Katapult Holdings, Inc. (NASDAQ: KPLT) has filed a 424B3 prospectus registering approximately 82.1 million new shares to be issued in connection with an all-stock reverse merger involving CCFI and Aaron's Holdings. Under the deal's structure, existing Katapult shareholders would retain roughly 6.2% of the combined company, while CCFI shareholders would hold approximately 79.7% and Aaron's shareholders about 14.1%.

The filing is structured as a Form S-4/424B3 rather than a typical resale shelf, meaning the shares are being registered to facilitate a strategic business combination — not a capital raise through open-market sales by a financing counterparty. Nonetheless, the dilution math is severe for legacy Katapult holders: an ~82.1 million share issuance against Katapult's existing share count effectively transforms the company's equity base.

Legacy Preferred and Warrant Overhang

Among the most structurally notable instruments disclosed in the filing is Hawthorn's Series A Convertible Preferred Stock. That instrument accrues a 19% dividend compounding on a weekly basis — an unusually aggressive rate that, if left outstanding, could allow the holder to convert into a majority equity position absent a contractual blocker provision. The filing indicates that this Series A preferred, along with a Series B preferred tranche and certain private-placement warrants struck at penny or near-zero exercise prices, are slated to be repurchased or exercised prior to the merger's closing.

If those instruments are not retired before the deal closes, the convertible preferred's compounding mechanics and the warrants' cashless-exercise provisions could layer additional dilution on top of the merger share issuance.

Structural Features Worth Noting

Several structural characteristics flagged in the registration statement stand out:

• Reset provisions that could adjust conversion or exercise prices downward under certain conditions.
• Cashless exercise rights, which allow warrant holders to receive shares without injecting cash, increasing dilution without any offsetting capital inflow.
• Variable-price conversion language, typically associated with instruments whose conversion rate floats with the market price.
• Short-maturity timelines on certain legacy instruments, which compress the window in which conversion or exercise activity could occur.

These features are common in micro-cap financing structures but are unusual within a merger prospectus, underscoring the complexity of Katapult's pre-merger capitalization table.

What the Pro Forma Cap Table Shows

The pro forma ownership split — 79.7% CCFI, 14.1% Aaron's, 6.2% legacy Katapult — makes clear that this is structurally a reverse merger in which CCFI is the dominant acquirer despite Katapult being the surviving public shell. The 6.2% residual stake reflects not only the new share issuance but the relative enterprise valuations assigned to each party in the merger agreement.

The deal's completion remains contingent on stockholder approval from all three entities and the successful retirement or exercise of the outstanding preferred stock and warrant instruments described above. The timing of those pre-closing transactions will determine whether any residual convertible overhang carries into the combined company's post-merger capital structure.