What changed in this filing

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Item 1. Business

2024-03-12 compared with 2023-03-22 · 546 added, 555 removed, 156 unchanged (88% of the section changed)

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We began as a digitally-native

vertical brand founded on comfort product innovation with premium offerings, and are now omni-channel.

We offer a variety of innovative,

branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets and more.

Our products are the result of

decades of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing processes.

Our proprietary Hyper-Elastic Polymer gel technology underpins many of our comfort products and provides a range of benefits that differentiate

our offerings from other competitors’ products.

Specially engineered to relieve pressure, maintain an ideal body temperature, and

provide instantly adaptive support, Purple’s patented technology has been used and tested rigorously within medical and consumer

applications for over 30 years.

Originally designed for use in hospital beds and wheelchairs, we adapted this unique pressure-relieving

material for our mattresses and other cushion products.

We market and sell our products

through direct-to-consumer e-commerce and Purple owned retail showrooms (collectively “DTC”) and retail wholesale partners.

The foundation of our business is core competencies in design, development

and manufacturing.

Our accumulated knowledge enables us to create all aspects of our innovative products, including fundamental comfort

technologies and machines and processes necessary to bring them to market.

vertical brand founded on comfort product innovation with premium offerings, and have since expanded into brick & mortar stores as

a true omni-channel brand.

We offer a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions,

bases, sheets and more.

Our products are the result of decades of innovation and investment in proprietary and patented comfort technologies

and the development of our own manufacturing processes.

Our proprietary Hyper-Elastic Polymer gel technology underpins many of our comfort

products and provides a range of benefits that differentiate our products from our competitors.

Specially engineered to relieve pressure,

maintain an ideal body temperature, and provide instantly adaptive support, Purple’s patented technology has been tested rigorously

within medical and consumer applications for over 30 years.

Originally designed for use in hospital beds and wheelchairs, we adapted this

unique pressure-relieving material for our mattresses and other cushion products.

We market and sell our products through direct-to-consumer e-commerce

and Purple showrooms (collectively “DTC”) and wholesale partners.

Our core competencies in design,

development and manufacturing are the foundation of our business.

We have integrated our operations to include research and development,

marketing and manufacturing, resulting in an ability to rapidly test, learn, adapt and scale our product offerings.

In order to solve

complex manufacturing challenges such as large-format injection molding of our Hyper-Elastic Polymer cushioning material, we designed

and produced our own manufacturing equipment including our proprietary and patented molding machinery.

These fully customized machines

are unique to Purple and, we believe, can handle both our size and scale requirements.

We believe our combination of patents and intellectual

property, proprietary and patented manufacturing equipment, production processes and decades of acquired knowledge create an advantage

over our competitors who rely on commoditized materials, such as foam and outsourced manufacturing.

marketing and manufacturing.

As a result, we have the ability to rapidly test, learn, adapt and scale our product offerings.

to solve complex manufacturing challenges such as large-format injection molding of our Hyper-Elastic Polymer cushioning material, we

designed and produced our own manufacturing equipment including our proprietary and patented molding machinery.

These fully customized

machines are unique to Purple and, we believe, can handle both our size and scale requirements.

We believe our combination of patents

and intellectual property, proprietary and patented manufacturing equipment, production processes and decades of acquired knowledge create

an advantage over our competitors who rely on commoditized materials, such as foam and outsourced manufacturing.

In addition to developing

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We have an experienced marketing team, providing efficient customer acquisition and brand demand development.

Our marketing strategy enables

us to market our full product suite to customers, generate frequent interactions online and drive traffic to all channels offering our

Our knowledge of and engagement

with consumers across digital and brick and mortar retail channels is advantageous and increasing.

To complement our DTC efforts, we have

developed multiple wholesale relationships with best-in-class retailers in the furniture, mattress specialty, home décor, and department

store spaces.

Our goal is to provide opportunities for each customer to learn, shop, and buy in the way that works for them.

our distinctly differentiated products, including newly broadened spectrum of mattresses across price points, comfort preferences, benefit

segments, marketing strategies, manufacturing capabilities, unique branding and proprietary technologies position us to continue to drive

In 2022, our DTC sales, which includes online and Purple owned retail showrooms, accounted for 57.4% of our net revenues and

wholesale accounted for 42.6% of net revenues, while sales of sleep products accounted for 91.2% of our net revenues and other products

accounted for 8.8%.

In 2022, we grew our DTC efforts by adding 27 Purple owned retail showrooms,

making a total of 55 Company locations across the United States.

We anticipate opening 11 additional Purple owned retail showrooms throughout

2023 and in the future.

Our marketing strategy

enables us to market our full product suite to customers, generate frequent interactions online and drive traffic to all channels offering

our products.

Our knowledge of and engagement with consumers across digital and brick

and mortar retail channels is advantageous and increasing.

To complement our DTC efforts, we have developed multiple wholesale relationships

with best-in-class retailers in the furniture, mattress specialty, and home décor spaces.

Our goal is to provide opportunities

for each customer to learn, shop, and buy in the way that works for them.

We believe our differentiated products (including differences

across price, comfort, benefit, marketing strategies, manufacturing capabilities, branding and technology) position us to continue to

drive our growth.

For the year ended December 31, 2023, our DTC sales, which includes online and Purple showrooms, accounted for 58.1%

of our net revenues, as compared to 57.7% for 2022 and 65.4% for 2021 and wholesale accounted for 41.9% of net revenues for 2023, as compared

to 42.3% for 2022 and 34.6% for 2021.

For the year ended December 31, 2023, sales of sleep products accounted for 97.2% of our net revenues,

as compared to 97.1% for 2022 and 96.5% for 2021, and other products accounted for 2.8%, as compared to 2.9% for 2022 and 3.5% for 2021.

As of December 31, 2023 we operate 60 Company locations across the

United States as compared to 55 Company locations at the end of 2022 and 28 Company locations at the end of 2021.

While we are slowing

the opening of new showrooms in the short term, we anticipate continued expansion of our showrooms in the future.

Industry and Competition

Our portfolio of products

is driven by our commitment to innovating real comfort solutions that meaningfully help people sleep, feel and live better.

getting a better night’s rest or elevating the work from home experience, we design and manufacture truly innovative, differentiated

products that put our customers’ comfort first.

Our portfolio of products is driven by our commitment to innovating

real comfort solutions that meaningfully help people sleep, feel and live better.

Whether it’s getting a better night’s rest

or elevating every day life, we design and manufacture innovative, differentiated products that put our customers’ comfort first.

Sleep Products

The sleep products category

encompasses a variety of products including mattresses, pillows, bases, foundations, sheets, mattress protectors, blankets and duvets.

Meaningful innovation in sleep products has remained stagnant and limited over the last 150 years.

Coil spring mattresses and memory foam,

two of the primary materials underpinning mattress technology today, were invented in the 1860’s and 1990’s.

and air mattresses followed, emerging in the latter part of the 20 th century.

Since these early inventions, the sleep product

industry has remained complacent with little meaningful innovation, until the introduction of our proprietary Hyper-Elastic Polymer material,

which represents a meaningful innovation in pressure relief, temperature neutrality, responsiveness, durability and limited motion transfer.

Our proprietary technology solves problems that regular mattresses create and has proven that material innovations can have a positive

impact on sleep.

The sleep products category encompasses a variety of products including

mattresses, pillows, bases, foundations, sheets, mattress protectors, blankets and duvets.

Meaningful innovation in sleep products has

remained stagnant and limited over the last 150 years.

Coil spring mattresses and memory foam, two of the primary materials underpinning

mattress technology today, were invented in the 1860’s and 1990’s.

Latex, water and air mattresses followed, emerging in the

latter part of the 20 th century.

The sleep product industry has generally remained complacent until the introduction of our

proprietary Hyper-Elastic Polymer material, which we believe represents a meaningful innovation in pressure relief, temperature neutrality,

responsiveness, durability and limited motion transfer.

We believe that our proprietary technology solves problems that regular mattresses

create and has proven that material innovations can have a positive impact on sleep.

Beginning in 2015, the market

for sleep products underwent a fundamental transformation with the rise of e-commerce-based brands and direct-to-consumer distribution.

which disrupted the traditional category dynamics and drove the majority of category growth (versus traditional mattress companies) for

several years.

This market change disrupted the traditional category dynamics and drove the majority of category growth (versus traditional mattress

companies) for several years.

Today, the U.S.

sleep product industry has rebalanced to be comprised of vendors that rely on retail distribution as well

as a consolidated number of direct-to-consumer retailers who have tried to expand brick and mortar distribution to capture more market

share in a category still tied to instore product trials.

Amidst this changing category dynamic, Purple’s manufacturing capabilities

paired with our strategic mix of showrooms, e-commerce and third-party retailers, has allowed us to gain share and be a leader in the

sleep products category.

sleep product industry has rebalanced to be comprised of vendors that rely on retail distribution

as well as a consolidated number of direct-to-consumer retailers who have tried to expand brick and mortar distribution to capture more

market share in a category still tied to instore product trials.

Amidst this changing category dynamic, Purple’s product differentiation

and manufacturing capabilities paired with our strategic mix of showrooms, e-commerce and third-party retailers, has allowed us to gain

share and be a leader in the sleep products category.

