Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 12, 2021 | |
Entity Listings [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39116 | |
Entity Registrant Name | Katapult Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-4424170 | |
Entity Address, Address Line One | 5204 Tennyson Parkway, Suite 500 | |
Entity Address, City or Town | Plano | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75024 | |
City Area Code | 833 | |
Local Phone Number | 528-2785 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 97,472,371 | |
Amendment Flag | false | |
Entity Central Index Key | 0001785424 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Common Stock, par value $0.0001 per share | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | KPLT | |
Security Exchange Name | NASDAQ | |
Redeemable Warrants | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Redeemable Warrants | |
Trading Symbol | KPLTW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 99,731 | $ 65,622 |
Restricted cash | 3,213 | 3,975 |
Accounts receivable, net of allowance for doubtful accounts of $5,799 and $4,372 at September 30, 2021 and December 31, 2020, respectively | 1,912 | 1,636 |
Property held for lease, net of accumulated depreciation and impairment (Note 4) | 65,142 | 66,737 |
Prepaid expenses and other current assets | 5,067 | 1,248 |
Total current assets | 175,065 | 139,218 |
Property and equipment, net (Note 5) | 499 | 330 |
Security deposits | 91 | 91 |
Capitalized software and intangible assets, net (Note 6) | 753 | 188 |
Total assets | 176,408 | 139,827 |
Current liabilities: | ||
Accounts payable | 2,358 | 1,688 |
Accrued liabilities | 11,729 | 12,967 |
Unearned revenue | 2,322 | 2,652 |
Total current liabilities | 16,409 | 17,307 |
Revolving line of credit | 67,498 | 74,316 |
Long term debt (Note 9) | 39,633 | 36,413 |
Other liabilities | 19,754 | 12,740 |
Total liabilities | 143,294 | 140,776 |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Common stock, $.0001 par value-- 250,000,000 shares authorized; 97,472,371 and 31,432,477 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 10 | 3 |
Additional paid-in capital | 77,426 | 57,097 |
Accumulated deficit | (44,322) | (58,049) |
Total stockholders' equity (deficit) | 33,114 | (949) |
Total liabilities and stockholders' equity (deficit) | $ 176,408 | $ 139,827 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,799 | $ 4,372 |
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 97,472,371 | 31,432,477 |
Common stock, shares outstanding (in shares) | 97,472,371 | 31,432,477 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue | ||||
Rental revenue | $ 71,671 | $ 71,088 | $ 229,533 | $ 173,652 |
Other revenue | 39 | 102 | 281 | 117 |
Service fees | 0 | 4 | 0 | 73 |
Total revenue | 71,710 | 71,194 | 229,814 | 173,842 |
Cost of revenue | 53,351 | 46,953 | 162,155 | 116,534 |
Gross profit | 18,359 | 24,241 | 67,659 | 57,308 |
Operating expenses: | ||||
Servicing costs | 1,141 | 1,024 | 3,351 | 3,003 |
Underwriting fees | 456 | 541 | 1,400 | 1,870 |
Professional and consulting fees | 1,276 | 657 | 4,134 | 1,305 |
Technology and data analytics | 2,392 | 1,389 | 6,708 | 4,636 |
Bad debt expense | 5,936 | 3,931 | 18,849 | 9,614 |
Compensation costs | 6,475 | 1,806 | 23,812 | 4,674 |
General and administrative | 3,308 | 1,338 | 6,571 | 3,093 |
Total operating expenses | 20,984 | 10,686 | 64,825 | 28,195 |
Income (loss) from operations | (2,625) | 13,555 | 2,834 | 29,113 |
Interest expense and other fees | (4,176) | (3,482) | (12,462) | (10,091) |
Change in fair value of warrant liability | 21,349 | 0 | 24,160 | 0 |
Income before provision for income taxes | 14,548 | 10,073 | 14,532 | 19,022 |
Provision for income taxes | (808) | (233) | (805) | (423) |
Net income (loss) | 13,740 | 9,840 | 13,727 | 18,599 |
Comprehensive income (loss) | $ 13,740 | $ 9,840 | $ 13,727 | $ 18,599 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.32 | $ 0.23 | $ 0.61 |
Diluted (in dollars per share) | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.40 |
Weighted average shares used in computing net income per share: | ||||
Basic (in shares) | 97,082,182 | 30,801,304 | 58,826,335 | 30,663,966 |
Diluted (in shares) | 105,605,479 | 46,159,679 | 72,208,593 | 45,990,086 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED) - USD ($) $ in Thousands | Total | Previously Reported | Recapitalization impact | Common Stock | Common StockPreviously Reported | Common StockRecapitalization impact | Additional Paid-in Capital | Additional Paid-in CapitalPreviously Reported | Additional Paid-in CapitalRecapitalization impact | Accumulated Deficit | Accumulated DeficitPreviously Reported | Accumulated DeficitRecapitalization impact |
Beginning balance (in shares) at Dec. 31, 2019 | 0 | 68,589,913 | (68,589,913) | |||||||||
Beginning balance at Dec. 31, 2019 | $ 0 | $ 49,894 | $ (49,894) | |||||||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | |||||||||||
Ending balance at Sep. 30, 2020 | $ 0 | |||||||||||
Beginning balance (in shares) at Dec. 31, 2019 | 30,594,515 | 8,686,478 | 21,908,037 | |||||||||
Beginning balance at Dec. 31, 2019 | (23,944) | $ (73,838) | $ 49,894 | $ 3 | $ 9 | $ (6) | $ 56,633 | $ 6,733 | $ 49,900 | $ (80,580) | $ (80,580) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Merger financing | 0 | |||||||||||
Stock options exercised (in shares) | 663,293 | |||||||||||
Stock options exercised | 112 | 112 | ||||||||||
Stock-based compensation expense | 274 | 274 | ||||||||||
Stock warrant exercise (in shares) | 128,601 | |||||||||||
Stock warrant exercise | 1 | 1 | ||||||||||
Net income | 18,599 | 18,599 | ||||||||||
Ending balance (in shares) at Sep. 30, 2020 | 31,386,409 | |||||||||||
Ending balance at Sep. 30, 2020 | $ (4,958) | $ 3 | 57,020 | (61,981) | ||||||||
Beginning balance (in shares) at Jun. 30, 2020 | 0 | 68,589,913 | (68,589,913) | |||||||||
Beginning balance at Jun. 30, 2020 | $ 0 | $ 49,894 | $ (49,894) | |||||||||
Ending balance (in shares) at Sep. 30, 2020 | 0 | |||||||||||
Ending balance at Sep. 30, 2020 | $ 0 | |||||||||||
Beginning balance (in shares) at Jun. 30, 2020 | 30,596,265 | 8,688,228 | 21,908,037 | |||||||||
Beginning balance at Jun. 30, 2020 | (14,988) | $ (64,882) | $ 49,894 | $ 3 | $ 9 | $ (6) | 56,830 | 6,930 | 49,900 | (71,821) | (71,821) | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Stock options exercised (in shares) | 661,543 | |||||||||||
Stock options exercised | 112 | 112 | ||||||||||
Stock-based compensation expense | 77 | 77 | ||||||||||
Stock warrant exercise (in shares) | 128,601 | |||||||||||
Stock warrant exercise | 1 | 1 | ||||||||||
Net income | 9,840 | 9,840 | ||||||||||
Ending balance (in shares) at Sep. 30, 2020 | 31,386,409 | |||||||||||
Ending balance at Sep. 30, 2020 | $ (4,958) | $ 3 | 57,020 | (61,981) | ||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 0 | 68,589,913 | (68,589,913) | |||||||||
Beginning balance at Dec. 31, 2020 | $ 0 | $ 49,894 | $ (49,894) | |||||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | |||||||||||
Ending balance at Sep. 30, 2021 | $ 0 | |||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 31,432,477 | 31,432,477 | 9,524,440 | 21,908,037 | ||||||||
Beginning balance at Dec. 31, 2020 | $ (949) | $ (50,843) | $ 49,894 | $ 3 | $ 10 | $ (7) | 57,097 | 7,196 | $ 49,901 | (58,049) | (58,049) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
PIPE proceeds (in shares) | 15,000,000 | |||||||||||
PIPE proceeds | 150,000 | $ 2 | 149,998 | |||||||||
Merger financing (in shares) | 39,408,662 | |||||||||||
Merger financing | 251,109 | $ 4 | 251,105 | |||||||||
Consideration paid to selling stockholders | (329,560) | (329,560) | ||||||||||
Transaction costs | (33,534) | (33,534) | ||||||||||
Merger warrants liability | (44,272) | (44,272) | ||||||||||
Stock options exercised (in shares) | 2,073,162 | |||||||||||
Stock options exercised | 629 | 629 | ||||||||||
Stock-based compensation expense (in shares) | 2,850,000 | |||||||||||
Stock-based compensation expense | 12,862 | 12,862 | ||||||||||
Stock warrant exercise (in shares) | 6,708,070 | |||||||||||
Stock warrant exercise | 13,102 | $ 1 | 13,101 | |||||||||
Net income | $ 13,727 | 13,727 | ||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 97,472,371 | 97,472,371 | ||||||||||
Ending balance at Sep. 30, 2021 | $ 33,114 | $ 10 | 77,426 | (44,322) | ||||||||
Beginning balance (in shares) at Jun. 30, 2021 | 0 | |||||||||||
Beginning balance at Jun. 30, 2021 | $ 0 | |||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 0 | |||||||||||
Ending balance at Sep. 30, 2021 | $ 0 | |||||||||||
Beginning balance (in shares) at Jun. 30, 2021 | 96,821,615 | |||||||||||
Beginning balance at Jun. 30, 2021 | $ 16,091 | $ 10 | $ 74,143 | $ (58,062) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Stock options exercised (in shares) | 650,756 | |||||||||||
Stock options exercised | 186 | 186 | ||||||||||
Stock-based compensation expense (in shares) | 0 | |||||||||||
Stock-based compensation expense | 3,097 | 3,097 | ||||||||||
Net income | $ 13,740 | 13,740 | ||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 97,472,371 | 97,472,371 | ||||||||||
Ending balance at Sep. 30, 2021 | $ 33,114 | $ 10 | $ 77,426 | $ (44,322) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 13,727 | $ 18,599 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 108,977 | 77,696 |
Net book value of property buyouts | 34,530 | 21,953 |
Impairment expense | 11,115 | 12,785 |
Bad debt expense | 18,849 | 9,614 |
Change in fair value of warrant liability | (24,160) | 0 |
Stock-based compensation | 12,862 | 274 |
Amortization of debt discount | 2,068 | 0 |
Amortization of debt issuance costs | 268 | 428 |
Other | 1,153 | 0 |
Change in operating assets and liabilities: | ||
Accounts receivable | (19,123) | (10,160) |
Net purchase of property held for lease | (152,811) | (143,446) |
Prepaid expenses and other current assets | (3,820) | (334) |
Accounts payable | 674 | 286 |
Accrued liabilities | (1,238) | 4,657 |
Unearned revenues | (331) | 1,472 |
Net cash provided by (used in) operating activities | 2,740 | (6,176) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (267) | (121) |
Additions to capitalized software | (684) | (181) |
Other assets and security deposits | 0 | 34 |
Net cash used in investing activities | (951) | (268) |
Cash flows from financing activities: | ||
Proceeds from revolving line of credit, net of deferred financing costs | 5,809 | 35,335 |
Principal repayments of revolving line of credit | (12,895) | (2,011) |
Proceeds from warrant exercise | 0 | 1 |
Proceeds from exercise of stock options | 629 | 112 |
PIPE proceeds | 150,000 | 0 |
Cash Acquired Through Reverse Recapitalization | 251,109 | 0 |
Consideration paid to selling stockholders | (329,560) | 0 |
Transaction costs paid | (33,534) | 0 |
Net cash provided by financing activities | 31,558 | 33,437 |
Net increase in cash and restricted cash | 33,347 | 26,993 |
Cash and restricted cash at beginning of period | 69,597 | 12,246 |
Cash and restricted cash at end of period | 102,944 | 39,239 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 8,801 | 9,506 |
Cash paid for income taxes | 0 | 26 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Assumed warrant liability in connection with Merger | 44,272 | 0 |
Exercise of common stock warrant accounted for as a liability | $ 13,102 | $ 0 |
Description of Business and Bas
Description of Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Katapult Holdings, Inc. (“Katapult”), is an e-commerce focused financial technology company offering e-commerce point-of-sale (“POS”) lease-purchase options for nonprime US consumers. Katapult’s fully-digital technology platform provides nonprime U.S. consumers with a flexible lease purchase option to enable them to obtain durable goods from Katapult’s network of e-commerce merchants. Katapult’s end-to-end technology platform provides seamless integration with merchants. On June 9, 2021 (the "Closing Date"), Katapult (formerly known as FinServ Acquisition Corp. or “FinServ”), consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated December 18, 2020 (the "Merger Agreement"), by and among FinServ Keys Merger Sub 1, Inc. (“Merger Sub 1”), a wholly owned subsidiary of FinServ, Keys Merger Sub 2, LLC (“Merger Sub 2”), the entity formerly known as Katapult Holdings. Inc. (formerly known as Cognical Holdings, Inc.), a Delaware corporation (“Legacy Katapult”), and Orlando Zayas, in his capacity as the representative of all pre-closing stockholders. Pursuant to the terms of the Merger Agreement, a business combination between Legacy Katapult and FinServ was effected on June 9, 2021 through the merger of Merger Sub 1 with and into Legacy Katapult, with Legacy Katapult surviving the merger as a wholly owned subsidiary of FinServ (the “First Merger”), followed immediately by the merger of the resulting company with and into Merger Sub 2, with Merger Sub 2 surviving the merger as a wholly owned subsidiary of FinServ (the “Second Merger” and together with the First Merger, the “Merger”). References to “the Company” are to Katapult following the Merger and Legacy Katapult prior to the Merger. On the Closing Date, a number of investors purchased from the Company an aggregate of 15,000,000 shares of Company common stock for a purchase price of $10.00 per share and an aggregate purchase price of $150,000 (the “PIPE Investment” or “PIPE”), pursuant to separate subscription agreements. The PIPE was consummated concurrently with the Merger. On the Closing Date, and in connection with the closing of the Merger, FinServ changed its name to Katapult Holdings, Inc. Legacy Katapult was deemed the accounting acquirer in the Merger based on an analysis of the criteria outlined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations . This determination was primarily based on Legacy Katapult’s stockholders prior to the Merger having had a majority of the voting rights in the combined company, Legacy Katapult’s operations represented the ongoing operations of the combined company, Legacy Katapult and its former owners had the right to appoint a majority of the directors in the combined company, and Legacy Katapult's senior management represented the senior management of the combined company. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Katapult issuing stock for the net assets of FinServ, accompanied by a recapitalization. The net assets of FinServ are stated at historical cost, with no goodwill or other intangible assets recorded. In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company's common stock, $0.0001 par value per share, issued to Legacy Katapult's stockholders in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Katapult redeemable convertible preferred stock and Legacy Katapult common stock prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger Agreement. The unaudited condensed consolidated financial statements (“consolidated financial statements”) include the accounts of Katapult and its wholly owned subsidiaries which are Katapult Group, Inc. (formerly known as Cognical, Inc.), Katapult SPV-1 LLC, Cognical SPV-3 LLC, and Cognical SPV-4 LLC. Cognical SPV-3 LLC originated all of the Company’s lease agreements with its customers and owned all of the leased property through April 2019. Katapult SPV-1 LLC originated all of the Company’s lease agreements thereafter. Cognical SPV-4 LLC has halted the origination of new leases on behalf of a third-party merchant, however the Company serviced activity from existing leases of Cognical SPV-4 LLC through November 2020. Cognical SPV-3 LLC and Cognical SPV-4 LLC were liquidated in December 2020. The Company was headquartered in New York, New York through December 31, 2020. During the first quarter of 2021, the Company changed its headquarters to Plano, Texas. Katapult was incorporated in Delaware in 2016. Katapult Group, Inc. was incorporated in the state of Delaware in 2012. Cognical SPV-3 LLC, Cognical SPV-4 LLC, and Katapult SPV-1 LLC are all Delaware limited liability companies formed in Delaware in 2016, 2017, and 2019, respectively. In February 2020, Cognical Holdings, Inc. officially changed its name to Katapult Holdings, Inc. Additionally, in February 2020, Cognical, Inc. officially changed its name to Katapult Group, Inc. Basis of Presentation —The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. The consolidated financial statements include the accounts of Katapult Holdings, Inc. and its wholly owned subsidiaries. As permitted for interim reporting, certain footnotes or other financial information that are normally required by US GAAP may be condensed or omitted, unless otherwise required by US GAAP or SEC rules and regulations. These consolidated financial statements were prepared on the same basis as the Company’s annual consolidated financial statements. 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. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or future year. The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited annual consolidated financial statements as of that date. All intercompany balances and transactions have been eliminated in consolidation. Risks and Uncertainties —The Company is subject to a number of risks including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology. COVID-19 — We anticipate that the economic and social impacts resulting from the pandemic will continue to affect our business through the remainder of 2021. The COVID-19 pandemic continues to affect macroeconomic conditions, resulting in volatility and unpredictability in markets in which we operate. Due to the economic uncertainty that this has and can continue to cause, there is an added risk factor in the overall future outlook of the Company. During 2020, we implemented cost containment and cash management initiatives to mitigate the potential impact of the COVID-19 pandemic on our business and liquidity. We experienced positive performance during the pandemic due to increased customer activity and the resiliency of our business model. However, certain COVID-19 related trends underlying that positive performance may not continue at current levels and the economic recovery is expected to be impacted by a number of factors such as the onset of new policies from the COVID-19 variants. Management will continue to monitor any changes to the business as the pandemic continues throughout 2021. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates —The preparation of the consolidated financial statements in accordance with US 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 period. The most significant estimates relate to the allowance for doubtful accounts, the selection of useful lives of property and equipment, the selection of useful lives for property held for lease and the related depreciation method, intangible assets and associated useful lives, determination of fair value of the Company’s common stock, determination of fair value of stock option grants, and the fair value of the common stock warrants, and the valuation allowance associated with deferred tax assets. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. Segment Information —Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment. Cash —As of September 30, 2021 and December 31, 2020, cash consists primarily of checking and savings deposits. The Company does not hold any cash equivalents, which would 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 September 30, 2021 and December 31, 2020 consists primarily of cash advanced from the lines of credit in Katapult SPV-1 LLC, which were established pursuant to various agreements for the purpose of funding and servicing originated leases. All of the Company’s restricted cash is classified as current due to its short-term nature. The reconciliation of cash and restricted cash is as follows : September 30, December 31, 2021 2020 Cash $ 99,731 $ 65,622 Restricted cash 3,213 3,975 Total cash and restricted cash $ 102,944 $ 69,597 Accounts Receivable, Net of Allowance for Doubtful Accounts —Accounts receivable are recorded net of allowances for doubtful accounts. Accounts receivable consist primarily of lease receivables due from customers incurred during the normal course of business for lease payments earned not yet received from the customer. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance for doubtful accounts or if any accounts should be written off based on past history of write-offs, collections, and current credit conditions. The Company maintains an allowance for doubtful accounts to provide for uncollected amounts based on historical collection experience and an analysis of the aging of receivables per the following categories: 1-30 days, 31-60 days, 61-90 days. This analysis results in the determination of loss rate percentages that are applied to outstanding receivables in each of these categories as of period end. The Company writes off accounts receivables that are over 90 days contractually past due. Bad debt expense is classified in operating expenses within the consolidated statements of operations and comprehensive income. The Company does not require any security or collateral to support its receivables. A rollforward of the allowance for doubtful accounts is as follows: Balance at beginning of period Charged to cost and expenses, net of recoveries Write-offs Balance at end of period Nine months ended September 30, 2020 $ 1,855 $ 9,614 $ (8,585) $ 2,884 Nine months ended September 30, 2021 $ 4,372 $ 18,849 $ (17,422) $ 5,799 Property Held for Lease, Net —Property held for lease consists of furniture, consumer electronics, appliances, and other durable goods offered for lease-purchase in the normal course of business. Such property is provided to consumers pursuant to a lease purchase agreement with a minimum term; typically one week, two weeks, or one month. The contemplated length of the agreement is typically 12 or 18 months. Consumers may terminate a lease purchase agreement at any time without penalty. The average consumer continues to lease the property for 7 months because the consumer either exercises the buyout (early purchase) options or terminates the lease purchase agreement prior to the end of the 12 or 18 month lease term. As a result, property held for lease is classified as a current asset on the consolidated balance sheets. Property held for lease 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. Under the income forecasting method, property held for lease is depreciated in the proportion of rents received to total expected rents received based on historical data, which is an activity-based method similar to the units of production method. 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. Impairment expense includes expense related to property identified as impaired based on historical data, including default trends, such that the recorded amount closely approximates actual impairment expense incurred during the period. The Company derecognizes the undepreciated net book value of property buyouts as buyouts occur with a corresponding charge to cost of revenue. The Company periodically evaluates fully depreciated property held for lease, net. When it is determined there is no future economic benefit, the cost of the assets are written off and the related accumulated depreciation reversed. Property and Equipment, Net — Property and equipment other than property held for lease are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method and are recorded in general and administrative expense over the estimated useful lives of the assets. The estimated useful lives of property and equipment are described below: Property and Equipment Useful Life Computer, office and other equipment 5 years Computer software 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Capitalized Software —Starting January 1, 2020, the Company began capitalizing 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 function. Once a project 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 software upgrades and enhancements when it is probable the expenditures will result in additional software 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 the consolidated balance sheets. Amortization of capitalized software is included in general and administrative on the consolidated statements of operations and comprehensive income. Debt Issuance Costs —Costs incurred in connection with the issuance of the Company’s line of credit and long-term debt 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 long-term debt issuance costs utilizes the effective interest method, and the amortization of the line of credit debt issuance costs utilizes the straight-line method, which is not materially different compared to the effective interest method . Impairment of Long-Lived Assets —The Company assesses long-lived assets for impairment in accordance with the provisions of ASC 360, Property, Plant and Equipment . Long-lived assets, such as intangible assets and property and equipment, are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. No impairment charges have been recorded during the three and nine months ended September 30, 2021 and 2020. Rental Revenue —Property held for lease is leased to customers pursuant to lease purchase agreements with a minimum term: typically one week, two weeks, or one month, with non-refundable lease payments. Generally, the customer has the right to acquire title to the property either through a 90-day promotional pricing option, an early purchase option (buyout), or through payments of all required lease payments, generally 12 or 18 months. On any current lease, customers have the option to terminate the agreement at any time without penalty in accordance with lease terms. Accordingly, lease purchase agreements are accounted for as operating leases with lease revenues recognized in the month they are earned. Amounts received from customers who elect early 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 month in which the revenue is earned. Rental revenue also includes agreed-upon charges assessed to customer lease applications. 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 initial lease term. The Company also may assess fees for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Revenues from leases and sales are reported net of sales taxes. Other Revenue — Other revenue consists of sub-lease revenue, revenue from merchant partnerships, and infrequent sales of property formerly on lease when customers terminate a lease and elect to return the property to the Company rather than the Company’s retail partners. Stock-Based Compensation —The Company measures and records compensation expense related to stock-based awards 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 uses 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. Forfeitures are accounted for as they are incurred. The Company calculates the fair value of stock options granted to employees by using the following assumptions: Expected Volatility —The Company estimates volatility for stock option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the stock option grant for a term that is approximately equal to the stock options’ expected term. Expected Term —The expected term of the Company’s stock options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint of the stock options vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Risk-Free Interest Rate —The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with a term that is equal to the stock options’ expected term at the grant date. Dividend Yield —The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero. 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 future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized based on all available positive and negative evidence. As of September 30, 2021 and December 31, 2020, the Company continues to maintain a full valuation allowance against its deferred tax assets. The Company recognizes a tax benefit only if it is more likely than not the tax position will be sustained on examination by the local taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit greater than 50% likelihood of being realized upon settlement with the related tax authority. The changes in recognition or measurement are reflected in the period in which the change in judgment occurs. As of September 30, 2021 and December 31, 2020, the Company has not identified any uncertain tax positions. The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes. Net Income Per Share – The Company calculates basic and diluted net income per share attributable to common stockholders using the two-class method required for companies with participating securities. Under the two-class method, basic net income per share available to stockholders was calculated by dividing the net income available to stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share available to stockholders was 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 available to stockholders, diluted net loss per share available to stockholders would be the same as basic net loss per share available to stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Concentrations of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. 