Purple Innovation, Inc. 10-K

Item 9A. Controls and Procedures As a non-accelerated filer, we are exempt from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes Oxley Act of 2002. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO” and together with the CEO, the “Certifying Officers”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, and the above criteria, our Certifying Officers concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2024. Management’s Annual Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). 41 The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that: ● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the Company; ● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and the directors of the Company; and, ● Provide reasonable assurance regarding prevention or timely detection of unauthorized use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Under the supervision and with the participation of our management, including our Certifying Officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Previously Reported Material Weakness As previously reported, we identified a material weakness related to the review and evaluation of wholesale customer contracts, specifically as it relates to variable consideration, including wholesale warranty obligations. Specifically, we did not design and maintain effective controls over the review and evaluation of the accounting relating to contract terms agreed upon with our wholesale customers and the identification and calculation of the related wholesale accrued warranty liabilities. In response to this material weakness, management, with oversight of the Audit Committee of the Board, designed and effectively implemented a control over the review of all wholesale customer contracts to ensure the terms contained therein are appropriately evaluated and recorded. This control includes increased rigor and participation among our legal and accounting personnel regarding the appropriate consideration and application of contractual terms. We also implemented new controls over credit memo review and approval and the evaluation and review of accrued wholesale warranty liabilities. Based on these measures, management has tested the new controls, found them effective, and concluded that the previously reported material weakness described above has been remediated as of June 30, 2024 . Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 42 Item 9B. Other Information 10b5-1 Trading Arrangements During the quarter ended December 31, 2024, none of our directors or executive officers adopted , modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K. Special Incentive Bonus Equity Grants On March 12, 2025, the Board unanimously approved special incentive bonus equity grants to certain members of the Company’s senior leadership team, including, among others, Todd Vogensen, Chief Financial Officer, John J. Roddy, Chief Human Resources Officer, and Eric S. Haynor, Chief Operating Officer. Mr. Vogensen, Mr. Roddy, and Mr. Haynor will receive grants of 450,000, 175,000, and 350,000 restricted stock units, respectively, pursuant to the terms of restricted stock unit grant agreements and the Company’s 2017 Equity Incentive Plan. Such restricted stock units will vest at the sooner of (a) a change in control, as defined in the award agreements, or (b) March 12, 2028, provided that if the recipient’s employment with the Company is involuntarily terminated other than for cause, a pro rata number of restricted stock units will vest as of such termination date. The foregoing summary of the restricted stock units does not purport to be complete and is qualified in its entirety by reference to the full text of the form of restricted stock unit grant agreement, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. Amendment to Senior Leadership Team Special Recognition Bonus On January 26, 2024, the Board unanimously approved a special recognition bonus payment to certain members of the Company’s senior leadership team, including, among others, Todd Vogensen, Chief Financial Officer, John J. Roddy, Chief People Officer, and Eric S. Haynor, Chief Operating Officer. Each participant is eligible to earn a special recognition bonus payment equal to 15 months of their regular salary. The special recognition bonus payment is payable, subject to the employee’s continued employment with the Company, 10% on August 1, 2024, 20% on February 1, 2025, and 70% on August 1, 2025. On March 12, 2025, the Board amended the special recognition bonus payments and entered into letter agreements (the “Letter Agreements”) with the participants to provide that if a change in control occurs prior to August 1, 2025 and the participant remains employed with the Company until the consummation of the change in control, then 100% of the remaining special recognition bonus payment for such participant shall vest and become payable upon the consummation of such change in control. The foregoing description of the