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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” or “Katapult” refer to Katapult Holdings, Inc. and its subsidiaries.

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part I, Item 1A, “Risk Factors,” and “Special Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and related notes included elsewhere in this Annual Report on Form 10-K. All dollar amounts are in thousands, unless otherwise specified.

OVERVIEW

We are a technology driven lease-to-own platform that integrates with omnichannel retailers and e-commerce platforms to power the purchasing of everyday durable goods for underserved U.S. non-prime consumers. Our POS integrations and innovative mobile app, featuring KPay, make it easier for U.S. non-prime consumers unable to access traditional financing to spend responsibly and with confidence, easier for merchants to convert sales and grow, and easier for commerce to thrive.

Recent Developments

Pending Strategic Mergers with CCFI and Aaron’s

On December 11, 2025, we entered into the Merger Agreement pursuant to which CCFI and Aaron’s will become wholly owned subsidiaries of the Company, and the Company will remain a publicly traded entity. The Mergers, if completed, will create a premier omni-channel platform that provides non-prime consumers access to durable goods and a comprehensive suite of innovative financial solutions tailored to their specific needs. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Mergers. The Mergers are expected to close in the second quarter of 2026, following the receipt of the requisite stockholder and regulatory approvals and other customary closing conditions.

We expect the Mergers, if completed, to significantly affect our future capital structure. Immediately following the consummation of the Mergers, the existing Katapult stockholders, CCFI equity holders, and Aaron’s equity holders, on a fully diluted basis, are expected to hold approximately 6.0%, 79.9%, and 14.1%, respectively, of the issued and outstanding shares of the combined company.

Refer to “Risk Factors” in Item 1A of Part I of this Annual Report for further discussion about the risks related to the Mergers.

Key Performance Metrics

We regularly review several metrics, including the following U.S. GAAP and non-GAAP key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions, which may also be useful to an investor.

Gross Originations

We measure gross originations to assess the growth trajectory and overall size of our lease portfolio. We define gross originations as the retail price of the merchandise associated with lease-purchase agreements entered into during the period through our platform. Gross originations do not represent revenue earned but are a leading indicator of forecasted revenue and is a useful operating metric for investors as it provides insight into the volume of transactions that take place on our platform.

Revenue is recognized over a period of time subsequent to the gross origination (on average over an 8 month period). Historically, we recognized approximately 70-75% of revenue from gross originations two quarters after the quarter in which the origination occurred.

The following tables present gross originations for the years ended December 31, 2025 and 2024:

Year Ended December 31, Change

Gross originations through KPay represented 42% and 32% of gross originations during the years ended December 31, 2025 and 2024, respectively.

Wayfair represented 25% and 36% of gross originations for the years ended December 31, 2025 and 2024, respectively. The gross originations from Wayfair exclude transactions through KPay and only include transactions directly through the Wayfair waterfall platform.

Total Revenue

Total revenue represents the sum of rental revenue and other revenue. We record rental revenue in accordance with ASC 842, Leases, with revenue being recorded when earned and cash is collected. Other revenue is recorded in accordance with ASC 606, Revenue from Contracts with Customers, with revenue being recorded as performance obligations are satisfied. See “—Results of Operations" section below for total revenue amounts.

Historically, our revenue is typically strongest during the first quarter primarily due to higher gross originations during the fourth quarter holiday season. Our first quarter revenue is also positively impacted by the federal and state income tax refunds that our customers receive in the first quarter which, in the past, has led to our customers more frequently exercising the early purchase option on their lease agreements. Revenue was highest in the third quarter driven by the strong growth of gross originations in the first half of 2025. Adverse and other events that occur could have a disproportionate effect on our financial results throughout the year.

Gross Profit

Gross profit represents total revenue less cost of revenue, and is a measure presented in accordance with U.S. GAAP. See “—Results of Operations” section below for gross profit amounts.

Adjusted Gross Profit

Adjusted gross profit is a non-GAAP measure utilized by management representing gross profit less variable operating expenses, which are servicing costs and underwriting fees. We believe that adjusted gross profit provides a meaningful understanding of profitability when variable lease origination costs are included. See “—Non-GAAP Financial Measures” section below for a reconciliation of gross profit to adjusted gross profit.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that is defined as net income (loss) before interest expense and other fees, transaction related costs, stock-based compensation expense, debt refinancing costs, depreciation and amortization on property and equipment and capitalized software, litigation and settlement expenses, provision for impairment of leased assets, interest income, gain on extinguishment of term loan and settlement of derivative liability, net, and change in fair value of derivative liability and warrants. Transaction-related costs consist primarily of professional fees incurred and retention bonus costs in connection with the Mergers.

We believe that adjusted EBITDA provides a meaningful understanding of our operating performance. See “—Non-GAAP Financial Measures” section below for a reconciliation of adjusted EBITDA, which is a non-GAAP measure utilized by management, to net income (loss).

RESULTS OF OPERATIONS (amounts in thousands, except per share data)

Year Ended December 31, 2025 compared to Year Ended December 31, 2024:

Year Ended December 31,

Revenue

Operating expenses:

Change in fair value of derivative liability and warrants 17,432 17 17,415 NM

Revenue

Total revenue is comprised of rental revenue and other revenue. Rental revenue is recognized in the period it is earned and cash is collected. 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, and is recognized as performance obligations are satisfied.

The increase in total revenue of $44.6 million, or 18.0%, during the year ended December 31, 2025 as compared to the same period in 2024 was primarily a result of gross origination growth becoming more efficient and healthy customer collections. We saw gross origination growth in 2025 primarily as a result of our Katapult App featuring KPay, which we launched in the third quarter of 2022 and growth from our direct merchants. Write-offs as a percentage of total revenue were 9.6% and 9.2% during the years ended December 31, 2025 and 2024 , respectively, and remains within our 8% to 10% target range. The provision for write-offs represents estimated losses based on historical results. Actual write-offs may differ from this estimate.

Cost of Revenue

Cost of revenue consists primarily of depreciation expense related to property held for lease, accelerated depreciation for impairment of property held for lease, accelerated depreciation of early lease-purchase options (buyouts), payment processing fees, and other costs associated with offering lease-purchase transactions to customers.

The increase in cost of revenue of $38.7 million, or 19.2%, for the year ended December 31, 2025 as compared to 2024 was a result of higher gross origination growth and capitalized property held for lease. The increase in property held for lease and historical lease portfolio collection patterns impacted the associated depreciation expense, which includes accelerated depreciation for early lease-purchase options (buyouts), and accelerated depreciation for impairment charges related to property held for lease. As depreciation expense is accelerated for buyouts and impairment, the cost of sales is greater earlier in the property held for lease asset life. As a result, in periods of high gross origination growth with higher rates of property held for lease additions, cost of sales will be disproportionately higher as compared to revenue growth.

Gross Profit

The increase in gross profit of $5.8 million, or 12.7%, for the year ended December 31, 2025 as compared to 2024 was due primarily to higher gross originations year-over-year and healthy customer collections.

Operating Expenses

Operating expenses primarily consist of servicing costs, underwriting fees, professional and consulting fees, technology and data analytics expense, compensation costs, general and administrative expense and litigation and settlement expenses. Servicing costs include permanent and temporary call center support. Underwriting fees primarily consist of data costs related to inputs for customer underwriting models. Professional and consulting fees include corporate legal, transaction related costs and accounting costs. Transaction related costs consist of professional fees and other expenses incurred in connection with the Mergers. Technology and data analytics expense includes technology costs and salaries and benefits for computer programming and data analytics employees that support our underlying technology and proprietary risk model algorithms. Compensation costs consist primarily of payroll and related costs and stock-based compensation. General and administrative expenses include insurance, occupancy costs, travel and entertainment, and other general overhead costs, including depreciation and amortization related to office equipment and software. Litigation and settlement expenses consist of agreed upon settlement amounts that are probable and estimable and associated legal fees.

The decrease in total operating expenses of $1.8 million, or 3.3%, for the year ended December 31, 2025 as compared to 2024 was primarily due to lower litigation and settlement expenses of $2.9 million, and lower stock-based compensation expense of $2.1 million, partially offset by an increase of $3.0 million of transaction related

costs related to the Mergers included in professional and consulting fees for the year ended December 31, 2025 as compared to 2024.

Gain on Extinguishment of Term Loan and Settlement of Derivative Liability

The Company recognized a gain of $5.1 million for the year ended December 31, 2025 related to extinguishment of term loans and settlement of the associated derivative liability, including the write-off of unamortized debt discount and issuance costs. No such gain or loss was recognized in 2024. See Note 6 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K for more details.

Interest Expense and Other Fees

Interest expense increased $1.7 million for the year ended December 31, 2025 as compared to 2024. The increase in interest expense for the year ended December 31, 2025 was primarily attributable to higher average outstanding principal balances under the Existing and New Revolving Facility as well as changes in the Company’s debt structure associated with the refinancing completed in June 2025. These increases were partially offset by a decline in the average Secured Overnight Financing Rate (“SOFR”) rate during the year.

Change in Fair Value of Derivative Liability and Warrants

The Company recognized a gain of $17.4 million for year ended December 31, 2025 compared to an immaterial change in 2024. The gain was primarily driven by the remeasurement of the Company’s derivative liability and warrant liabilities to fair value. These adjustments are non-cash in nature and reflect changes in the estimated fair value of these instruments at each reporting date. See Note 12 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K for more details.

Net Income (Loss)

As a result of the factors discussed above, the Company generated net income of $1.4 million for the year ended December 31, 2025 compared to a net loss of $(25.9) million for the year endedDecember 31, 2024.

Net Loss Attributable to Common Stockholders.

Net loss attributable to common stockholders was $(0.6) millionfor the year ended December 31, 2025 compared to $(25.9) million for the year endedDecember 31, 2024. Although the Company generated net income in 2025, net income attributable to common stockholders was reduced by $1.9 million of accumulated undeclared dividends on the Company’s Series A and Series B Convertible Preferred Stock, which are deducted in calculating net income (loss) per share attributable to common stockholders.

Accumulated Undeclared Dividends on Series A and Series B Convertible Preferred Stock

Accumulated undeclared dividends on the Company’s Series A Convertible Preferred Stock and Series B Convertible Preferred Stock were $1.9 millionfor the year ended December 31, 2025. The Series A Convertible Preferred Stock and Series B Convertible Preferred Stock accrue cumulative dividends at the contractual rates specified in the applicable Certificate of Designations, and are recognized as a liability when declared by the Board of Directors. As of December 31, 2025, no dividends were declared and thus the accumulated undeclared dividends were deducted in calculating net income (loss) attributable to common stockholders. No such dividends were recorded in 2024. See Note 7 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K

Net Loss Attributable to Common Stockholders Per Share — Basic and Diluted

Net loss per share attributable to common stockholders, basic and diluted, was $(0.11) for the year ended December 31, 2025 compared to $(5.96) for the year ended 2024.

Non-GAAP Financial Measures

In addition to gross profit and net income (loss), which are measures presented in accordance with U.S. GAAP, we believe that adjusted gross profit, adjusted EBITDA, adjusted net income (loss) and fixed cash operating expenses provide relevant and useful information which is widely used by analysts, investors, and competitors in our industry in assessing performance. Adjusted gross profit, adjusted EBITDA, adjusted net income (loss) and fixed cash operating expenses are supplemental measures of our performance that are neither required by nor presented in accordance with U.S. GAAP. Adjusted gross profit, adjusted EBITDA and adjusted net income (loss) should not be considered as substitutes for U.S. GAAP metrics such as gross profit, operating income (loss), net income (loss), or any other performance measures derived in accordance with U.S. GAAP and may not be comparable to similar measures used by other companies.

Adjusted gross profit, adjusted EBITDA and adjusted net income (loss) are useful to an investor in evaluating our performance because these measures:

•Are widely used to measure a company’s operating performance;

•Are financial measurements that are used by rating agencies, lenders and other parties to evaluate our credit worthiness; and

•Are considered by our management for various purposes, including as measures of performance and as a basis for strategic planning and forecasting.

Adjusted Gross Profit

Adjusted gross profit represents gross profit less variable operating expenses related to lease originations, which are servicing costs and underwriting fees. We believe that adjusted gross profit provides a meaningful understanding of one aspect of our performance specifically attributable to total revenue and the variable costs associated with total revenue. The reconciliations of gross profit to adjusted gross profit for the years ended December 31, 2025 and 2024 are as follows:

Year Ended December 31,

Less:

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure. We believe that adjusted EBITDA provides a meaningful understanding of our operating performance.

The reconciliations of net income (loss) to adjusted EBITDA for the years ended December 31, 2025 and 2024 are as follows:

Year Ended December 31,

Add back:

Transaction related costs 4,931 —

Stock-based compensation expense 3,693 5,759

Debt refinancing costs 1,489 —

Litigation and settlement expenses 813 3,666

Provision for impairment of leased assets 738 2,227

Provision for income taxes 319 143

Change in fair value of derivative liability and warrants (17,432) (17)

Adjusted Net Loss

Adjusted net loss is a non-GAAP financial measure that is defined as net income (loss) before transaction related costs, stock-based compensation expense, debt refinancing costs, litigation and settlement expenses, gain on extinguishment of term loan and settlement of derivative liability, net, and change in fair value of derivative liability and warrants. The reconciliations of net income (loss) to adjusted net loss for the years ended December 31, 2025 and 2024 are as follows:

Year Ended December 31,

Add back:

Transaction related costs 4,931 —

Stock-based compensation expense 3,693 5,759

Debt refinancing costs 1,489 —

Litigation and settlement expenses 813 3,666

Change in fair value of derivative liability and warrants (17,432) (17)

Fixed Cash Operating Expenses

Fixed cash operating expenses is a non-GAAP measure that is defined as operating expenses less variable lease costs such as servicing costs and underwriting fees, transaction related costs, stock-based compensation expense, debt refinancing costs, depreciation and amortization on property and equipment and capitalized software, and litigation and settlement expenses. We believe fixed cash operating expenses illustrates our controllable ongoing expenses.

The reconciliations of operating expenses to fixed cash operating expenses for the years ended December 31, 2025 and 2024 are as follows:

Year Ended December 31,

Less:

Transaction related costs 4,931 —

Stock-based compensation expense 3,693 5,759

Debt refinancing costs 1,489 —

Litigation and settlement expenses 813 3,666

LIQUIDITY & CAPITAL RESOURCES (dollars in thousands)

The Company’s financing generally consists of cash generated from leases and borrowings under its revolving line of credit (“RLOC”), which is fully collateralized by the Company’s assets. Restricted cash consists primarily of customer lease payments received in a collection account pending release by the Company's lender. Restrictions are released on a weekly basis pursuant to completion of waterfall and borrowing base requirements.

Our revenue and operating results depend significantly on gross originations, which is defined as the retail price of the merchandise associated with lease-purchase agreements entered into during the period. Gross originations are a leading indicator of potential revenue streams. Revenue is recognized over a period of time subsequent to the gross origination date (on average over 8 months). As gross originations increase, the Company may require additional borrowings under the New Revolving Facility to fund growth in property held for lease.

The following table presents cash used in operating, investing, and financing activities for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Net cash provided by (used in):

Cash, cash equivalents and restricted cash at end of period $ 23,480 $ 16,552

Net cash used in operating activities decreased by $20.6 million in 2025 compared to 2024, primarily driven by improved net income (loss), adjusted for non-cash charges, and higher spending on property held for lease, partially offset by changes in working capital, including accrued liabilities and litigation-related balances.

Net cash used in investing activities decreased by $0.2 million in 2025 compared to 2024, primarily due to lower capitalized software additions.

Net cash provided by financing activities decreased by $1.6 million in 2025 compared to 2024, primarily due to the $35.1 million repayment of the New Term Loan, lower borrowings and higher principal repayments under the RLOC resulting in a $26.0 million reduction in net financing inflows, and a $5.3 million increase in debt issuance costs. These outflows were partially offset by $65.0 million of proceeds from the issuance of Convertible Preferred Stock in 2025.

The New Revolving Facility provides total commitments of $110 million and matures on December 4, 2026. As the maturity date falls within twelve months of the issuance date of these financial statements and the Company does not have sufficient cash on hand to repay the outstanding borrowings at maturity absent refinancing or extension, the upcoming maturity raises substantial doubt about the Company’s ability to continue as a going concern.

The New Revolving Facility contains financial covenants, and as of December 31, 2025, the Company was in compliance with all such covenants; however, future compliance with certain covenants may require additional waivers from the lender, and there can be no assurance that such waivers will be obtained.

Management intends to refinance, extend, or replace the New Revolving Facility prior maturity and continues to work closely with the Lender; however, there can be no assurance that such refinancing or extension will be completed on acceptable terms or at all.

Financing Arrangements

For additional information on our loan obligations under the Loan Agreement, see Note 6 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K.

Pledge and Guaranty

Borrowings under the New Revolving Facility are secured by substantially all of the Company’s assets and the equity interests of certain subsidiaries.

Contractual Obligations and Commitments

Refer to the descriptions of our material cash commitments, financing arrangements, and contractual obligations outlined below within the following notes to our consolidated financial statements.

See Note 6 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K for future payments on the Company's debt facility, including outstanding borrowings and the applicable interest rate.

See Note 11 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K for litigation related liabilities and timing of expected future payments.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We review our estimates on an ongoing basis and make judgments about the carrying values of assets and liabilities based on a number of factors. These factors include historical experience and assumptions made by management that are believed to be reasonable under the circumstances. Although management believes that the judgment applied in the preparation of estimates is reasonable based on the circumstances and information known at the time, actual results could differ materially from the estimates based on the assumptions used in the preparation of our consolidated financial statements. This section summarizes the critical accounting policies and the related judgments involved in their application.

For further information, see Note 2 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K.

Rental Revenue Recognition

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. 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. Services are considered to be rendered and revenue earned over the lease term.

Revenues from leases that originated from merchants with a direct or waterfall integration 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 in accordance with the rules of each tax jurisdiction. For KPay transactions, all sales tax is paid by the Company upon purchase of the goods and is recorded in the cost basis of the capitalized property held for lease. Revenue is recognized for leases originating through KPay in the period it is earned and cash is collected.