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. During the three and nine months ended September 30, 2021 and 2020, the Company did not have any customers that accounted for 10% or more of total revenue. As of September 30, 2021 and December 31, 2020, the Company also did not have any customers that accounted for 10% or more of outstanding gross accounts receivable. A significant portion of the Company’s transaction volume is with a limited number of merchants, including most significantly, Wayfair Inc. Recently Adopted Accounting Pronouncements —In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , as amended (“ASU 2014-09”). ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. ASU 2014-09 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new standard on January 1, 2020. The adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements as the majority of the Company’s revenue generating activities are leasing arrangements, which are outside the scope of this guidance. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain fair value measurement disclosure requirements of Accounting Standards Codification 820, Fair Value Measurement . On January 1, 2020, the Company adopted ASU 2018-13, which did not impact the consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU is effective for all entities beginning as of its date of effectiveness, March 12, 2020. This ASU did not have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740 , Income Taxes . The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective, or prospective basis. The Company adopted this standard on January 1, 2021, and the adoption did not have a material impact on the consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Adopted — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , as amended (“ASU 2016-02”). Under ASU 2016-02, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to control the use of an identified asset for the lease term, at the commencement date for all leases with a term greater than one year. In June 2020, the FASB issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) – Effective Dates for Certain Entities (“ASU 2020-05”), which defers the effective date of ASU 2016-02 for private entities to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 . The Company will defer the adoption of ASU 2016-02 pursuant to ASU 2020-05 and plans to adopt the new standard on January 1, 2022, unless a change in filer status requires earlier adoption. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. Further, the FASB issued ASU 2019-04 , ASU 2019-05 and ASU 2019-11 to provide additional guidance on the credit losses standard. The standard will be adopted using the modified retrospective approach. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted, unless a change in filer status requires earlier adoption. The Company is evaluating the potential impact of adopting ASU 2016-13 on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . ASU 2020-06 changes how entities account for convertible instruments and contracts in an entity’s own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. ASU 2020-06 also modifies the guidance on diluted earnings per share calculations. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Merger
Merger | 9 Months Ended |
Sep. 30, 2021 | |
Reverse Recapitalization [Abstract] | |
Merger | MERGERThe Merger is accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, FinServ was treated as the “acquired” company for financial reporting purposes, see Note 1. Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Katapult issuing stock for the net assets of FinServ, accompanied by a recapitalization. Recapitalization Cash - FinServ Trust $ 251,059 Less: Redemptions (64) Cash - FinServ Operating 114 Cash - PIPE 150,000 Less: Consideration paid to selling stockholders (329,560) Less: Transaction costs (33,534) Net contributions from Merger and PIPE 38,015 Less: Warrant liability (44,272) Total $ (6,257) Merger Warrants Warrants to purchase shares of the Company’s stock deemed acquired as part of the Merger and outstanding during the three and nine months ended September 30, 2021 consisted of the following: September 30, 2021 Public warrants 12,500,000 Private warrants 332,500 Total 12,832,500 Earn out Shares At the closing of the Merger, the Company issued 7,500,000 earn out shares to Legacy Katapult stockholders subject to an earn out period and vesting conditions. The earn out period concludes on the sixth anniversary of the Merger (June 9, 2027). One-half of the earn out shares will vest if the closing price of Katapult common stock is greater than or equal to $12.00 over any 20 trading days within any 30 consecutive trading day period and one-half will vest if the closing price of the Katapult common stock is greater than or equal to $14.00 over any 20 trading days within any 30 consecutive trading day period, in each case, during the earn out period. The earn out shares are classified as equity. |
Property Held for Lease, Net
Property Held for Lease, Net | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Property Held for Lease, Net | PROPERTY HELD FOR LEASE, NET Property held for lease, net consists of the following: September 30, December 31, 2021 2020 Property held for lease $ 234,361 $ 213,838 Less: accumulated depreciation (169,219) (147,101) Property held for lease, net $ 65,142 $ 66,737 Total depreciation expense related to property held for lease, net for the three months ended September 30, 2021 and 2020, was $35,719 and $31,984, respectively. Total depreciation expense related to property held for lease, net for the nine months ended September 30, 2021 and 2020, was $108,760 and $77,587, respectively. Net book value of property buyouts for the three months ended September 30, 2021 and 2020, was $11,695 and $9,849, respectively. Net book value of property buyouts for the nine months ended September 30, 2021 and 2020, was $34,530 and $21,953, respectively. Total impairment charges related to property held for lease, net for the three months ended September 30, 2021 and 2020, was $3,394 and $4,417, respectively. Total impairment charges related to property held for lease, net for the nine months ended September 30, 2021 and 2020, was $11,115 and $12,785, respectively. Depreciation expense, net book value of property buyouts and impairment charges are included within cost of revenue in the condensed consolidated statement of operations and comprehensive income. All property held for lease, net is on-lease as of September 30, 2021 and December 31, 2020. |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: September 30, December 31, 2021 2020 Computer, office and other equipment $ 543 $ 407 Computer software 80 80 Furniture and fixtures 100 64 Leasehold improvements 237 142 960 693 Less: accumulated depreciation (461) (363) Property and equipment, net $ 499 $ 330 Total depreciation expense related to property and equipment, net was $36 and $11 for the three months ended September 30, 2021 and 2020, respectively. Total depreciation expense related to property and equipment, net was $98 and $59 for the nine months ended September 30, 2021 and 2020, respectively. The Company has not acquired any property and equipment under capital leases. |
Capitalized Software and Intang
Capitalized Software and Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Capitalized Software and Intangible Assets, Net | CAPITALIZED SOFTWARE AND INTANGIBLE ASSETS, NET Capitalized software and intangible assets, net consists of the following: September 30, December 31, 2021 2020 Capitalized software $ 886 $ 202 Domain name 16 16 902 218 Less: accumulated amortization (149) (30) Capitalized software and intangible assets, net $ 753 $ 188 Total amortization expense for capitalized software and intangible assets was $63 and $39 for the three months ended September 30, 2021 and 2020, respectively. Total amortization expense for capitalized software and intangible assets was $119 and $50 for the nine months ended September 30, 2021 and 2020, respectively. The following table summarizes estimated future amortization expense of capitalized software and intangible assets, net for the years ending December 31: 2021 (remaining 3 months) $ 73 2022 91 2023 216 2024 233 2025 115 Thereafter — $ 728 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Accrued Liabilities | ACCRUED LIABILITIES Accrued liabilities consists of the following: September 30, December 31, 2021 2020 Bonus accrual $ 1,950 $ 600 Sales tax payable 4,994 5,065 Unfunded lease payable 2,307 5,045 Interest payable 63 66 Other accrued liabilities 2,415 2,191 Total accrued liabilities $ 11,729 $ 12,967 |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Line of Credit | LINE OF CREDIT During 2019, the Company refinanced its revolving line of credit facility (the “RLOC”), which resulted in an initial commitment amount of $50,000, with lender having the right to increase to a maximum of $150,000 commitment over time. The RLOC is subject to certain covenants and originally had an 85% advance rate on eligible accounts receivable, which was increased to 90% during March 2020. At September 30, 2021, the total outstanding on the RLOC was $68,307 less issuance costs of $809, netting to a total of $67,498. As of December 31, 2020, the total outstanding on the RLOC was $75,393 less issuance costs of $1,077, netting a total of $74,316. The issuance costs are amortized over the life of the facility and included in interest expense. The annual interest rate on the principal was the LIBOR Rate plus 11% per annum through July 2020. Beginning in August 2020, the interest rate stepped down to LIBOR plus 7.5% per annum. There is a 2% floor on the LIBOR Rate. On September 28, 2020, the lender exercised their right to increase the maximum commitment to a total of $125,000. On December 4, 2020, the Company entered into the ninth amendment to the RLOC. This amendment provided the lenders with the right to increase the revolving commitment amount from $125,000 to $250,000. This right has not yet been exercised by the lender as of the date these consolidated financial statements were issued. This facility is also subject to certain debt covenants as set forth in the loan agreement, which consists of maintaining lease performance metrics, financial ratios related to operating results, and lease delinquency ratios and is secured by all assets of the Company. The outstanding line of credit, including unpaid principal and interest, is due on May 14, 2023 unless there is an earlier event of default such as bankruptcy, default on interest payments, or a change of control (excluding an acquisition by a special purpose acquisition company (“SPAC”)), at which point the facility may become due earlier. As of September 30, 2021 and December 31, 2020, the Company was in compliance with the covenants set forth in the above agreements. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long Term Debt | LONG TERM DEBTThe ninth amendment to the first revolving line of credit facility provided the Company with a senior secured term loan facility commitment of up to $50,000. The Company drew down the full $50,000 of this term loan on December 4, 2020. The interest rate on the term loan is one-month LIBOR plus 8% per annum, and there is a 1% floor on the LIBOR Rate. An additional 3% interest per annum will accrue to the principal balance as paid-in-kind (“PIK”) interest. The term loan maturity date is December 4, 2023. A reconciliation of the outstanding principal to the carrying amount of long term debt is as follows: September 30, December 31, 2021 2020 Outstanding principal 50,000 50,000 PIK 1,270 117 Debt discount (11,637) (13,704) Total carrying amount 39,633 36,413 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION The Company has two stock incentive plans, the Cognical Holdings, Inc. 2014 Stock Incentive Plan, (the “2014 Plan”) and the Katapult Holdings, Inc. 2021 Stock Incentive Plan, (the “2021 Plan”). 2014 Plan In accordance with the 2014 Plan, directors may issue stock options to officers, employees, directors and consultants to purchase common stock. There were no stock options granted to nonemployees during 2021 and 2020. The 2014 Plan has specific vesting for each stock option grant allowing vesting of the options over one Stock Options A summary of the status of the stock options under the 2014 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of Weighted- Average Weighted-Average Aggregate Balance - December 31, 2020 11,180,731 $ 0.27 8.22 $ 82,013 Recapitalization impact (609,509) Balance - December 31, 2020 10,571,222 0.29 8.22 82,013 Granted — — Exercised (2,073,162) 0.30 Forfeited (10,583) 0.84 Balance - September 30, 2021 8,487,477 0.27 7.58 $ 43,577 Exercisable - September 30, 2021 8,427,835 0.29 7.58 $ 43,353 Unvested - September 30, 2021 59,642 1.50 8.44 $ 224 There were no options granted under the 2014 Plan during the nine months ended September 30, 2021 and 2020. The total intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $10,644 and $2,058, respectively. As of September 30, 2021, total compensation cost not yet recognized related to unvested stock options was $50, which is expected to be recognized over a period of 1.60 years. 2021 Plan On June 9, 2021, the Company’s board of directors approved the 2021 Plan, which was concurrently approved by the Company’s stockholders. In accordance with the 2021 Plan, directors may issue restricted stock awards and stock options to officers, employees, directors and consultants to purchase common stock. The awards granted are subject to either service-based or performance-based vesting conditions. Stock Options A summary of the status of the stock options under the 2021 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of Shares Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Balance - December 31, 2020 — $ — — $ — Granted - service conditions 1,039,810 10.45 Granted - performance conditions 693,206 10.45 Exercised — — Forfeited — — Balance - September 30, 2021 1,733,016 10.45 9.75 $ — Exercisable - September 30, 2021 — — — $ — Unvested - September 30, 2021 1,733,016 $ 10.45 9.75 $ — The grant date fair value of the stock options was $6.18. As of September 30, 2021, total compensation cost not yet recognized related to unvested stock options was $5,067, which is expected to be recognized over a period of 3.16 years. The Company granted 693,206 stock options with certain performance conditions. As of September 30, 2021, no stock-based compensation expense has been recorded as the performance condition being satisfied is not probable. Stock Options Valuation — The weighted-average assumptions used to estimate the fair value of stock options granted are as follows: Nine Months Ended September 30, 2021 Exercise price $ 10.45 Risk-free interest rate 1.02 % Expected term (in years) 5.78 Expected volatility 66.9 % Expected dividend yield 0 % No stock options were granted during the nine months ended September 30, 2020. 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. A summary of the status of the RSU’s under the 2021 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of RSUs Weighted Average Grant Date Fair Value Outstanding - December 31, 2020 — $ — Granted 1,981,369 6.30 Vested — — Forfeited — — Outstanding - September 30, 2021 1,981,369 $ 6.30 Stock-Based Compensation Expense — Stock-based compensation expense was $3,097 and $121 for three months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense was $12,862 and $274 for the nine months ended September 30, 2021 and 2020, respectively. Stock-based compensation expense is included in compensation costs. On August 26, 2020, the Company granted a total of 19,000,000 restricted shares of the Company’s common stock to certain employees (the “Award Shares”). The Award Shares vest only upon a Liquidation Event, which is defined as any liquidation, dissolution, or winding up of the Company, including a consolidation, stock exchange, or merger with another Company. The number of Award Shares that will be forfeited or will vest will depend upon the achieved liquidation price per share of common stock. Vesting of the Award Shares is contingent upon the recipient’s continuous employment with the Company through a Liquidation Event. The Liquidation Event represented a performance condition that was satisfied as a result of the Merger discussed in Note 1. The Award Shares had a grant date fair value of $3.28 per share which resulted in the recognition of $9,348 of stock-based compensation expense during the three and nine months ended September 30, 2021. Based on the liquidation price per share of common stock, 15% of the total Award Shares vested as a result of the Merger. |
Stock Warrants
Stock Warrants | 9 Months Ended |
Sep. 30, 2021 | |
Equity [Abstract] | |
Stock Warrants | STOCK WARRANTS At December 31, 2020, warrants to purchase 722,260 shares of Legacy Katapult common stock issued in 2014 had vested to a former lender and investor and remained exercisable. Such warrants were exercisable at a price of $0.49 per share and were exercisable through June of 2024. The warrants did not convey any voting privileges or claims on dividends declared until they were exercised into common stock by the holder. These warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1. At December 31, 2020, warrants to purchase 1,084,618 shares of Legacy Katapult common stock issued in 2017 to a new investor remained exercisable. Such warrants were exercisable at a price of $1.7084 per share and exercisable through April of 2022. The warrants did not convey any voting privileges or claims on dividends declared until they were exercised into common stock by the holder. These warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1. At December 31, 2020, warrants to purchase 36,417 shares of Legacy Katapult common stock that were issued in 2018 to current investors were outstanding and remained exercisable. Such warrants were exercisable at a price of $0.01 per share and were exercisable through April 2023. The warrants did not convey any voting privileges or claims on dividends declared until they were exercised into common stock by the holder. These warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1. At December 31, 2020, warrants to purchase 3,637,536 shares of Legacy Katapult common stock that were issued in 2019 to current investors were outstanding and remained exercisable. Such warrants were exercisable at a price of $0.01 per share and were exercisable through April 2024. The warrants did not convey any voting privileges or claims on dividends declared until they were exercised into common stock by the holder. These warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1. The warrants to purchase the remaining 1,241,675 shares of Legacy Katapult common stock were issued in conjunction with the $2,500 of additional convertible notes payable issued in 2019. Due to these warrants being issued in connection with the convertible notes, a beneficial conversion feature was recognized on the issuance date of the instruments. The balance related to this feature was extinguished upon the conversion of the related convertible notes. In accordance with ASC 470-20 , a beneficial conversion feature exists if the conversion price is less than the fair value of the shares into which the instrument is convertible at the commitment date. In February and March 2019, when the $2,500 of additional convertible notes were issued, the preferred stock price at fair value was $1.7084. This was greater than the conversion prices of $1.6051 and $1.6068 for the February and March issuances, respectively. This difference multiplied by the number of shares issued was calculated at $151 and recorded as additional paid in capital. Both groups of warrants were exercisable through May 2024. The warrants did not convey any voting privileges or claims on dividends declared until they are exercised into common stock by the holder. These warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1. On December 4, 2020, the Company issued a warrant to purchase 4,988,719 Series C-1 Convertible Preferred Shares in conjunction with the issuance of the $50,000 term loan (“Term Loan Warrant”). The Term Loan Warrant had an exercise price of $0.01 per share and became exercisable upon the earlier of June 30, 2021 or one minute prior to the occurrence of a liquidation event, which includes a SPAC transaction. The Term Loan Warrant would terminate upon the earlier of December 4, 2027, or immediately prior to the occurrence of a liquidation event, which includes a SPAC transaction. The Term Loan Warrant was carried at its fair value because there were certain put rights that may obligate the Company to repurchase the warrant in the future, based on events that were outside of the control of the Company. The Term Loan Warrant is presented within the Other liabilities line item of the balance sheet. As of December 31, 2020, there were 4,988,719 Term Loan Warrants outstanding . Pursuant to the warrant agreement, 1,496,616 warrants were exercised on June 9, 2021 in connection with the Merger discussed in Note 1, with the remaining warrants forfeited in accordance with the warrant agreement. In connection with the Merger discussed in Note 3, the Company has 12,832,500 warrants to purchase one share of Katapult common stock outstanding with an exercise price of $11.50 per warrant as of September 30, 2021. These warrants are accounted for as liabilities and recorded at fair value each reporting period and included in other liabilities on the unaudited condensed consolidated balance sheet. These warrants can be exercised up to five years after the Merger. Of these warrants, 12,500,000 warrants (the “public warrants”) were originally issued in the initial public offering of FinServ (“IPO”) and 332,500 warrants (the “private warrants”) were originally issued in a private placement in connection with the IPO. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES For the three months ending September 30, 2021 and 2020, the Company recorded an income tax provision of $808 and $233, respectively. For the nine months ending September 30, 2021 and 2020, the Company recorded an income tax provision of $805 and $423, respectively. As of December 31, 2020, the Company had U.S. federal net operating loss carryforward of $113,700 that expire at various dates from 2032 through 2037 and includes $78,000 that have an unlimited carryforward period. As of December 31, 2020, the Company has U.S. state and local net operating loss carryforwards of $29,100 that expire at various dates from 2021 through 2039 and includes $4,300 that have an unlimited carryforward period. In evaluating its ability to realize its net deferred tax assets, the Company considered all available positive and negative evidence, such as past operating results, forecasted earnings, prudent and feasible tax planning strategies, and the future realization of the tax benefits of existing temporary differences. The Company remains in a cumulative tax loss position for the 36 months ended September 30, 2021, and determined that it is more likely than not that its net deferred tax assets will not be realized. The Company continues to maintain a full valuation allowance as of September 30, 2021 and December 31, 2020. It is possible that the Company will achieve profitability to enable the release of some or all of its valuation allowance in the future. |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Preferred Stock | REDEEMABLE CONVERTIBLE PREFERRED STOCKDuring 2019, the Company converted all shares outstanding of Series A, Series A-1, Series A-2, Series B, Series B-1, and Series B-2 redeemable convertible preferred stock to shares of Series C redeemable convertible preferred stock (the “Series C Preferred Shares”) by issuing on a 1:1 ratio 24,773,767 Series C Preferred Shares. Additionally, the Company issued 17,061,472 Series C Preferred Shares valued at $6,062 to execute the conversion feature of the outstanding convertible notes. Lastly, the company raised additional equity of $9,506 by issuing 26,754,674 of Series C Preferred Shares. Upon issuance of the Series C Preferred Shares, the Company determined that the down round financing triggered a contingent beneficial conversion feature for certain previously issued share classes. In accordance with ASC 470, the Company recorded the beneficial conversion feature as an increase to additional paid-in-capital. Given that the preferred shares were readily convertible at the discretion of the investors, the Company immediately amortized the beneficial conversion feature through accumulated deficit. Redeemable convertible preferred stock as of December 31, 2020, consisted of the following: Preferred Preferred Average Liquidation Carrying Series C 95,415,981 68,589,913 $ 0.753892 $ 51,709 $ 49,894 The holders of redeemable convertible preferred stock have various rights and preferences as follows: Voting – Each Series C Preferred Share entitled the holder to the number of votes equal to the number of whole shares of common stock into which each share is convertible at the time of the vote. The holders of record of the Series C Preferred Shares, voting as a separate class, were entitled to elect three (3) members of the Company’s board of directors. The holders of record of Series C Preferred Shares, voting as a separate class, shall be entitled to elect two (2) members of the Company’s board of directors. Dividends – The holders of Series C Preferred Shares, in preference to the holders of Legacy Katapult common stock, were entitled to receive, as and if declared by the Board of Directors, but only out of funds that are legally available therefore, non-cumulative cash dividends at the rate of 8% of the original issue price of each outstanding share of Series C Preferred Shares. Liquidation Preference – In the event of any liquidation, dissolution, or winding-up of the Company, the holders of Series C Preferred Shares were entitled to receive, ratably, prior and in preference to any distribution of the assets or funds of the Company to the holders of common stock, an amount equal to the original issuance price per share plus any accrued and unpaid dividends. If the Company has insufficient assets to permit payment of the Liquidation Preference in full to the holders of the Series C Preferred Shares, then the assets of the Company would be distributed ratably to the Series C Preferred Shares in proportion to the Liquidation Preference that such holders would otherwise be entitled to receive. After payment of the Liquidation Preference to the holders of Series C Preferred Shares, the remaining assets of the Company would be distributed ratably to the holders of common stock. Redemption – The Series C Preferred Shares did not contain any mandatory redemption provisions. In accordance with ASC Topic 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities, preferred stock issued with redemption provisions that are outside of the control of the Company or that contain certain redemption rights in a deemed liquidation event is required to be classified as temporary equity in the mezzanine section of the balance sheets. The Series C Preferred Shares are redeemable upon the occurrence of a deemed liquidation event, which is outside of the control of the Company. Therefore, these shares were classified as temporary equity at December 31, 2020, before accounting for the effects of the Merger. Conversion – Each share of Series C Preferred Shares was convertible at the option of the holder, at any time after the date of issuance of each share, into shares of common stock as is determined by dividing the original purchase price of preferred stock by the conversion price in effect at the time of conversion. As of December 31, 2020, the 68,589,913 shares of Series C Preferred Shares were convertible into 69,389,533 shares of Legacy Katapult common stock. In connection with the Merger discussed in Note 1, all convertible redeemable preferred stock was converted to Katapult common stock. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | NET INCOME PER SHAREThe following table sets forth the computation of net income per common share: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income per share Numerator Net Income $ 13,740 $ 9,840 $ 13,727 $ 18,599 Denominator Denominator for basic net income per weighted average common shares 97,082,182 30,801,304 58,826,335 30,663,966 Effect of dilutive securities Warrants — 4,916,073 3,867,094 4,813,062 Unvested RSU’s 72,052 — 75,281 — Stock options 8,451,245 10,442,302 9,439,883 10,513,058 Denominator for diluted net income per weighted average common shares 105,605,479 46,159,679 72,208,593 45,990,086 Net income per common share Basic $ 0.14 $ 0.32 $ 0.23 $ 0.61 Diluted $ 0.13 $ 0.21 $ 0.19 $ 0.40 The Company excluded the securities within the table below from the diluted net income per share calculation as their effect would have been anti-dilutive for the three and nine months ended September 30, 2021 and September 30, 2020. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Public warrants 12,500,000 — 12,500,000 — Private warrants 332,500 — 332,500 — Stock options 1,733,016 — 1,733,016 — 14,565,516 — 14,565,516 — Warrants and options to purchase shares of Katapult common stock were not included in the computation of diluted EPS because their exercise price was greater than the average market price of Katapult common stock. All warrants and options were still outstanding at September 30, 2021. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Leases —The Company leases office space in Plano, TX and New York, NY under operating leases with a non-cancelable lease term which ends in September 2023. These amounts are included in general and administrative expenses. The following is a schedule of future minimum lease payments required under the non-cancelable leases: Years Ending December 31, 2021 (remaining 3 months) $ 125 2022 511 2023 407 2024 334 2025 170 Thereafter — Total future minimum lease payments $ 1,547 Rent expense for operating leases for the three months ended September 30, 2021 and 2020 were $167 and $191, respectively. Rent expense for operating leases for the nine months ended September 30, 2021 and 2020 were $489 and $575, respectively. Litigation risk— 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 not accrued any liabilities related to such obligations in the consolidated financial statements as of September 30, 2021 and December 31, 2020. Except as set forth below, the Company and its subsidiaries are not a party to, and their properties are not the subject of, any material pending legal proceedings. DCA Litigation On April 9, 2021, Daiwa Corporate Advisory LLC (formerly known as DCS Advisory LLC) (“DCA”), a financial advisory firm, served Katapult Group, Inc. with a summons and a complaint filed in the Supreme Court of the State of New York, New York County, in a matter bearing the index number 652164/2021. The complaint relates to a March 22, 2018 letter agreement (the “Letter Agreement”) entered into by DCA and Legacy Katapult. Among other things, DCA alleges that the Letter Agreement confers upon DCA (i) a right to act as the “exclusive financial advisor” with respect to certain transactions defined in the Letter Agreement, (ii) a right to a “Placement Fee” and/or “mutually-agreed upon fees” in connection with such advisory roles, and (iii) a right to a $100 termination fee payable in certain circumstances by Katapult Group, Inc. in the event that Katapult Group, Inc. terminated the Letter Agreement. For its first cause of action, DCA alleges that Katapult Group, Inc. “breached the Letter Agreement by failing and/or refusing to extend to DCA the opportunity to exercise its right of first refusal in connection with” certain transactions and the PIPE Investment. DCA seeks “damages in an amount to be determined at trial” with respect to this first cause of action. For its second cause of action, DCA alleges that, assuming Katapult Group, Inc. properly terminated the Letter Agreement in April 2019 (which DCA disputes), Katapult Group, Inc. “also breached the Letter Agreement by failing to pay DCA a termination fee when it terminated the Letter Agreement.” DCA seeks “damages in an amount to be determined at trial, but no less than $100,” with respect to this second cause of action. With respect to both causes of action, DCA also seeks attorneys’ fees and costs pursuant to the Letter Agreement, an award of pre- and post-judgment interest, and such other and further relief as the Court deems just and proper.” On May 24, 2021, Katapult Group, Inc. filed its answer to the complaint and also asserted counterclaims against DCA for breach of contract and for breach of the duty of good faith and fair dealing. In connection with its counterclaims, Katapult Group, Inc. is seeking damages in the amount of approximately $10,600, as well as attorneys’ fees and costs. Katapult Group, Inc. disputes the allegations in DCA’s complaint and intends to vigorously defend against the claims. On July 29, 2021, the court entered a Preliminary Conference Order, which was subsequently amended on September 13, 2021 and October 25, 2021. The Amended Scheduling Order dated October 25, 2021 provides that: the parties must complete fact discovery on or before May 13, 2022; they must serve any expert disclosures by June 10, 2022; they must complete all discovery no later than June 24, 2022; and any motions for summary judgment must be filed by July 29, 2022. The parties are currently engaged in discovery. The Company has not recorded any loss or gain contingencies associated with this matter as it is not probable or reasonably estimable at September 30, 2021. Shareholder Litigation On August 27, 2021, a putative class action lawsuit was filed in the U.S. District Court for the Southern District of New York against Katapult Holdings, Inc., two officers of FinServ, one of whom is a current Company director, and two officers of Legacy Katapult, both of whom are current Company officers. The lawsuit is captioned McIntosh v. Katapult Holdings, Inc., et al. The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seeks an unspecified amount of damages on behalf of persons and entities that purchased or otherwise acquired Katapult securities between December 18, 2020 and August 10, 2021, inclusive (the “Putative Class”). The complaint alleges that defendants misled the Putative Class by failing to disclose that the Company was experiencing declining e-commerce retail sales and consumer spending, lacked visibility into its consumers’ future buying behavior, and had no reasonable basis for positive statements about its business, operations, and prospects. On October 26, 2021, seven investors filed motions to be appointed lead plaintiff of the Putative Class. The Company and the other defendants intend to vigorously defend against the claims in this action . The Company has not recorded any loss or gain contingencies associated with this matter as it is not probable or reasonably estimable at September 30, 2021. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | RELATED-PARTY TRANSACTIONSCertain prior debt facilities of the Company were with related parties. Total interest paid to related parties was $1,199 and $3,690 for the three and nine months ended September 30, 2020, respectively. No interest was paid to related parties during the three and nine months ended September 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value accounting is applied for all assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability 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 follows the established framework for measuring fair value. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: 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 are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3 —Inputs are unobservable inputs for the asset or liability. 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. The Company’s financial instruments consist of its warrant liability, revolving line of credit, and long-term debt. The estimated fair value of the Company’s revolving line of credit, and long term debt were as follows: September 30, 2021 December 31, 2020 Principal amount Carrying amount Fair value Principal amount Carrying amount Fair value Revolving line of credit $ 68,307 $ 67,498 $ 75,512 $ 75,393 $ 74,316 $ 83,014 Long term debt 51,270 39,633 57,561 50,117 36,413 55,378 $ 119,577 $ 107,131 $ 133,073 $ 125,510 $ 110,729 $ 138,392 The estimated fair values of the Company’s revolving line of credit, and long term debt were determined using Level 2 inputs based on an estimated credit rating for the Company and the trading value of debt for similar debt instruments with similar credit ratings. There were no assets measured at fair value on a recurring basis as of September 30, 2021 or December 31, 2020. Liabilities measured at fair value on a recurring basis and included in Other Liabilities were as follows: September 30, 2021 Total Level 1 Level 2 Level 3 Warrant liability - Public warrants $ 19,125 $ 19,125 $ — $ — Warrant liability - Private warrants 629 — — 629 Total Other Liabilities $ 19,754 $ 19,125 $ — $ 629 December 31, 2020 Total Level 1 Level 2 Level 3 Term Loan Warrant $ 12,744 $ — $ — $ 12,744 Total Other Liabilities $ 12,744 — — $ 12,744 During the three and nine months ended September 30, 2021 and 2020, there were no transfers between Level 1 and Level 2, nor into or out of Level 3. Unrealized gains related to Level 3 liabilities held as of the balance sheet date are included in the statement of operations and were $599 and $518 for the three and nine months ended September 30, 2021, respectively. There were no unrealized gains or losses included in the statement of operation for the three and nine months ended September 30, 2020. The following table summarizes the activity for the Company’s Level 3 liabilities measured at fair value on a recurring basis: Term Loan Warrant Warrant Liability Balance at December 31, 2020 $ 12,744 $ — Exercise (13,102) — Assumed from Merger — 44,272 Changes in fair value 358 (24,518) Balance at September 30, 2021 $ — $ 19,754 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTSThe Company evaluated subsequent events from September 30, 2021, the date of these consolidated financial statements, through November 12, 2021, which represents the date the consolidated financial statements were issued, for events requiring adjustment to or disclosure in these consolidated financial statements. Except as discussed below, there are no events that require adjustment to or disclosure in these consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation —The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim reporting. The consolidated financial statements include the accounts of Katapult Holdings, Inc. and its wholly owned subsidiaries. As permitted for interim reporting, certain footnotes or other financial information that are normally required by US GAAP may be condensed or omitted, unless otherwise required by US GAAP or SEC rules and regulations. These consolidated financial statements were prepared on the same basis as the Company’s annual consolidated financial statements. 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. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or future year. The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited annual consolidated financial statements as of that date. |
Risks and Uncertainties | Risks and Uncertainties —The Company is subject to a number of risks including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology. |
Use of Estimates | Use of Estimates —The preparation of the consolidated financial statements in accordance with US 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 period. The most significant estimates relate to the allowance for doubtful accounts, the selection of useful lives of property and equipment, the selection of useful lives for property held for lease and the related depreciation method, intangible assets and associated useful lives, determination of fair value of the Company’s common stock, determination of fair value of stock option grants, and the fair value of the common stock warrants, and the valuation allowance associated with deferred tax assets. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the consolidated financial statements; therefore, actual results could differ from those estimates. |
Segment Information | Segment Information —Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, the Company has one operating segment, and therefore, one reportable segment. |
Cash | Cash —As of September 30, 2021 and December 31, 2020, cash consists primarily of checking and savings deposits. The Company does not hold any cash equivalents, which would consist of highly liquid investments with original maturities of three months or less at the time of purchase. |
Restricted Cash | Restricted Cash —The Company classifies all cash whose use is limited by contractual provisions as restricted cash. Restricted cash as of September 30, 2021 and December 31, 2020 consists primarily of cash advanced from the lines of credit in Katapult SPV-1 LLC, which were established pursuant to various agreements for the purpose of funding and servicing originated leases. All of the Company’s restricted cash is classified as current due to its short-term nature. |
Accounts Receivable, net of Allowance for Doubtful Accounts | Accounts Receivable, Net of Allowance for Doubtful Accounts —Accounts receivable are recorded net of allowances for doubtful accounts. Accounts receivable consist primarily of lease receivables due from customers incurred during the normal course of business for lease payments earned not yet received from the customer. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance for doubtful accounts or if any accounts should be written off based on past history of write-offs, collections, and current credit conditions. The Company maintains an allowance for doubtful accounts to provide for uncollected amounts based on historical collection experience and an analysis of the aging of receivables per the following categories: 1-30 days, 31-60 days, 61-90 days. This analysis results in the determination of loss rate percentages that are applied to outstanding receivables in each of these categories as of period end. The Company writes off accounts receivables that are over 90 days contractually past due. Bad debt expense is classified in operating expenses within the consolidated statements of operations and comprehensive income. The Company does not require any security or collateral to support its receivables. |
Property Held for Lease, Net | Property Held for Lease, Net —Property held for lease consists of furniture, consumer electronics, appliances, and other durable goods offered for lease-purchase in the normal course of business. Such property is provided to consumers pursuant to a lease purchase agreement with a minimum term; typically one week, two weeks, or one month. The contemplated length of the agreement is typically 12 or 18 months. Consumers may terminate a lease purchase agreement at any time without penalty. The average consumer continues to lease the property for 7 months because the consumer either exercises the buyout (early purchase) options or terminates the lease purchase agreement prior to the end of the 12 or 18 month lease term. As a result, property held for lease is classified as a current asset on the consolidated balance sheets. Property held for lease 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. Under the income forecasting method, property held for lease is depreciated in the proportion of rents received to total expected rents received based on historical data, which is an activity-based method similar to the units of production method. 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. Impairment expense includes expense related to property identified as impaired based on historical data, including default trends, such that the recorded amount closely approximates actual impairment expense incurred during the period. The Company derecognizes the undepreciated net book value of property buyouts as buyouts occur with a corresponding charge to cost of revenue. The Company periodically evaluates fully depreciated property held for lease, net. When it is determined there is no future economic benefit, the cost of the assets are written off and the related accumulated depreciation reversed. |