In 2022, we acquired Advanced Comfort Technologies, Inc., dba Intellibed

(“Intellibed”), a premium sleep and health wellness company that was a pre-existing licensee of our founders of some

(“Intellibed”), a premium sleep and health wellness company that was a pre-existing licensee of the founders of some

of our technologies.

That acquisition resulted in us owning the sole right to use all of our Hyper-Elastic Polymer technologies in our

In addition, the acquisition will allow us to immediately expand into the luxury mattress segment.

Purple has recently announced

three collections to be available in the second quarter of 2023:

Essentials (including the New Day, The Purple Mattress, and The Purple

Plus), Premium (including Restore, RestorePlus, and RestorePremier) and Luxe (including Rejuvenate, RejuvenatePlus and RejuvenatePremier).

In general, direct to consumer mattress companies offer convenience,

free shipping and returns, and low prices, while leveraging third-party manufacturing and distribution.

Materials used by online mattress

retailers include layers of foam cushioning that are assembled, compressed and folded into a box for distribution.

This market is highly

fragmented, commoditized and competitive, with customer purchase decisions based primarily on price.

Prior to Purple, there has been little

recent success disrupting the premium market, where the majority of category revenue and profit is realized.

Competitors in the premium

market include Tempur Sealy and Sleep Number.

This acquisition resulted in us owning the sole right to use all of our Hyper-Elastic Polymer technologies in our

In addition, the acquisition allowed us to immediately expand into the luxury mattress segment.

As a result, Purple launched three

collections in the second quarter of 2023:

Essentials (including the New Day, The Purple Mattress, and The Purple Plus), Premium (including

Restore, RestorePlus, and RestorePremier) and Luxe (including Rejuvenate, RejuvenatePlus and RejuvenatePremier).

In general, direct-to-consumer

mattress companies offer convenience, flexible shipping and returns, and low prices, while leveraging third-party manufacturing and distribution.

Materials used by online mattress retailers include layers of foam cushioning that are assembled, compressed and folded into a box for

distribution.

This market is highly fragmented, commoditized and competitive, with customer purchase decisions based primarily on price.

Prior to Purple, there has been little recent success disrupting the premium market, where the majority of category revenue and profit

Competitors in the premium market include Tempur Sealy and Sleep Number.

While e-commerce home goods

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The leading brick-and-mortar specialty mattress

retailers in the United States and Canada are, respectively, Mattress Firm and Sleep Country Canada, both of which Purple has significant

partnerships with.

These national retailers compete with both regional and local retailers as well as furniture and department stores.

Purple has also expanded into many of these regional furniture retailers.

retailer in the United States is Mattress Firm and the leading furniture store is Ashley Furniture These national retailers compete with

both regional and local retailers as well as furniture and department stores.

Purple has also expanded into many of these regional and

local furniture retailers.

Across these channels, some

key factors that impact competition in our industry include comfort feel, product features, reliable logistics and manufacturing capabilities,

key factors that impact competition in our industry are comfort feel, product features, reliable logistics and manufacturing capabilities,

marketing efficacy and efficiency, brand differentiation, expertise of sales associates, customer care, pace of innovation and product

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30 years of expertise in comfort innovation.

Purple is founded upon decades of history developing innovative comfort solutions, including

the invention of our proprietary and patented Hyper-Elastic Polymer technology.

Our breakthrough mattress represents what we believe

to be the first substantive innovation in the sleep product industry since the introduction of memory foam in 1992.

We believe that the unique

properties of our technology enable several improvements to existing sleep products that are not addressed by foam, spring and air mattresses.

Relief— Our Hyper-Elastic Polymer technology is designed around the science of column buckling which enables our mattresses

to be both firm and soft.

This offers support across the body’s larger surface areas, such as the back, while providing pressure

relief at local areas or points of pressure, such as the hips and shoulders.

We believe Purple’s founders were the first to leverage

this technology in mattresses after its success in licensing its proprietary Hyper-Elastic Polymer technology to medical manufacturers

for use in wheelchairs, critical care beds and to this day, hospital beds.

The resulting feel is often described as buoyant and responsive.

● Temperature

Neutral— The Hyper-Elastic Polymer material itself is temperature neutral, with the surface comprised mostly of air, made

from thousands of open-air channels.

The channels allow for high airflow and dissipation of heat and vapor.

This is the opposite of foam

beds, which absorb heat from the body and then radiate the heat back, constantly increasing the temperature.

Our technology allows for

continual sleeping without waking up hot.

● Responsive— Unlike

memory foam, which compresses, gets hard and then takes time to recoil, our Hyper-Elastic Polymer technology is instantly responsive

to the body as it moves.

It will immediately flex to support the sleeper’s position and spring back into place as the sleeper readjusts

during the night.

● Durable— Hyper-Elastic

Polymer material is a highly durable gel that we believe is more durable than most foams.

The Hyper-Elastic Polymer technology

also has numerous applications beyond mattress products including seat cushions, pillows, and others.

The development of the Hyper-Elastic

Polymer technology is only one of numerous innovations we have developed to produce a range of unique and effective comfort products

across the sleep, seat cushion and other categories.

● Proprietary

technologies and manufacturing expertise provide a significant competitive advantage— We believe the combination of patent

protection, proprietary manufacturing equipment and decades of accumulated knowledge creates a competitive advantage through barriers

to imitation.

We have hundreds of granted or pending patents and hundreds of patent filings that cover current and future products as

well as proprietary manufacturing equipment we have designed and fabricated.

In addition to intellectual property protection of key products

and manufacturing capabilities, our team has in depth experience and unique insights derived from inventing and refining proprietary

comfort technologies, machines and products.

Our patented and proprietary molding processes and machines allow for large-format injection

molding of gels efficiently and at scale.

a brand with a passionate following— Our brand mirrors our passion for uncompromising performance, quality and durability,

and our dedication to improving lives by delivering better sleep and better comfort We believe our brand awareness and consideration

rivals category leaders, after only seven years.

Our brand has extended beyond awareness of individual products and we have successfully

marketed our full suite of products to customers using our omni-channel strategy.

We believe our customers’ satisfaction with our

product has continued to drive “word of mouth” recommendations, one of the most persuasive ways customers learn about our

Balanced, omni-channel distribution strategy— We have sought opportunities to expand brand awareness in brick-and-mortar retailers where our beds can be displayed.

This is a very different approach from most bed-in-a-box players who seek traditional consumer packaged goods distribution, e.g., boxes on shelves.

Our goal is to support the customer wherever and however they want to learn, try, and buy.

Whether in wholesale, Purple owned retail showrooms, or our e-commerce channel, we are a leader in the sleep products market.

Our flexible return policies and aggressive expansion of wholesale doors and our own showrooms allow for more of our targeted customers to feel and experience our products throughout the purchase process.

In our wholesale channel, we sell most of our products through select national and regional retailers as well as a variety of independent retail partners throughout the United States and Canada.

As a result, we believe we will drive accelerated growth in the sleep products industry.

Vertical integration

enables nimble design, development and execution —We design and develop our products in-house and we have extensive

research and development capabilities led by a team of engineers, industrial designers and marketing specialists.

The ability to

develop and test products in this manner enables us to not only prototype and deploy new ideas, but also design and develop corresponding

manufacturing equipment and processes.

In addition, we continuously refine our production methods to improve product quality and

enhance efficiency.

The resulting real-time feedback cycle is a key differentiator compared to other competitors that outsource many

of these functions and lack an integrated approach.

Purple is founded upon decades of history-developing innovative comfort solutions,

including the invention of our proprietary and patented Hyper-Elastic Polymer technology.

Our breakthrough mattress represents what

we believe to be the first substantive innovation in the sleep product industry since the introduction of memory foam in 1992.

believe that the unique properties of our technology have resulted in several improvements to existing sleep products that are not

addressed by foam, spring or air mattresses.

Relief— Our Hyper-Elastic Polymer technology is designed around the science of column buckling which enables our

mattresses to be both firm and soft.

This offers support across the body’s larger surface areas, such as the back, while

providing pressure relief at local areas or points of pressure, such as the hips and shoulders.

We believe Purple’s founders

were the first to leverage this technology in mattresses after their success in licensing their proprietary Hyper-Elastic Polymer

technology to medical manufacturers for use in wheelchairs, critical care beds and hospital beds.

The resulting feel is often

described as buoyant and responsive.

Temperature Neutral— The Hyper-Elastic Polymer

material itself is temperature neutral, with the surface comprised mostly of air, made from thousands of open-air channels.

channels allow for high airflow and dissipation of heat and vapor.

This is the opposite of foam beds, which absorb heat from the

body and then radiate the heat back, constantly increasing the temperature.

Our technology allows for continual sleeping without

waking up hot.

Responsive— Unlike memory foam, which compresses,

gets hard and then takes time to recoil, our Hyper-Elastic Polymer technology is instantly responsive to the body as it moves.

will immediately flex to support the sleeper’s position and spring back into place as the sleeper readjusts during the night.

Hyper-Elastic Polymer material is a highly durable gel that we believe is more durable than most foams.