Income Taxes

We account for income taxes under the asset and liability method pursuant to ASC 740, Income Taxes. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that the Company would be able to realize deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive income (loss). As of December 31, 2025, no accrued interest or penalties are included on the related tax liability line on the consolidated balance sheet.

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 to 18 months. Customers may terminate a lease agreement at any time without penalty. 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 typical 12 or 18 month renewal periods. As a result, property held for lease is classified as a current asset on the 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 received based on the Company’s historical data of lease performance. The utilization of rental merchandise occurs during periods of rental and directly 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 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 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.

Fair Value of Convertible Preferred Derivative Liability

The Company’s Convertible Preferred Derivative represents a critical accounting estimate due to the significant estimation uncertainty and judgment required in determining its fair value and the potential for material impact on the Company’s results of operations. As discussed in Note 7 – Mezzanine Equity and Note 12 – Fair Value Measurements to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K, in connection with the issuance of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock on November 3, 2025, the Company bifurcated a compound embedded derivative related to the contingent redemption and conversion features of the preferred stock. The Convertible Preferred Derivative is recorded as a derivative liability and remeasured at fair value at each reporting date, with changes in fair value recognized in earnings.

The fair value of the Convertible Preferred Derivative is determined using a “with-and-without” valuation methodology that incorporates significant unobservable inputs, including expected time to liquidity, expected volatility of the Company’s common stock, risk-free interest rates, dividend rate, discount rate, and the probability and timing of potential redemption or conversion events. Because these inputs are not directly observable in the market and require significant management judgment, the Convertible Preferred Derivative is classified as Level 3 within the fair value hierarchy.

The fair value of the Convertible Preferred Derivative is sensitive to changes in the Company’s common stock price, expected volatility, and assumptions regarding liquidity or redemption events. As the derivative liability is remeasured at each reporting date, changes in these assumptions may result in material non-cash gains or losses in future periods.

Recently Issued and Adopted Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements included within Part II, Item 8 contained in this Annual Report on Form 10-K for a discussion of accounting pronouncements recently adopted and recently issued accounting pronouncements not yet adopted and their potential impact to our consolidated financial statements.

Smaller Reporting Company

As of December 31, 2025, we are a “smaller reporting company” as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the fair value of our voting and non-voting common stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100 million during the most recently completed fiscal year and the fair value of our voting and non-voting common stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands)

We are exposed to a variety of market and other risks, including the effects of changes in interest rates, and inflation, as well as risks to the availability of funding sources and other risks. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments.

Interest Rate Risk

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. We manage our interest rate risk based on an ongoing assessment of trends in interest rates and economic developments, giving consideration to possible effects on both total return and reported earnings. As a result of such assessment, we may enter into swap contracts or other interest rate protection agreements from time to time to mitigate this risk.

In connection with the Loan Agreement, the New Revolving Facility accrues interest at a rate per annum equal to SOFR, subject to a 3% floor and an applicable credit adjustment spread of 0.10%, plus 7.00% per annum. As of December 31, 2025, the interest rate on our RLOC was 11.5%.

The effect of a hypothetical 10% increase or decrease in interest rates would not have had a material impact on the fair market value of our investments as of December 31, 2025 and 2024. A 100 basis point change in interest rates would cause our RLOC to change by approximately $0.8 million.

Inflation Risk

Although we believe that inflation has indirectly impacted our business by negatively impacting consumer spending and the sales of our key merchants, we do not believe that inflation has directly had, or currently directly has, a material effect on our results of operations or financial condition.

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Financial Statements Page

Consolidated Balance Sheets as of December 31, 2025 and 2024 64

Notes to Consolidated Financial Statements 69

Board of Directors and Shareholders

Katapult Holdings, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Katapult Holdings Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, mezzanine equity and stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Going concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the consolidated financial statements, the impending maturity of the Company’s credit facility and uncertainty about the Company’s ability to meet financial covenant requirements of the credit facility over a forward-looking period raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also discussed in Note 6. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Depreciation and impairment of property held for lease

As described further in Note 3 to the consolidated financial statements, the Company recorded $163.0 million of depreciation expense for property held for lease, $37.6 million of depreciation for early lease purchase options (buyouts), and $28.6 million of depreciation for impaired leases for the year ended December 31, 2025. As described further in Note 2 to the consolidated financial statements, depreciation for property held for lease is an estimate that is determined by the Company using an income forecasting method, where the property held for lease is depreciated in the proportion of expected rents received to expected total rents to be received. The Company also provisions for future impairment on leases, which is an estimate that is determined by the Company based on its expectation of leases that will default prior to the completion of the full lease term. The Company’s expectations are developed based on its historical patterns of customer payments when an item is leased for the full

lease duration, historical patterns of lease impairment, and historical patterns of lease buyouts. We identified depreciation and impairment of property held for lease as a critical audit matter.

The principal consideration for our determination that depreciation and impairment of property held for lease is a critical audit matter is that management’s model used to determine expectations of customer payments, lease impairments, and lease buyouts requires complex auditor judgment in evaluating the reasonableness of depreciation and impairment of property held for lease.

Our audit procedures related to the depreciation and impairment of property held for lease included the following, among others:

•We tested historical customer payments, buyouts, and lease impairment data for completeness and accuracy.

•We tested the existence of the leased property by vouching the cost basis of the leased property to bank statements and through review of a selection of customer lease contracts.

•We analyzed the historical customer payments, buyouts, and lease impairment data in evaluating the reasonableness of the Company’s recorded estimate of depreciation and impairment of property held for lease.

Fair value of derivative liability

As described further in Notes 7 and 12 to the consolidated financial statements, on November 3, 2025, the Company issued 35,000 shares of Series A Convertible Preferred Stock and 30,000 shares of Series B Convertible Preferred Stock (collectively, the “Katapult Convertible Preferred Stock”). The Katapult Convertible Preferred Stock includes embedded features that require bifurcation and are accounted for as a compound derivative which is recorded at its estimated fair value at issuance and is remeasured at its estimated fair value at each reporting date. The estimated fair value of the derivative liability recorded at the issuance date was $31.0 million and the estimated fair value of the derivative liability remeasured at December 31, 2025 was $13.6 million, resulting in a change in fair value of $17.4 million recognized in earnings during the year ended December 31, 2025. The fair value of the derivative liability was determined by management’s specialist using a “with and without” scenario methodology whereby the fair value of the Katapult Convertible Preferred Stock with the embedded features, which was determined using a binomial lattice price model, was compared to the fair value of the Katapult Convertible Preferred Stock without the embedded features, which was determined using a discounted cash flows model. The models incorporate significant unobservable inputs. We identified the fair value of the derivative liability as a critical audit matter.

The principal consideration for our determination that the fair value of the derivative liability is a critical audit matter is that the fair value estimate is complex and incorporates significant unobservable inputs that required use of management’s judgments, which required the assistance of those with specialized skills and knowledge in evaluating the reasonableness of management’s judgments.

Our audit procedures related to the fair value of the derivative liability included testing management’s process for developing significant judgments used in the fair value estimate with the assistance of professionals with specialized skills and knowledge, amongst other procedures.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2023.

Philadelphia, Pennsylvania

March 11, 2026

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

December 31,

ASSETS

Current assets:

Prepaid expenses and other current assets 4,257 6,731

Deferred financing costs, net 3,802 —

Property and equipment, net 163 253

Security deposits 15 91

Capitalized software and intangible assets, net 2,119 2,076

Right-of-use assets, non-current 339 383

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accrued litigation settlement (Note 11) 750 2,199

Term loan, net (Note 6) — 30,047

Derivative liability (Note 12) 13,600 —

Lease liabilities, non-current 392 444

MEZZANINE EQUITY

Total mezzanine equity 27,909 —

STOCKHOLDERS' DEFICIT

Total liabilities, mezzanine equity and stockholders' deficit $ 107,866 $ 93,171

See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(amounts in thousands, except per share data)

Year Ended December 31,

Revenue

Operating expenses:

Professional and consulting fees 8,167 5,201

Technology and data analytics 6,113 7,170

Litigation and settlement expenses 813 3,666

Change in fair value of derivative liability and warrants 17,432 17

Income (loss) before income taxes 1,684 (25,772)

Provision for income taxes (319) (143)

Accumulated undeclared dividends on Series A and B Preferred Stock (1,922) —

Net loss attributable to common stockholders $ (557) $ (25,915)

Weighted average common shares outstanding - basic and diluted 5,027 4,347

See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT

(amounts in thousands)

Mezzanine Equity Stockholders’Deficit

Shares Amount Shares Amount

Stock options exercised — — 45 — 211 — 211

Vesting of restricted stock units — — 163 — — — —

Stock-based compensation expense — — — — 5,759 — 5,759

Issuance of shares due to litigation settlement — — 212 — 1,756 — 1,756

Stock options exercised — — 2 — 8 — 8

Vesting of restricted stock units — — 192 — — — —

Stock-based compensation expense — — — — 3,693 — 3,693

Issuance of shares due to litigation settlement — — 168 — 1,504 $ — 1,504

See accompanying notes.