Letter Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Letter Agreements, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. Amendment to Chief Executive Officer Special Recognition Bonus On January 26, 2024, the Board unanimously approved an amendment to the amended and restated employment agreement of Robert T. DeMartini, the Company’s Chief Executive Officer (the “2024 CEO Amendment”). Under the 2024 CEO Amendment, the Company agreed that, among other things, Mr. DeMartini will be eligible to earn an incremental aggregate cash bonus equal to $850,000 that will vest 10% on August 1, 2024, 20% on February 1, 2025, and 70% on August 1, 2025, provided he continues to be employed by the Company and subject to Mr. DeMartini’s obligation to repay any such bonus actually received in the event his employment is terminated other than by the Company without cause prior to June 30, 2026, subject to certain conditions. On March 12, 2025, the Board adopted an amendment (the “2025 CEO Amendment”) to Mr. DeMartini’s amended and restated employment agreement, as amended by the 2024 CEO Amendment (the “Amended and Restated Employment Agreement”), to provide that if a change in control occurs prior to August 1, 2025 and Mr. DeMartini remains employed by the Company until the consummation of the change in control, then 100% of the unpaid cash bonus payment for Mr. DeMartini shall vest and become payable upon the consummation of such change in control and the bonus repayment condition tied to his employment with the Company until June 30, 2026 shall no longer be applicable. Other than the changes provided by the 2025 CEO Amendment, no other changes were made to Mr. DeMartini’s Amended and Restated Employment Agreement. The foregoing description of the 2025 CEO Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the 2025 CEO Amendment, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2025. Departure of Chief Marketing Officer On March 7, 2025, Keira Krausz, the Company’s Chief Marketing Officer, and the Company agreed that Ms. Krausz’ last day of employment with the Company was March 11, 2025. Because Ms. Krausz’s departure is the result of a termination without cause, the Company expects to pay approximately $237,865.57 in termination payments to Ms. Krausz, subject to the Company and Ms. Krausz entering into a mutually agreeable release. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 43 PART III Item 10. Directors, Executive Officers and Corporate Governance Information concerning our executive officers is included in Part I of this report under the caption “Information About Our Executive Officers.” We have adopted a Code of Ethics that applies to all officers, directors, employees and contractors. The Code of Ethics is posted on our website at https://investors.purple.com/governance. We intend to disclose on our website any amendments, or waiver from, a provision to the Code of Ethics by posting the information on our website at the address specified above. The remaining information required under this item will be included under the captions “Directors and Corporate Governance” and “Delinquent Section 16(a) Reports” in the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of the Company’s year ended December 31, 2024, and is incorporated herein by reference thereto. Item 11. Executive Compensation The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of the Company’s year ended December 31, 2024. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of the Company’s year ended December 31, 2024. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of the Company’s year ended December 31, 2024. Item 14 . Principal Accountant Fees and Services The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the SEC not later than 120 days after the close of the Company’s year ended December 31, 2024. 44 PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this Report: (1) Financial Statements The following financial statements are included in Part II, Item 8 of this Form 10-K: Report of Independent Registered Public Accounting Firm (BDO USA, P.C., Salt Lake City, Utah; PCAOB ID#243) F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Stockholders’ Equity (Deficit) F-6 Consolidated Statements of Cash Flows F-7 Notes to the Consolidated Financial Statements F-8 (2) Financial Statements Schedule All other financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in our consolidated financial statements and notes thereto in Item 15 of Part IV below. (3) Exhibits We hereby file as part of this report the exhibits listed in the attached Exhibit Index. 45 EXHIBIT INDEX Exhibit No. Description 2.5# Merger Agreement, dated as of August 31, 2022, by and among Purple Innovation, Inc., Gelato Intermediate, LLC, Gelato Merger Sub, Inc., Advanced Comfort Technologies, Inc., and D. Scott Peterson (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on September 1, 2022). 3.1 Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on November 6, 2019) . 