DEBT & LIQUIDITY

3 Months Ended

Mar. 31, 2025

Debt Disclosure [Abstract]

DEBT & LIQUIDITY

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

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.