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MEZZANINE EQUITY | 6 Months Ended
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Jun. 30, 2026
Temporary Equity Disclosure [Abstract] |
MEZZANINE EQUITY | MEZZANINE EQUITY Series A Convertible Preferred Stock and Series B Convertible Preferred Stock On November 3, 2025 (“Initial Issue Date”), the Company issued 35,000 shares of $0.0001 par value Series A Convertible Preferred Stock and 30,000 shares of $0.0001 par value Series B Convertible Preferred Stock to Hawthorn at a price of $1,000 per share for aggregate cash consideration of $65.0 million. The Company classifies the Katapult Convertible Preferred Stock as mezzanine equity because it is not mandatorily redeemable but is redeemable upon the occurrence of events that are not solely within the Company’s control. The Company has concluded that the events upon which the Katapult Convertible Preferred Stock becomes redeemable are not considered probable to occur and, accordingly, no remeasurement or accretion to redemption value has been recognized for the periods presented. Additionally, as discussed in Note 1, the Company executed the Hawthorn Side Letter with Hawthorn related to the pending Mergers with CCFI and Aaron’s. In accordance with the Hawthorn Side Letter, all outstanding shares of Katapult Convertible Preferred Stock immediately prior to the Mergers will be automatically redeemed at a price equal to the liquidation preference plus accrued and unpaid dividends, payable through the issuance of a new debt instrument. In accordance with ASC 815, Derivatives and Hedging, the contingent redemption feature and the conversion feature of the Katapult Convertible Preferred Stock represent a compound embedded derivative (the “Convertible Preferred Derivative”) that is bifurcated from the host instrument and accounted for separately as a derivative liability. The Convertible Preferred Derivative is initially measured at fair value and subsequently remeasured at each reporting date, with changes in fair value recognized in earnings within “Change in fair value of derivative liability and warrants” in the condensed consolidated statements of operations. As of June 30, 2026, the Convertible Preferred Derivative was remeasured to a fair value of $8.7 million. During the three and six months ended June 30, 2026, the Company recognized gains of $0.6 million and $4.9 million, respectively, resulting from the remeasurement of the Convertible Preferred Derivative. As of December 31, 2025, the Convertible Preferred Derivative had a fair value of $13.6 million. See Note 11 for additional information regarding fair value measurements. As of June 30, 2026 and December 31, 2025, there were 35,000 shares of Series A Convertible Preferred Stock and 30,000 shares of Series B Convertible Preferred Stock issued and outstanding. Liquidation and Dividend Rights Each share of Katapult Convertible Preferred Stock has a stated liquidation preference of $1,000 per share, plus accrued and unpaid dividends. The Katapult Convertible Preferred Stock ranks senior to the Company’s common stock with respect to dividends and distributions upon liquidation, with the Series B Convertible Preferred Stock ranking senior to the Series A Convertible Preferred Stock. As of June 30, 2026, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock had liquidation preference totals of $39.5 million and $33.8 million, respectively. As of December 31, 2025, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock had liquidation preference totals of $36.0 million and $30.9 million, respectively. The Katapult Convertible Preferred Stock initially accrued cumulative dividends at an annual rate of 18% from the Initial Issue Date. Pursuant to the terms of the Katapult Convertible Preferred Stock, as supplemented by a waiver entered into by Hawthorn, because the Preferred Stockholder Approval was not obtained on or before the date of the Company's first annual or special meeting of stockholders following November 3, 2025 (the "Dividend Step-up Deadline"), the cumulative annual dividend rate increased to 19%. The cumulative annual dividend rate will remain 19% until the Preferred Stockholder Approval is first obtained, if at all, at which time the cumulative annual dividend rate will decrease to 12%. Dividends may be paid in cash or added to the liquidation preference. As of June 30, 2026, the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock had accumulated undeclared dividends accrued to the liquidation preference of the Convertible Preferred Stock of $4.5 million and $3.8 million, respectively. As of December 31, 2025, the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock had accumulated undeclared dividends accrued to the liquidation preference of the Convertible Preferred Stock of $1.0 million and $0.9 million, respectively.

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