The Hyper-Elastic

Polymer technology also has numerous applications beyond mattress products including seat cushions and pillows.

Hyper-Elastic Polymer technology is only one of numerous innovations we have developed to produce a range of unique and

effective comfort products across the sleep, seat cushion and other categories.

Proprietary technologies and manufacturing expertise provide

a significant competitive advantage— We believe the combination of patent protection, proprietary manufacturing equipment

and decades of accumulated knowledge creates a competitive advantage through barriers to imitation.

We have hundreds of granted or

pending patents and hundreds of patent filings that cover current and future products as well as proprietary manufacturing equipment

we have designed and fabricated.

In addition to intellectual property protection of key products and manufacturing capabilities,

our team has in depth experience and unique insights derived from inventing and refining proprietary comfort technologies, machines

and products.

Our patented and proprietary molding processes and machines allow for large-format injection molding of gels efficiently

and at scale.

a brand with a passionate following— Our brand mirrors our passion for uncompromising

performance, quality and durability, and our dedication to improving lives by delivering

better sleep and better comfort We believe our brand awareness rivals category leaders.

brand has extended beyond awareness of individual products and we have successfully marketed

our full suite of products to customers using our omni-channel strategy.

We believe our customer

satisfaction metrics are amongst the best in the industry, and that our customers’

high satisfaction with our product has continued to drive “word of mouth” recommendations,

one of the most persuasive ways consumers learn about our products.

omni-channel distribution strategy— We have sought opportunities to expand brand awareness in brick-and-mortar

retailers where our beds can be displayed.

Our goal is to support the customer wherever and however they want to learn, try, and

Whether in wholesale, Purple showrooms or our e-commerce channel, we are a leader in the sleep products market.

Our flexible return policies and aggressive expansion into wholesale locations (commonly referred to as “doors”) and our

own showrooms allow for more of our targeted customers to feel and experience our products throughout the purchase process.

wholesale channel, we sell most of our products through select national and regional retailers as well as a variety of independent

retail partners throughout the United States and Canada.

As a result, we believe we will drive accelerated growth in the sleep

products industry.

Vertical integration enables nimble design, development and

execution — We design and develop our products in-house and we have extensive research and development capabilities led

by a team of engineers, industrial designers and marketing specialists.

The ability to develop and test products in this manner

enables us to not only prototype and deploy new ideas, but also design and develop corresponding manufacturing equipment and

In addition, we continuously refine our production methods to improve product quality and enhance efficiency.

resulting real-time feedback cycle is a key differentiator compared to other competitors that outsource many of these functions and

lack an integrated approach.

Growth Strategies

Expansion of the Brand to Premium and Luxe Categories— To complement and support our expansion into the higher-priced, higher margin categories, Purple is evolving its differentiated brand to broaden appeal.

We are investing in brand demand-driving marketing and advertising to create awareness, engagement, and preference for the Purple brand and for our products across all our sales channels.

We also plan on developing a reimagined brand associated with life enhancing sleep.

In 2023, we expect to be able to increase effective marketing by 11% over the prior year with an anticipated 40% increase occurring after the launch of our new Premium and Luxe product categories anticipated to occur on May 15 in our showrooms and online and from May to July in our wholesale partners’ retail stores.

This strategic focus and investment will support our growth plans in the wholesale channel, in Purple owned retail showrooms, on Purple.com and online marketplaces, and in particular our Luxe offerings are expected to increase average sales prices significantly.

We’ll also continue to harness the evangelism of the ever-growing base of Purple owners whose advocacy of our products is one of the brand’s greatest strengths.

Further direct-to-consumer growth and penetration— We believe that we are well positioned to leverage our brand, leading product portfolio, vertical integration and strong marketing capabilities to continue to attract new customers via our e-commerce channel.

We have invested in substantial improvements to our website, enhancing the education, shopping, and buying experiences, and we have expanded our contact center, enabling live voice, chat and messaging with our sales associates which has driven higher customer satisfaction, higher average order value, and higher conversion.

Continued successful execution on Purple.com supports planned e-commerce growth, and growth in all channels given the importance of the site during the customer decision journey.

In addition, we currently operate 55 Company showrooms in cities across the U.S.

where consumers can experience our brand, learn about and engage with our technology, and purchase our products.

We anticipate continual expansion of our showrooms as we optimize the format.

Expanded wholesale retail relationships— We continue to work closely with existing retail partners to increase market share and sales, and we are forming new partnerships to expand our wholesale footprint.

With our new Premium and Luxe collections, we believe we have an increased opportunity to tap into the large brick-and-mortar category of the sleep products market.

Currently during 2023, we anticipate increasing the number of beds in our approximate 3,400 doors by 1.2 to 1.4 beds per door, on a blended basis, which already is over our initial goal for the year of a 20% increase, and we believe this will contribute an estimated $1,000 to $1,500 per month per incremental slot.

We believe this is a result of the developing interest in our Premium and Luxe product categories which allows retailers to place these products as alternatives to other premium products to increase sales on high-end mattresses with materially higher margins for the retailer and Purple.

Existing product

innovation— We have a rich history of product innovation and have developed core competencies in design, prototyping

and manufacturing.

This vertical integration enables us to continuously refine our existing products and manufacturing processes,

as well as introduce new offerings, with the potential to attract new customers and drive repeat sales.

New product launches— We have focused intensively on innovation, and we expect to launch more new mattresses in 2023 than all other years of our operations combined to support our long-range growth plan, with more to come.

We have a pipeline of future products we are developing.

We are constantly exploring new technologies and ways to expand the benefits of our technologies through new product offerings.

This includes innovations in mattresses beyond our Hyper-Elastic Polymer technology, an expanded assortment based on the Harmony Pillow that includes new patent-pending technology, other assortment expansion and new products in sleep, comfort and additional categories.

International expansion— We believe there is a substantial opportunity for international expansion, and we expect to find new opportunities as we expand into foreign markets.

We entered the Canada market in Q4 2020 via the wholesale retailer Sleep Country Canada and we plan to expand in other foreign markets in the future.

We believe that our differentiated products, multi-channel distribution strategy, manufacturing capabilities, vertical integration and marketing expertise will enable us to successfully enter new markets.

of the Brand to Premium and Luxe Categories— To complement and support our expansion into the higher-priced, higher margin

categories, Purple is evolving its differentiated brand to broaden appeal.

We are investing in brand demand-driving

marketing and advertising to create awareness, engagement and preference for the Purple brand and for our products across all our sales

We developed a reimagined brand associated with life enhancing sleep.

We believe that this strategic focus

and investment will support our growth plans in the wholesale channel, in Purple showrooms, on Purple.com and online marketplaces.

Our Luxe (“Rejuvenate”) offerings are expected to increase average sales prices significantly.

We will also continue to harness

the evangelism of the ever-growing base of Purple owners whose advocacy of our products is one of our brand’s greatest strengths.

direct-to-consumer growth and penetration— We believe that we are well positioned to leverage our brand, leading

product portfolio, vertical integration and strong marketing capabilities to continue to attract new customers via our e-commerce channel.

We have invested in substantial improvements to our website and analytics, enhancing the education, shopping and buying experiences, and

we have expanded our contact center, enabling live voice, chat and messaging with our sales associates.

These actions are intended to

drive higher customer satisfaction, higher average order value and higher conversion.

Continued successful execution on Purple.com

supports our planned e-commerce growth, and also supports further growth in all channels given the importance of the site during the customer

decision journey.

In addition, as of December 31, 2023, we operated 60 Purple showrooms in cities across the United States.

At our showrooms,

consumers can experience our brand, learn about and engage with our technology and purchase our products, assisted by our highly-trained

retail sales associates who are able to both increase door productivity and trade customers up to higher price points.

Our showrooms enable

us to strengthen the relationship with the consumer and develop a more profitable DTC revenue mix.

We anticipate continued

expansion of our showrooms as we optimize the format.

wholesale retail relationships— We continue to work closely with existing retail partners to improve productivity

to increase market share and sales, and we are forming new partnerships to expand our wholesale footprint.

With our new Premium and

Luxe collections, we believe we have an increased opportunity to tap into the large brick-and-mortar category of the sleep products

As a result of our new product launch in 2023, we increased the number of wholesale partner slots (a term commonly used to

describe a section in a wholesale partner’s store to display a particular product).

We believe this trend is a result of the

developing interest in our Premium and Luxe product categories.

This allows retailers to market these products as

alternatives to other premium products to increase sales on high-end mattresses with materially higher margins for the retailer and

Existing product innovation— We have a rich

history of product innovation and have developed core competencies in design, prototyping and manufacturing.

integration, which enables us to continuously refine our existing products and manufacturing processes, combined with our

strengthened research and development disciplines and go-to-market processes allows us to further develop our current product

categories with new offerings, enhance gross margins through improved pricing, and position our business to eventually expand to

additional categories with the potential to attract new customers and drive repeat sales.

product launches— We focus intensively on innovation, to support our long-range growth plan.

We have a pipeline of

future products we are developing.

We are constantly exploring new technologies and ways to expand the benefits of our technologies

through new product offerings.

These efforts include innovations beyond our Hyper-Elastic Polymer technology, including products in

sleep, comfort and similar categories.

