8-K
Katapult Holdings, Inc. (KPLT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the SecuritiesExchange Act of 1934
Date of Report (Date of earliest event reported): June 15, 2021
| KATAPULT HOLDINGS, INC. | ||
|---|---|---|
| (Exact name of registrant as specified in its charter) | ||
| Delaware | 001-39116 | 81-4424170 |
| (State or other jurisdiction<br><br><br><br> <br>of incorporation) | (Commission File Number) | (IRS Employer<br><br><br><br> <br>Identification No.) |
| 5204 Tennyson Parkway, Suite 500Plano, TX | 75024 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (833) 528-2785
FinServ Acquisition Corp. c/o Ellenoff Grossman & Schole LLP 1345 Avenue of the Americas New York, NY 10105
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities<br>Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange<br>Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under<br>the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br>the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b)of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange onWhich Registered |
|---|---|---|
| Common Stock, par value $0.0001 per share | KPLT | The Nasdaq Stock Market LLC |
| Redeemable<br>Warrants | KPLTW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On June 15, 2021, Katapult Holdings, Inc., a Delaware corporation, issued a press release announcing its financial results for the three months ended March 31, 2021, and also provided a corporate update. A copy of the press release is furnished herewith as Exhibit 99.1.*
Item 9.01 Financial Statements and Exhibits.
(d)
| Exhibit No. | Exhibit |
|---|---|
| 99.1 | Press Release of Katapult Holdings, Inc., dated June 15, 2021. |
| * | The information in Item 2.02 of this Form 8-K shall not be<br>deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),<br>or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities<br>Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. |
| --- | --- |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: June 15, 2021 | KATAPULT HOLDINGS, INC. | ||
|---|---|---|---|
| By: | /s/ Orlando Zayas | ||
| Name: | Orlando Zayas | ||
| Title: | Chief Executive Officer |
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Exhibit 99.1
KatapultAnnounces First Quarter 2021 Financial Results
NEWYORK – June 15, 2021 – Katapult Holdings, Inc. (“Katapult” or the “Company”) (NASDAQ: KPLT), an e-commerce focused financial technology company, today announced financial results for the first quarter ended March 31, 2021.
“We are pleased to report strong first quarter 2021 results and excited to begin a new chapter as a publicly traded company. Our results reflect solid execution and a strong positive trajectory in our business as we continue to onboard more merchants and drive growth with our existing customers” said Orlando Zayas, CEO of Katapult. “Looking to the remainder of 2021 and beyond, we are excited about the breadth of opportunities available to us to continue to expand our business and build long-term shareholder value.”
FirstQuarter 2021 Financial and Operating Highlights:
| ● | Total<br> Revenue for the first quarter was $80.6 million, an increase of 88% year-over-year, driven<br> by strong growth in originations as we continue to add new merchant relationships and expand<br> with our existing merchants. |
|---|---|
| ● | Gross<br> Originations were $63.7 million, an increase of 71% from $37.2 million in Q1 2021. |
| --- | --- |
| ● | Onboarded<br> 26 new retailers in the first quarter of 2021, including Motorola, Simply Mac, and Cybertron. |
| --- | --- |
| ● | Our<br> Adjusted EBITDA in the first quarter was $14.7 million, up 122% from $6.6 million in the<br> first quarter of 2020, primarily reflecting the scalability of our business as revenue growth<br> is outpacing our operating expense growth. |
| --- | --- |
| ● | Net<br> Income was $8.1 million in the first quarter, up 120% year-over-year. Adjusted Net Income<br> for the first quarter was $9.3 million, up 146% from $3.8 million in the first quarter of<br> 2020. |
| --- | --- |
RecentBusiness Highlights
| ● | Listed<br> as a new public company following completion of a business combination with FinServ Acquisition<br> Corp. (“FinServ”) that closed on June 9, 2021. |
|---|---|
| ● | Katapult<br> Holdings, Inc., and its common stock and warrants began trading on the Nasdaq Stock Market<br> under the ticker symbols “KPLT” and “KPLTW”, respectively on June<br> 10, 2021. |
| --- | --- |
| ● | Announced<br> new Board of Directors comprising of proven leaders. Brian Hirsch, Managing Partner at Tribeca<br> Venture Partners, will serve as Chairman of Katapult’s newly formed Board of Directors. |
| --- | --- |
KeyOperating Metrics, GAAP and Non-GAAP Financial Measures
($ million) Unaudited
| Three Months Ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | Growth | |||||||
| Gross Originations^1^ | $ | 63.7 | $ | 37.2 | 71 | % | |||
| Revenue | $ | 80.6 | $ | 42.9 | 88 | % | |||
| Net Income | $ | 8.1 | $ | 3.7 | 120 | % | |||
| Adjusted Net Income | $ | 9.3 | $ | 3.8 | 146 | % | |||
| Adjusted EBITDA | $ | 14.7 | $ | 6.6 | 122 | % | |||
| Adjusted EBITDA Margin | 18 | % | 15 | % |
| ^1^ | Gross Originations are defined as the retail price of the merchandise<br>associated with lease-purchase agreements entered into during the period through the Katapult platform. Net Originations were $51.9 million<br>and $31.4 million for the three months ended March 31, 2021 and 2020, respectively representing an increase of 65% year-over-year. Effective<br>2021 and going forward, the Company will be reporting Gross Originations, as we believe this metric is more representative of the underlying<br>growth of our business as Net Originations are continuously revised over subsequent periods and Gross Originations is more consistent<br>with how our public peers report volume. |
|---|
2021Financial Guidance
As of June 15, 2021, Katapult anticipates FY 2021 Gross Originations, Revenue and Adjusted EBITDA to be in the following ranges:
| ● | Gross<br> Originations: $375-$425 million |
|---|---|
| ● | Revenue:<br> $425-$475 million |
| --- | --- |
| ● | Adjusted<br> EBITDA: $50-$60 million |
| --- | --- |
Basisof Presentation
The financial information as of and for the three months ended March 31, 2021 and as of December 31, 2020 and the three months ended March 31, 2020 included in this press release reflects, and is based upon, information of Katapult Holdings, Inc. prior to giving effect to the business combination with FinServ Acquisition Corp. completed on June 9, 2021 (as further discussed below).
ConferenceCall and Webcast
Katapult will host a conference call and webcast at 8:00 AM ET to discuss the company’s financial results.
A live audio webcast of the event will be available on the Katapult Investor Relations website at http://ir.katapultholdings.com/.
A live dial-in will be available at (888) 302-0680 (domestic) or (281) 962-4859 (international). The conference ID number is 1591375. Shortly after the conclusion of the call, a replay of this conference call will be available through 11:00 AM ET on June 29, 2021 at (855) 859-2056 (domestic) or (404) 537-3406 (international). The replay passcode is 1591375.
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AboutKatapult
Katapult is a next generation platform for digital and mobile-first commerce for the nonprime consumer. Katapult provides POS lease purchase options for consumers challenged with accessing traditional financial products who are seeking to obtain everyday durable goods. The Company has developed a sophisticated end-to-end technology platform that enables seamless integration with merchants, underwriting capabilities that exceed the industry standard, and exceptional customer experiences.
BusinessCombination
On June 9, 2021, FinServ Acquisition Corp., a special purpose acquisition company, announced that they completed their previously announced business combination under which FinServ acquired Katapult Holdings, Inc. for approximately $842 million in total consideration. Upon completion of the business combination, the combined company changed its name to Katapult Holdings, Inc., and its common stock and warrants began trading on the Nasdaq Stock Market under the ticker symbols “KPLT” and “KPLTW”, respectively on June 10, 2021.
Forward-LookingStatements
Certain statements included in this Press Release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Press Release, and on the current expectations of Katapult’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Katapult. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; failure to realize the anticipated benefits of the transaction with FinServ; risks relating to the uncertainty of the projected financial information with respect to Katapult; risks related to the concentration of Katapult’s business among a relatively small number of merchants; the effects of competition on Katapult’s future business; the impact of the COVID-19 pandemic on Katapult’s business; the ability of Katapult to issue equity or equity-linked securities or obtain debt financing in the future, and those factors discussed in FinServ’s final prospectus dated October 31, 2019 and Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and FinServ’s registration statement on Form S-4 which was declared effective on May 14, 2021, in each case, under the heading “Risk Factors,” and other documents of FinServ filed, or to be filed by Katapult, with the Securities and Exchange Commission (“SEC”). If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that Katapult does not presently know or that Katapult currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Katapult’s expectations, plans or forecasts of future events and views as of the date of this Press Release. Katapult anticipates that subsequent events and developments will cause Katapult’s assessments to change. However, while Katapult may elect to update these forward-looking statements at some point in the future, Katapult specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Katapult’s assessments as of any date subsequent to the date of this Press Release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Certain market data information in this Press Release is based on the estimates of Katapult management. Katapult obtained the industry, market and competitive position data used throughout this Press Release from internal estimates and research as well as from industry publications and research, surveys and studies conducted by third parties. Katapult believes its estimates to be accurate as of the date of this Press Release. However, this information may prove to be inaccurate because of the method by which Katapult obtained some of the data for its estimates or because this information cannot always be verified due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process.
