shares of Katapult Preferred Stock designated as “Series B Convertible Preferred Stock.”

“Special Meeting” means the special meeting of Katapult stockholders to obtain approval of the Stock Issuance Proposal.

“Stock Issuance Proposal” means the proposal for Katapult stockholders to approve the issuance of Katapult common stock pursuant to the Merger Agreement.

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. Certain capitalized terms used in this Quarterly Report have the meanings set forth in the section entitled “Certain Definitions.” These forward-looking statements include, but are not limited to, statements concerning the following:

•the outcome and impact of the Mergers, including our ability to recognize the anticipated objectives and benefits thereof;

•the occurrence of any event, change or other circumstances that could give rise to the right of one or all of the Company, CCFI and Aaron’s to terminate the Merger Agreement;

•the possibility that the Mergers do not close when expected or at all because the conditions to closing are not received or satisfied on a timely basis or at all;

•the potential disruptions the Mergers may cause in the business operations of the Company, CCFI and Aaron’s;

•potential adverse effects of the Mergers on the business relationships of the Company, CCFI and Aaron’s while the Mergers are pending;

•changes in our share price following the closing of the Mergers;

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

•our ability to obtain, and the impact of, Preferred Stock Investment Stockholder Approval;

•potential impact of the Katapult Convertible Preferred Stock;

•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® (“KPay”);

•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 and security;

•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, 2026

INDEX


		Page
PART 1	Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets — March 31, 2026 (unaudited) and December 31, 2025	1
	Condensed Consolidated Statements of Operations (unaudited) — Three Months Ended March 31, 2026 and 2025	2
	Condensed Consolidated Statements of Mezzanine Equity and Stockholders' Deficit (unaudited) — Three Months Ended March 31, 2026 and 2025	3
	Condensed Consolidated Statements of Cash Flows (unaudited) — Three Months Ended March 31, 2026 and 2025	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	27

PART II	Other Information	27
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
	Signatures	58

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 share and per share data)


	March 31,		December 31,
	2026		2025
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	22,348	$	22,432
Restricted cash	5,772		1,048
Property held for lease, net of accumulated depreciation and impairment (Note 3)	67,308		73,691
Prepaid expenses and other current assets	3,104		4,257
Deferred financing costs, net	2,778		3,802
Total current assets	101,310		105,230

Property and equipment, net	144		163
Capitalized software and intangible assets, net	2,204		2,119
Right-of-use assets, non-current	326		339
Security deposits	15		15
Total assets	$	103,999	$	107,866
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	4,287	$	1,891
Accrued liabilities (Note 4)	16,402		17,701
Accrued litigation settlement (Note 10)	500		750
Unearned revenue	5,454		4,883
Revolving line of credit, net (Note 5)	71,615		78,727

Derivative liability (Note 11)	9,300		13,600
Lease liabilities	53		51
Total current liabilities	107,611		117,603
Lease liabilities, non-current	377		392
Other liabilities	29		45

Total liabilities	108,017		118,040
MEZZANINE EQUITY
Series A Convertible Preferred Stock, $.0001 par value; 35,000 shares authorized and issued (and outstanding) as of March 31, 2026 and December 31, 2025; stated value $1,000 per share; liquidation preference of $37.7 million as of March 31, 2026.	$	11,308	$	11,308
Series B Convertible Preferred Stock, $.0001 par value; 30,000 shares authorized and issued (and outstanding) as of March 31, 2026 and December 31, 2025; stated value $1,000 per share; liquidation preference of $32.3 million as of March 31, 2026.	16,601		16,601
Total mezzanine equity	27,909		27,909
STOCKHOLDERS' DEFICIT
Common stock, $.0001 par value; 250,000,000 shares authorized; 4,765,058 and 4,750,258 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively	—		—
Additional paid-in capital	109,473		109,003
Accumulated deficit	(141,400)		(147,086)
Total stockholders' deficit	(31,927)		(38,083)
Total liabilities, mezzanine equity and stockholders' deficit	$	103,999	$	107,866


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,
	2026		2025
Revenue
Rental revenue	$	77,422	$	71,078
Other revenue	1,599		868
Total revenue	79,021		71,946
Cost of revenue	60,822		57,597
Gross profit	18,199		14,349








Operating expenses	13,864		14,885
Income (loss) from operations	4,335		(536)

Interest expense and other fees	(3,139)		(5,144)
Interest income	130		57
Change in fair value of derivative liability and warrants	4,316		(36)
Income (loss) before income taxes	5,642		(5,659)
Benefit (provision) for income taxes	44		(29)
Net income (loss)	$	5,686	$	(5,688)


Net income (loss) available to common stockholders	$	355	$	(5,688)


Weighted average common shares outstanding - basic and diluted	5,455		4,618



Net income (loss) per common share available to common stockholders - basic and diluted	$	0.07	$	(1.23)