3.2 Third Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the Commission on April 21, 2023). 3.3 Certificate of Designation of the Preferred Stock of the Company, dated September 26, 2022 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on September 27, 2022). 3.4 Certificate of Designation of Proportional Representation Preferred Linked Stock of the Company, dated February 14, 2023 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on February 14, 2023). 3.6 Certificate of Elimination of the Series A Junior Participating Preferred Stock, dated April 27, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed April 27, 2023). 3.7 Certificate of Elimination of the Proportional Representation Preferred Linked Stock, dated April 27, 2023 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed April 27, 2023). 3.8 Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on October 16, 2024). 3.9 Certificate of Designation of the Preferred Stock of the Company, dated June 28, 2024 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on June 28, 2024). 4.1 Form of Class A Common Stock certificate (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on October 16, 2024). 4.2* Description of Registered Securities. 4.3 Stockholder Rights Agreement, dated June 27, 2024, by and between the Company and Pacific Stock Transfer Company, as rights agent (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on June 28, 2024). 10.1+ Form of Option Award Agreement (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 15, 2018) . 10.2+ Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 15, 2018) . 10.3+ Form of Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 15, 2018) . 10.4+ Form of Stock Appreciation Right Award Agreement (incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 15, 2018) . 10.5+ Form of Stock Bonus Award Agreement (incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 15, 2018) . 10.6 Subscription Agreement, dated February 1, 2018, between Global Partner Acquisition Corp., Global Partner Sponsor I LLC, Coliseum Capital Partners, L.P. and Blackwell Partners LLC – Series A (incorporated by reference to Exhibit 10.15 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on February 8, 2018) . 10.7 Exchange Agreement, dated February 2, 2018, by and between Purple Innovation, Inc., Purple Innovation, LLC and InnoHold, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on February 8, 2018) . 46 10.8 Registration Rights Agreement, dated February 2, 2018, between Global Partner Acquisition Corp., Coliseum Capital Partners, L.P., Blackwell Partners, LLC and Coliseum Co-Invest Debt Fund, L.P. (incorporated by reference to Exhibit 10.18 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on February 8, 2018) . 10.9 Tax Receivable Agreement, dated February 2, 2018, by and between Purple Innovation, Inc. and InnoHold, LLC (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on February 8, 2018) . 10.10+ Purple Innovation, Inc. Amended and Restated 2017 Equity Incentive Plan (incorporated by reference to Exhibit 99.1 to the S-8 (File No. 333-272712) filed with the SEC on June 16, 2023). 10.11+ Form of Restricted Share Unit Agreement pursuant to the Purple Innovation, Inc. 2017 Incentive Plan (incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on April 19, 2023). 10.12† Second Amended and Restated Confidential Assignment and License Back Agreement between the Company and EdiZONE (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on November 14, 2018) . 10.13 Master Retailer Agreement dated September 18, 2018 by and between Purple Innovation LLC and Mattress Firm, Inc. (incorporated by reference to Exhibit 10.10 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 7, 2019). 10.14+ Restated and Amended Purple Innovation, Inc. 2019 Long-Term Equity Incentive Plan dated July 12, 2021 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on July 13, 2021). 10.15 Lease Agreement dated June 10, 2019 between Purple Innovation, LLC and North Slope One, LLC (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on August 13, 2019). 10.16 First Amendment to Lease dated November 19, 2019 between the Company and North Slope One, LLC (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on November 25, 2019). 10.17 Amendment to TNT Holdings Amended and Restated Lease Agreement dated April 23, 2020 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 11, 2020). 10.18 Lease Agreement between Purple Innovation, LLC and PNK S2, LLC dated July 21, 2020 (incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on August 14, 2020). 10.19 License Transfer and IP Assignment Agreement between Purple Innovation, LLC and EdiZONE, LLC dated August 14, 2020 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on November 10, 2020). 10.20 Amendment to Lease Agreement between Purple Innovation, LLC and PNK S2, LLC dated March 4, 2021 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 17, 2021). 