KATAPULT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

Year Ended December 31,

Cash flows from operating activities:

Depreciation for early lease purchase options (buyouts) 37,671 29,061

Change in fair value of derivative liability, warrants, and other (17,381) (256)

Amortization of debt discount 3,002 3,104

Amortization of debt issuance costs, net 2,410 220

Amortization of right-of-use assets 183 318

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 2,288 (2,053)

Litigation insurance reimbursement receivable — 5,000

Unearned revenues 60 (126)

Net cash used in operating activities (11,933) (32,569)

Cash flows from investing activities:

Purchases of property and equipment (34) (54)

Additions to capitalized software (1,147) (1,249)

Other assets and security deposits 76 —

Net cash used in investing activities (1,105) (1,303)

Cash flows from financing activities:

Proceeds from New and Existing Revolving Facilities 21,968 34,421

Principal repayments on New and Existing Revolving Facilities (25,999) (12,406)

Repayment of term loan and repurchase of warrants (35,070) —

Payments of issuance costs related to debt and preferred stock (5,347) —

Repurchases of restricted stock (594) (613)

Proceeds from issuance of Convertible Preferred Stock and warrants 65,000 —

Proceeds from exercise of stock options 8 211

Net cash provided by financing activities 19,966 21,613

Cash, cash equivalents and restricted cash at beginning of period 16,552 28,811

Cash, cash equivalents and restricted cash at end of period $ 23,480 $ 16,552

Supplemental disclosure of cash flow information:

Cash paid for income taxes $ 106 $ 226

Cash paid for operating leases $ 275 $ 359

Supplemental disclosure of non-cash investing and financing activities

Debt issuance costs accrued but not yet paid $ 200 $ —

Extinguishment of Existing Term Loan $ 32,654 $ —

See accompanying notes.

(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 purchasing of everyday durable goods for underserved U.S. non-prime consumers. Through the Company's POS integrations and innovative mobile app (the “Katapult 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 our 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 our customers more frequently exercising the early purchase option on their lease agreements. Adverse events that occur could have a disproportionate effect on our financial results throughout the year.

Subsidiaries— The consolidated financial statements of Katapult includes 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 March 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, Katapult Merger Sub 1 Inc., a Delaware corporation incorporated in December 2025 and Katapult Merger Sub 2, LLC, 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 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 Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of the Company 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 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 income (loss) equals comprehensive loss in our consolidated statement of operations, and accumulated other comprehensive income (loss) was zero as of December 31, 2025 and 2024 in our consolidated balance sheets.

Pending Mergers with CCFI and Aaron’s

On December 11, 2025, Katapult entered into that certain Merger Agreement with CCF Holdings LLC (“CCFI”), Aaron’s Intermediate Holdco, Inc. (“Aaron’s”), and two wholly owned indirect subsidiaries of Katapult, Katapult Merger Sub 1, Inc. (“Merger Sub 1”) and Katapult Merger Sub 2, LLC (“Merger Sub 2”). The Merger Agreement provides that, subject to the conditions set forth therein, Merger Sub 1 will merge with and into Aaron’s, and Merger Sub 2 will merge with and into CCFI, (collectively, the “Mergers”). As a result of the Mergers, CCFI and Aaron’s will become wholly owned indirect subsidiaries of Katapult.

Immediately prior to the effective times of the Mergers, CCFI MIP Equity, and the Aaron’s MIP Units will be contributed to and exchanged for shares of $0.0001 par value Katapult common stock pursuant to the terms of the Merger Agreement and related contribution and exchange agreements. CCFI MIP Equity will be exchanged for 11,011,927 shares of Katapult common stock. Aaron’s MIP Units will be exchanged for 943,580 shares of Katapult common stock

At the effective times of the respective Mergers, the outstanding equity interests of CCFI and Aaron’s, with specified exceptions, will be converted into the right to receive shares of Katapult common stock in the aggregate amounts set forth in the Merger Agreement. The aggregate equity interests of CCFI will be collectively converted solely into the right to receive an aggregate of 58,516,558 shares of Katapult common stock, inclusive of the 11,011,927 shares from the contribution of CCFI MIP Equity, of which 244,146 shares will be subject to the CCFI Warrants that are outstanding. The aggregate equity interests of Aaron’s will be collectively converted solely into the right to receive an aggregate of 11,369,237 shares of Katapult common stock, inclusive of the 943,580 shares from the contribution of Aaron’s MIP Units. Following completion of the Mergers, the

(dollars in thousands, except per share data)

existing Katapult stockholders, CCFI unitholders and Aaron’s stockholders are expected to hold approximately 6.0%, 79.9% and 14.1%, respectively, of the issued and outstanding shares (on a fully diluted basis) of the combined organization. Consummation of the Mergers, which is currently anticipated to occur during the second quarter of 2026, is subject to a number of customary closing conditions, including (i) the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (ii) the registration statement on Form S‐4 relating to the shares of Katapult common stock to be issued in the Mergers, (iii) the approval of the stockholders and equityholders of each of Katapult, CCFI and Aaron’s, (iv) approval for listing of the shares of Katapult common stock to be issued in the Mergers on Nasdaq, (v) the absence of certain legal impediments, and (vi) the accuracy of the parties’ representations and warranties and compliance with the covenants set forth in the Merger Agreement.

In connection with the execution of the Merger Agreement, certain equityholders of Katapult, CCFI and Aaron’s entered into voting and lock‐up arrangements and certain equityholders of CCFI and Aaron’s entered into a stockholders agreement addressing governance and board composition following the closing of the Mergers. In addition, Katapult entered into a Second Amendment to its Loan Agreement to permit the transactions contemplated by the Merger Agreement and release Katapult from certain guaranty and lien obligations in connection with the corporate reorganization steps contemplated by the Mergers. The Merger Agreement includes a termination fee of $1.5 million payable by Katapult under certain circumstances. For further information, see Note 11 Commitments and Contingencies.

Katapult also entered into the Hawthorn Side Letter with Hawthorn Horizon Credit Fund, LLC (“Hawthorn”) related to the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock described in Note 7, and warrants transferred to Hawthorn as described in Note 6. The Hawthorn Side Letter states that immediately prior to the Mergers, Hawthorn will exercise all outstanding warrants for Katapult’s common stock, and Katapult will repurchase all outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (the “Hawthorn Preferred Stock Exchange”). Refer to Note 7 for further discussion.

In connection with the pending Mergers, the Company has incurred $4.2 million of expenses for the year ended December 31, 2025 related to legal and other advisory fees and retention bonus costs, $3.0 million of which are included within “Professional and consulting fees” and $1.2 million retention bonus costs of which are included within “Compensation costs” in our consolidated statements of operations and comprehensive income (loss).

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 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 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, 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.

Segment Information— The Company is a single segment business, which provides lease payment options to consumers to obtain durable goods from omnichannel and e-commerce partners. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment.

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 December 31, 2025 and 2024, 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 December 31, 2025 and 2024. Customer leases with the Company’s largest merchant, Wayfair Inc., represented more than 10% of our total revenue for the years ended December 31, 2025 and 2024.

(dollars in thousands, except per share data)

Cash and Cash Equivalents— As of December 31, 2025 and 2024, cash consists primarily of checking and savings deposits. The Company holds certain cash equivalents, which consist of highly liquid investments with original maturities of three months or less at the time of purchase.

Restricted Cash— The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash as of December 31, 2025 and 2024 consists primarily of customer lease payments received into a collection account pending release by the Company’s lender. Restrictions are released on a weekly basis pursuant to completion of waterfall and borrowing base requirements. All of the Company’s restricted cash is classified as current due to its short-term nature of the restrictions.

The reconciliation of cash, cash equivalents and restricted cash is as follows:

December 31,

Total cash, cash equivalents and restricted cash $ 23,480 $ 16,552

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 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 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.

Capitalized Software—The Company capitalizes certain development costs incurred in connection with its internal use software. Costs incurred in the preliminary stages of development are expensed as incurred. Capitalization of costs begins when the preliminary project stage is completed, and it is probable that the project will be completed and used for its intended

(dollars in thousands, except per share data)

function. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Maintenance costs are expensed as incurred. Internal use software is amortized on a straight-line basis over its estimated useful life, generally three years. Capitalized software cost is included within the capitalized software and intangible assets, net line item of our consolidated balance sheets. Amortization of capitalized software is included in general and administrative expenses in our consolidated statements of operations and comprehensive income (loss).

Debt Issuance Costs— Costs incurred in connection with the issuance of the Company’s revolving line of credit (“RLOC”) and senior secured term loan ("Term Loan") have been recorded as a direct reduction against the debt and amortized over the life of the associated debt as a component of interest expense. The amortization of the Term Loan issuance costs utilizes the effective interest method, and the amortization of the RLOC debt issuance costs utilizes the straight-line method, which is not materially different compared to the effective interest method. The amortization of debt issuance costs is recorded and included in interest expense and other fees in our consolidated statements of operations and comprehensive income (loss).

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.

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 and comprehensive income (loss).

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. 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. Services are considered to be rendered and revenue earned over the lease term.

