What changed in this filing

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Item 1A. Risk Factors

2023-08-09 compared with 2023-05-10 · 147 added, 35 removed, 53 unchanged (77% of the section changed)

1 unchanged sentence

with the SEC on March 22, 2023.The disclosure of risks identified below does not imply that the risk has not already materialized.

We may need additional

capital to execute our business plan and fund operations and may not be able to obtain such capital on acceptable terms or at all.

connection with the development and expansion of our business, we expect to incur significant capital and operational expenses.

that we can increase our sales and net income by implementing a growth strategy that focuses on (i) increasing our manufacturing

(ii) increasing our marketing;

(iii) expanding our distribution channels;

(iv) elevating the premium customer

experience of our products;

(v) opening additional Purple owned retail showrooms;

(vi) expanding our global sales;

(vii) engaging

global partners to improve distribution efficiencies and cost savings;

and (viii) product assortment and category expansion.

ability to obtain other capital resources and sources of liquidity may not be sufficient to support future growth strategies.

unable to satisfy our liquidity and capital resource requirements, we may have to scale back, postpone or discontinue our growth strategies,

which could result in slower growth or no growth, and we may run the risk of losing key suppliers, we may not be able to timely satisfy

customer orders, and we may not be able to retain our employees.

In addition, we may be forced to restructure our obligations to creditors,

pursue work-out options or other protective measures.

we have access to a revolving asset-based credit facility of up to $50 million under the ABL Credit Agreement and have borrowed $25 million

of term loans under the Term Loan Credit Agreement our ability to access funds under the ABL Credit Agreement (each a “Revolving

Loan” and collectively, the “Revolving Loans”) is subject to certain conditions and restrictive covenants, and there

is no guarantee that we will be able to satisfy such conditions and restrictive covenants.

For example, we did not satisfy certain financial

and performance covenants under our prior credit agreement and were required to amend such credit agreement to avoid non-compliance.

the extent that waivers and amendments are necessary under either of the Credit Agreements, there can be no guarantee that we will be

able to obtain waivers or amendments from the applicable Agent and Lenders if, in the future, we are unable to comply with the covenants

and other terms of the Credit Agreements.

Our failure to satisfy the required conditions under the Credit Agreements or maintain compliance

with the financial and performance covenants under the Credit Agreements could result in a default, which would adversely affect our financial

condition and results of operations, including, potentially, as a result of acceleration of our outstanding debt.

In addition, any default

under the Credit Agreements would adversely affect our ability to obtain alternative financing.

Further, our ability to obtain

additional capital on acceptable terms or at all is subject to a variety of uncertainties.

Adequate alternative financing may not be available

or, if available, may only be available on unfavorable terms or subject to covenants that we may not be able to satisfy.

There is no assurance we will

obtain the capital we require.

As a result, there can be no assurance that we will be able to fund our future operations or growth strategies.

equity or debt financings may require us to also issue warrants or other equity securities that are likely to be dilutive to our existing

stockholders.

For example, on February 13, 2023, we completed an offering of our Class A Shares that increased the number of outstanding

Class A Shares from 91,380,323 to 104,780,323.

Newly issued securities may include preferences or superior voting rights or may be combined

with the issuance of warrants or other derivative securities, which each may have additional dilutive effects.

Furthermore, we may incur

substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, printing and

distribution expenses and other costs.

We may also be required to recognize non-cash expenses in connection with certain securities

we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

If we cannot raise additional

funds on favorable terms or at all, we may not be able to carry out all or parts of our long-term growth strategy, maintain our growth

and competitiveness or continue in business.

Anti-takeover provisions in our Second Amended

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Board of Directors that some stockholders may consider favorable.

Provisions of Delaware law, our Second Amended and Restated Certificate

of Incorporation, and our Third Amended and Restated Bylaws could hamper a third party’s acquisition of us, or discourage a third

party from attempting to acquire control of us.