10.21 Second Amendment to Lease Agreement between Purple Innovation, LLC and PNK S2, LLC dated March 26, 2021 (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (File No. 001-37523) filed with the SEC on May 17, 2021). 10.22+ Form of Restricted Share Unit Agreement (incorporated by reference to Exhibit 99.3 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on July 13, 2021). 10.23+ Amended and Restated Restricted Share Unit Agreement dated March 15, 2023, between the Company and Robert T. DeMartini (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 21, 2023). 10.24+ Amended and Restated Restricted Share Unit Agreement (Reissued) dated March 15, 2023, between the Company and Robert T. DeMartini (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed March 21, 2023). 10.25+ Amended and Restated Restricted Share Unit Agreement (Reissued Excess Subject to Approval) dated March 15, 2023, between the Company and Robert T. DeMartini (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on March 21, 2023). 10.26+ Purple Innovation, Inc. 2021 Short-Term Cash Incentive Plan dated July 12, 2021 (incorporated by reference to Exhibit 99.5 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on July 13, 2021). 10.27+ Amended and Restated Employment Agreement, dated as of March 19, 2022, by and among Robert T. DeMartini and Purple Innovation, Inc. (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on March 22, 2022). 10.28+ Offer letter dated as of April 29, 2022, signed by Eric Haynor (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-37523) filed with the SEC on May 3, 2022). 47 10.29+ Amended and Restated Option Grant Agreement dated March 15, 2023, between the Company and Robert T. DeMartini (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed March 21, 2023). 10.30+ Amended and Restated Option Grant Agreement (Reissued Excess Subject to Approval) dated March 15, 2023, between the Company and Robert T. DeMartini (incorporated by reference to exhibit 10.6 to the Company’s Current Report on Form 8-K filed on March 21, 2023). 10.31+ Purple Innovation, Inc. 2023 Short-Term Cash Incentive Plan, dated as of April 13, 2023 (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on April 19, 2023). 10.32+ Form of Performance-Based Share Unit Agreement (incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on April 19, 2023). 10.33 Cooperation Agreement between Purple Innovation, Inc. and Coliseum Capital Management, LLC, dated April 19, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 21, 2023). 10.34 Amended and Restated Credit Agreement, dated January 23, 2024, by and among Purple Innovation, Inc., Purple Innovation, LLC, Intellibed, LLC, Coliseum Capital Partners, L.P., Blackwell Partners LLC – Series A, Harvest Small Cap Partners Master, Ltd., Harvest Small Cap Partners, L.P., HSCP Strategic IV, L.P., and Delaware Trust Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on January 23, 2024). 10.35+ Offer Letter Entered into between Purple Innovation, LLC and Todd E. Vogensen dated September 19, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on September 21, 2023). 10.36 Form of Warrant (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on January 23, 2024). 10.37 Amended and Restated Registration Rights Agreement, dated January 23, 2024, by and among Purple Innovation, Inc., Coliseum Capital Partners, L.P., Blackwell Partners LLC – Series A, Coliseum Capital Co-Invest III, L.P., Harvest Small Cap Partners Master, Ltd., Harvest Small Cap Partners, L.P., and HSCP Strategic IV, L.P. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on January 23, 2024). 10.38 Amended and Restated Pledge and Security Agreement, dated January 23, 2024, by and among Purple Innovation, Inc., Purple Innovation, LLC, Intellibed, LLC, and Delaware Trust Company (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on January 23, 2024). 10.39+ Amendment to the Amended and Restated Employment Agreement dated January 26, 2024, between the Company and Robert T. DeMartini (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-37523) filed on January 26, 2024). 10.40+ Offer Letter, dated as of September 21, 2023, between Purple Innovation, LLC and Tricia McDermott, dated September 21, 2023 (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (File No. 001-37523) filed with the SEC on March 14, 2024). 10.41‡* Amendment to Amended and Restated Credit Agreement, dated as of March 12, 2025, by and among Purple Innovation, Inc., Purple Innovation, LLC, Intellibed, LLC, Coliseum Capital Partners, L.P., Blackwell Partners LLC – Series A, and CSC Delaware Trust Company. 10.42* Form of Warrant. 10.43‡* Second Amended and Restated Registration Rights Agreement, dated as of March 12, 2025, by and among Purple Innovation, Inc., Coliseum Capital Partners, L.P., Blackwell Partners LLC – Series A and Coliseum Capital Co-Invest III, L.P. 19.1* Insider Trading Policy. 21.1* List of Subsidiaries of the Registrant. 