(dollars in thousands, except per share data)

Revenues from leases that originated from merchants with a direct or waterfall integration 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. For KPay transactions, all sales tax is paid by the Company upon purchase of the goods and is recorded in the cost basis of the capitalized property held for lease. Revenue is recognized for leases originating through KPay in the period it is earned and cash is collected.

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$4.6 million and $3.2 million was recognized for the years ended December 31, 2025 and 2024, respectively.

Stock-Based Compensation— In accordance with ASC 718, Stock Compensation, compensation expense related to stock-based awards are measured and recorded based on the fair value of those awards as determined on the date of the grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. The Company historically used the Black-Scholes-Merton (“Black-Scholes”) option-pricing model to determine the estimated fair value of stock option awards. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option. The Company has not issued any stock options for the years ended December 31, 2025 and 2024, respectively. Forfeitures are accounted for as they are incurred.

Income Taxes— The Company accounts for income taxes under the asset and liability method pursuant to ASC 740, Income Taxes. Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive income (loss). As of December 31, 2025 and 2024, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.

Net Income (Loss) Per Share— The Company calculates basic and diluted net income (loss) per share attributable to common stockholders in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Net income (loss) attributable to common stockholders reflects net income (loss) adjusted for accumulated undeclared dividends on the Company’s preferred stock, including the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, for which no liability is recognized on the balance sheet.

Diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents outstanding for the period. In periods in which the Company reports a net loss attributable to

(dollars in thousands, except per share data)

common stockholders, diluted net income (loss) per share equals basic net income (loss) per share, as the inclusion of potentially dilutive securities would be anti-dilutive.The Company reported net loss attributable to common stockholders for the years ended December 31, 2025 and 2024, respectively.

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.

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.

Advertising— The Company expenses advertising costs as incurred. Total advertising costs were $1.5 million and $0.5 million for the years ended December 31, 2025 and 2024, respectively, and are classified within operating expenses in the consolidated statements of earnings.

Recently Adopted Accounting Pronouncements— In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about the reportable segments’ significant expenses on an interim and annual basis to enable investors to develop more decision-useful financial analyses. ASU 2023-07 was adopted during the fourth quarter of 2024. Refer to Note 13, Segment Reporting.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU will improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. As of December 31, 2025, the Company adopted this new ASU and it only impacts the Company’s income tax disclosures with no impact to its operations, cash flows, or financial condition. Refer to Note 9, Income Taxes.

Recent Accounting Pronouncements Not Yet Adopted— In November 2024, the FASB issues ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. This update is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting ASU 2024-03.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, providing (1) all entities with a practical expedient and (2) entities other than public business entities with an accounting policy election when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606 all entities with a practical expedient. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim periods within those annual reporting periods. The Company is evaluating the impact of adopting ASU 2025-05.

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

(dollars in thousands, except per share data)

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:

December 31,

Less: accumulated depreciation and impairment (118,324) (233,518)

The table below details the cost of revenue for the years ended December 31, 2025 and 2024:

December 31,

Depreciation for early lease purchase options (buyouts) 37,671 29,061

(1) Other consists mainly of payment processing fees, incentives, and other lease related costs.

4.CAPITALIZED SOFTWARE AND INTANGIBLE ASSETS, NET

Capitalized software and intangible assets, net consists of the following:

December 31,

Less: accumulated amortization (1,589) (2,734)

Capitalized software and intangible assets, net $ 2,119 $ 2,076

Amortization expense for capitalized software and intangible assets of $1,104 and $1,092 was recognized for the years ended December 31, 2025 and 2024, respectively, which is included in general and administrative expenses in our consolidated statements of operations and comprehensive income (loss).

(dollars in thousands, except per share data)

The following table summarizes estimated future amortization expense of capitalized software, exclusive of software not yet placed in service, as of December 31, 2025:

Year Future Amortization Expense of Capitalized Software

As of December 31, 2025 and 2024, $377 and $410 of capitalized software was not yet placed in service, respectively, and such amounts are excluded from the table above.

5.ACCRUED LIABILITIES

Accrued liabilities consists of the following:

December 31,

6.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 Loan Security Agreement (the “2019 Loan Agreement”) with Midtown Madison Management, LLC (“Midtown”) as agent for various funds of Atalaya Capital Management (“Atalaya”), for a revolving line of credit (“RLOC”). In September 2024, Atalaya was acquired by Blue Owl Capital Inc (“Blue Owl”). The RLOC initially had a commitment of $125 million which the Lenders had the right to increase to $250 million.

In connection with an amendment to the 2019 Loan Agreement entered into on December 4, 2020, Atalaya also provided the Company with a senior secured term loan (“Term Loan”) with commitments of up to $50 million. The full $50 million was drawn on December 4, 2020. The Term Loan bore interest at London Interbank Offered Rate (“LIBOR”) plus 8.0% (subject to a 1.0% LIBOR floor) and an additional 3.0% interest per annum accrued to the principal balance as paid-in-kind (“PIK”) interest.

The 2019 Loan Agreement contained certain financial covenants, including Minimum Adjusted EBITDA, Minimum Tangible Net Worth, Minimum Liquidity and compliance with a Total Advance Rate. The 2019 Loan Agreement also contained customary affirmative and negative covenants. The negative covenants limited the Company’s 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 collateral, make negative pledges, consolidate or merge, dispose of substantially all of assets, or enter into certain transactions with affiliates. Certain early repayments of the Term Loan were subject to prepayment penalties.

Amendments and Waivers to the 2019 Loan Agreement

On March 6, 2023, the Company entered into the 15th Amendment to the 2019 Loan Agreement (“15th Amendment”). The maturity dates of the RLOC and the Term Loan were extended from December 4, 2023 to June 4, 2025 and commitments under the RLOC were reduced from $125 million to $75 million. The PIK interest rate on the Term Loan was (A) revised to 4.5% if Liquidity exceeded $25 million, or (B) 6.0% if Liquidity was below $25 million. .The spread on the RLOC increased from 7.5% to 8.5%, while the Term Loan spread remained unchanged at 8.0%. Effective April 1, 2023, the benchmark rate for the

(dollars in thousands, except per share data)

RLOC and the Term Loan transitioned from LIBOR to the Secured Overnight Financing Rate (“SOFR”), subject to a 3.0% floor and a fixed credit adjustment spread of 0.10%. As of December 31, 2025, the interest rate on the RLOC was 11.5%. The Term Loan was fully repaid on November 3, 2025.

In connection with the 15th Amendment, the Company repaid $25 million of outstanding principal under the Term Loan and issued a warrant to purchase up an aggregate of 160,000 shares of common stock at an exercise price of $0.25 per share, which vested in September 2023 and March 2024 (collectively, the “First Warrants”).

The 15th Amendment also updated certain financial covenants.

On April 24, 2024, the Company entered into the 16th Amendment to the 2019 Loan Agreement (“16th Amendment”), pursuant to which Midtown granted waivers of specified defaults related to accounting errors that resulted in the restatement of the Company’s previously issued financial statements and updated certain financial covenants.

On November 21, 2024, the Company entered into the 17th Amendment to the 2019 Loan Agreement (“17th Amendment”), which increased RLOC commitments from $75 million to $90 million. In addition, Midtown was permitted, in their discretion, to provide up to $10 million of additional RLOC advances.

On February 20, 2025, the Company entered into the 18th amendment to the 2019 Loan Agreement (“18th Amendment”), which updated certain financial covenants and waived defaults related to prior borrowing base certificates.

On May 14, 2025, the Company entered into the Limited Waiver and Amendment Agreement to the 2019 Loan Agreement (“19th Amendment”). Pursuant to the 19th Amendment, the Lenders granted the Company a limited waiver through June 4, 2025, the existing maturity of the 2019 Loan Agreement, of certain Existing Defaults, including those related to (i) Liquidity, the Total Advance Rate and Tangible Net Worth (each as defined in the 2019 Loan) not meeting applicable thresholds required by the 2019 Loan Agreement, (ii) the inclusion of going-concern explanatory language or opinions 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 the Borrowing Base Certificates (as defined in the 2019 Loan Agreement) (the “Waiver”).

Amended and Restated Loan Agreement

On June 12, 2025, Katapult SPV-1, LLC, Katapult Group, Inc., the Company, Midtown Madison Management LLC, as agent, and the lenders party thereto (the “Lenders”) entered into an Amended and Restated Loan and Security Agreement (“2025 Loan Agreement”), which amended and restated the 2019 Loan Agreement in full.

The 2025 Loan Agreement is secured by substantially all of the assets of the Borrower, Katapult Group, Inc. and the Company, subject to customary exceptions. Katapult Group, Inc. and the Company guarantee the obligations of the Borrower under the 2025 Loan Agreement. The rights of the Lenders under the Loan Agreement are fully transferable and assignable.