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

(amounts in thousands)

(unaudited)


	Mezzanine Equity			Stockholders’ Deficit
	Preferred Stock			Common Stock				Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount		Shares		Amount
Balances at December 31, 2025	65,000	$	27,909	4,750		$	—	$	109,003	$	(147,086)	$	(38,083)
Net income	—	—		—		—		—		5,686		5,686


Vesting of restricted stock units	—	—		27		—		—		—		—
Repurchases of restricted stock for payroll tax withholding	—	—		(12)		—		(76)		—		(76)
Stock-based compensation expense	—	—		—		—		546		—		546


Balances at March 31, 2026	65,000	$	27,909	$	4,765	$	—	$	109,473	$	(141,400)	$	(31,927)


	Mezzanine Equity			Stockholders’ Deficit
	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Deficit
	Shares	Amount		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)


See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Three Months Ended March 31,
	2026		2025

Cash flows from operating activities:
Net income (loss)	$	5,686	$	(5,688)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	40,659		39,392
Depreciation for early lease purchase options (buyouts)	11,128		9,664
Depreciation for impaired leases	6,658		6,632
Change in fair value of derivative liability, warrants, and other	(4,355)		36
Stock-based compensation	546		1,066

Amortization of debt discount	—		963
Amortization of debt issuance costs, net	1,025		88
Accrued PIK interest expense	—		480
Amortization of right-of-use assets	11		76
Changes in operating assets and liabilities:
Property held for lease	(51,745)		(55,185)
Prepaid expenses and other current assets	1,194		2,217

Accounts payable	2,396		1,549
Accrued liabilities	(1,299)		1,573
Accrued litigation	(250)		(250)
Lease liabilities	(13)		(63)
Unearned revenues	571		888
Net cash provided by operating activities	12,212		3,438
Cash flows from investing activities:
Purchases of property and equipment	(8)		(24)
Additions to capitalized software	(376)		(377)
Net cash used in investing activities	(384)		(401)
Cash flows from financing activities:
Proceeds from New and Existing Revolving Facilities	1,297		5,128
Principal repayments on New and Existing Revolving Facilities	(8,409)		(10,135)


Repurchases of restricted stock	(76)		(271)

Net cash used in financing activities	(7,188)		(5,278)
Net increase (decrease) in cash, cash equivalents and restricted cash	4,640		(2,241)
Cash, cash equivalents and restricted cash at beginning of period	23,480		16,552
Cash, cash equivalents and restricted cash at end of period	$	28,120	$	14,311






Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,886	$	3,661
Cash paid for income taxes	$	1	$	—
Cash paid for operating leases	$	27	$	111


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 ("LTO") platform that integrates with omnichannel retailers and e-commerce platforms to power the purchase 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® (“KPay”), consumers who may be unable to access traditional financing can shop a growing network of merchants.

The Company experiences moderate seasonal fluctuations in revenue as a result of consumer spending patterns. Historically, revenue is strongest during the first quarter primarily due to higher gross originations during the fourth quarter holiday season. First quarter revenue is also impacted by the federal and state income tax refunds that customers receive, which in the past, has led to customers more frequently exercising the early purchase option on their lease agreements. Adverse events that occur could have a disproportionate effect on 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, Katapult SPV-2 LLC, a Delaware limited liability company formed in 2025, Katapult Intermediate Holdings I, LLC, a Delaware limited liability company formed in December 2025, Katapult Intermediate Holdings II, LLC, a Delaware limited liability company formed in December 2025, Katapult Intermediate Holdings III, LLC, a Delaware limited liability company formed in December 2025, Merger Sub 1, a Delaware corporation incorporated in December 2025 and Merger Sub 2, a Delaware limited liability company formed in December 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 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, 2025. 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. The Company had no items of other comprehensive income (loss) for the periods presented; accordingly, net loss equals comprehensive loss in our condensed consolidated statements of operations, and accumulated other comprehensive income (loss) was zero as of March 31, 2026 and December 31, 2025 in our condensed consolidated balance sheets.

Pending Mergers with CCFI and Aaron’s

On December 11, 2025, the Company entered into a merger agreement with CCFI, Aaron’s, and two wholly owned indirect subsidiaries of the Company, pursuant to which those subsidiaries will merge with and into CCFI and Aaron’s, respectively. Upon completion of the Mergers, CCFI and Aaron’s will become wholly owned indirect subsidiaries of the Company. For additional information regarding the Mergers and related agreements, refer to Note 1, “Description of Business and Basis of Presentation,” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Under the terms of the Merger Agreement, equityholders of CCFI and Aaron’s will receive shares of the Company’s common stock, resulting in a change of control of the Company upon closing.

The Mergers are currently expected to close within the third quarter of 2026, subject to customary closing conditions, including regulatory approvals, effectiveness of a registration statement on Form S-4, approval of the Company’s stockholders and the equityholders of CCFI and Aaron’s, and other customary conditions.