International

expansion— We believe there is a substantial opportunity for international expansion.

We entered the Canada market in

2020 and we plan to expand in other foreign markets in the future.

We believe that our differentiated products, multi-channel

distribution strategy, manufacturing capabilities, vertical integration and marketing expertise will help enable us to successfully

enter new markets.

Our current product portfolio is as follows:

Mattresses —Our

mattresses utilize the unique benefits of our Hyper-Elastic Polymer technology creating a

one-of-a-kind sleep solution that is breathable to help regulate body temperature and soft

enough to cradle pressure points while also providing support through localized buckling

Our Hyper-Elastic Polymer products are manufactured with non-toxic ingredients that

are third-party tested and free from carcinogenic chemicals.

The patented Hyper-Elastic Polymer

technology is used in all Purple mattresses.

The buckling columns in our mattresses instantly

adapt to your body to cradle your hips and shoulders while supporting your spine’s

natural alignment for uniquely buoyant, supportive comfort.

We back up the quality and durability

of our mattress with a 100-night trial and a ten-year warranty.

Beginning in 2023, we will

have three collections – Essentials, Premium, and Luxe, with mattresses ranging from

our original Purple, to our redesigned and improved Premium and Luxe mattresses, all of which

include our Hyper-Elastic Polymer technology.

● Pillows —We

currently sell five types of pillows:

The Purple Harmony Pillow, the Purple Pillow, the Purple

Twin Cloud Pillow, the Purple Cloud Pillow™ and the Kids Pillow.

The Purple Harmony

Pillow is a hybrid, hypoallergenic pillow featuring the world’s first and only tapered

360º Hyper-Elastic Polymer Grid Hex surrounding a soft, responsive Talalay latex core

for optimal head and neck support.

It has a cool-to-the-touch, moisture-wicking breathable

cover to enhance the benefits of our Hyper-Elastic Polymer technology.

It’s the ultimate

balance of soft, cool, and responsive no pressure support.

The Purple Pillow is a head-specific

triangular grid-shape to protect against breaking down or losing shape.

The Purple Twin Cloud

Pillow is a hypoallergenic down-alternative that features our patented cover construction

which includes two chambers filled with gel fibers that double up for better sleep.

Cloud Pillow is filled with hypoallergenic, ultra-fine gel fibers that won’t clump,

trap heat, or flatten over time.

The result is plush cushioning that molds to support the

head and neck.

The Kids Pillow is smaller and softer than our original Purple pillow

and adjusted to fit smaller sleepers.

We believe our pillows are unique, with no other products

in the market like them in appearance, design, functionality or comfort.

We also back up

the quality and durability of our pillows with a 100-night trial and a one-year warranty.

sell two types of sheets and pillowcases.

Made from stretchy and breathable bamboo-based Viscose, our SoftStretch sheets are designed

to maximize the functionality of our mattresses and pillows.

We developed our own technology to enable customers to experience the full

performance potential of our mattress (or any other mattress).

We also sell more traditional cotton-based Complete Comfort sheets designed

to have cushion enhancing two-way stretch.

Our sheet sets include pillowcases that also maximize the unique functionality of our pillows.

and Duvet Covers— The Purple TempBalance Duvet insulates yet breathes to deliver an ideal body temperature, all year long.

Purple PerfectStay Duvet cover offers a unique patent-pending lay-and-zip design that solves the problem of inserting the duvet into

the cover, and ensures the duvet stays put within the cover without ties, pins, or bulky attachments.

Protector —Like our sheets, our mattress protector is designed to optimize the functionality of our Hyper-Elastic Polymer

technology in our mattress.

mattresses utilize the unique benefits of our patented GelFlex Grid

technology creating a one-of-a-kind sleep solution that regulates body temperature, keeping you sleeping cooler and soft enough to cradle

pressure points while also providing support through localized buckling columns.

The columns in our Gelflex Grid mattresses instantly

adapt to your body to cradle your hips and shoulders while supporting your spine’s natural alignment for uniquely buoyant, supportive

Our GelFlex Grid products are manufactured with non-toxic ingredients that are third-party tested and free from carcinogenic

Our patented Gelflex Grid technology is used in all Purple mattresses.

We back up the quality and durability of our mattress

with a 100-night trial and a 10-year warranty.

With our new premium product launch in 2023, we now have three collections that come in

a variety of feels and price points to appeal to a wide range of consumers with high satisfaction and delivering best sleep.

Pillows — We currently sell eight pillow models with different designs to suit

different needs.

The Purple Harmony™ Pillow, the Purple Freeform™ Pillow, the Purple DreamLayer™ Pillow, the Purple

Harmony Anywhere™ Pillow, the Purple Pillow®, the Purple Twin Cloud® Pillow, the Purple Cloud® Pillow and the Kids Pillow®.

The Purple Harmony Pillow is the world’s first pillow with a full wrap of honeycomb Gelflex® Grid surrounding a soft, responsive

latex core for blissfully cool comfort and responsive airy support.

The newly launched Purple Freeform Pillow features the honeycomb Gelflex

Grid with an all-new MicroFlex™ Moon Foam fill interior for luxurious, moldable comfort.

It is our first fully adjustable

pillow as the MicroFlex Moon Foam and optional neck roll chambers can be adjusted for personalized height, firmness and support.

launched Purple DreamLayer Pillow uses an all-new version of the GelFlex Grid combined with MicroAir Foam for a dreamy, melt-in comfort

that provides contour-hugging support without the heat and delay of a traditional memory foam.

The Purple Harmony Anywhere Pillow has

all of the advantages and feel of the Purple Harmony Pillow in a portable, take-anywhere travel size.

The Purple Pillow is designed entirely

of Gelflex Grid for a firmer, no-fluff, ergonomic support with ultimate cooling and adjustable height layers.

The Purple Twin Cloud Pillow

is a hypoallergenic down-alternative that features our patented cover construction and two chambers of silky, down-like fibers for an

extra fluffy, cloud-like comfort with two optional firmness settings.

The Purple Cloud Pillow features the same fill as the Purple Twin

Cloud Pillow, but a simpler, single chamber design for classic, cloud-like comfort.

The Kids Purple Pillow is made entirely of Gelflex

Grid, similar to the Purple Pillow, but is smaller and softer for smaller sleepers.

We believe our pillows are unique and there is a sleep

solution for every type of sleeper to get the best sleep of their life, with no other products in the market like them in appearance,

design, functionality or comfort.

We also back up the quality and durability of our pillows with a 100-night trial and a one-year warranty.

We sell two types of sheets and pillowcases:

Softstretch and Complete Comfort.

Made from stretchy and breathable bamboo-based

Viscose, our SoftStretch sheets are designed to maximize the functionality of our mattresses and pillows.

We developed our own

technology to enable customers to experience the full performance potential of our mattress (or any other mattress).

traditional cotton-based Complete Comfort sheets designed to have cushion enhancing two-way stretch.

Our sheet sets include

pillowcases that also maximize the unique functionality of our pillows.

Duvets and Duvet Covers— The Purple TempBalance

Duvet insulates yet breathes to deliver an ideal body temperature, all year long.

The Purple PerfectStay Duvet cover offers

a unique patent-pending lay-and-zip design that solves the problem of inserting the duvet into the cover, and ensures the duvet stays

put within the cover without ties, pins, or bulky attachments.

Protector — Like our sheets, our mattress protector is designed to optimize the functionality of our Gelflex Grid in

our mattress.

Our mattress protector is stretchy and breathable.

Our protector is also stain-resistant and machine-washable,

making it easy to clean.

Bases —Our bases have been designed to pair with our mattresses and meet the needs of our customers.

Our Purple Ascent Adjustable Base complements our mattresses by adding electrically powered functions, such as adjustable head and foot positions, zero-gravity preset for a near weightless feel, a “sitting” preset, under-bed lighting and a remote with cradle that provides additional USB ports for device charging.

Our protector is also stain-resistant and machine-washable, making

it easy to clean.

Our recently added new line of smart adjustable bases have been designed to pair with our new mattresses for the ideal Purple sleep

The Purple Premium and Purple Premium Plus smart bases have a wide range of functions, such as adjustable head and

foot positions, zero-gravity preset for a near weightless feel, a “sitting” preset, under-bed lighting, adjustable legs

and a wireless remote with in-app control.

Our Purple Bed Frame is easy to ship and assemble, with no tools required.

It has the look of a stylish upholstered bed frame.

The supports are made of high-density polyethylene, so they don’t creak or make noise like wood supports.

look of a stylish upholstered bed frame.

The supports are made of high-density polyethylene, so they don’t creak or

make noise like wood supports.

Plus, the joints of the Purple Bed Frame are reinforced with nylon buffers to help prevent squeaking.

Our Purple Platform Bed Frame is designed specifically for all current Purple bed sizes and offers a high quality, simpler alternative to our more premium offerings.

Constructed from lightweight steel, the Purple Platform Bed provides optimal support and prevents the mattress from sagging.

Beginning in 2023, we plan to introduce the Purple Premium and Purple Premium Plus smart bases, a new line of smart adjustable bases that are designed to pair with the new mattresses for the ideal Purple sleep experience.