New Revolving Facility

The 2025 Loan Agreement provides for an amended and upsized revolving credit facility (“New Revolving Facility”), which represents a continuation of the revolving credit facility under the 2019 Loan Agreement (“Existing Revolving Facility”), with initial commitments of $110 million, including $20 million of new commitments. All outstanding RLOC advances under the 2019 Loan Agreement were automatically converted into RLOC advances under the New Revolving Facility upon effectiveness of the 2025 Loan Agreement. Advances under the New Revolving Facility are limited to the lesser of (i) $110 million or (ii) a specified advanced rate applied to eligible leases pledged as collateral under the Loan Agreement. The New Revolving Facility matures on December 4, 2026.

Borrowings under the New Revolving Facility bear interest at a term SOFR-based rate, subject to a 3.0% floor and a 0.10% credit adjustment spread, plus 7.0% per annum.

New Term Loan

The 2025 Loan Agreement also provided for an amended term loan facility (“New Term Loan”) with an initial principal amount of $32.7 million, representing a cashless conversion of the outstanding term loan under the 2019 Loan Agreement (the

(dollars in thousands, except per share data)

“Existing Term Loan”). The New Term Loan did not amortize and bore interest at 18.0% per annum, accruing as PIK interest. The New Term Loan was fully repaid on November 3, 2025.

The 2025 Loan Agreement contains certain financial covenants, each as defined in the 2025 Loan Agreement, including Minimum Trailing Three-Month Net Origination levels, Minimum Liquidity and compliance with a Term Advance Rate, as well as customary affirmative and negative covenants.

During 2025, the Company did not comply with the Minimum Trailing Three-Month Net Origination covenant. The Lender granted a series of limited waivers during 2025 related to compliance with this covenant, including a Limited Waiver and First Amendment dated November 2, 2025. As a result of these waivers, the Company was in compliance with all covenants as of December 31, 2025. See Note 14 Subsequent Events for additional information regarding subsequent waivers received after December 31, 2025.

New Term Loan Conversion Feature

The New Term Loan initially included a conversion feature permitting certain lenders to convert outstanding principal into shares of the Company’s common stock upon the occurrence of specified events. The conversion price was based on the greater of a fixed price per share or a discounted volume-weighted average price over a specified trading period, subject to adjustments. The maximum number of shares issuable upon conversion was 21,413,548 shares based on the contractual terms.

In accordance with ASC 815, the Company evaluated the embedded conversion feature (“New Term Loan Derivative”) at issuance and determined that bifurcation was required. The conversion feature was initially measured at its estimated fair value of $3.6 million on the issuance date, with a corresponding discount recorded to the New Term Loan. The New Term Loan Derivative was subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the consolidated statements of operations and comprehensive income (loss).

The New Term Loan was prepaid in full prior to any conversion, and the embedded conversion feature expired unexercised upon repayment of the debt. The New Term Loan Derivative was derecognized in connection with the extinguishment of the New Term Loan.

Warrants Issued in Connection with the Financing

In connection with the 2025 Loan Agreement, the Company issued warrants to purchase up to 486,264 shares of common stock at an exercise price of $0.01 per share (the “Second Blue Owl Warrants”). The Second Blue Owl Warrants expire on June 12, 2032 and are subject to customary anti-dilution adjustments. The First Warrants and Second Blue Owl Warrants are collectively referred to as (the “Katapult Private Warrants”).

The Company concluded that the Second Blue Owl Warrants qualified for equity classification under ASC 815-40 and recorded the warrants at their estimated fair value of $3.9 million in additional paid-in capital at issuance.

Accounting Treatment and Extinguishment

On June 12, 2025, the Company accounted for the refinancing of the Existing Term Loan as an extinguishment under ASC 470. The carrying value of the Existing Term Loan was derecognized, and the New Term Loan was recorded in accordance with its contractual terms. Any difference between the carrying value of the Existing Term Loan and the amount recorded for the New Term Loan was recognized in earnings. As a result of the June 12, 2025 refinancing, the Company recognized a loss on extinguishment of $1.0 million.

On November 3, 2025, the Company used proceeds from the issuance of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock to repay and extinguish the New Term Loan. Upon extinguishment, the Company derecognized the related derivative liability and wrote off the unamortized debt discount and deferred financing costs.

In connection with the Preferred Stock issuance, the Katapult Private Warrants that were previously issued to Blue Owl were assigned to Hawthorn. The Company accounted for this as a reacquisition of the warrants from Blue Owl and a subsequent reissuance to Hawthorn. In accordance with ASC 505-30, a portion of the consideration paid to Blue Owl in connection with the extinguishment of the New Term Loan was allocated to the reacquired warrants based on their relative fair value, resulting in a $6.2 millionreduction to additional paid-in capital. Similarly, $5.0 million of the $63.9 million net proceeds from the

(dollars in thousands, except per share data)

issuance of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock was allocated to the reissued warrants based on their relative standalone fair value at issuance.

In connection with the November 3, 2025 repayment of the New Term Loan and derecognition of the related derivative liability, the Company recognized a gain of $6.2 million.

In total, the Company recognized a net gain on extinguishment of term loan and settlement of derivative liability of $5.1 million for the year ended December 31, 2025. The Company did not recognize a gain or loss on extinguishment for the year ended December 31, 2024.

Revolving Credit Facilities

As of December 31, 2025, the Company had $78.7 millionoutstanding principal under the New Revolving Facility at an 11.5% interest rate. As of December 31, 2024, the Company had $82.8 million outstanding principal under the Existing Revolving Facility at a 13.1% interest rate.

A reconciliation of outstanding principal to the carrying amounts is as follows:

New Revolving Facility Existing Revolving Facility

December 31, December 31,

Less: Unamortized issuance costs — (176)

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 consolidated statements of operations and comprehensive income (loss). Debt issuance costs on the New Revolving Facility are included in deferred financing costs, net on the December 31, 2025 consolidated balance sheet. The unamortized issuance costs total $3.8 million as of December 31, 2025.

Amortization expense related to the New Revolving Facility debt discount and issuance costs and Existing Revolving Facility issuance costs was $2.4 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.

Term Loan

As of December 31, 2025, the New Term Loan had been fully repaid and extinguished. As of December 31, 2024, the Company had $25 million outstanding principal under the Existing Term Loan at an interest rate of 18.6%.

A reconciliation of the outstanding principal to carrying amount is as follows:

Existing Term Loan

December 31,

Principal balance $ 25,000

Less: Unamortized debt discount and issuance costs (1,733)

Total carrying amount $ 30,047

Amortization of debt discount and issuance costs is included in interest expense and other fees in the consolidated statements of operations and comprehensive income (loss). Amortization expense related to the New Term Loan and Existing Term Loan debt discount and issuance costs was $3.0 million and $3.1 million for the years ended December 31, 2025 and 2024, respectively.

(dollars in thousands, except per share data)

Pursuant to the Pledge Agreement, dated as of May 14, 2019, between Katapult Group, Inc. (f/k/a Cognical, Inc.) and Midtown Madison Management, LLC, Katapult Group, Inc. pledged and granted a first priority security interest in all equity interests of the Borrower and any investment property and general intangibles evidenced by or related to such membership interests. Pursuant to the Corporate Guaranty and Security Agreement, dated as of December 4, 2020, by and among Katapult Group, Inc., Legacy Katapult and Midtown Madison Management, LLC, Katapult and Katapult Group, Inc. have granted a first priority security interest in all of their respective assets and Katapult and Katapult Group, Inc. guarantee payment of all obligations of the Borrower under the 2019 Loan. In connection with the Loan Agreement, the respective obligations under each of the Pledge Agreement and Corporate Guaranty and Security Agreement were reaffirmed and all references to the 2019 Loan in each such agreement thereafter were deemed to refer to the Loan Agreement.

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 New Revolving Facility matures on December 4, 2026, which is within one year after the date these financial statements are issued. The Company does not have sufficient cash on hand to repay the outstanding balance of the facility at maturity absent refinancing or extension. As of December 31, 2025, the Company was in compliance with all financial covenants under the New Revolving Credit Facility. Future compliance with certain financial covenants may require additional waivers from the lender, and there can be no assurance that such waivers will be obtained. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.

The Company plans to continue to work closely with the Lender and intends to refinance, extend, or replace the New Revolving Credit Facility prior to its maturity; however, there can be no assurance that such refinancing or extension will be completed on acceptable terms or at all.

The consolidated 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 result from the outcome of this uncertainty. Borrowings on the New Revolving Credit Facility are classified as current liabilities in the December 31, 2025 consolidated balance sheet.

7.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 (“Series A Convertible Preferred Stock”) and 30,000 shares of $0.0001 par value Series B Convertible Preferred Stock (“Series B Convertible Preferred Stock,” and together with the Series A Preferred Stock, the “Katapult Convertible Preferred Stock”) to Hawthorn at a price of $1,000 per share for cash consideration of $65.0 million in the aggregate. Issuance costs of $0.6 million and $0.5 millionwere incurred in connection with the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, respectively. Additionally, the warrants previously issued to Blue Owl (as described in Note 6) were reissued to Hawthorn as part of the transaction, allowing Hawthorn to purchase up to an aggregate of 646,264 shares of the Company’s common stock at an exercise price per share of $0.01.

The Company classifies the Katapult Convertible Preferred Stock as mezzanine equity as the Katapult Convertible Preferred Stock is not mandatorily redeemable but is redeemable upon the occurrence of events not within the Company’s control as described below. There was no remeasurement of the Katapult Convertible Preferred Stock at December 31, 2025 as the Company concluded the events upon which the Katapult Convertible Preferred Stock become redeemable are not considered probable to occur.

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 in accordance with the provisions described in Redemption Rights below, payable by the issuance of a new debt instrument by the Company.

After giving effect to $1.1 million of issuance costs, the Company received net proceeds of $63.9 million on the Initial Issuance Date. The net proceeds were allocated among (i) the Series A Convertible Preferred Stock, (ii) the Series B Convertible

(dollars in thousands, except per share data)

Preferred Stock, and (iii) the warrants issued to Hawthorne at the instruments relative fair value on Initial Issue Date. From the value allocated to the Series A and Series Convertible Preferred Stock, the company bifurcated the compound embedded derivative at its estimated fair value on Initial Issue Date. Of the total net proceeds, $11.3 million was allocated to the Series A Preferred Stock, $16.6 million was allocated to the Series B Preferred Stock, $31.0 million was allocated to the compound derivative liability (the “Convertible Preferred Derivative”), and $5.0 million was allocated to the warrants.

The warrants issued to Hawthorn were evaluated under ASC 815-40 and determined to qualify for equity classification as they are indexed to the Company’s own stock and do not contain cash settlement provisions. Accordingly, the warrants were recorded at their allocated fair value within additional paid-in capital

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 was bifurcated from the host preferred stock and accounted for separately as a derivative liability. The Convertible Preferred Derivative was initially measured at its issuance-date fair value and is presented separately on the consolidated balance sheet.

The derivative liability is subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings within “Change in fair value of derivative liability and warrants” in the consolidated statements of operations and comprehensive income (loss). As of December 31, 2025, the Convertible Preferred Derivative was remeasured at a fair value of $13.6 million and the Company recognized a gain of $17.4 million due to change in fair value. See Note 12 for fair value measurement related to the derivative liability.

As of 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 Rights

Each share of Katapult Convertible Preferred Stock has a stated liquidation preference of $1,000 per share, plus accumulated and unpaid dividends, to the extent not included in liquidation preference. The Katapult Convertible Preferred Stock ranks senior to the Company’s common stock with respect to dividends and distributions upon liquidation, winding up, or dissolution, with the Series B Convertible Preferred Stock ranking senior to the Series A Convertible Preferred Stock. As of December 31, 2025, the Series A Preferred Stock and the Series B Preferred Stock had liquidation preference totals of $36.0 million and $30.9 million, respectively.

Voting Rights

Holders of the Series A Convertible Preferred Stock are generally entitled to vote with holders of common stock on an as‐converted basis on all matters submitted to stockholders, subject to applicable conversion and ownership limitations. Holders of the Series B Convertible Preferred Stock have no general voting rights except as required by law. However, certain actions including amendments, modifications or repeals to the certificate of incorporation that adversely affect the series, creation or issuance of senior or parity securities, changes to authorized shares of the series, and certain business combinations require the separate approval of a majority of the outstanding Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, voting as separate classes.

Dividend Rights

The Katapult Convertible Preferred Stock accrues cumulative dividends at an annual rate of 18% from the Initial Issue Date until the later of (i) the date of stockholder approval contemplated by Nasdaq listing rules with respect to conversion issuances in excess of applicable limitations (“Preferred Stock Investment Stockholder Approval” and (ii) the Company’s 2026 Annual Meeting of Stockholders, and 12% thereafter. The dividend rate will increase by 1% if the Preferred Stock Investment Stockholder Approval is not obtained by the date of the Company’s first annual or special meeting of stockholders following the Initial Issue Date during the period from such deadline until the Preferred Stock Investment Stockholder Approval is obtained, if at all. Dividends may be paid in cash at the Company’s election; if not paid in cash, such dividends are added to the liquidation preference.

Holders of the Katapult Convertible Preferred Stock are also entitled to participate in and receive any dividends declared or paid on the Katapult common stock on an as-converted basis, and no dividends may be paid to holders of Katapult common stock

(dollars in thousands, except per share data)

unless full participating dividends are concurrently paid to holders of the Katapult Convertible Preferred Stock. The Company recognizes dividends as a liability when declared. As of December 31, 2025, the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock had accumulated undeclared dividends of $1.0 million and $0.9 million, respectively.

Conversion Rights

The Katapult Convertible Preferred Stock is convertible into shares of the Company’s common stock, in whole or in part, at the option of the holder. The initial conversion price is $12.32 per share of common stock for the Series A Convertible Preferred Stock and $11.39 per share of common stock for the Series B Convertible Preferred Stock. The Series A Convertible Preferred Stock conversion rate is the greater of (a) 81.16883 shares of common stock per $1,000 of liquidation preference and (b) a rate based on a 30‐trading‐day average price formula described in the certificate of designations. The Series B Convertible Preferred Stock conversion rate is 87.7963 shares of common stock per $1,000 of liquidation preference.

Based on the applicable conversion rates and liquidation preferences as of December 31, 2025, 5.6 million shares of common stock would be issuable upon conversion. The number of shares issuable upon conversion is also affected by customary anti‐dilution adjustments and by increases in liquidation preference from dividends not paid in cash.

Conversion is subject to ownership and issuance limitations prior to obtaining the Preferred Stock Investment Stockholder Approval, including a cap designed to prevent issuance of shares in excess of Nasdaq’s 19.99% limitation absent stockholder approval.

The Company may, at its option, after the second anniversary of the Initial Issue Date require conversion of all, but not less than all, outstanding shares of each series if, for at least 20 trading days during the 30 consecutive trading days immediately preceding the date the Company notifies holders of its election, the closing sale price of the Company’s common stock is at least 115% of the applicable conversion price and other conditions are satisfied.

Upon conversion, the consideration consists solely of shares of the Company’s common stock based on the applicable conversion rate and the liquidation preference, including any amounts added for dividends not paid in cash, subject to the foregoing limitations.

Redemption Rights

The Company may voluntarily redeem all, but not less than all, of the Katapult Convertible Preferred Stock on or after November 3, 2027 at a cash purchase price equal to the liquidation preference plus accumulated and unpaid dividends, to the extent not included in liquidation preference.

Upon a Change of Control, as defined below, each holder may require the Company to repurchase all or a portion of its Katapult Convertible Preferred Stock at 100% of liquidation preference, plus accumulated and unpaid dividends if the Change of Control occurs prior to the first anniversary of the Initial Issue Date, or 150% of liquidation preference if the Change of Control occurs on or after the first anniversary of the Initial Issue Date, subject to specified settlement conditions.

Change of Control is defined as either (a) a person of group other than Hawthorn or its affiliates becomes a direct or indirect beneficial owner of the Company’s common equity representing more than 50% of the voting power of the Company’s common equity, or (b) the consummation of (i) any sale, lease or other transfer, in one transaction or a series of transactions, of all or substantially all of the assets of the Company and its subsidiaries; or (ii) any transaction or series of related transactions in connection with which (whether by means of merger, consolidation, share exchange, combination, reclassification, recapitalization, acquisition, liquidation or otherwise) the beneficial owners prior to the transactions do not retain more than 50% of all classes of equity in the surviving company.

The Company may elect to pay the repurchase price in cash, shares or common stock (or other securities) or any combination thereof, except that the Company may not elect to deliver shares of common stock (or other securities) if certain liquidity conditions or ownership limitations with regard to such shares would not be satisfied.

As noted above, the Company executed the Hawthorn Side Letter in December 2025 in connection with the Merger Agreement. The Hawthorn Side Letter states that immediately prior to the pending Mergers, all issued and outstanding shares of the Katapult Convertible Preferred Stock will be redeemed by Katapult at a price per share equal to the liquidation preference plus

(dollars in thousands, except per share data)

any accrued and unpaid dividends as of the day immediately prior to the consummation of the Mergers. The purchase price will be payable by the issuance of a promissory note, with a five year term beginning on the Initial Issue Date, accruing interest at 15% annually.

8.STOCK-BASED COMPENSATION

As of December 31, 2025, the Company has two stock incentive plans, the Cognical Holdings, Inc. 2014 Stock Incentive Plan, (“Katapult 2014 Plan”) and the Katapult Holdings, Inc. 2021 Stock Incentive Plan, (“Katapult 2021 Plan”).

Katapult 2014 Plan

In accordance with the Katapult 2014 Plan, the board of directors could grant equity awards to officers, employees, directors and consultants for common stock. The Katapult 2014 Plan has specific vesting for each stock option grant allowing vesting of the options over one to four years. No equity awards have been granted under the Katapult 2014 Plan since October 2020 and no new equity awards are expected to be granted under the Katapult 2014 Plan.

Stock Options

A summary of the status of the stock options under the Katapult 2014 Plan as of December 31, 2025, and changes during the year is presented below:

Granted — —

Forfeited — —

Expired — —

The total intrinsic value of stock options exercised during the year endedDecember 31, 2025 was $17 thousand.

Katapult 2021 Plan

On June 9, 2021, the approved Katapult 2021 Plan became effective.

In accordance with the Katapult 2021 Plan, directors may issue equity awards, including restricted stock awards (“RSAs”), restricted stock unit award, and stock options to officers, employees, directors and consultants to purchase common stock. The awards granted are subject to either service-based and/or performance-based vesting conditions. Restricted stock units (“RSUs”) are equity awards granted to employees that entitle the holder to shares of common stock when the awards vest. RSUs are measured based on the fair value of the Company’s common stock on the date of grant. Awards granted under the Katapult 2021 Plan generally vest over one to four years. As of December 31, 2025, there were 273,853 RSAs available for future issuance under the Katapult 2021 Plan.

The following tables summarizes the Company’s RSA activity under the Katapult 2021 Plan during the year ended December 31, 2025:

(dollars in thousands, except per share data)

Stock Options Restricted Stock Units

Stock-Based Compensation Expense—Stock-based compensation expense of $3.7 million and $5.8 million was recognized for the years ended December 31, 2025 and 2024, respectively. Stock-based compensation expense is included in operating expenses in the consolidated statements of operations and comprehensive income (loss).

As ofDecember 31, 2025, there was $1.4 million of unrecognized compensation costs. This amount is expected to be recognized over a weighted-average period of 0.9 years. The total fair value of vested RSUs as of their respective vesting dates was $2.2 million.

9.INCOME TAXES

The Company recorded a federal income tax loss fully related to its U.S.-based jurisdictions for the years ended December 31, 2025 and 2024, respectively. As a full valuation allowance is recorded against all of the deferred tax assets, the Company did not record a federal provision for income tax or benefits during the years ended December 31, 2025 and 2024. The provision for income taxes for the year ended December 31, 2025 relates to state income taxes.

A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:

Amount Percent Amount Percent

Pretax income (loss) before income taxes $ 1,684 $ (25,772)

State and local income taxes, net of federal benefit 223 13.2 % 111 (0.4 %)

Nontaxable or nondeductible Items:

Transaction costs 625 37.1 % — — %

Debt modification (868) (51.5 %) — — %

Gain on derivative liability (3,654) (217.0 %) — — %

The Company’s effective tax rate includes the effects of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to Arizona, Florida, Maryland, and North Carolina where the Company has significant business activities. These states have higher effective tax rates compared to other jurisdictions where the Company operates, and together, they account for more than half of the Company’s total state tax expense.

(dollars in thousands, except per share data)

The components of deferred tax assets and liabilities are as follows:

Year Ended Year Ended December 31,

Deferred tax assets:

Total deferred tax asset before valuation allowance 55,313 45,247

Deferred tax asset - net of valuation allowance 10,508 752

Deferred tax liabilities:

Depreciation and amortization (10,411) (144)

Right-of-use assets (97) (608)

Total deferred tax liabilities (10,508) (752)

Net deferred tax asset (liability) $ — $ —

As of December 31, 2025 and 2024, the Company had a U.S. federal net operating loss carryforward of $234.2 million and $124.8 million, respectively. As of December 31, 2025 and 2024, the Company has state net operating loss (“NOL”) carryforwards of $69.1 million and $91.0 million, respectively. Of the $234.2 million of federal NOL carryforwards, $22.5 million begins to expire in 2033 and $211.7 million may be carried forward indefinitely. The state NOL carryforwards begin to expire in 2025.

Future realization of the tax benefits of existing temporary differences and NOL carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2025 and 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We conducted an ownership analysis under IRC Section 382 as of December 31, 2025 and determined that there have been multiple ownership changes with the most recent being November 3, 2025. These ownership changes generate a limit on the pre-change tax attributes and may cause some tax attributes to expire unutilized. The Company has maintained a valuation allowance against its tax attributes given the uncertainty of being able to utilize them. Additionally, the pending strategic merger with CCFI and Aaron's could create future limitations on the utilization of our tax attributes and the Company will continue to monitor going forward.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which we operate or do business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2025 and 2024, we have not recorded any uncertain tax positions in our financial statements.

(dollars in thousands, except per share data)

The Company recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive income (loss). As of December 31, 2025 and 2024, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company's tax years are still open under statute from December 31, 2022, to the present.

The following summarizes the Company’s income taxes paid (net of refunds received) for the years presented below:

Year Ended December 31,

Federal $ — $ —

Foreign — —

The following summarizes the jurisdictions that exceeded 50% of the Company’s total income taxes paid (net of refunds) for the years presented below (in thousands):

Year Ended December 31,

California $ — $ 12

Illinois — 42

Massachusetts 9 —

New Hampshire 7 —

Pennsylvania — 58

10.NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is computed using net income (loss) attributable to common stockholders divided by the weighted-average number of shares of common stock outstanding during the period. Net income (loss) attributable to common stockholders reflects net income (loss) adjusted for accumulated dividends on preferred stock, including accumulated but undeclared dividends for which no liability is recognized on the balance sheet. For the year ended December 31, 2025, net loss attributable to common stockholders was reduced by $1.0 million and $0.9 million of accumulated undeclared dividends on the Company’s Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, respectively. Diluted net loss per share reflects the effect of potentially dilutive securities only in periods in which net income is attributable to common stockholders; therefore, in periods of net loss attributable to common stockholders, diluted weighted average shares outstanding equal basic weighted-average shares outstanding.

(dollars in thousands, except per share data)

The following tables summarizes the Company’s computation of basic and diluted net loss per share attributable to common stockholders for the years ended December 31, 2025 and 2024:

Year Ended December 31,

Numerator:

Accumulated undeclared dividends on series A preferred stock (1,035) —

Accumulated undeclared dividends on series B preferred stock (887) —

Net loss attributable to common stockholders $ (557) $ (25,915)

Denominator:

Weighted average common shares outstanding

Net loss per share attributable to common stockholders

— basic and diluted $ (0.11) $ (5.96)

Lender Warrants

The First Warrants and the Second Warrants were exercisable for little or no consideration. Accordingly, the underlying shares are included in weighted average shares outstanding basic and diluted from the dates they became exercisable — September 6, 2023 (for the First Warrants issued March 6, 2023), March 5, 2024 (for the First Warrants issued December 5, 2023), and June 12, 2025 (for the Second Warrants) — and are excluded from the table of potentially dilutive securities below.

On November 3, 2025, the Company repurchased the First Warrants and the Second Warrants and subsequently reissued these warrants on the same day as part of the Hawthorn transaction. This transaction did not have any impact on basic or diluted net loss per share as the warrants previously included in weighted average shares outstanding basic and diluted from the dates they became exercisable.

IPO Warrants

In connection with the initial public offering (“IPO”) merger, the Company had 500,000 public warrants originally issued in the IPO and 13,300 private placement warrants issued in connection with the IPO. Each warrant is exercisable for one share of common stock at an exercise price of $287.50 per share and expires on June 9, 2026 (five years after the IPO merger closing).

For net loss per share attributable to common stockholders, unexercised warrants are excluded from weighted average shares outstanding – basic shares. They are included in diluted shares outstanding only when dilutive under the treasury stock method (i.e., when the average market price exceeds the exercise price). For the periods presented, the Company reported a net loss attributable to common stockholders and the warrants were out-of-the-money; accordingly, the warrants were anti-dilutive and were excluded from diluted weighted average shares outstanding and included in the table of potentially dilutive securities below.

Series A Convertible Preferred Stock and Series B Convertible Preferred Stock

As discussed in Note 7, the Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock provide for conversion into up to 5,636,650shares of the Company’s common stock at the option of the holders and upon the occurrence of certain events, including a Change in Control or Deemed Liquidation Event, as defined by the Series A Investment Agreement and Series B Investment Agreement. As of December 31, 2025, no mandatory conversion events had occurred. Accordingly, the related shares were excluded from diluted net loss per share because the Company reported a net loss attributable to common stockholders for the periods presented and their inclusion would have been anti-dilutive..

The Company’s potentially dilutive securities, including shares issuable upon conversion of Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock, unvested RSUs, stock options to purchase common stock, and warrants to purchase common stock, were excluded from diluted net loss per share for the periods presented because the Company incurred

(dollars in thousands, except per share data)

net losses attributable to common stockholders for the years ended December 31, 2025 and 2024, and their effect would have been antidilutive. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share is the same in periods of a net loss.

The following table summarizes potential common shares outstanding at each period end that were excluded from diluted net loss per share because their effect would have been anti-dilutive:

Year Ended December 31,

11.COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become involved in various legal actions arising in the ordinary course of business. Management is of the opinion 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 and has accrued liabilities related to such obligations in the consolidated financial statements when estimable and probable, as of December 31, 2025 and 2024.

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 April 9, 2021, Daiwa Corporate Advisory LLC (“DCA”) filed a complaint in the Supreme Court of the State of New York, New York County relating to an April 11, 2018 letter agreement (“Letter Agreement”) entered into by DCA and Legacy Katapult.

KPLT US Equity

KPLT · 10-K · period ended 2025-12-31

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands)

Item 8. Financial Statements and Supplementary Data

KPLT US Equity☆

KPLT · 10-K · period ended 2025-12-31

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk (dollars in thousands)

Item 8. Financial Statements and Supplementary Data

KPLT US Equity