23.1* Consent of Independent Registered Public Accounting Firm 24.1* Power of Attorney (included on signature page) 31.1* Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) 31.2* Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) 32.1* Certification of the Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 32.2* Certification of the Principal Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 97.1 Compensation Clawback Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 10-K (File No. 001-37523) filed with the SEC on March 12, 2024). 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith # Schedules and exhibits to the Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally a copy of any omitted schedules and exhibits to the Securities and Exchange Commission upon request. + Indicates management contract or compensatory plan. † Confidential treatment of certain provisions has been granted by the Securities and Exchange Commission. ‡ Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted exhibit or schedule will be furnished supplementally to the SEC or its staff upon request. Item 16. Form 10-K Summary 48 PURPLE INNOVATION, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (BDO USA, P.C., Salt Lake City, Utah; PCAOB ID# 243 ) F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 F-5 Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2024, 2023 and 2022 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 F-7 Notes to Consolidated Financial Statements F-8 F- 1 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Purple Innovation, Inc. Lehi, Utah Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Purple Innovation, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 , in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. F- 2 Accrued Warranty Liabilities As of December 31, 2024, the Company’s accrued warranty liabilities were $32.2 million. As discussed in Note 2 to the consolidated financial statements, the Company provides a limited warranty on the majority of its products sold. Accrued warranty liabilities are estimated based on the results of historical trends and warranty claim rates incurred, and are adjusted for any current or expected trends. Estimated warranty costs for the Company’s direct to consumer customers are recognized at the time of sale in cost of revenues and warranty costs for the Company’s wholesale customers are recognized at the time of sale as an offset to net revenues. We identified the estimate of accrued warranty liabilities as a critical audit matter because of certain assumptions used by management to estimate warranty costs at the time of sale, specifically, estimated future warranty claims and estimated costs to remedy warranty claims. The principal consideration for our determination was the subjective judgment required to determine the future warranty claim rate used to estimate warranty claims through the end of the warranty period and an increased extent of audit effort to address this matter. The primary procedures we performed to address this critical audit matter included: ● Evaluating management’s ability to estimate future warranty claims by comparing management’s prior-year assumption of expected claims to actuals claims incurred during the year. ● Testing management’s process used to estimate accrued warranty liabilities, including the appropriateness of the methodology, the mathematical accuracy of the calculation, and the sources of data from which the assumptions were derived. ● Evaluating the reasonableness of estimated future warranty claims and the estimated costs to remedy warranty claims by: o Testing the key inputs that served as the basis for the estimate, including the historical claims made, actual warranty costs incurred and costs expected to be reimbursed by the customer. o Inquiring of operational management regarding their knowledge of any existing product warranty claims or product issues and evaluating whether management appropriately considered these issues in the estimation of accrued warranty liabilities. /s/ BDO USA, P.C. We have served as the Company's auditor since 2017. Salt Lake City, Utah March 13, 2025 F- 3 PURPLE INNOVATION, INC. Consolidated Balance Sheets (In thousands, except for par value) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 29,011 $ 26,857 Accounts receivable, net 33,057 37,802 Inventories 56,863 66,878 Prepaid expenses 6,023 8,536 Other current assets 1,414 1,737 Total current assets 126,368 141,810 Property and equipment, net 93,874 128,661 Operating lease right-of-use assets 75,516 95,767 Intangible assets, net 8,890 22,196 Other long-term assets 3,197 2,191 Total assets $ 307,845 $ 390,625 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 40,639 $ 49,831 Accrued compensation 9,415 5,064 Customer prepayments 6,411 5,718 Accrued rebates and allowances 10,013 13,243 Accrued warranty liabilities – current portion 6,114 9,793 Operating lease obligations – current portion 15,661 14,843 Other current liabilities 12,750 12,490 Total current liabilities 101,003 110,982 Related party debt 55,394 — Long-term