Cushions —The evolution of our portfolio of seat cushions has resulted from decades of in-house manufacturing experience

including development of proprietary machines and trade secrets, extending the benefits of our Hyper-Elastic Polymer technology.

currently sells four types of seat cushions and one back cushion, all in varying sizes and shapes to meet the needs of our customers.

Technology is key to our unique

position within the sleep products industry.

The introduction of our proprietary Hyper-Elastic Polymer material is the first major innovation

to the consumer mattress category in decades.

Mattresses from our competitors are typically manufactured using one or more layers of springs,

standard polyurethane foam, memory foam, air chambers or latex foam.

These technologies have existed for decades and are undifferentiated

from competitors within their product type.

Our Purple Platform Bed Frame is designed specifically for all current Purple bed sizes and offers a high quality, simpler

alternative to our more premium offerings.

Constructed from lightweight steel, the Purple Platform Bed provides optimal support and

prevents the mattress from sagging.

Cushions — The evolution of our portfolio of seat cushions has resulted from decades of in-house manufacturing

experience including development of proprietary machines and trade secrets, extending the benefits of our GelFlex Grid technology.

Purple currently sells four types of seat cushions and one back cushion, all in varying sizes and shapes to meet the needs of our

Technology is key to our unique position within the sleep products

The introduction of our proprietary Hyper-Elastic Polymer material was the first major innovation in the consumer mattress category

Mattresses from our competitors are typically manufactured using one or more layers of springs, standard polyurethane foam,

memory foam, air chambers or latex foam and are undifferentiated from competitors within their product type.

Proprietary Technologies

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through their scientific journey to get to the root causes of pressure sores, designed the Hyper-Elastic Polymer material and other

proprietary comfort technologies in order to improve the lives of “every body.” Each different cushioning product line requires

unique molding techniques.

patented and proprietary comfort technologies in order to improve the lives of “every body.” Each different cushioning product

line requires unique molding techniques.

Our Hyper-Elastic Polymer material

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material is both soft and supportive.

While the columns in this structure provide support where it is needed, they also buckle where it

is needed to reduce pressure by allowing shoulders and hips to sink into the cushion with reduced force pushing back on those areas of

the body unlike other cushion technologies.

The soft and flexible columns also return to their original position as forces lessen and

are capable of immediately providing support.

While the columns in this structure provide support where it is needed, they also buckle where

it is needed to reduce pressure by allowing shoulders and hips to sink into the cushion with reduced force pushing back on those areas

of the body unlike other cushion technologies.

The soft and flexible columns also return to their original position as forces lessen

and are capable of immediately providing support.

Proprietary Machinery

Internally designed, developed

and built, our patented and proprietary molding machines are the only machines able to mold our Hyper-Elastic Polymer material into

large-format king-sized mattresses at scale.

We have modified other molding machines to manufacture additional products containing Hyper-Elastic

Polymer material.

We also acquired in the Intellibed acquisition the patented manufacturing machine and process we owned that had

been licensed by our founders, preventing others from obtaining access to that technology.

The process of molding our Hyper-Elastic Polymer material

using our molding machinery is proprietary, patent-protected and complex, requiring specific knowledge and expertise to successfully execute

manufacturing.

We have vertically integrated with our own machine shop with mechanics and engineers at each of our factories to maintain

our machines and other equipment.

Furthermore, we have extensive in-house fabrication capabilities, which enable us to design, manufacture,

install and maintain new equipment as well as optimize the performance and efficiency of our existing machinery based on real-time insights

gained from our vertically integrated operations.

and built, our patented and proprietary molding machines are able to mold our Hyper-Elastic Polymer material into large-format king-sized

mattresses at scale.

We have modified other molding machines to manufacture additional products containing Hyper-Elastic Polymer material.

We also acquired in the Intellibed acquisition the patented manufacturing machine and process that had been licensed by our founders,

preventing others from obtaining access to that technology.

The process of molding our Hyper-Elastic Polymer material using our molding

machinery is proprietary, patent-protected and complex, requiring specific knowledge and expertise to successfully execute manufacturing.

We have vertically integrated with our own machine shop with mechanics and engineers at each of our factories to maintain our machines

and other equipment.

Furthermore, we have in-house fabrication capabilities enabling us to design, manufacture, install and maintain new

equipment as well as optimize the performance and efficiency of our existing machinery based on real-time insights gained from our vertically

integrated operations.

We have developed a brand that resonates with consumers.

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We also amplify the voices

of our evangelical product owners, whose word-of-mouth recommendation is one of our most powerful (and ownable) marketing vehicles.

engagement with current customers enables us to increase additional product sales across our portfolio of offerings.

The success we have

achieved through our marketing campaigns has been key to rapidly building our branding and awareness.

We plan to launch our elevated

brand positioning with a gradual transition in our wholesale partners’ stores during the period of May 2023 through July 2023 with

a hard conversion in our owned retails stores and online occurring on May 15, 2023 as we build our premium brand position to grow market

share of the premium mattress category during the second half of 2023.

of our evangelical product owners, whose word-of-mouth recommendations are one of our most powerful (and ownable) marketing vehicles.

Deep engagement with current customers enables us to increase additional product sales across our portfolio of offerings.

we have achieved through our marketing campaigns has been key to rapidly building our branding and awareness.

We launched our elevated

brand positioning in 2023 with the launch of our new products and we believe our premium brand position will allow us to increase our

market share of the premium mattress category going forward.

Our Sales Channels

We sell our products via Purple.com,

online marketplaces (e.g., Amazon), our Purple owned retail showrooms, and wholesale retailers.

We sell our products via our DTC, including Purple.com, online marketplaces

(e.g., Amazon), our customer contact center, our Purple showrooms and through wholesale retailers.

Direct-to-Consumer Channel

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deeper awareness, engagement and brand loyalty.

We believe our 100-night trial, ten-year warranty, attractive financing options, strong

customer testimonials and excellent service provide confidence to consumers in buying a mattress.

We operate 55 Purple owned

retail showrooms across the United States where consumers can experience our brand, learn and engage with our technology and purchase

our products.

We plan to continue expanding our showroom footprint across the United States.

We believe our 100-night trial, 10-year warranty, attractive financing options, strong

customer testimonials and excellent service provide confidence to consumers buying a mattress.

We operate 60 Purple showrooms across the United States where consumers

can experience our brand, learn and engage with our technology and purchase our products.

Over time, we plan to continue expanding our

showroom footprint across the United States.

Wholesale Channel

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and other sleep products are sold.

We now sell mattresses through Ashley Furniture, Big Sandy, City Furniture, Furniture Row, HOM Furniture,

Macy’s, Mathis Brothers, Mattress Firm, Raymour & Flanigan, Rooms To Go, Sleep County Canada and Steinhafels, among others.

We typically have four to five mattress models on the floor.

Sales associates have been trained and we believe are effective in educating

consumers regarding our unique benefits as well as shifting the mix upward to our more premium and higher-margin mattresses.

We now sell mattresses through Ashley Furniture, Big Sandy, City Furniture, Denver Mattress, HOM Furniture,

Living Spaces, Mathis Brothers, Mattress Firm, Mattress Warehouse, Raymour & Flanigan and Rooms To Go, among others.

have four to five mattress models on the floor.

Sales associates have been trained and we believe are effective in educating consumers

regarding our unique benefits as well as shifting the mix upward to our more premium and higher-margin mattresses.

We expect to continue

to grow our placements with wholesale partners to give our customers the opportunity to feel the difference of our Hyper-Elastic Polymer

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Factories, Supply Chain and Manufacturing

We operate factories in Grantsville,

Utah, Salt Lake City, Utah and McDonough, Georgia, which manufacture Purple products.

Our factory in Grantsville has approximately

574,000 square-feet and our factory in McDonough, Georgia, which opened to service our customers on the east coast, provides another 844,000

At these factories we manufacture our proprietary Hyper-Elastic Polymer cushioning used in our mattress, pillow and seat

cushion products.

We also assemble, package and ship our products from these two facilities.

Our facility in Salt Lake City was acquired

as part of the Intellibed acquisition and has approximately 67,000 square feet.

This facility manufactures our proprietary Hyper-Elastic

Polymer for assembly in our luxury mattresses.

We continually improve our manufacturing processes and create efficiencies in production

through new equipment and process designs and resources.

We believe these factories will provide ample room to accommodate our future

growth and expansion plans for the near term.

We operate manufacturing factories in Grantsville, Utah, Salt Lake

City, Utah and McDonough, Georgia.

Our factory in Grantsville has approximately 574,000 square-feet and our factory in McDonough, which

services our customers on the east coast, provides another 844,000 square-feet.

At these factories we manufacture our proprietary Hyper-Elastic

Polymer cushioning used in our mattress, pillow and seat cushion products.

We also assemble, package and ship our products from these

two facilities.

Our facility in Salt Lake City was acquired as part of the Intellibed acquisition and has approximately 67,000 square

This facility manufactures our proprietary Hyper-Elastic Polymer for assembly in our luxury mattresses.

We continually strive to

improve our manufacturing processes and create efficiencies in production through new equipment and process designs and resources.

also manage our production labor and capacity utilization to promote efficient use of our manufacturing facilities.