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Non-GAAPFinancial Measures
To supplement the financial measures presented in this press release and related conference call or webcast in accordance with generally accepted accounting principles in the United States (“GAAP”), we also present the following non-GAAP measures of financial performance: Adjusted EBITDA, Adjusted Net Income, Gross Originations, and Net Originations.
Adjusted EBITDA is defined as net income before interest expense and other fees, loss on extinquishment of debt, provision for income taxes, depreciation and amortization on property and equipment, impairment of leased assets, stock compensation expense, change in fair value of warrant liability, transaction costs associated with the merger, legal fees associated with investor transactions, and employee recruiting costs. Adjusted Net Income is defined as net income before loss on extinquishment of debt, stock compensation expense, change in fair value of warrant liability, transaction costs associated with the merger, legal fees associated with investor transactions, and employee recruiting costs.
Gross Originations are defined as the retail price of the merchandise associated with lease-purchase agreements entered into during the period through the Katapult platform. Gross Originations do not represent revenue earned. However, we believe this is a useful operating metric for both the Company and investors to use in assessing the volume of transactions that take place on our platforms. Net Originations are defined as Gross Originations less modifications and cancellations that occur in the period.
Management believes the use of non-GAAP financial measures, as a supplement to GAAP measures, is useful to investors in that they eliminate items that are either not part of our core operations or do not require a cash outlay, such as stock-based compensation expense. Management uses these non-GAAP financial measures when evaluating operating performance and for internal planning and forecasting purposes. We believe that these non-GAAP financial measures help indicate underlying trends in the business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing operating performance. However, these non-GAAP measures exclude items that are significant in understanding and assessing Katapult’s financial results or position. Therefore, these measures should not be considered in isolation or as alternatives to revenue, net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that Katapult’s presentation of these measures may not be comparable to similarly titled measures used by other companies.
A reconciliation of our forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the adjusting items necessary for such reconciliations that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Contacts
Katapult Vice President of Investor Relations
Bill Wright
917-750-0346
Katapult Investor Contact
William Maina
ICR for Katapult
646-277-1236
Press Inquiries:
Tribe Builder Media
Kristen Shea
929-367-8993
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KATAPULTHOLDINGS, INC.
CONDENSEDCONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amountsin thousands)
| December 31,<br><br> 2020 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Current assets: | |||||
| Cash | 67,788 | $ | 65,622 | ||
| Restricted cash | 2,877 | 3,975 | |||
| Accounts receivable, net of allowance for doubtful accounts of 3,611 and 4,372 at March 31, 2021 and December 31, 2020, respectively | 1,343 | 1,636 | |||
| Property held for lease, net of accumulated depreciation and impairment | 67,590 | 66,737 | |||
| Prepaid expenses and other current assets | 3,273 | 1,248 | |||
| Total current assets | 142,871 | 139,218 | |||
| Property and equipment, net | 403 | 330 | |||
| Security deposits | 91 | 91 | |||
| Capitalized software and intangible assets, net | 336 | 188 | |||
| Total assets | 143,701 | $ | 139,827 | ||
| LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT | |||||
| Current liabilities: | |||||
| Accounts payable | 2,202 | $ | 1,688 | ||
| Accrued liabilities | 12,173 | 12,967 | |||
| Unearned revenue | 3,032 | 2,652 | |||
| Total current liabilities | 17,407 | 17,307 | |||
| Revolving line of credit | 68,400 | 74,316 | |||
| Long term debt | 37,487 | 36,413 | |||
| Other liabilities | 13,102 | 12,740 | |||
| Total liabilities | 136,396 | 140,776 | |||
| COMMITMENTS AND CONTINGENCIES | |||||
| REDEEMABLE CONVERTIBLE PREFERRED STOCK | |||||
| Redeemable convertible preferred stock (Series C), .001 par value-- 95,415,981 shares authorized; 68,589,913 shares issued and outstanding at March 31, 2021 and December 31, 2020 | 49,894 | 49,894 | |||
| STOCKHOLDERS’ DEFICIT | |||||
| Common stock, .001 par value-- 120,000,000 shares<br> authorized; 9,781,884 and 9,524,440 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively | 10 | 10 | |||
| Additional paid-in capital | 7,360 | 7,196 | |||
| Accumulated deficit | (49,959 | ) | (58,049 | ) | |
| Total stockholders’ deficit | (42,589 | ) | (50,843 | ) | |
| Total liabilities, redeemable convertible preferred stock and stockholders’ deficit | 143,701 | $ | 139,827 |
All values are in US Dollars.