You may not have the opportunity to participate in these transactions.

These provisions

could also limit the price that investors might be willing to pay in the future for equity interests in the Company.

These provisions

right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of

a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our Board;

prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of

our stockholders;

prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders may only be called by members

of our Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal

of directors;

requirement that changes or amendments to certain provisions of our certificate of incorporation or bylaws must be approved by holders

of at least two-thirds of our common stock;

notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon

at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the

acquirer’s own slate of directors or otherwise attempting to obtain control of us.

Provisions of Delaware law,

our Second Amended and Restated Certificate of Incorporation, and our Third Amended and Restated Bylaws could hamper a third party’s

acquisition of us, or discourage a third party from attempting to acquire control of us.

You may not have the opportunity to participate

in these transactions.

These provisions could also limit the price that investors might be willing to pay in the future for equity interests

in the Company.

These provisions include:

the right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director in certain circumstances, which prevents stockholders from being able to fill vacancies on our Board;

a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

a prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders may only be called by members of our Board, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;

the requirement that changes or amendments to certain provisions of our certificate of incorporation or bylaws must be approved by holders of at least two-thirds of our common stock;

advance notice procedures that stockholders must comply with in order to nominate candidates to our Board or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

In December 2022, we amended

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a written questionnaire and that stockholder nominees make themselves available for interviews by our Board upon request.

In addition, we are subject

to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain transactions with stockholders owning

15% or more of our outstanding voting stock or require us to obtain stockholder approval prior to engaging in such transactions.

collectively holds approximately 44.7% of our outstanding voting stock.

Any delay or prevention of a change in control transaction or

changes in our Board could adversely affect our ability to execute transactions that are needed to carry out our operations and growth

strategies and cause the market price of our common stock to decline.

addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain transactions

with stockholders owning 15% or more of our outstanding voting stock or require us to obtain stockholder approval prior to engaging in

such transactions.

Coliseum collectively holds approximately 44.7% of our outstanding voting stock.

Any delay or prevention of a change

in control transaction or changes in our Board could adversely affect our ability to execute transactions that are needed to carry out

our operations and growth strategies and cause the market price of our common stock to decline.

We may not be able

to identify, complete or successfully integrate acquisitions, and any such acquisitions may not achieve the anticipated financial benefits,

all of which could have a negative impact on our growth, financial condition, and results of operations.

We may seek to acquire businesses

in the future as we encounter acquisition prospects that would complement our current product offerings, increase the size and geographic

scope of our operations, or otherwise offer strategic, growth and operating efficiency opportunities.

We cannot assure investors that

we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future, or that any acquisitions

will achieve the anticipated strategic or financial benefits.

Even if we do identify opportunities to acquire businesses, we may not be

able to consummate such acquisitions due to a number of factors, including lacking access to sufficient capital to fund such acquisitions.

addition, acquisitions involve numerous risks and uncertainties and may be of businesses in which we lack operational or market experience.

The financing for any of these acquisitions could dilute the interests of our stockholders, result in an increase in our indebtedness

Future acquisitions could entail numerous risks, including:

difficulties in integrating acquired technologies, operations or products;

the difficulties of imposing financial and operating controls on the acquired companies and their management and the potential costs of doing so;

the potential loss of key employees, customers, suppliers or distributors from acquired businesses and disruption to our direct selling channel;

diversion of management’s attention from our core business;

the failure to achieve the strategic objectives of these acquisitions;

increased fixed costs;

the failure of the acquired businesses to achieve the results we have projected in either the near or long term;

the assumption of unexpected liabilities, including compliance and litigation risks;

adverse effects on existing business relationships with our suppliers, sales force or consumers;

Failure to gain consumer or wholesale market acceptance of acquired brands and products;

risks associated with entering markets or industries in which we have limited or no prior experience, including limited expertise in running the business, developing the technology, and selling and servicing the products.

failure to successfully complete the integration of any acquired business, or a failure to effectively identify and pursue such acquisitions,

could have a material adverse effect on our business, financial condition and operating results.