We believe our factories

provide ample room to accommodate our future growth and expansion plans for the near term.

We have a number of contract

manufacturers who assemble mattresses and have established a network of third-party logistics providers to help with order fulfillment

across the United States to minimize delivery times and provide white glove service.

across the United States.

These arrangements help to minimize delivery times and provide white glove service in addition to parcel services.

We outsource and resell other

products, including adjustable bases, platform bases, sheets, mattress protectors, blankets and duvets.

These products are either designed

in-house or in partnership and are unique to Purple.

These products unique to Purple

are either designed in-house or in partnership.

We have relationships with

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Environmental and Governmental Regulation

We are subject to numerous

federal, state, local and foreign consumer protection and other laws and regulations applicable to the sleep product industry.

laws and regulations vary among the states and countries in which we do and intend to do business.

For example, in the United States,

we are subject to regulations promulgated by the U.S.

Environmental Protection Agency, the Occupational Safety and Health Administration

and other federal agencies that restrict the generation, emission, treatment, storage and disposal of materials, substances and waste.

We are also subject to laws such as the Toxic Substances Control Act, the Resource Conservation and Recovery Act, the Clean Air Act,

the Clean Water Act, the Safe Drinking Water Act and the Comprehensive Environmental Response, Compensation and Liability Act.

products are also subject to fire-retardant standards developed by the State of California, U.S.

Consumer Product Safety Commission and

other jurisdictions where we sell these products.

We are subject to numerous federal, state, local and foreign consumer

protection and other laws and regulations applicable to the sleep product industry.

These laws and regulations vary among the states and

countries in which we do and intend to do business.

For example, in the United States, we are subject to regulations promulgated by the

Environmental Protection Agency, the Occupational Safety and Health Administration and other federal agencies that restrict the generation,

emission, treatment, storage and disposal of materials, substances and waste.

We are also subject to laws such as the Toxic Substances

Control Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act and the Comprehensive

Environmental Response, Compensation and Liability Act, and related state and local statutes and regulations.

Our mattress products are

also subject to fire-retardant standards developed by the State of California, U.S.

Consumer Product Safety Commission and other jurisdictions

where we sell these products.

As a retailer of sleep and

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warranty disclosure, delivery timing requirements and similar requirements.

It is our policy and practice

to comply with all applicable domestic and foreign laws and regulations.

We have made and will continue to make capital and other expenditures

necessary to comply with these laws and regulations.

necessary to help us comply with these laws and regulations.

These expenditures have been immaterial to our financial results.

We have not suffered

a material adverse effect from non-compliance with federal, state, local or foreign legislation, but there can be no assurance that material

costs or liabilities will not be incurred in connection with such legislation in the future.

Research and Development

In May 2022, we appointed

our first ever Chief Innovation Officer.

Our research and development teams are focused primarily on developing new comfort technologies

and products.

We have recently announced our three mattress collections including our new line of luxury mattresses.

We have an extensive

history of innovation that is core to our culture and key to our continued success.

Our inventions have culminated over years of persistent

not suffered a material adverse effect from non-compliance with federal, state, local or foreign legislation, but there can be no assurance

that material costs or liabilities will not be incurred in connection with such legislation in the future.

Research and Development

We intend to continue to develop and introduce new comfort technologies and products to improve how people live.

Our vertical integration is a key differentiator that enhances the effectiveness of our research and development capabilities.

real-time feedback, we can integrate these insights into our manufacturing process, digital marketing, products and equipment.

to facilitate further innovation and development, we have recently leased a facility that will serve as our new innovation center and

will replace the older and remote facility we previously had in Alpine, Utah.

This new facility is located in Draper, Utah, close to our

headquarters and comprises approximately 61,000 square feet.

It is expected that we will occupy the building in June of 2023.

Our research and development teams are focused primarily on developing

new comfort technologies and products.

In May 2022, we appointed our first ever chief innovation officer.

In 2023, we launched our three

new premium mattress collections including our new line of luxury mattresses.

We have an extensive history of innovation that is core

to our culture and key to our continued success.

Our inventions have culminated over years of persistent research and development.

intend to continue to develop and introduce new comfort technologies and products.

Our vertical integration is a key differentiator that

enhances the effectiveness of our research and development capabilities.

By gaining real-time feedback, we can integrate these insights

into our manufacturing process, digital marketing, products and equipment.

In order to facilitate further innovation and development,

we opened a facility in August 2023 that serves as our new innovation center and replaces the older and remote facility we previously

had in Alpine, Utah.

This new facility is located in Draper, Utah, close to our headquarters and comprises approximately 61,000 square

Intellectual Property

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Our intellectual property portfolio is integral

to our continued success in this industry, with respect to our Hyper-Elastic Polymer material as well as our molding processes and machines.

We own or have the exclusive

right to use hundreds of granted or pending patents and hundreds of patent filings on inventions and designs pertaining to our machines,

processes, mattresses, pillows, seat cushions, packaging techniques and other related existing and future products.

Our issued United

States patents that are significant to our operations are expected to expire at various dates up to 2041.

We have several trademarks

registered with the U.S.

Patent and Trademark Office (USPTO), including EquaPressure ® , WonderGel ® and

EquaGel ® (for cushions), and Purple ® , No Pressure ® , Hyper-Elastic Polymer ® ,

Somnigel ® , Gel Matrix ® , Matrix ® , Gelee ® , Ascent ® , Softstretch ® ,

Purple Powerbase ® , Sleep Genius ® , Firm and Soft ® , Intellipillow ® , and Intellibed ®

(for plasticized elastomeric gel and certain types of products including mattresses, seat cushions, bed linen, mattress foundation and

Additional registered trademarks include, but are not limited to, Purple Grid ® , Reinventing Comfort ® ,

Comfort Reinvented ® , TwinCloud ® , Purple Cloud ® , Purple Pillow ® , The Purple

Mattress ® , Purple Hybrid ® , Purple Hybrid Premier ® , The Purple Mattress ® , The

Purple Plus ® , Gelflex ® and registration of the color purple as a trademark (for mattresses, pillows,

and seat cushions).

to our continued success in this industry, particularly with respect to our Hyper-Elastic Polymer material as well as our molding processes

and machines.

We own or have the exclusive right to use hundreds of granted or pending

patents and hundreds of patent filings on inventions and designs pertaining to our machines, processes, mattresses, pillows, seat cushions,

packaging techniques and other related existing and future products.

Our issued United States patents that are significant to our operations

are expected to expire at various dates up to 2041.

We have several trademarks registered with the U.S.

Patent and Trademark

Office (USPTO).

Applications are pending for registration of additional trademarks and some of these listed trademarks for additional

classes of goods both in the U.S.

and internationally.

Our Purple, No Pressure and Hyper-Elastic Polymer trademarks are also registered

and have applications pending for various classes of goods in numerous foreign jurisdictions, some of which include Australia, Canada,

China, Europe, United Kingdom, Japan and Korea.

Certain international trademark applications previously resided with EdiZONE, LLC, which

is an entity owned by our founders and were licensed to Purple LLC, and we have taken the necessary steps to have those trademarks assigned

to Purple LLC upon registration.

We also have a number of common

law trademarks, including Sleep Purple, Live Better Ô , New Day Ô ,

Restore Ô , RestorePlus Ô , RestorePremier Ô ,

Rejuvenate Ô , RejuvenatePlus Ô, RejuvenatePremier Ô ,

Perfectstay™, TempBalance™, Success Happens Overnight™, Overnight Success™, Harmony™, Purple Harmony Pillow™,

Harmony Pillow™, Purple +™, Purple Plus™, +™, Find Comfort™, Dreams On Dreams™, Reinventing Sleep™,

Gelflex Grid™, Gelflex Grid Plus™, Purple Ascent™, ™, Purple Squishy™, Purple Powerbase Premier™,

Purple Powerbase Plus™, Purple Glove™, Eidertech™, Mattress Max™, WonderGel Original™, WonderGel Extreme™,

DoubleGel™, DoubleGel Plus™, DoubleGel Ultra™, Roll n’ Go™, Fold N’ Go™, Purple Bed™,

Purple Top™, Purple Pillow™, Portable Purple™, Everywhere Purple™, Simply Purple™, Lite Purple™, Royal

Purple™, Double Purple™, Deep Purple™, Ultimate Purple™, Purple Back™, EquaGel Straight Comfort™,

EquaGel General™, EquaGel Protector™, and EquaGel Adjustable™.

classes of goods both in the United States and internationally.

Our Purple, No Pressure and Hyper-Elastic Polymer trademarks are also

registered and have applications pending for various classes of goods in numerous foreign jurisdictions, some of which include Australia,

Canada, China, Europe, United Kingdom, Japan and Korea.

We also have several common law trademarks.

Many of the common law marks

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to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks.

In addition, we maintain

copyrights, many registered, to past and present versions of purple.com, onpurple.com, equapressure.com, wondergel.com, marketing content,

blogs, logos, graphics, videos and other marketing and promotional materials promoting our products.

We protect and enforce our intellectual property

rights, including through litigation as necessary.

In addition, we maintain copyrights,

many registered, to past and present versions of purple.com, onpurple.com, equapressure.com, wondergel.com, marketing content, blogs,

logos, graphics, videos and other marketing and promotional materials promoting our products.