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KATAPULTHOLDINGS, INC.
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amountsin thousands, except per share amounts)
| Three Months Ended<br><br> March 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Revenue | ||||||
| Rental revenue | $ | 80,625 | $ | 42,578 | ||
| Other revenue | 10 | 264 | ||||
| Service fees | - | 46 | ||||
| Total revenue | 80,635 | 42,888 | ||||
| Cost of revenue | 52,882 | 27,333 | ||||
| Gross profit | 27,753 | 15,555 | ||||
| Operating expenses: | ||||||
| Servicing costs | 1,138 | 980 | ||||
| Underwriting fees | 467 | 479 | ||||
| Professional and consulting fees | 1,534 | 222 | ||||
| Technology and data analytics | 1,715 | 1,828 | ||||
| Bad debt expense | 4,887 | 3,388 | ||||
| General and administrative | 3,599 | 1,924 | ||||
| Total operating expenses | 13,340 | 8,821 | ||||
| Income from operations | 14,413 | 6,734 | ||||
| Interest expense and other fees | (4,140 | ) | (2,985 | ) | ||
| Change in fair value of warrant liability | (358 | ) | - | |||
| Income before provision for income taxes | 9,915 | 3,749 | ||||
| Provision for income taxes | (1,825 | ) | (79 | ) | ||
| Net income and comprehensive income | $ | 8,090 | $ | 3,670 | ||
| Net income and comprehensive income available to common shareholders | $ | 695 | $ | 293 | ||
| Net income per share: | ||||||
| Basic | $ | 0.07 | $ | 0.03 | ||
| Diluted | $ | 0.02 | $ | 0.01 | ||
| Weighted average shares used in computing net income per share: | ||||||
| Basic | 9,650,717 | 8,686,478 | ||||
| Diluted | 30,414,536 | 23,867,235 |
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KATAPULTHOLDINGS, INC.
RECONCILIATIONOF NON-GAAP MEASURES (Unaudited)
(Amountsin thousands)
| Three Months Ended<br><br> March 31, | ||||||
|---|---|---|---|---|---|---|
| Adjusted EBITDA | 2021 | 2020 | ||||
| Net income | $ | 8,090 | $ | 3,670 | ||
| Add back: | ||||||
| Interest expense and other fees | 4,140 | 2,985 | ||||
| Change in fair value of warrant liability | 358 | - | ||||
| Provision for income taxes | 1,825 | 79 | ||||
| Depreciation and amortization on property and equipment | 48 | 20 | ||||
| Impairment of leased assets | (625 | ) | (246 | ) | ||
| Stock compensation expense | 80 | 77 | ||||
| Employee recruiting costs | 106 | 34 | ||||
| Transaction costs associated with merger | 676 | - | ||||
| Adjusted EBITDA | $ | 14,698 | $ | 6,619 |
| Three Months Ended<br><br> March 31, | ||||
|---|---|---|---|---|
| Adjusted Net Income | 2021 | 2020 | ||
| Net income | $ | 8,090 | $ | 3,670 |
| Add back: | ||||
| Change in fair value of warrant liability | 358 | - | ||
| Stock compensation expense | 80 | 77 | ||
| Employee recruiting costs | 106 | 34 | ||
| Transaction costs associated with merger | 676 | - | ||
| Adjusted net income | $ | 9,310 | $ | 3,781 |
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