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DEBT & LIQUIDITY | 6 Months Ended
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Jun. 30, 2025
Debt Disclosure [Abstract] |
DEBT & LIQUIDITY | DEBT & LIQUIDITY 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.) (“Holdings”) 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 “Existing 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. In addition, in connection with a prior amendment to the Existing 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 Existing Credit Agreement contains certain financial covenants, each as defined in the Existing Credit Agreement, including Minimum Adjusted EBITDA levels, Minimum Tangible Net Worth, Minimum Liquidity and compliance with a Total Advance Rate. The Existing 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 Existing 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 Existing 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%. 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 Existing 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 Existing 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 Existing Credit Agreement. On February 20, 2025, the Company entered into the 18th amendment to the Existing Credit Agreement with the Lenders (the “18th Amendment”), which updated certain financial covenants, including the Minimum Liquidity and Total Advance Rate, and 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 Limited Waiver and Amendment Agreement to the Existing Credit Agreement (the “19th Amendment”). Pursuant to such 19th Amendment, the Lenders granted the Company a limited waiver through June 4, 2025, the existing maturity of the Existing Credit Agreement of certain Existing Defaults including related to (i) Liquidity, the Total Advance Rate and Tangible Net Worth (each as defined in the Existing Credit Agreement) not meeting applicable thresholds required by the Existing Credit Agreement, (ii) “going concern” qualifications or opinions included in the auditor's report accompanying the Company's audited financial statements for the fiscal year ended December 31, 2024, and (iii) certain technical reporting requirements with respect to our Borrowing Base Certificates (as defined in the Existing Credit Agreement) (the “Waiver”). On June 12, 2025, Katapult SPV-1, LLC (the “Borrower”), Katapult Group, Inc. (“Group”), the Company, Midtown Madison Management LLC (“the Agent”) and the lenders party thereto (the “Lenders”) entered into an Amended and Restated Loan and Security Agreement (the “Refinancing Agreement”), which amended and restated in full the Loan and Security Agreement, dated as of May 14, 2019 (as amended, amended and restated, supplemented, revised, or otherwise modified from time to time prior to the date hereof), by and among Borrower, Group, the Company, the Agent, and the lenders party thereto (the “Existing Credit Agreement”). The Refinancing Agreement provides for an amended and upsized revolving credit facility (the “New Revolving Facility”) in an initial committed amount of $110 million, which represents a continuation in full of the revolving credit facility under the Existing Credit Agreement, with all of the revolving advances outstanding under the Existing Credit Agreement having been automatically converted into (and are deemed to be) revolving advances under the New Revolving Facility, and with the New Revolving Facility including a tranche of $20 million of new commitments. Advances made and outstanding under the New Revolving Facility may not exceed the lesser of (x) $110 million and (y) the product of an advance rate of 95.00% (increasing to 96.00% on September 1, 2025, (b) 97.00% on October 1, 2025 and (c) 99.00% on November 1, 2025 through the maturity date described below) multiplied by an adjusted current lease balance for eligible leases pledged as collateral under the Refinancing Agreement. The New Revolving Facility matures on the Maturity Date (as defined below). The Refinancing Agreement also provides for an amended term loan facility (the “New Term Loan”) in an initial principal amount of $33 million, representing a continuation of, on a cashless conversion basis, the term loans outstanding under the Existing Credit Agreement (including any outstanding original issue discount and accrued and unpaid interest). The maturity date applicable to the New Term Loan is December 4, 2026 (the “Maturity Date”). The New Term Loan will not amortize. Borrowings under the New Revolving Facility bear interest at a rate per annum equal to a term Secured Overnight Financing Rate (“SOFR”)-based rate, subject in each case to a 3% floor and an applicable credit adjustment spread of 0.10%, plus 7.00% per annum. The New Term Loan bears interest at a rate per annum equal to 18.0%, which interest accrues to the principal balance as PIK interest on a weekly basis. The Refinancing Agreement contains certain financial covenants, each as defined in the Refinancing Agreement, including Minimum Trailing Three-Month Net Origination levels, Minimum Liquidity and compliance with a Term Advance Rate. The Refinancing Agreement is also subject to certain negative and affirmative covenants. The negative covenants limit our ability to, among other things: incur additional indebtedness; pay dividends, redeem stock or make other distributions; amend our material agreements; make investments; create liens; transfer or sell the collateral or other assets; make negative pledges; consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and enter into certain transactions with affiliates. On August 5, 2025, the Company entered into the Limited Waiver (as defined herein) pursuant to which the Lenders waived the financial covenants as of July 31, 2025, see Note 12 Subsequent Events. The Company is in compliance with all of its covenants as of June 30, 2025. On or at any time after the earliest to occur of (i) June 30, 2026 or (ii) the occurrence of an Event of Default (as defined in the Refinancing Agreement) that is then continuing under and as defined in the Refinancing Agreement, Class B Lenders (as defined in the Refinancing Agreement) holding 51% or more of the New Term Loans shall have the right to cause all Class B Lenders to convert up to 100% of the outstanding New Term Loans in a minimum Conversion Amount (as defined in the Refinancing Agreement) of $1 million (or such lesser amount if such lesser amount constitutes the remaining outstanding advances under the Term Loan), into duly authorized, validly issued, fully paid and nonassessable shares of Common Stock of the Company (“Conversion Stock”) plus cash in lieu of fractional shares (the “Term Loan Conversion”). The number of shares of Conversion Stock issuable upon any such conversion shall be determined by dividing (x) the relevant Conversion Amount by (y) the greater of (A) $2.00 per share of Conversion Stock, subject to adjustment and (B) a price per share of Conversion Stock at a discount (the “Discount”) of 50% to the average of the volume-weighted average prices of the Common Stock of the Company for the 20 consecutive trading day period ending on the date of the applicable notice of conversion (the “VWAP Period”); provided, however, that in the event that the volume-weighted average price of the Common Stock of the Company on any such trading day during the VWAP Period exceeds $10.00 per share, for each $0.50 per share increase in excess of $10.00, the Discount shall be reduced by 5%, up to $15.00 per share, at and above which the Discount shall be 0%. The maximum number of shares of Common Stock issuable upon the Term Loan Conversion is 21,378,017 based on the conversion terms noted. The Term Loan may be repaid at any time prior to the Term Loan Conversion without any prepayment penalty or fee. The Company, Group and Borrower intend to continue to pursue strategic alternatives to repay the Term Loan, including equity capital raises, a sale of the business or refinancing the Refinancing Agreement. There can be no assurances that these efforts will be successful. If the Company, Group or the Borrower enters into an agreement for a transaction that, after consummation thereof, results in (x) the stockholders of the Company ceasing to own a majority of the total voting power of the Company, or the Company or the stockholders of the Company ceasing to directly or indirectly own a majority of the consolidated total assets of the Company and its subsidiaries taken as a whole and (y) all outstanding amounts under the loans under the Refinancing Agreement being repaid in full, and if approval, consent or clearance under antitrust or other laws or regulations is required in order to consummate such transaction, then the Company, Group and/or the Borrower may temporarily suspend the exercisability of any conversion right described above for a period of up to 120 days in order to permit the Company, Group and/or the Borrower to seek and obtain such approval, consent or clearance (and if all such approvals, consents and/or clearances are received within such 120 day period, the Company, Group and/or the Borrower may further extend such suspension for ten days to facilitate the consummation of such transaction). The Company concluded that issuance of the New Term Loan would be accounted for as an extinguishment of the Existing Term Loan based on the guidance under ASC Topic 470. A loss on extinguishment of $1.0 million was recorded in the consolidated statement of operations for the three months and six months June 30, 2025. The Company accounted for the Term Loan Conversion feature of the New Term Loan as a derivative liability under ASC Topic 815, Derivatives and Hedging (“ASC 815”) which is subsequently remeasured at fair value each reporting period. The Company determined that the fair value of the derivative liability on June 12, 2025 was $3.6 million and that there was no material change in fair value as of June 30, 2025. The Refinancing Agreement is secured by substantially all of the assets of the Borrower, Group and the Company, subject to certain exceptions. Group and the Company guarantee payment of all obligations of the Borrower under the Refinancing Agreement. In connection with the Refinancing Agreement the Lenders also waived certain Existing Defaults (as defined in the Refinancing Agreement) existing as of the closing date. The rights of the Lenders under the Refinancing