debt, net of current portion — 26,909 Accrued warranty liabilities, net of current portion 26,091 25,798 Operating lease obligations, net of current portion 87,072 109,094 Warrant liabilities 16,067 — Other long-term liabilities 2,009 2,235 Total liabilities 287,636 275,018 Commitments and contingencies (Note 15) Stockholders’ equity: Class A common stock; $ 0.0001 par value, 210,000 shares authorized; 107,545 and 105,507 issued and outstanding at December 31, 2024 and 2023, respectively 11 11 Class B common stock; $ 0.0001 par value, 90,000 shares authorized; 165 and 205 issued and outstanding at December 31, 2024 and 2023, respectively — — Additional paid-in capital 594,053 591,380 Accumulated deficit ( 573,866 ) ( 475,969 ) Total stockholders’ equity attributable to Purple Innovation, Inc. 20,198 115,422 Noncontrolling interest 11 185 Total stockholders’ equity 20,209 115,607 Total liabilities and stockholders’ equity $ 307,845 $ 390,625 The accompanying notes are an integral part of these consolidated financial statements. F- 4 PURPLE INNOVATION, INC. Consolidated Statements of Operations (In thousands, except per share amounts) Year Ended December 31, 2024 2023 2022 Revenues, net $ 487,877 $ 510,541 $ 573,201 Cost of revenues: Cost of revenues 291,303 338,716 365,110 Cost of revenues – restructuring related charges 15,442 — — Total cost of revenues 306,745 338,716 365,110 Gross profit 181,132 171,825 208,091 Operating expenses: Marketing and sales 171,263 182,313 165,388 General and administrative 69,117 84,446 76,702 Research and development 12,962 11,898 8,755 Restructuring, impairment and other related charges 19,973 — — Loss on impairment of goodwill — 6,879 — Total operating expenses 273,315 285,536 250,845 Operating loss ( 92,183 ) ( 113,711 ) ( 42,754 ) Other (expense) income: Interest expense ( 17,510 ) ( 1,967 ) ( 3,536 ) Other income (expense), net 11,548 ( 1,198 ) 423 Loss on extinguishment of debt ( 3,394 ) ( 4,331 ) — Change in fair value – warrant liabilities 3,504 — 4,343 Tax receivable agreement income — — 161,970 Total (expense) other income, net ( 5,852 ) ( 7,496 ) 163,200 Net (loss) income before income taxes ( 98,035 ) ( 121,207 ) 120,446 Income tax expense 63 8 213,169 Net loss ( 98,098 ) ( 121,215 ) ( 92,723 ) Net loss attributable to noncontrolling interest ( 201 ) ( 458 ) ( 253 ) Net loss attributable to Purple Innovation, Inc. $ ( 97,897 ) $ ( 120,757 ) $ ( 92,470 ) Net loss per share: Basic $ ( 0.91 ) $ ( 1.17 ) $ ( 1.13 ) Diluted $ ( 0.91 ) $ ( 1.17 ) $ ( 1.13 ) Weighted average common shares outstanding: Basic 107,139 103,602 81,779 Diluted 107,324 103,936 81,779 The accompanying notes are an integral part of these consolidated financial statements. F- 5 PURPLE INNOVATION, INC. Consolidated Statements of Stockholders’ Equity (Deficit) (In thousands) Class A Common Stock Class B Common Stock Additional Paid-in Accumulated Total Stockholders’ Equity attributable to Purple Innovation, Noncontrolling Total Shares Par Value Shares Par Value Capital Deficit Inc. Interest Equity Balance — December 31, 2021 66,493 $ 7 448 $ — $ 407,591 $ ( 262,742 ) $ 144,856 $ 762 $ 145,618 Net loss — — — — — ( 92,470 ) ( 92,470 ) ( 253 ) ( 92,723 ) Stock-based compensation — — — — 3,366 — 3,366 — 3,366 Exercise of stock options 20 — — — 166 — 166 — 166 Issuance of stock upon underwritten offering, net of costs 16,100 1 — — 92,865 — 92,866 — 92,866 Issuance of stock for Intellibed acquisition 8,613 1 — — 26,105 — 26,106 — 26,106 Accrued distributions — — — — ( 228 ) — ( 228 ) — ( 228 ) Issuance of stock under equity compensation plans 154 — — — — — — — — Impact of transactions affecting NCI — — — — ( 399 ) — ( 399 ) 399 — Balance – December 31, 2022 91,380 $ 9 448 $ — $ 529,466 $ ( 355,212 ) $ 174,263 $ 908 $ 175,171 Net loss — — — — — ( 120,757 ) ( 120,757 ) ( 458 ) ( 121,215 ) Stock-based compensation — — — — 4,875 — 4,875 — 4,875 Exchange of stock 243 — ( 243 ) — — — — — — Proportional Representation Preferred Linked Stock redemption fee — — — — ( 105 ) — ( 105 ) — ( 105 ) Issuance of stock upon underwritten offering, net of costs 13,400 2 — — 56,997 — 56,999 — 56,999 Escrow shares cancelled in connection with Intellibed acquisition ( 41 ) — — — ( 118 ) — ( 118 ) — ( 118 ) Issuance of stock under equity compensation plans 525 — — — — — — — — Impact of transactions affecting NCI — — — — 265 — 265 ( 265 ) — Balance – December 31, 2023 105,507 $ 11 205 $ — $ 591,380 $ ( 475,969 ) $ 115,422 $ 185 $ 115,607 Net loss — — — — — ( 97,897 ) ( 97,897 ) ( 201 ) ( 98,098 ) Stock-based compensation — — — — 2,815 — 2,815 — 2,815 Exchange of stock 40 — ( 40 ) — — — — — — Issuance of stock for Intellibed acquisition 1,500 — — — — — — — — Issuance of stock under equity compensation plans 498 — — — ( 115 ) — ( 115 ) — ( 115 ) Impact of transactions affecting NCI — — — — ( 27 ) — ( 27 ) 27 — Balance – December 31, 2024 107,545 $ 11 165 $ — $ 594,053 $ ( 573,866 ) $ 20,198 $ 11 $ 20,209 The accompanying notes are an integral part of these