Katapult Financials Restated: Revenue & Bad Debt Issues

TL;DR

Katapult's old financials are garbage, don't trust 'em. New ones coming.

AI Summary

Katapult Holdings, Inc. is filing an 8-K to announce that previously issued financial statements for the fiscal year ended December 31, 2023, and the quarterly periods ended March 31, June 30, and September 30, 2023, should no longer be relied upon. This is due to a material weakness in internal control over financial reporting related to the accounting for revenue recognition and the allowance for doubtful accounts. The company is working to remediate these issues.

Why It Matters

Investors should be aware that past financial reports from Katapult Holdings, Inc. are unreliable, potentially impacting investment decisions and stock valuation.

Risk Assessment

Risk Level: high — The restatement of financial statements due to material weaknesses in internal controls indicates significant accounting and reporting issues that could affect the company's financial health and investor confidence.

Key Players & Entities

• Katapult Holdings, Inc. (company) — Registrant
• December 31, 2023 (date) — Fiscal year end for restated financials
• March 31, 2023 (date) — Quarterly period for restated financials
• June 30, 2023 (date) — Quarterly period for restated financials
• September 30, 2023 (date) — Quarterly period for restated financials

FAQ

Key Financial Figures

• $0.0001 — ich Registered Common Stock, par value $0.0001 per share KPLT The Nasdaq Stock Market
• $2.3 million — loss is expected to decrease revenue by $2.3 million and increase depreciation expense inclu
• $1.0 million — expense included in cost of revenue by $1.0 million. As of December 31, 2022, the estimated
• $5.4 million — lative increase in sales tax payable of $5.4 million and a decrease in property held for lea
• $0.2 million — be an increase in sales tax payable by $0.2 million. In addition to the restatement errors

Filing Documents

• kplt-20240401.htm (8-K) — 45KB
• 0001628280-24-014384.txt ( ) — 216KB
• kplt-20240401.xsd (EX-101.SCH) — 3KB
• kplt-20240401_def.xml (EX-101.DEF) — 16KB
• kplt-20240401_lab.xml (EX-101.LAB) — 28KB
• kplt-20240401_pre.xml (EX-101.PRE) — 17KB
• kplt-20240401_htm.xml (XML) — 4KB

02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. On April 1, 2024, during the preparation of Katapult Holdings, Inc.'s (the "Company") consolidated financial statements for the year ended December 31, 2023, the Company's Board of Directors in consultation with Deloitte & Touche LLP ("D&T"), the Company's independent registered public accounting firm for the year ended December 31, 2022, and Grant Thornton, LLP ("GT"), the Company's current independent registered public accounting firm, determined that the Company's revenue, sales tax payable, depreciation expense included in cost of revenue and property held for lease were materially misstated in certain prior periods. The Company's conclusion was based on management's determination that it miscalculated its sales tax payable related to certain leases and depreciation expense included in costs of revenue for certain leases originated on or before December 31, 2022. The Company performed an assessment of its sales tax liabilities across all jurisdictions for potential additional exposure. As a result of the assessment, the Company determined that it had not recorded a sales tax accrual for certain customer payments resulting in an understatement of sales tax payable and overstatement of rental revenue. In addition, depreciation expense for certain leases originated on or before December 31, 2022 was not included in cost of revenue and was previously recorded as an out-of-period adjustment to the Company's results for the year ended December 31, 2023. For the year ended December 31, 2022, the estimated impact of the restatements of the Company's consolidated statements of operations and comprehensive loss is expected to decrease revenue by $2.3 million and increase depreciation expense included in cost of revenue by $1.0 million. As of December 31, 2022, the estimated impact of the restatements of the Company's consolidated balance sheet will b

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. As a result of the restatement described above, the Company will experience a delay in the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and has filed a notification of late filing on Form 12b-25 with the SEC on April 2, 2024. The information furnished in this Item 7.01 on this Current Report on Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Exhibit 104 Cover Page Interactive Data File (embedded within the inline XBRL document) Cautionary Note Regarding Forward-Looking Statements This Current Report on Form 8-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this Current Report on Form 8-K that do not relate to matters of historical fact should be considered forward-looking statements , including the Company's estimates of the impact to its financial results and the required filings . Words such as "may," "could," "expect," "project," "outlook," "strategy," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "strive," "goal," "continue," "likely," "will," "would" and other similar words and expressions are intended to signify forward-looking statements. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by the Company and its management, are inherently uncertain and are subject to various risks and uncertainties, including, without limitation, the risk that, upon completion of further procedures, the estimated financial results for the years ended December 31, 2022 and December 31, 2023 are different than the results described in this Form 8-K, the financial information provided herein has not been audited, reviewed, or compiled by our independent registered public accounting firms, the Company's ongoing work with the relevant sales tax authorities and are subject to change risks related to the timely and correct completion of the restatement and related filings identification of errors in our financial reporting in the future that require us to restate previously issued financial statements, which may subject us to unanticipated costs or regulatory penalties and c

SIGNATURES

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: April 2, 2024 /s/ Orlando Zayas Name: Orlando Zayas Title: Chief Executive Officer

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View this 8-K filing on SEC EDGAR