Property and Equipment, Net | Property and Equipment, Net — |
Capitalized Software | Capitalized Software —Starting January 1, 2020, the Company began capitalizing 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 function. Once a project 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 software upgrades and enhancements when it is probable the expenditures will result in additional software 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 the consolidated balance sheets. Amortization of capitalized software is included in general and administrative on the consolidated statements of operations and comprehensive income. |
Debt Issuance Costs | Debt Issuance Costs —Costs incurred in connection with the issuance of the Company’s line of credit and long-term debt 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 long-term debt issuance costs utilizes the effective interest method, and the amortization of the line of credit debt issuance costs utilizes the straight-line method, which is not materially different compared to the effective interest method . |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets —The Company assesses long-lived assets for impairment in accordance with the provisions of ASC 360, Property, Plant and Equipment |
Rental Revenue | Rental Revenue —Property held for lease is leased to customers pursuant to lease purchase agreements with a minimum term: typically one week, two weeks, or one month, with non-refundable lease payments. Generally, the customer has the right to acquire title to the property either through a 90-day promotional pricing option, an early purchase option (buyout), or through payments of all required lease payments, generally 12 or 18 months. On any current lease, customers have the option to terminate the agreement at any time without penalty in accordance with lease terms. Accordingly, lease purchase agreements are accounted for as operating leases with lease revenues recognized in the month they are earned. Amounts received from customers who elect early 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 month in which the revenue is earned. Rental revenue also includes agreed-upon charges assessed to customer lease applications. 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 initial lease term. The Company also may assess fees for missed or late payments, which are recognized as revenue in the billing period in which they are assessed if collectability is reasonably assured. Revenues from leases and sales are reported net of sales taxes. |
Other Revenue | Other Revenue — Other revenue consists of sub-lease revenue, revenue from merchant partnerships, and infrequent sales of property formerly on lease when customers terminate a lease and elect to return the property to the Company rather than the Company’s retail partners. |
Stock-Based Compensation | Stock-Based Compensation —The Company measures and records compensation expense related to stock-based awards 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 uses 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. Forfeitures are accounted for as they are incurred. The Company calculates the fair value of stock options granted to employees by using the following assumptions: Expected Volatility —The Company estimates volatility for stock option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the stock option grant for a term that is approximately equal to the stock options’ expected term. Expected Term —The expected term of the Company’s stock options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint of the stock options vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior. Risk-Free Interest Rate —The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with a term that is equal to the stock options’ expected term at the grant date. |
Income Taxes | 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 future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized based on all available positive and negative evidence. As of September 30, 2021 and December 31, 2020, the Company continues to maintain a full valuation allowance against its deferred tax assets. The Company recognizes a tax benefit only if it is more likely than not the tax position will be sustained on examination by the local taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit greater than 50% likelihood of being realized upon settlement with the related tax authority. The changes in recognition or measurement are reflected in the period in which the change in judgment occurs. As of September 30, 2021 and December 31, 2020, the Company has not identified any uncertain tax positions. The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes. |
Net Income Per Share | Net Income Per Share – The Company calculates basic and diluted net income per share attributable to common stockholders using the two-class method required for companies with participating securities. |
Concentrations of Credit Risk | Concentrations of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company’s cash balances exceed those that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances. |
Recently Adopted Accounting Pronouncements; Recent Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements —In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) , as amended (“ASU 2014-09”). ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods or services to customers in an amount that reflects the expected consideration received in exchange for those goods or services. ASU 2014-09 requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the new standard on January 1, 2020. The adoption of ASU 2014-09 did not have a material impact on the consolidated financial statements as the majority of the Company’s revenue generating activities are leasing arrangements, which are outside the scope of this guidance. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain fair value measurement disclosure requirements of Accounting Standards Codification 820, Fair Value Measurement . On January 1, 2020, the Company adopted ASU 2018-13, which did not impact the consolidated financial statements and related disclosures. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . This ASU provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. This ASU is effective for all entities beginning as of its date of effectiveness, March 12, 2020. This ASU did not have a material impact on our consolidated financial statements. In December 2019, the FASB issued ASU 2019-12 , Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes by removing certain exceptions to the general principles of ASC 740 , Income Taxes . The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective, or prospective basis. The Company adopted this standard on January 1, 2021, and the adoption did not have a material impact on the consolidated financial statements and related disclosures. Recent Accounting Pronouncements Not Yet Adopted — In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , as amended (“ASU 2016-02”). Under ASU 2016-02, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to control the use of an identified asset for the lease term, at the commencement date for all leases with a term greater than one year. In June 2020, the FASB issued ASU 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842) – Effective Dates for Certain Entities (“ASU 2020-05”), which defers the effective date of ASU 2016-02 for private entities to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022 . The Company will defer the adoption of ASU 2016-02 pursuant to ASU 2020-05 and plans to adopt the new standard on January 1, 2022, unless a change in filer status requires earlier adoption. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The main objective of the update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by companies at each reporting date. For trade and other receivables, held to maturity debt securities and other instruments, companies will be required to use a new forward-looking "expected losses" model that generally will result in the recognition of allowances for losses earlier than under current accounting guidance. Further, the FASB issued ASU 2019-04 , ASU 2019-05 and ASU 2019-11 to provide additional guidance on the credit losses standard. The standard will be adopted using the modified retrospective approach. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted, unless a change in filer status requires earlier adoption. The Company is evaluating the potential impact of adopting ASU 2016-13 on its consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity . ASU 2020-06 changes how entities account for convertible instruments and contracts in an entity’s own equity and simplifies the accounting for convertible instruments by removing certain separation models for convertible instruments. ASU 2020-06 also modifies the guidance on diluted earnings per share calculations. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Reconciliation of Cash and Restricted Cash | The reconciliation of cash and restricted cash is as follows : September 30, December 31, 2021 2020 Cash $ 99,731 $ 65,622 Restricted cash 3,213 3,975 Total cash and restricted cash $ 102,944 $ 69,597 |
Reconciliation of Cash and Restricted Cash | The reconciliation of cash and restricted cash is as follows : September 30, December 31, 2021 2020 Cash $ 99,731 $ 65,622 Restricted cash 3,213 3,975 Total cash and restricted cash $ 102,944 $ 69,597 |
Reconciliation of Allowance for Doubtful Accounts | A rollforward of the allowance for doubtful accounts is as follows: Balance at beginning of period Charged to cost and expenses, net of recoveries Write-offs Balance at end of period Nine months ended September 30, 2020 $ 1,855 $ 9,614 $ (8,585) $ 2,884 Nine months ended September 30, 2021 $ 4,372 $ 18,849 $ (17,422) $ 5,799 |
Summary of Useful Lives | The estimated useful lives of property and equipment are described below: Property and Equipment Useful Life Computer, office and other equipment 5 years Computer software 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Property and equipment, net consists of the following: September 30, December 31, 2021 2020 Computer, office and other equipment $ 543 $ 407 Computer software 80 80 Furniture and fixtures 100 64 Leasehold improvements 237 142 960 693 Less: accumulated depreciation (461) (363) Property and equipment, net $ 499 $ 330 |
Merger (Tables)
Merger (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Reverse Recapitalization [Abstract] | |
Schedule of Reverse Capitalization | Recapitalization Cash - FinServ Trust $ 251,059 Less: Redemptions (64) Cash - FinServ Operating 114 Cash - PIPE 150,000 Less: Consideration paid to selling stockholders (329,560) Less: Transaction costs (33,534) Net contributions from Merger and PIPE 38,015 Less: Warrant liability (44,272) Total $ (6,257) |
Schedule of Warrants | Warrants to purchase shares of the Company’s stock deemed acquired as part of the Merger and outstanding during the three and nine months ended September 30, 2021 consisted of the following: September 30, 2021 Public warrants 12,500,000 Private warrants 332,500 Total 12,832,500 |
Property Held for Lease, Net (T
Property Held for Lease, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Schedule of Property Held for Lease, Net | Property held for lease, net consists of the following: September 30, December 31, 2021 2020 Property held for lease $ 234,361 $ 213,838 Less: accumulated depreciation (169,219) (147,101) Property held for lease, net $ 65,142 $ 66,737 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment, Net | The estimated useful lives of property and equipment are described below: Property and Equipment Useful Life Computer, office and other equipment 5 years Computer software 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of estimated useful life or remaining lease term Property and equipment, net consists of the following: September 30, December 31, 2021 2020 Computer, office and other equipment $ 543 $ 407 Computer software 80 80 Furniture and fixtures 100 64 Leasehold improvements 237 142 960 693 Less: accumulated depreciation (461) (363) Property and equipment, net $ 499 $ 330 |
Capitalized Software and Inta_2
Capitalized Software and Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Capitalized Software and Intangible Assets, Net | Capitalized software and intangible assets, net consists of the following: September 30, December 31, 2021 2020 Capitalized software $ 886 $ 202 Domain name 16 16 902 218 Less: accumulated amortization (149) (30) Capitalized software and intangible assets, net $ 753 $ 188 |
Summary of Estimated Future Amortization Expense | The following table summarizes estimated future amortization expense of capitalized software and intangible assets, net for the years ending December 31: 2021 (remaining 3 months) $ 73 2022 91 2023 216 2024 233 2025 115 Thereafter — $ 728 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consists of the following: September 30, December 31, 2021 2020 Bonus accrual $ 1,950 $ 600 Sales tax payable 4,994 5,065 Unfunded lease payable 2,307 5,045 Interest payable 63 66 Other accrued liabilities 2,415 2,191 Total accrued liabilities $ 11,729 $ 12,967 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | A reconciliation of the outstanding principal to the carrying amount of long term debt is as follows: September 30, December 31, 2021 2020 Outstanding principal 50,000 50,000 PIK 1,270 117 Debt discount (11,637) (13,704) Total carrying amount 39,633 36,413 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Options | A summary of the status of the stock options under the 2014 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of Weighted- Average Weighted-Average Aggregate Balance - December 31, 2020 11,180,731 $ 0.27 8.22 $ 82,013 Recapitalization impact (609,509) Balance - December 31, 2020 10,571,222 0.29 8.22 82,013 Granted — — Exercised (2,073,162) 0.30 Forfeited (10,583) 0.84 Balance - September 30, 2021 8,487,477 0.27 7.58 $ 43,577 Exercisable - September 30, 2021 8,427,835 0.29 7.58 $ 43,353 Unvested - September 30, 2021 59,642 1.50 8.44 $ 224 A summary of the status of the stock options under the 2021 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of Shares Weighted- Average Exercise Price Weighted-Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value Balance - December 31, 2020 — $ — — $ — Granted - service conditions 1,039,810 10.45 Granted - performance conditions 693,206 10.45 Exercised — — Forfeited — — Balance - September 30, 2021 1,733,016 10.45 9.75 $ — Exercisable - September 30, 2021 — — — $ — Unvested - September 30, 2021 1,733,016 $ 10.45 9.75 $ — |