consolidated financial statements. F- 6 PURPLE INNOVATION, INC. Consolidated Statements of Cash Flows (In thousands) Years Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net loss $ ( 98,098 ) $ ( 121,215 ) $ ( 92,723 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 35,355 25,106 17,487 Non-cash interest 7,229 1,237 1,072 Paid-in-kind interest 9,679 — — Non-cash restructuring, impairment and other related charges 20,238 — — Loss on impairment of goodwill — 6,879 — Loss on extinguishment of debt 3,394 4,331 — Loss on disposal of property and equipment 770 1,680 620 Change in fair value – warrant liabilities ( 3,504 ) — ( 4,343 ) Tax receivable agreement income — — ( 161,970 ) Stock-based compensation 2,815 4,875 3,366 Gain from effective settlement of preexisting relationship — — ( 1,421 ) Deferred income taxes — — 213,548 Changes in operating assets and liabilities: Accounts receivable 4,745 ( 3,651 ) ( 4,112 ) Inventories 5,989 5,903 28,956 Prepaid expenses and other assets 2,345 1,574 1,757 Operating leases, net ( 2,412 ) 1,404 7,709 Accounts payable ( 6,376 ) 4,382 ( 33,609 ) Accrued compensation 4,351 ( 1,627 ) ( 2,892 ) Customer prepayments 693 1,266 ( 6,456 ) Accrued rebates and allowances ( 3,230 ) 3,439 ( 365 ) Accrued warranty liabilities ( 3,386 ) 11,128 6,854 Other accrued liabilities 1,553 ( 1,373 ) ( 2,251 ) Net cash used in operating activities ( 17,850 ) ( 54,662 ) ( 28,773 ) Cash flows from investing activities: Cash, cash equivalents and restricted cash acquired from acquisition, net of cash paid — — 3,660 Excess restricted cash returned to acquiree — ( 826 ) — Purchase of property and equipment ( 7,244 ) ( 14,391 ) ( 35,376 ) Investment in intangible assets ( 286 ) ( 844 ) ( 2,785 ) Net cash used in investing activities ( 7,530 ) ( 16,061 ) ( 34,501 ) Cash flows from financing activities: Proceeds from term loan — 25,000 — Proceeds from revolving line of credit — 17,000 — Proceeds from related party loan 61,000 — — Payments on term loan ( 25,000 ) ( 24,656 ) ( 17,531 ) Payments on revolving line of credit ( 5,000 ) ( 12,000 ) ( 55,000 ) Payments for debt issuance costs ( 3,466 ) ( 6,143 ) ( 1,242 ) Proceeds from stock offering — 60,300 98,210 Payments for stock offering costs — ( 3,301 ) ( 5,344 ) Proceeds from exercise of stock options — — 166 Proportional Representation Preferred Linked Stock redemption fee — ( 105 ) — Tax receivable agreement payments — ( 269 ) ( 5,847 ) Net cash provided by financing activities 27,534 55,826 13,412 Net increase (decrease) in cash, cash equivalents and restricted cash 2,154 ( 14,897 ) ( 49,862 ) Cash, cash equivalents and restricted cash, beginning of the year 26,857 41,754 91,616 Cash, cash equivalents and restricted cash, end of the year $ 29,011 $ 26,857 $ 41,754 Supplemental disclosures of cash flow information: Cash paid during the year for interest, net of amounts capitalized $ 159 $ 189 $ 2,693 Cash paid during the year for income taxes $ 317 $ 385 $ 303 Supplemental schedule of non-cash investing and financing activities: Property and equipment included in accounts payable $ 416 $ 3,232 $ 4,162 Issuance of stock for acquisition $ — $ — $ 26,106 Escrow shares cancelled in connection with Intellibed acquisition $ — $ 118 $ — Accrued distributions $ — $ — $ 228 The accompanying notes are an integral part of these consolidated financial statements. F- 7 PURPLE INNOVATION, INC. Notes to the Consolidated Financial Statements 1. Organization The Company’s mission is to help people feel and live better through innovative comfort solutions. Purple Innovation, Inc., collectively with its subsidiary (the “Company” or “Purple Inc.”), is an omni-channel Company that began as a digitally-native vertical brand founded on comfort product innovation with premium offerings. The Company designs and manufactures a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets, and other products. The Company markets and sells its products through its direct-to-consumer e-commerce channels, retail brick-and-mortar wholesale partners, Purple showrooms, and third-party online retailers. The Company was incorporated in Delaware on May 19, 2015 as a special purpose acquisition company under the name of Global Partnership Acquisition Corp (“GPAC”). On February 2, 2018, the Company consummated a transaction structured similar to a reverse recapitalization (the “Business Combination”) pursuant to which the Company acquired a portion of the equity of Purple Innovation, LLC (“Purple LLC”). At the closing of the Business Combination (the “Closing”), the Company became the sole managing member of Purple LLC, and GPAC was renamed Purple Innovation, Inc. As the sole managing member of Purple LLC, Purple Inc. through its officers and directors is responsible for all operational and administrative decision making and control of the day-to-day business affairs of Purple LLC without the approval of any other member. On August 31, 2022, the Company acquired all the issued and outstanding stock of Advanced Comfort Technologies, Inc., dba Intellibed (“Intellibed”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), in which Gelato Merger Sub, Inc., a wholly owned subsidiary of Purple Inc., merged with and into Intellibed, with Intellibed continuing as a wholly owned subsidiary of Purple Inc. On October 3, 2022, Purple Inc. contributed 100 % of the membership interest in Intellibed to Purple LLC and Intellibed became a wholly owned subsidiary of Purple LLC. Refer to Note 4 — Acquisition for more information . 