Our business and our reputation could be

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a breach may be covered in part by insurance that we carry, such coverage may not be adequate for liabilities or losses actually incurred.

We may be subject to data

privacy and data breach laws in the states in which we do business, and as we expand into other countries, we may be subject to additional

data privacy laws and regulations.

In many states, state data privacy laws (such as the California Consumer Privacy Act), including application

and interpretation, are rapidly evolving.

The rapidly evolving nature of state and federal privacy laws, including potential inconsistencies

between such laws and uncertainty as to their application, adds additional compliance costs and increases our risk of non-compliance.

may be subject to data privacy and data breach laws in the states in which we do business, and as we expand into other countries, we may

be subject to additional data privacy laws and regulations.

In many states, state data privacy laws (such as the California Consumer Privacy

Act), including application and interpretation, are rapidly evolving.

The rapidly evolving nature of state and federal privacy laws, including

potential inconsistencies between such laws and uncertainty as to their application, adds additional compliance costs and increases our

risk of non-compliance.

While we attempt to comply with such laws, we may not be in compliance at all times in all respects.

Failure to comply with such laws

may subject us to fines, administrative actions, and reputational harm.

comply with such laws may subject us to fines, administrative actions, and reputational harm.

Our level of indebtedness

and related covenants could limit our operational and financial flexibility and adversely affect our business if we breach such covenants

and default on such indebtedness.

Under the Credit Agreements,

we are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, investments,

forming or acquiring subsidiaries, business combinations or acquisitions, incurrence of additional indebtedness, and transactions with

affiliates, among other customary covenants, in each case, subject to certain exceptions.

In particular, we are (i) restricted from

incurring additional debt up to certain amounts, subject to limited exceptions, as set forth in each Credit Agreement, and (ii) required

to maintain minimum revolving availability under the ABL Credit Agreement, and, if revolving availability falls beneath a specified amount,

a specified Consolidated Fixed Charge Coverage Ratio (as such term is defined in the ABL Credit Agreement).

The Loan Parties are also

restricted from paying dividends or making other distributions or payments on their capital stock, subject to limited exceptions.

These restrictions may prevent

us from taking actions that we believe would be in the best interests of the business and may make it difficult for us to successfully

execute our business strategy or effectively compete with companies that are not similarly restricted.

If we determine that we need to

take any action that is restricted under any Credit Agreement, we will need to first obtain a waiver from the applicable Agent and Lenders.

Obtaining such waivers, if needed, may impose additional costs on the Company or we may be unable to obtain such waivers.

to comply with these restrictive covenants in future periods will largely depend on our ability to successfully implement our overall

business strategy.

The breach of any of these covenants or restrictions could result in a default, which could potentially result in the

acceleration of our outstanding debt.

In the event of an acceleration of such debt, we could be forced to apply all available cash flows

to repay such debt, which could also force us into bankruptcy or liquidation.

In the past, we have been

required to negotiate with our lenders to obtain amendments to our prior credit agreement to avoid non-compliance with certain of our

covenants thereunder.

If we are not able to maintain compliance with our covenants under the Credit Agreements, we may need to seek amendments

or waivers to the Term Loan Agreement and ABL Agreement in the future.

the extent that waivers and amendments under any Credit Agreement are necessary, there can be no guarantee that we will be able to obtain

waivers or amendments from the applicable Lenders if, in the future, we are unable to comply with the covenants and other terms of any

Credit Agreement.

Our failure to satisfy the required conditions under the Credit Agreements, any amendments thereof, or maintain compliance

with the financial and performance covenants under the Credit Agreements could result in a default, which would adversely affect our financial

condition and results of operations, including, potentially, as a result of acceleration of our outstanding debt.

In addition, any default

under would adversely affect our ability to obtain alternative financing, and significantly limit our ability to execute our business

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors