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COMMITMENTS AND CONTINGENCIES | 6 Months Ended
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Jun. 30, 2026
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES From time to time, the Company may become involved in various legal actions arising in the ordinary course of business. Management believes that the ultimate liability, if any, from these actions will not have a material effect on its financial condition or results of operations. The Company is not currently aware of any indemnification or other claims, except as discussed below. The Company has accrued liabilities related to such obligations in the condensed consolidated financial statements when estimable and probable, as of June 30, 2026 and December 31, 2025. 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 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. The case was formally discontinued, with prejudice on October 14, 2024. During the three months ended June 30, 2026, the Company made its next installment payment for $0.3 million. As of June 30, 2026 and December 31, 2025, the Company had $0.25 million and $0.8 million, respectively, recorded as litigation settlement liabilities related to the settlement agreement. All obligations under the settlement are expected to be fully satisfied by September 30, 2026. 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 alleged patent infringement and sought an injunction as well as damages for alleged lost profits and willfulness. On November 24, 2025, the court granted plaintiff’s counsel’s motion to withdraw due to “irreconcilable differences” and on January 20, 2026, the deadline, new counsel entered an appearance for plaintiff. On December 23, 2025, plaintiff filed for Chapter 11 protection in U.S. Bankruptcy Court for the District of Delaware. On March 3, 2026, FlexShopper was sold to ReadySett, LLC a subsidiary of Snap Finance. On June 5, 2026, the Company entered into a Patent License Agreement with ReadySett, LLC, resolving previously pending patent litigation. Under the agreement, the Company agreed to pay a lump-sum amount in exchange for a perpetual license to certain FlexShopper patents and the dismissal of all litigation-related claims. Based on management’s estimate of the fair value of the acquired patent license, the Company recognized a portion of the consideration as an intangible asset related to the patent license and the remainder as litigation settlement expense within operating expenses during the three and six months ended June 30, 2026. The patent license is being amortized over its estimated useful life of eight years. As a result of the settlement, the litigation was resolved and no further loss contingency exists as of June 30, 2026. The related settlement liability remained accrued as of June 30, 2026 and is expected to be paid during the third quarter of 2026. Pending Mergers with CCFI and Aaron’s In connection with the pending Mergers, the Company may be required to pay an aggregate termination fee of $1.5 million to CCFI and Aaron’s if the Merger Agreement is terminated under certain specified circumstances in accordance with the Merger Agreement, including, among others, if (i) the Company receives and accepts a superior acquisition proposal or (ii) the Board changes its recommendation with respect to the transaction. The Company has not recorded any amounts within the financial statements related to this fee.

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