The Company continues to evaluate the accounting and financial reporting implications of the Mergers, including purchase accounting and the related impact on its condensed consolidated financial statements.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

In connection with the pending Mergers, the Company incurred $1.7 million of transaction-related costs during the three months ended March 31, 2026, consisting primarily of professional and consulting fees and retention-related compensation costs, which are included in operating expenses within the condensed consolidated statements of operations three months ended March 31, 2026.

The Company cannot reasonably estimate the full financial impact of the Mergers until closing has occurred.

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, the fair value of the derivative liability, 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.

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 duration of the aggregated leases are typically 12 or 18 months. 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.

Embedded Derivatives and Hybrid Instruments— The Company evaluates debt and equity instruments issued to determine whether such instruments contain embedded features that require bifurcation and separate accounting as derivatives under ASC 815, Derivatives and Hedging. In performing this evaluation, the Company assesses whether the embedded feature is clearly and closely related to the host instrument and, for hybrid instruments such as preferred shares, whether the hybrid instrument is remeasured at fair value through earnings.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The Company bifurcates embedded derivatives from the host instrument for measurement purposes when certain criteria are met. Bifurcation is required when (i) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract, (ii) a separate instrument with the same terms would qualify as a derivative instrument, and, for hybrid instruments, (iii) the instrument is not otherwise required to be remeasured at fair value, with changes in fair value recognized in earnings.

If bifurcation is required, the embedded derivative is initially recorded at fair value and subsequently remeasured at fair value each reporting period, with changes in fair value recognized in the consolidated statements of operations.

The Company also evaluates whether freestanding financial instruments meet the definition of a derivative and whether such instruments should be classified as liabilities or equity in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Contracts in Entity’s Own Equity.

Mezzanine Equity— The Company classifies preferred stock and other financial instruments as mezzanine equity when such instruments are redeemable at the option of the holder or upon the occurrence of events that are not solely within the Company’s control. Mezzanine equity instruments are presented outside of stockholders’ equity on the consolidated balance sheets in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 480-10-S99 and related SEC guidance. The Company evaluates the classification of such instruments at issuance and upon the occurrence of any modification or triggering event.

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.

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 KPay transactions, all sales tax is paid by the Company upon purchase of the goods and is typically recorded in the cost basis of the capitalized property held for lease.

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 $1.6 million and $0.9 million was recognized for the three months ended March 31, 2026 and 2025, 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, 2026 and 2025, the Company did not have any customers that accounted for 10% or more of outstanding gross accounts receivable or total revenue during the years ended March 31, 2026 and 2025. Customer leases with the Company’s largest merchant, Wayfair Inc., represented more than 10% of our total revenue for the years ended March 31, 2026 and 2025.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

Cash, Cash Equivalents and Restricted Cash— The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total amounts shown in the condensed consolidated statements of cash flows:


	March 31,		December 31,
	2026		2025

Cash and cash equivalents	$	22,348	$	22,432
Restricted cash	5,772		1,048
Total cash, cash equivalents and restricted cash	$	28,120	$	23,480

Net Income (Loss) Per Share— The Company calculates basic and diluted net income (loss) per share available to common stockholders in accordance with ASC 260, Earnings Per Share.

The Company applies the two-class method as its preferred stock are considered participating securities. Under this method, net income (loss) is allocated to common stockholders and participating securities based on their respective rights to receive dividends. Net income (loss) available to common stockholders reflects net income (loss) adjusted for dividends on preferred stock, including accumulated but undeclared dividends, which are not recognized as a liability but are treated as a reduction of income available to common stockholders for purposes of computing earnings per share.

Basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share available to common stockholders reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. The Company applies the if-converted method for its convertible preferred stock and the treasury stock method for warrants, restricted stock units (“RSUs”) and stock options. Potentially dilutive securities are included in diluted net income (loss) per share only to the extent they are dilutive.

In applying the if-converted method, the Company evaluates the impact of its convertible preferred stock on diluted earnings per share by comparing the results under the two-class method and the if-converted method, and includes such securities only when the effect is dilutive.

In periods in which the Company reports a net loss available to common stockholders, or when the inclusion of potentially dilutive securities would increase earnings per share, diluted net income (loss) per share equals basic net income (loss) per share, as the inclusion of such securities would be anti-dilutive.

Fair Value Measurements— Certain assets and liabilities are measured at fair value in accordance with GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company uses a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3—Inputs are unobservable inputs for the asset or liability and are used when observable inputs are not available.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per share data)

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety.

Recent Accounting Pronouncements Not Yet Adopted—In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, to make targeted improvements to Subtopic 350-40 to increase the operability of the recognition guidance considering different methods of software development. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2025-06.

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:

SEC Form 10-Q filed by Katapult Holdings Inc.