While we may own or have the

exclusive rights in this intellectual property it is our responsibility to maintain that exclusivity through intellectual property enforcement

efforts when an infringement occurs.

We continue to enforce those intellectual property rights and will continue to do so to maintain

our success in this industry.

We protect and enforce our

intellectual property rights, including through litigation as necessary.

Human Capital

At Purple, our focus is to

have our employees develop personally, work with talented teammates, and contribute to the success of Purple while working in a safe environment

and building an authentic culture.

We strive to deliver on our promise of improving the lives of our customers by knowing that our most

valuable asset at Purple is our people and their learned institutional knowledge.

At Purple, our primary focus is fostering the professional development

of our employees through collaboration of engaged teams and helping them feel connected to Purple’s success.

We try to achieve this

through maintaining a safe and high-functioning work environment that cultivates an authentic company culture.

Our people initiatives

are strategically crafted to enhance the professional growth and overall satisfaction of our employees, with the overarching goal of making

Purple the best place they’ve ever worked.

As of March 12, 2024, we had approximately 1,700 employees engaged

in manufacturing, research and development, general corporate functions, wholesale, ecommerce, and Purple owned retail showrooms.

of showroom growth, this is down approximately 45% from the end of 2021.

With the appointment of our

new Chief People Officer in November 2021, Purple’s People team now operates under the following five pillars that drive our people

Acquire Great Talent, Retain and Develop Great Talent, Build and Strengthen the Foundation of an Exceptional People Experience,

Champion an Authentic Values-Based Culture, and Support and Drive the Path to Premium.

Acquire Great Talent

We believe our people are

critical for our future success.

Therefore, our efforts to acquire great talent begin with inviting the right kind of people to our community.

To support this initiative, we are investing in better recruitment technology to improve our candidate experience.

Retain and Develop Great Talent

In 2022, we created Purple’s

Center of Excellence, a new resource intended to streamline people operations enterprise-wide, resulting in lower wait times for employees

to receive information, resources, and helping to increase the overall efficiency of operations.

We also deployed a newly designed Talent

Management and Succession Planning program in 2022.Through this program, we identified high potential employees that will form our first

mentoring group called the Pinnacle Program, which aims to provide meaningful touchpoints across senior leadership team members and the

future leaders of Purple.

In addition to improving the

employee experience and constructing a mentorship program, we are also focused on delivering competitive, meaningful, and transparent

compensation and benefits to our employees.

Build and Strengthen the Foundation of

an Exceptional People Experience

In July 2022, with the appointment

of our new Chief Operating Officer, our top priority has been to take action to promote the safety of our employees through various safety

We retooled our on-site safety departments and modeled them after Safety, Health, and Environment (“SHE”) requirements.

In addition, we continue to

invest in new technology to improve communication and enhance our human resource information system functionality to support manager and

employee self-service.

Paired with our continued dedication to creating shared experiences for employees to connect and build real relationships

with those they work with, we believe these efforts will result in a more rewarding employee experience.

Champion an Authentic Values-Based Culture

After our cost restructuring

in early 2022, we worked to rebuild our Purple culture.

Through executive support and sponsorship, we hosted an employee-led committee

that created six new values.

Our value roll-out campaign included a roadshow, where all executive senior leadership members as well as

committee members met on-site at our facilities in Utah and Georgia, alongside virtual all-hands meetings for our wholesale and retail

We plan to continue this work in 2023 with events, trainings, and internal branding.

Support and Drive the Path to Premium

In repositioning to a premium

brand, we will rely heavily on our employees to support and drive success.

In 2022, we allocated additional resources to our growing wholesale

and retail teams.

Additionally, with the launch of our new products and wholesale partnerships, we successfully deployed extensive training

for our employees and external partners.

We believe these efforts have equipped our sales channels with the needed expertise to position

our products in the premium category.

in manufacturing, research and development, general corporate functions, wholesale, e-commerce, and Purple showrooms.

In 2024, Purple’s human resources team is focusing on four pillars

that drive our people strategy:

(i) acquire, retain, and develop great people;

(ii) improve organizational performance;

(iii) deliver

competitive and meaningful pay and benefits;

and (iv) celebrate our people.

Acquire, retain,

and develop great people

We attempt to strategically acquire, keep and cultivate a

talented, motivated, and high-caliber workforce.

We believe will be achieved by selectively recruiting outstanding talent, tailoring development

plans for employees, implementing an accelerated leadership development program for promising individuals, and building cross-functional

Improve organizational

We attempt to drive efficiency, effectiveness, and business success

through strategic people initiatives.

We will continue to invest in new technology to enhance communication channels and optimize

our human resource information system, enabling self-service functionalities for managers and employees.

In alignment with our core values,

we will place emphasis on creating shared experiences that will facilitate genuine connections and foster strong relationships within

our workforce.

Deliver competitive

and meaningful pay and benefits

attempt to provide compensation packages that are both competitive and meaningful, encompassing salary and benefits that align to market

We will continue to provide relevant employee perks that connect our employees with our Company’s mission and actively

contribute to nurturing employee engagement.

We attempt to continue to focus on maintaining a culture of recognition

where we actively acknowledge and honor the achievements, contributions, and milestones of our people.

Through thoughtful and authentic

celebration, we not only create a culture of gratitude, but we will also foster a sense of belonging and motivation, ultimately strengthening

our team cohesion and morale.

Purple was created by two

brothers that set out to revolutionize the comfort space.

One in manufacturing and design, and the other an advanced aerospace scientist,

the brothers embarked on a partnership in the early 1990s to put together a team to develop cushioning solutions for wheelchairs and medical

They later created what we call Hyper-Elastic Polymer —an elastomeric polymer that can stretch up to 15x its resting size

and never lose shape or function.

Our proprietary Hyper-Elastic Polymer technology has since been used in mattresses, seat cushions and

One of the brothers had expertise in manufacturing and design, and the other

brother was an advanced aerospace scientist.

Together, the brothers embarked on a partnership in the early 1990s to put together a team

to develop cushioning solutions for wheelchairs and medical beds.

They later created what we call Hyper-Elastic Polymer —an elastomeric

polymer that can stretch up to 15x its resting size and without losing shape or function.

Our proprietary Hyper-Elastic Polymer technology

has since been used in mattresses, seat cushions and pillows.

Available Information

Our website address is www.purple.com.

We make available, free of charge on our Investor Relations website, investors.purple.com, our Annual Reports on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)

of the Securities Exchange Act of 1934,as amended (the “Exchange Act”) as soon as reasonably practicable after we electronically

file such material with, or furnish it to, the U.S.

Securities and Exchange Commission (“SEC”).

We also use our Investor

Relations website, investors.purple.com, as a channel of distribution of additional Purple information that may be deemed material.

We make available, free of charge

on our Investor Relations website, investors.purple.com, all of our reports filed with or furnished to the Securities and Exchange Commission

We also use our Investor Relations

website, investors.purple.com, as a channel of distribution of additional Purple information that may be deemed material.

investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts.

2 unchanged sentences

As of the date of this report,

our directors and executive officers are as follows:

our executive officers are as follows:

Director, Chief Executive Officer

Interim Chief Financial Officer and Treasurer

Chief Financial Officer and Treasurer

Chief Legal Officer and Secretary

20 unchanged sentences

He also currently

serves on the boards of Welch’s Foods and Q30 Innovations/Q30 Sports Canada, and formerly served on the boards of Advanced Functional

Fabrics of America, The American Apparel & Footwear Association, and Aloha.

DeMartini received a Bachelor of Science degree in

Finance from San Diego State University.

He is well qualified to serve on our Board due to his extensive operational and management background.

has served as our Interim Chief Financial Officer (“CFO”) since August 2021.

serves on the board of directors of Welch’s Foods and Q30 Innovations/Q30 Sports Canada, and formerly served on the board of directors

of Advanced Functional Fabrics of America, The American Apparel & Footwear Association, and Aloha.

DeMartini received a Bachelor

of Science degree in Finance from San Diego State University.

Vogensen has served as Chief Financial Officer since October 2023.

Prior to joining the Company, Mr.

Nussbaum served

as the Interim Chief Financial Officer of American Megatrends, Inc., from 2019 to 2020.

During that period he also served as Operating

Partner of HGGC, LLC, from 2017 to 2020.

He also served as Interim CFO at 4over, Inc., from 2017 to 2018.

From 2016 to 2017 he was the

Chief Financial Officer of American Apparel, LLC.

He currently serves on the advisory board for the W.

Edwards Deming Center for Quality,

Productivity, and Competitiveness at the Columbia University Graduate School of Business, a position he has held since 2011.

previously served on the boards of directors of The Collected Group, LLC, from 2018 to 2019, Charlotte Russe, Inc., from 2018 to 2019,

and BCBGMAXAZRIA, LLC, during 2017.

Nussbaum has extensive leadership and stakeholder management expertise and has led multibillion-dollar

publicly traded and private equity-owned businesses through turnarounds, transitions and accelerated growth.

Nussbaum is a graduate

of the Wharton School of the University of Pennsylvania with a BS in Economics and holds an MBA from Columbia University in New York,

served as the Chief Legal Officer and General Counsel of Purple LLC since its inception in 2010 as WonderGel, LLC.

He also has served

as Corporate Secretary of Purple Inc.

since the Business Combination.

From 2008 until the Business Combination, he also has served as

General Counsel of various affiliated technology companies owned by the founders, including EdiZONE, LLC, focused on developing advanced

cushioning technology.

McGarvey has a deep knowledge of the Company and its technologies and intellectual property.

Prior to joining

EdiZONE and Purple LLC, Mr.

McGarvey was a shareholder, partner or of counsel at several law firms during which, among other things, he

litigated and advised businesses on the protection of their patents and trademarks and other business matters.

McGarvey has the following

degrees, each from the University of Utah, a Bachelor of Arts and Honors, Bachelor in political science with a Certificate in public administration,

a Juris Doctor and an Executive Masters of Business Administration.

Vogensen served as executive

vice president and chief financial officer of Party City Holdings Inc.

from February 2020 to August 2023.

In January 2013, Party

City Holdings Inc.

filed a voluntary petition for reorganization relief pursuant to Chapter 11 of the U.S.

Bankruptcy Code.

Previously, Mr.

served as executive vice president—chief financial officer at Chico’s FAS, Inc.

from June 2015 to January 2020.

Chico’s FAS in October 2009, and served in roles of increasing responsibility, including senior vice president – finance,

and vice president – investor relations.

Previously, Mr.

Vogensen served in executive finance roles at Michaels

Stores, Inc., Gap, Inc., Hewlett Packard Company and PricewaterhouseCoopers LLP.

Vogensen received a Bachelor of Science

degree in Accounting from Arizona State University.

McDermott joined Purple in October 2023 as Chief

Legal Officer.

McDermott is a skilled executive, attorney and business leader who brings more than 20 years of deep expertise

in global licensing, intellectual property and corporate governance in multi-national retail and manufacturing environments.

joining the Company, from February 2021 to October 2023, Ms.

McDermott served as the chief legal & risk officer and secretary at Shoe

Previously, from December 2011 to February 2021, Ms.

McDermott was with Perry Ellis International, Inc., where she served as

general counsel and secretary from November 2017 to February 2021.

McDermott received a Bachelor of Arts degree in English

and a Juris Doctor degree from Rutgers University along with a certificate in Accelerated Management from Yale School of Management.

served as the Chief Operating Officer of the Company since June 2022.

Prior to joining the company, Mr.

Haynor spent most of his career

with Ecolab in a variety of end-to-end supply chain roles.

From August 2019 until he joined the Company in June 2022 he served as Sr.

Vice President, Industrial Supply Chain providing strategic direction for eight Industrial business units.

Prior to that he held the role

of Vice President, Global Equipment Operations and Strategy from June 2015 to August 2019.

Haynor spent most of his career with Ecolab, a supplier of cleaning, sanitizing and maintenance products

and services for the institutional, hospitality, healthcare and industrial markets, in a variety of end-to-end supply chain roles.

August 2019 until he joined the Company in June 2022 he served as senior vice president, industrial supply chain at Ecolab providing strategic

direction for eight industrial business units.

Prior to that, he held the role of vice president, global equipment operations and strategy

from June 2015 to August 2019 at Ecolab.

From August 2009 to June 2015, Mr.

Ecolab’s EMEA Supply Chain Operations and from April 2005 to August 2009 he led Ecolab’s Asia Pacific Supply Chain Operations.

His early career was spent in a variety of developmental supply chain roles.

Haynor is a graduate of Michigan State University and

holds a BS degree in Mechanical Engineering, with honors.

has served as the Chief Innovation Officer of the Company since May 2022.

Hutchings has more than twenty years of experience in strategic

business leadership in innovation, new product introduction and quality assurance.

Haynor led Ecolab’s EMEA supply chain operations and

from April 2005 to August 2009 he led Ecolab’s Asia Pacific supply chain operations.

His early career was spent in a variety of

developmental supply chain roles.

Haynor is a graduate of Michigan State University and holds a Bachelor of Science degree in Mechanical

Hutchings has served as the Chief Innovation Officer of the Company since May 2022.

has more than 20 years of experience in strategic business leadership in innovation, new product introduction and quality assurance.

Prior to joining the Company, Mr.

Hutchings served

as Chief Product Officer at Skullcandy Inc.

since December 2018 and as Vice President of Product from June 2015 to December 2018.

to that from July 2010 to June 2015, Mr.

Hutchings served in various engineering and director roles at HARMAN International Mr.

holds a BS in Computer Engineering from University of Utah.

Hutchings served as chief product officer at Skullcandy Inc., a designer and manufacturer of performance

audio and gaming headphones and other accessory related products, from December 2018 to May 2022 and as vice president of product from

June 2015 to December 2018.

Prior to that from July 2010 to June 2015, Mr.

Hutchings served in various engineering and director roles

at HARMAN International.

Hutchings holds a Bachelor of Science degree in Computer Engineering from the University of Utah.

served as the Chief of Owned Retail Officer of the Company since January

Prior to joining the Company, Mr.

Kerby served as Vice

President, Head of Stores of Sephora since May 2019, responsible for leading 86 stores throughout Canada.

From March 2018 to January 2019,

he served as the Senior Regional Director of American Eagle where he led American Eagle/Aerie stores in the Midwest U.S.

and Canada with

Kerby served as vice president, head of stores of Sephora, a retailer of personal care and beauty

products, since May 2019, responsible for leading 86 stores throughout Canada.

From March 2018 to January 2019, he served as the senior

regional director of American Eagle, a specialty retailer of clothing, accessories and personal care products, where he led American Eagle/Aerie

stores in the Midwest United States and Canada with 225 stores.

Prior to joining American Eagle, Mr.

Kerby was with L Brands’ LaSensa from February 2017 to March 2018.

Prior to that,

Kerby was the Vice President, Head of Stores/Store Operations for L Brands’ Victoria’s Secret International from June

2015 to September 2016.

From October 2008 to June 2015, Mr.

Kerby grew from Director to Associate Vice President, Head of Stores for Bath

and Body Works.

Kerby holds a BS from Washington State University’s School of Communications.

Kerby was with L Brands’ LaSensa,

a Canadian retailer of women’s lingerie and apparel, from February 2017 to March 2018.

Prior to that, Mr.

Kerby was the vice president,

head of stores/store operations for L Brands’ Victoria’s Secret International from June 2015 to September 2016.

2008 to June 2015, Mr.

Kerby grew from director to associate vice president, head of stores for Bath and Body Works.

Kerby holds a

Bachelor of Science degree from Washington State University’s School of Communications.

served as Chief Marketing Officer since November 2022.

Prior to joining the Company, Ms.

Krausz was Chief Marketing Officer of HealthPlanOne,

a digital health distribution platform from August 2020 to October 2022.

Prior to joining

the Company, Ms.

Krausz was chief marketing officer of HealthPlanOne, a digital health distribution platform from August 2020 to October

From February 2013 to February 2020, Ms.

Krausz was the

EVP and Chief Marketing Officer, then President, of Nutrisystem.

Prior to Nutrisystem, she held a progression of leadership roles

in consumer marketing at Time Inc.

Krausz was the executive vice president and chief marketing officer, then president,

of Nutrisystem, a provider of weight management products and services.

Prior to Nutrisystem, she held a progression of leadership

roles in consumer marketing at Time Inc.

and the Reader’s Digest Association, Inc.

She serves on the board of the BioBuilder Educational

Past board roles include Second Nature Brands and the Association of National Advertisers.

Krausz attended

Cornell University as an undergraduate and received her MBA from Dartmouth College.

She serves on the board of directors of

the BioBuilder Educational Foundation.

Past board of directors roles include Second Nature Brands and the Association of National

Krausz attended Cornell University as an undergraduate and received her Masters of Business Administration degree

from Dartmouth College.

served as Chief People Officer of the Company since October 2021.

Roddy brings to the Company over 20 years of experience in

culture transformation, talent development, organization design and change leadership.

Roddy brings to the Company over 20 years of experience in culture transformation, talent development, organization design and change

Prior to joining the Company, Mr.

served as the Chief People Officer for VASA Fitness since 2018.

Prior to that he was the Chief Human Resources Officer for SeaWorld Parks

and Entertainment from 2016 to 2018.

Roddy served as the chief people officer for VASA Fitness, a fitness club operator,

from 2018 to October 2021.

Prior to that he was the chief human resources officer for SeaWorld Parks and Entertainment, a theme park and

entertainment company, from 2016 to 2018.

From 2012 to 2016, Mr.

Roddy was the Senior Vice President of Human Resources for Luxottica Group.

Roddy was the senior vice president of human resources for Luxottica

Prior to joining Luxottica Group, he was the vice president of human resources for Starbucks Corporation from 2004 to 2012.

Roddy holds a master’s degree from Columbia University on Organizational Psychology and a bachelor’s degree in Organizational

Roddy holds a Master’s degree from Columbia University in Organizational Psychology and a Bachelor’s degree in Organizational

Behavior from Brigham Young University – Hawaii.

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-K

Item 1. Business