Summary of Stock Options Valuation Assumptions | The weighted-average assumptions used to estimate the fair value of stock options granted are as follows: Nine Months Ended September 30, 2021 Exercise price $ 10.45 Risk-free interest rate 1.02 % Expected term (in years) 5.78 Expected volatility 66.9 % Expected dividend yield 0 % |
Summary of RSUs | A summary of the status of the RSU’s under the 2021 Plan as of September 30, 2021, and changes during the nine months then ended is presented below: Number of RSUs Weighted Average Grant Date Fair Value Outstanding - December 31, 2020 — $ — Granted 1,981,369 6.30 Vested — — Forfeited — — Outstanding - September 30, 2021 1,981,369 $ 6.30 |
Redeemable Convertible Prefer_2
Redeemable Convertible Preferred Stock (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Schedule of Redeemable Convertible Preferred Stock | Redeemable convertible preferred stock as of December 31, 2020, consisted of the following: Preferred Preferred Average Liquidation Carrying Series C 95,415,981 68,589,913 $ 0.753892 $ 51,709 $ 49,894 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income (Loss) Per Share | The following table sets forth the computation of net income per common share: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income per share Numerator Net Income $ 13,740 $ 9,840 $ 13,727 $ 18,599 Denominator Denominator for basic net income per weighted average common shares 97,082,182 30,801,304 58,826,335 30,663,966 Effect of dilutive securities Warrants — 4,916,073 3,867,094 4,813,062 Unvested RSU’s 72,052 — 75,281 — Stock options 8,451,245 10,442,302 9,439,883 10,513,058 Denominator for diluted net income per weighted average common shares 105,605,479 46,159,679 72,208,593 45,990,086 Net income per common share Basic $ 0.14 $ 0.32 $ 0.23 $ 0.61 Diluted $ 0.13 $ 0.21 $ 0.19 $ 0.40 |
Schedule of Antidilutive Securities | The Company excluded the securities within the table below from the diluted net income per share calculation as their effect would have been anti-dilutive for the three and nine months ended September 30, 2021 and September 30, 2020. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Public warrants 12,500,000 — 12,500,000 — Private warrants 332,500 — 332,500 — Stock options 1,733,016 — 1,733,016 — 14,565,516 — 14,565,516 — |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments | The following is a schedule of future minimum lease payments required under the non-cancelable leases: Years Ending December 31, 2021 (remaining 3 months) $ 125 2022 511 2023 407 2024 334 2025 170 Thereafter — Total future minimum lease payments $ 1,547 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Values | The estimated fair value of the Company’s revolving line of credit, and long term debt were as follows: September 30, 2021 December 31, 2020 Principal amount Carrying amount Fair value Principal amount Carrying amount Fair value Revolving line of credit $ 68,307 $ 67,498 $ 75,512 $ 75,393 $ 74,316 $ 83,014 Long term debt 51,270 39,633 57,561 50,117 36,413 55,378 $ 119,577 $ 107,131 $ 133,073 $ 125,510 $ 110,729 $ 138,392 |
Summary of Liabilities Measured on a Recurring Basis | Liabilities measured at fair value on a recurring basis and included in Other Liabilities were as follows: September 30, 2021 Total Level 1 Level 2 Level 3 Warrant liability - Public warrants $ 19,125 $ 19,125 $ — $ — Warrant liability - Private warrants 629 — — 629 Total Other Liabilities $ 19,754 $ 19,125 $ — $ 629 December 31, 2020 Total Level 1 Level 2 Level 3 Term Loan Warrant $ 12,744 $ — $ — $ 12,744 Total Other Liabilities $ 12,744 — — $ 12,744 |
Summary of Level 3 Liability Activity | The following table summarizes the activity for the Company’s Level 3 liabilities measured at fair value on a recurring basis: Term Loan Warrant Warrant Liability Balance at December 31, 2020 $ 12,744 $ — Exercise (13,102) — Assumed from Merger — 44,272 Changes in fair value 358 (24,518) Balance at September 30, 2021 $ — $ 19,754 |
Description of Business and B_2
Description of Business and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 09, 2021 | Dec. 31, 2019 | Sep. 30, 2021 | Dec. 31, 2020 |
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | 26,754,674 | |||
Cash proceeds from PIPE investment | $ 150,000 | |||
Common stock par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Private Placement | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Shares issued (in shares) | 15,000,000 | |||
Price per share (in dollars per share) | $ 10 | |||
Cash proceeds from PIPE investment | $ 150,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)segment | Sep. 30, 2020USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Number of operating segments | 1 | |||
Number of reportable segments | 1 | |||
Impairment expense | $ | $ 0 | $ 0 | $ 0 | $ 0 |
Dividend yield | 0.00% | |||
Capitalized software | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||||
Cash | $ 99,731 | $ 65,622 | ||
Restricted cash | 3,213 | 3,975 | ||
Total cash and restricted cash | $ 102,944 | $ 69,597 | $ 39,239 | $ 12,246 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 4,372 | $ 1,855 | ||
Charged to cost and expenses, net of recoveries | $ 5,936 | $ 3,931 | 18,849 | 9,614 |
Write-offs | (17,422) | (8,585) | ||
Balance at end of period | $ 5,799 | $ 2,884 | $ 5,799 | $ 2,884 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Useful Lives (Details) | 9 Months Ended |
Sep. 30, 2021 | |
Computer, office and other equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Computer software | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life | 7 years |
Merger - Summary of Reverse Rec
Merger - Summary of Reverse Recapitalization (Details) - USD ($) $ in Thousands | Jun. 09, 2021 | Sep. 30, 2021 | Sep. 30, 2020 |
Schedule Of Reverse Recapitalization [Line Items] | |||
Cash | $ 251,109 | $ 0 | |
Less: Redemptions | $ (64) | ||
Cash - PIPE | 150,000 | ||
Less: Consideration paid to selling stockholders | (329,560) | (329,560) | 0 |
Less: Transaction costs | (33,534) | $ (33,534) | $ 0 |
Net contributions from Merger and PIPE | 38,015 | ||
Less: Warrant liability | (44,272) | ||
Total | (6,257) | ||
FinServ Trust | |||
Schedule Of Reverse Recapitalization [Line Items] | |||
Cash | 251,059 | ||
FinServ Operating | |||
Schedule Of Reverse Recapitalization [Line Items] | |||
Cash | $ 114 |
Merger - Warrants (Details)
Merger - Warrants (Details) | Sep. 30, 2021shares |
Class of Warrant or Right [Line Items] | |
Warrants (in shares) | 12,832,500 |
Public warrants | |
Class of Warrant or Right [Line Items] | |
Warrants (in shares) | 12,500,000 |
Private warrants | |
Class of Warrant or Right [Line Items] | |
Warrants (in shares) | 332,500 |
Merger - Narrative (Details)
Merger - Narrative (Details) | Jun. 09, 2021tradingDay$ / sharesshares |
Class of Warrant or Right [Line Items] | |
Earnout shares (in shares) | shares | 7,500,000 |
Tranche one | |
Class of Warrant or Right [Line Items] | |
Percentage of shares vesting | 50.00% |
Stock price trigger (in dollars per share) | $ / shares | $ 12 |
Threshold trading days | 20 |
Threshold consecutive trading days | 30 |
Tranche two | |
Class of Warrant or Right [Line Items] | |
Percentage of shares vesting | 50.00% |
Stock price trigger (in dollars per share) | $ / shares | $ 14 |
Threshold trading days | 20 |
Threshold consecutive trading days | 30 |
Property Held for Lease, Net -
Property Held for Lease, Net - Summary of Property Held for Lease, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Property held for lease | $ 234,361 | $ 213,838 |
Less: accumulated depreciation | (169,219) | (147,101) |
Property held for lease, net | $ 65,142 | $ 66,737 |
Property Held for Lease, Net _2
Property Held for Lease, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Leases [Abstract] | ||||
Depreciation expense | $ 35,719 | $ 31,984 | $ 108,760 | $ 77,587 |
Net book value of property buyouts | 11,695 | 9,849 | 34,530 | 21,953 |
Impairment expense | $ 3,394 | $ 4,417 | $ 11,115 | $ 12,785 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 960 | $ 693 |
Less: accumulated depreciation | (461) | (363) |
Property and equipment, net (Note 5) | 499 | 330 |
Computer, office and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 543 | 407 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 80 | 80 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 100 | 64 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 237 | $ 142 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 36 | $ 11 | $ 98 | $ 59 |
Capitalized Software and Inta_3
Capitalized Software and Intangible Assets, Net - Summary of Capitalized Software and Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized software and intangible assets, gross | $ 902 | $ 218 |
Less: accumulated amortization | (149) | (30) |
Capitalized software and intangible assets, net | 753 | 188 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized software and intangible assets, gross | 886 | 202 |
Domain name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalized software and intangible assets, gross | $ 16 | $ 16 |
Capitalized Software and Inta_4
Capitalized Software and Intangible Assets, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 63 | $ 39 | $ 119 | $ 50 |
Capitalized computer software, not yet placed in service | $ 10 | $ 10 |
Capitalized Software and Inta_5
Capitalized Software and Intangible Assets, Net - Future Amortization (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2021 (remaining 3 months) | $ 73 |
2022 | 91 |
2023 | 216 |
2024 | 233 |
2025 | 115 |
Thereafter | 0 |
Capitalized software and intangible assets, net | $ 728 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Bonus accrual | $ 1,950 | $ 600 |
Sales tax payable | 4,994 | 5,065 |
Unfunded lease payable | 2,307 | 5,045 |
Interest payable | 63 | 66 |
Other accrued liabilities | 2,415 | 2,191 |
Accrued liabilities | $ 11,729 | $ 12,967 |
Line of Credit (Details)
Line of Credit (Details) - Revolving line of credit - USD ($) | 1 Months Ended | 12 Months Ended | 19 Months Ended | |||||
Aug. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Jul. 31, 2020 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 04, 2020 | Sep. 28, 2020 | |
Line of Credit Facility [Line Items] | ||||||||
Line of credit, principal amount | $ 68,307,000 | $ 75,393,000 | ||||||
First Revolving Line Of Credit, Refinanced | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Current borrowing capacity | $ 50,000,000 | $ 125,000,000 | ||||||
Line of credit, principal amount | $ 150,000,000 | $ 250,000,000 | ||||||
Advance rate | 90.00% | 85.00% | ||||||
Gross amount outstanding | 68,307,000 | 75,393,000 | ||||||
Issuance costs | 809,000 | 1,077,000 | ||||||
Amount outstanding | $ 67,498,000 | $ 74,316,000 | ||||||
London Interbank Offered Rate (LIBOR) | First Revolving Line Of Credit, Refinanced | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Basis spread on variable rate | 7.50% | 11.00% | ||||||
Minimum | London Interbank Offered Rate (LIBOR) | First Revolving Line Of Credit, Refinanced | ||||||||
Line of Credit Facility [Line Items] | ||||||||
Basis spread on variable rate | 2.00% |
Long Term Debt - Narrative (Det
Long Term Debt - Narrative (Details) - USD ($) | Dec. 04, 2020 | Sep. 30, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Outstanding principal | $ 119,577,000 | $ 125,510,000 | |
Senior Loans | Senior Secured Term Loan Facility Commitment | |||
Debt Instrument [Line Items] | |||
Outstanding principal | $ 50,000,000 | 50,000,000 | 50,000,000 |
Paid-in-kind interest rate | 3.00% | ||
Net outstanding balance | $ 39,633,000 | $ 36,413,000 | |
Senior Loans | Senior Secured Term Loan Facility Commitment | London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 8.00% | ||
Senior Loans | Senior Secured Term Loan Facility Commitment | London Interbank Offered Rate (LIBOR) | Minimum | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.00% |
Long Term Debt - Schedule of De
Long Term Debt - Schedule of Debt (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 04, 2020 |
Debt Instrument [Line Items] | |||
Outstanding principal | $ 119,577,000 | $ 125,510,000 | |
Senior Loans | Senior Secured Term Loan Facility Commitment | |||
Debt Instrument [Line Items] | |||
Outstanding principal | 50,000,000 | 50,000,000 | $ 50,000,000 |
PIK | 1,270,000 | 117,000 | |
Debt discount | (11,637,000) | (13,704,000) | |
Total carrying amount | $ 39,633,000 | $ 36,413,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) | Aug. 26, 2020 | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock options granted (in shares) | 0 | ||||||
Stock-based compensation expense | $ 3,097,000 | $ 121,000 | $ 12,862,000 | $ 274,000 | |||
Restricted shares granted (in shares) | 1,981,369 | ||||||
Restricted shares granted, grant date fair value (in dollars per share) | $ 6.30 | ||||||
2014 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock options granted (in shares) | 0 | 0 | |||||
Shares exercised, intrinsic value | $ 10,644,000 | $ 2,058,000 | |||||
Stock options outstanding (in shares) | 8,487,477 | 8,487,477 | 10,571,222 | ||||
Compensation cost not yet recognized | $ 50,000 | $ 50,000 | |||||
Compensation cost not yet recognized, period of recognition | 1 year 7 months 6 days | ||||||
2021 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock options outstanding (in shares) | 1,733,016 | 1,733,016 | 0 | ||||
Compensation cost not yet recognized | $ 5,067,000 | $ 5,067,000 | |||||
Compensation cost not yet recognized, period of recognition | 3 years 1 month 28 days | ||||||
Options granted, weighted-average grant-date fair value (in dollars per share) | $ 6.18 | ||||||
Options with performance conditions | 2021 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock options granted (in shares) | 693,206 | ||||||
Stock-based compensation expense | $ 0 | ||||||
Restricted shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation expense | $ 9,348,000 | $ 9,348,000 | |||||
Restricted shares granted (in shares) | 19,000,000 | ||||||
Restricted shares granted, grant date fair value (in dollars per share) | $ 3.28 | ||||||
Percentage of awards vested | 15.00% | ||||||
Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Nonemployee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock options granted (in shares) | 0 | 0 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Jun. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Number of Shares | |||
Granted (in shares) | 0 | ||
2014 Plan | |||
Number of Shares | |||
Beginning balance (in shares) | 10,571,222 | ||
Granted (in shares) | 0 | 0 | |
Exercised (in shares) | (2,073,162) | ||
Forfeited (in shares) | (10,583) | ||
Ending balance (in shares) | 8,487,477 | 10,571,222 | |
Exercisable (in shares) | 8,427,835 | ||
Unvested (in shares) | 59,642 | ||
Weighted- Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 0.29 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 0.30 | ||
Forfeited (in dollars per share) | 0.84 | ||
Ending balance (in dollars per share) | 0.27 | $ 0.29 | |
Exercisable (in dollars per share) | 0.29 | ||
Unvested (in dollars per share) | $ 1.50 | ||
Additional Disclosures | |||
Options outstanding, weighted-average remaining contractual term | 7 years 6 months 29 days | 8 years 2 months 19 days | |
Options exercisable, weighted-average remaining contractual term | 7 years 6 months 29 days | ||
Options unvested, weighted-average remaining contractual term | 8 years 5 months 8 days | ||
Options outstanding, aggregate intrinsic value | $ 43,577 | $ 82,013 | |
Options exercisable, aggregate intrinsic value | 43,353 | ||
Options unvested, aggregate intrinsic value | $ 224 | ||
2021 Plan | |||
Number of Shares | |||
Beginning balance (in shares) | 0 | ||
Exercised (in shares) | 0 | ||
Forfeited (in shares) | 0 | ||
Ending balance (in shares) | 1,733,016 | 0 | |
Exercisable (in shares) | 0 | ||
Unvested (in shares) | 1,733,016 | ||
Weighted- Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 0 | ||
Exercised (in dollars per share) | 0 | ||
Forfeited (in dollars per share) | 0 | ||
Ending balance (in dollars per share) | 10.45 | $ 0 | |
Exercisable (in dollars per share) | 0 | ||
Unvested (in dollars per share) | $ 10.45 | ||
Additional Disclosures | |||
Options outstanding, weighted-average remaining contractual term | 9 years 9 months | ||
Options unvested, weighted-average remaining contractual term | 9 years 9 months | ||
Options outstanding, aggregate intrinsic value | $ 0 | $ 0 | |
Options exercisable, aggregate intrinsic value | 0 | ||
Options unvested, aggregate intrinsic value | $ 0 | ||
Granted - service conditions | 2021 Plan | |||
Number of Shares | |||
Granted (in shares) | 1,039,810 | ||
Weighted- Average Exercise Price | |||
Granted (in dollars per share) | $ 10.45 | ||
Granted - performance conditions | 2021 Plan | |||
Number of Shares | |||
Granted (in shares) | 693,206 | ||
Weighted- Average Exercise Price | |||
Granted (in dollars per share) | $ 10.45 | ||
Previously Reported | 2014 Plan | |||
Number of Shares | |||
Beginning balance (in shares) | 11,180,731 | ||
Ending balance (in shares) | 11,180,731 | ||
Weighted- Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 0.27 | ||
Ending balance (in dollars per share) | $ 0.27 | ||
Recapitalization impact | 2014 Plan | |||
Number of Shares | |||
Beginning balance (in shares) | (609,509) | ||
Ending balance (in shares) | (609,509) |
Stock-Based Compensation - Op_2
Stock-Based Compensation - Option Valuation Assumptions (Details) | 9 Months Ended |
Sep. 30, 2021$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 0.00% |
Stock options | 2021 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Exercise price (in dollars per share) | $ 10.45 |
Risk-free interest rate | 1.02% |
Expected term (in years) | 5 years 9 months 10 days |
Expected volatility | 66.90% |
Dividend yield | 0.00% |
Stock-Based Compensation - RSU
Stock-Based Compensation - RSU Activity (Details) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of RSUs | |
Outstanding, beginning balance (in shares) | shares | 0 |
Granted (in shares) | shares | 1,981,369 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Outstanding, ending balance (in shares) | shares | 1,981,369 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 6.30 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Outstanding, ending balance (in dollars per share) | $ / shares | $ 6.30 |
Stock Warrants - Narrative (Det
Stock Warrants - Narrative (Details) - USD ($) | Jun. 09, 2021 | Mar. 31, 2019 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 04, 2020 | Feb. 28, 2019 |
Class of Warrant or Right [Line Items] | ||||||
Exercise price (in dollars per share) | $ 11.50 | |||||
Outstanding principal | $ 119,577,000 | $ 125,510,000 | ||||
Additional paid in capital adjustment | $ 151,000 | |||||
Warrants (in shares) | 12,832,500 | |||||
Warrants exercised (in shares) | 1,496,616 | |||||
Warrants outstanding, term | 5 years | |||||
Redeemable Convertible Preferred Stock | ||||||
Class of Warrant or Right [Line Items] | ||||||
Fair value price per share (in dollars per share) | $ 1.7084 | |||||
2014 Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 722,260 | |||||
Exercise price (in dollars per share) | $ 0.49 | |||||
2018 Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 1,084,618 | |||||
Exercise price (in dollars per share) | $ 1.7084 | |||||
2019 Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 36,417 | |||||
Exercise price (in dollars per share) | $ 0.01 | |||||
2020 Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 3,637,536 | |||||
Warrants, Second Lien Facility | ||||||
Class of Warrant or Right [Line Items] | ||||||
Exercise price (in dollars per share) | $ 0.01 | |||||
Warrants, Convertible Notes Payable | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 1,241,675 | |||||
Term Loan Warrant | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number of shares called by warrants (in shares) | 4,988,719 | |||||
Exercise price (in dollars per share) | $ 0.01 | |||||
Warrants (in shares) | 4,988,719 | |||||
Public warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants (in shares) | 12,500,000 | |||||
Private warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants (in shares) | 332,500 | |||||
Long term debt | ||||||
Class of Warrant or Right [Line Items] | ||||||
Outstanding principal | $ 51,270,000 | $ 50,117,000 | ||||
Convertible Notes Issued In February And March 2019 | Convertible Debt | ||||||
Class of Warrant or Right [Line Items] | ||||||
Outstanding principal | $ 2,500,000 | |||||
Convertible Notes Issued In February 2019 | Convertible Debt | ||||||
Class of Warrant or Right [Line Items] | ||||||
Conversion price (in dollars per share) | $ 1.6051 | |||||
Convertible Notes Issued In March 2019 | Convertible Debt | ||||||
Class of Warrant or Right [Line Items] | ||||||
Conversion price (in dollars per share) | $ 1.6068 | |||||
Term Loan Warrant | Long term debt | ||||||
Class of Warrant or Right [Line Items] | ||||||
Outstanding principal | $ 50,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||||
Provision (benefit) for income taxes | $ 808 | $ 233 | $ 805 | $ 423 | |
Federal | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforward | $ 113,700 | ||||
Operating loss carryforwards not subject to expiration | 78,000 | ||||
State and local | |||||
Operating Loss Carryforwards [Line Items] | |||||
Operating loss carryforward | 29,100 | ||||
Operating loss carryforwards not subject to expiration | $ 4,300 |
Redeemable Convertible Prefer_3
Redeemable Convertible Preferred Stock - Narrative (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021board_member | Dec. 31, 2019USD ($)shares | Dec. 31, 2020shares | |
Temporary Equity Disclosure [Abstract] | |||
Shares issued for conversion (in shares) | 24,773,767 | ||
Convertible notes, shares issued (in shares) | 17,061,472 | ||
Convertible note conversion | $ | $ 6,062 | ||
Additional equity | $ | $ 9,506 | ||
Shares issued (in shares) | 26,754,674 | ||
Preferred shares, number of board members entitled to elect | board_member | 3 | ||
Common stock, number of board members entitled to elect | board_member | 2 | ||
Dividend percentage | 8.00% | ||
Redeemable convertible preferred stock, shares issued (in shares) | 68,589,913 | ||
Common stock issuable (in shares) | 69,389,533 |
Redeemable Convertible Prefer_4
Redeemable Convertible Preferred Stock - Summary of Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Temporary Equity [Line Items] | ||||||
Preferred Shares Authorized (in shares) | 95,415,981 | |||||
Preferred Shares Issued (in shares) | 68,589,913 | |||||
Preferred Shares Outstanding (in shares) | 0 | 0 | 0 | 0 | 0 | |
Liquidation Preference | $ 51,709 | |||||
Carrying Value | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | |
Previously Reported | ||||||
Temporary Equity [Line Items] | ||||||
Preferred Shares Issued (in shares) | 68,589,913 | |||||
Preferred Shares Outstanding (in shares) | 0 | 68,589,913 | 68,589,913 | 68,589,913 | ||
Carrying Value | $ 0 | $ 49,894 | $ 49,894 | $ 49,894 | ||
Average | ||||||
Temporary Equity [Line Items] | ||||||
Average Issuance Price Per Share (in shares) | $ 0.753892 |
Net Income Per Share - Schedule
Net Income Per Share - Schedule of Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator | ||||
Net income | $ 13,740 | $ 9,840 | $ 13,727 | $ 18,599 |
Denominator | ||||
Denominator for basic net income per weighted average common shares (in shares) | 97,082,182 | 30,801,304 | 58,826,335 | 30,663,966 |
Effect of dilutive securities | ||||
Warrants (in shares) | 0 | 4,916,073 | 3,867,094 | 4,813,062 |
Denominator for diluted net income per weighted average common shares (in shares) | 105,605,479 | 46,159,679 | 72,208,593 | 45,990,086 |
Net income per common share | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.32 | $ 0.23 | $ 0.61 |
Diluted (in dollars per share) | $ 0.13 | $ 0.21 | $ 0.19 | $ 0.40 |
Unvested RSU’s | ||||
Effect of dilutive securities | ||||
Share-based payment arrangement (in shares) | 72,052 | 0 | 75,281 | 0 |
Stock options | ||||
Effect of dilutive securities | ||||
Share-based payment arrangement (in shares) | 8,451,245 | 10,442,302 | 9,439,883 | 10,513,058 |
Net Income Per Share - Antidilu
Net Income Per Share - Antidilutive Securities (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 14,565,516 | 0 | 14,565,516 | 0 |
Public warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 12,500,000 | 0 | 12,500,000 | 0 |
Private warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 332,500 | 0 | 332,500 | 0 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities (in shares) | 1,733,016 | 0 | 1,733,016 | 0 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) $ in Thousands | Oct. 26, 2021plaintiff | Aug. 27, 2021board_member | May 24, 2021USD ($) | Apr. 09, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Loss Contingencies [Line Items] | ||||||||
2021 (remaining 3 months) | $ 125 | $ 125 | ||||||
2022 | 511 | 511 | ||||||
2023 | 407 | 407 | ||||||
2024 | 334 | 334 | ||||||
2025 | 170 | 170 | ||||||
Thereafter | 0 | 0 | ||||||
Total future minimum lease payments | 1,547 | 1,547 | ||||||
Rent expense | $ 167 | $ 191 | $ 489 | $ 575 | ||||
Termination fee | $ 100 | |||||||
Damages sought (no less than) | $ 10,600 | $ 100 | ||||||
Subsequent Event | McIntosh v. Katapult Holdings, Inc., et all | Pending Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of plaintiffs | plaintiff | 7 | |||||||
FinServ | McIntosh v. Katapult Holdings, Inc., et all | Officer | Pending Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of defendants | board_member | 2 | |||||||
Legacy Katapult | McIntosh v. Katapult Holdings, Inc., et all | Officer | Pending Litigation | ||||||||
Loss Contingencies [Line Items] | ||||||||
Number of defendants | board_member | 2 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Related Party Transactions [Abstract] | ||||
Interest paid to related parties | $ 0 | $ 1,199,000 | $ 0 | $ 3,690,000 |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Debt Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Outstanding principal | $ 119,577 | $ 125,510 |
Long term debt | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Outstanding principal | 51,270 | 50,117 |
Revolving line of credit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Line of credit, principal amount | 68,307 | 75,393 |
Carrying amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt | 39,633 | 36,413 |
Debt | 107,131 | 110,729 |
Carrying amount | Revolving line of credit | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Line of credit | 67,498 | 74,316 |
Fair value | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long term debt | 57,561 | 55,378 |
Debt | 133,073 | 138,392 |
Fair value | Revolving line of credit | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Line of credit | $ 75,512 | $ 83,014 |
Fair Value Measurements - Liabi
Fair Value Measurements - Liabilities (Details) - Fair Value, Recurring - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | $ 19,754 | $ 12,744 |
Warrant liability - Public warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 19,125 | |
Warrant liability - Private warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 629 | |
Term Loan Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 12,744 | |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 19,125 | 0 |
Level 1 | Warrant liability - Public warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 19,125 | |
Level 1 | Warrant liability - Private warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 1 | Term Loan Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | 0 |
Level 2 | Warrant liability - Public warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 2 | Warrant liability - Private warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 2 | Term Loan Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 629 | 12,744 |
Level 3 | Warrant liability - Public warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | 0 | |
Level 3 | Warrant liability - Private warrants | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | $ 629 | |
Level 3 | Term Loan Warrant | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Other Liabilities | $ 12,744 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | ||||
Unrealized gain | $ 599,000 | $ 0 | $ 518,000 | $ 0 |
Fair Value Measurements - Level
Fair Value Measurements - Level 3 (Details) - Level 3 - Fair Value, Recurring - Warrant $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 0 |
Exercise | 0 |
Assumed from Merger | 44,272 |
Changes in fair value | (24,518) |
Ending balance | 19,754 |
Term Loan Warrant | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 12,744 |
Exercise | (13,102) |
Assumed from Merger | 0 |
Changes in fair value | 358 |
Ending balance | $ 0 |