Agreement are fully transferable and assignable. As of December 31, 2024, the Company had $82.8 million outstanding principal under the revolving line of credit under the Existing Credit Agreement (the “Existing Revolving Facility”) at a 13.1% interest rate. As of June 30, 2025, the Company had $80.6 million outstanding principal under the New Revolving Facility at an 11.9% interest rate. As of December 31, 2024, the Company had $25 million outstanding principal under the Existing Term Loan at a 18.6% interest rate. As of June 30, 2025, the Company had $32.7 million outstanding principal under the New Term Loan at a 18.0% interest rate. In connection with the Refinancing Agreement, the Company issued warrants to purchase up to 486,264 shares of Common Stock issuable upon the exercise of warrants to certain entities affiliated with Blue Owl (each a “Holder” and collectively, the “Holders”) on June 12, 2025 (the “Issue Date”) with an exercise price of $0.01 per share, subject to certain customary adjustments (the “Blue Own Warrants”). The Blue Owl Warrants expire on June 12, 2032. The Company concluded that the warrants are legally detachable, separately exercisable, and settled in a fixed number of shares without any net cash settlement provisions, thus satisfying the criteria under ASC 480 and ASC 815-40 for equity classification. The warrants were recorded in additional paid-in capital at their issuance date fair value of $3.9 million. A reconciliation of the outstanding principal to the carrying amount of the New Revolving Facility and for prior periods the Existing Revolving Facility is as follows:
| New Revolving Facility |  | Existing Revolving Facility
| June 30, |  | December 31, |  | June 30, |  | December 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Principal balance | $ | 80,617 |  |  | $ | — |  |  | $ | — |  |  | $ | 82,758 |
Less: Unamortized issuance costs | — |  |  | — |  |  | — |  |  | (176) |
Total carrying amount | $ | 80,617 |  |  | $ | — |  |  | $ | — |  |  | $ | 82,582 |
The issuance costs are amortized over the life of the New and Existing Revolving Credit Facility. Amortization of debt discount and issuance costs is included in interest expense and other fees in the condensed consolidated statements of operations. The Company notes that debt issuance costs on the New Revolving Facility are included in deferred financing costs, current on the June 30, 2025 condensed consolidated balance sheet. The unamortized issuance costs totaled $5.8 million as of June 30, 2025. Amortization expense related to the New Revolving Facility and Existing Revolving Facility discount and issuance costs of $0.3 million and $0.1 million were recorded for the three months ended June 30, 2025 and 2024, respectively. Amortization expense related to the New Revolving Facility and Existing Revolving Facility discount and issuance costs of $0.4 million and $0.4 million were recorded for the six months ended June 30, 2025 and 2024, respectively. A reconciliation of the outstanding principal to the carrying amount of the New Term Loan and for the prior periods the term loan under the Existing Credit Agreement (the “Existing Term Loan”) is as follows:
| New Term Loan |  | Existing Term Loan
| June 30, |  | December 31, |  | June 30, |  | December 31,
| 2025 |  | 2024 |  | 2025 |  | 2024
Principal balance | $ | 32,654 |  |  | $ | — |  |  | $ | — |  |  | $ | 25,000 |
PIK | 295 |  |  | — |  |  | — |  |  | 6,780 |
Less: Unamortized debt discount and issuance costs | (4,669) |  |  | — |  |  | — |  |  | (1,733) |
Total carrying amount | $ | 28,280 |  |  | $ | — |  |  | $ | — |  |  | $ | 30,047 |
Amortization of debt discount and issuance costs is included in interest expense and other fees in the condensed consolidated statements of operations. Amortization expense related to the New Term Loan and Existing Term Loan discount and issuance costs of $0.9 million and $0.6 million were recorded for the three months ended June 30, 2025 and 2024, respectively. Amortization expense related to the New Term Loan and Existing Term Loan discount and issuance costs of $1.9 million and $1.4 million were recorded for the six months ended June 30, 2025 and 2024, respectively. Liquidity & Going Concern The Company’s financial statements are prepared in accordance with U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The terms of the New Revolving Credit Facility, including the rigorous covenants thereunder, raise substantial doubt about the Company's ability to continue as a going concern for one year following the issuance of these financial statements. The Company plans to continue to work closely with Blue Owl to mitigate any potential adverse impact from the covenant provisions of the New Revolving Credit Facility. The Company anticipates that it will not have sufficient cash available to repay the loans in the Event of Default. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern. Borrowings on the New Term Loan and New Revolving Credit Facility are classified as current liabilities in the June 30, 2025 condensed consolidated balance sheet.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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