2. Summary of Significant Accounting Policies This summary of significant accounting policies is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of Purple Inc., its controlled subsidiary Purple LLC, and Intellibed, Purple LLC’s wholly owned subsidiary, from the date of acquisition. All intercompany balances and transactions have been eliminated in consolidation. As of December 31, 2024, Purple Inc. held 99.8 % of the common units of Purple LLC and other Purple LLC Class B Unit holders held 0.2 % of the common units in Purple LLC. The Company’s consolidated financial statements did not include consolidated statements of comprehensive income since it had no items of other comprehensive income in any of the periods presented. Liquidity The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. In connection with the preparation of the consolidated financial statements for the year ended December 31, 2024, the Company conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to its ability to continue as a going concern within one year after the date of the issuance of such financial statements. The Company had cash and cash equivalents of approximately $ 29.0 million and an accumulated deficit of $ 573.9 million at December 31, 2024, and a net loss of $ 97.9 million and net cash used in operating and investing activities of $ 25.4 million for the year ended December 31, 2024. T he Company entered into an Amendment to the Amended and Restated Credit Agreement (the “2025 Amendment”), pursuant to which it received $ 19.0 million on March 12, 2025 in additional term loan proceeds from the 2025 Term Loan Lenders pursuant to the 2025 Amendment (see Note 23— Subsequent Events ). F- 8 The Company has also taken a number of other actions to increase cash flow. In August 2024, the Company implemented the Restructuring Plan to consolidate manufacturing operations to create efficiencies and cost savings. The Company has realized and plans to continue to realize direct material cost savings through supply chain initiatives and supplier diversification efforts. The Company has taken additional cost-saving initiatives in 2025 to maintain liquidity to support our operations and strategies. Accordingly, the Company has concluded that it will have sufficient liquidity to fund its operations for at least one year from the date these consolidated financial statements are issued. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be no assurance that such sources will be sufficient to satisfy its liquidity requirements in the future. If the Company cannot generate or obtain needed funds, it might be forced to make substantial reductions in its operating and capital expenses or pursue restructuring plans, which could adversely affect its business operations and ability to execute its current business strategy. Variable Interest Entities Purple LLC is a variable interest entity. The Company determined that it is the primary beneficiary of Purple LLC as it is the sole managing member and has the power to direct the activities most significant to Purple LLC’s economic performance as well as the obligation to absorb losses and receive benefits that are potentially significant. At December 31, 2024, Purple Inc. had a 99.8 % economic interest in Purple LLC and consolidated 100 % of Purple LLC’s assets, liabilities and results of operations in the Company’s consolidated financial statements contained herein. The holders of Class B Units held 0.2 % of the economic interest in Purple LLC as of December 31, 2024. Refer to Note 17— Stockholders’ Equity for more information. Reclassification Certain prior year amounts in the consolidated financial statements have been reclassified to conform to the current year presentation with no effect on previously reported net loss, cash flows or stockholders’ equity. Accrued compensation, previously included in the consolidated balance sheets within other current liabilities, is now presented separately. Also, the change in accrued compensation, previously reflected in the consolidated statement of cash flows within the change in other accrued liabilities, is now presented separately. Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) and reflect the financial position, results of operations and cash flows of the Company. The preparation of consolidated financial statements in conformity with GAAP requires the Company to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The Company regularly makes estimates and assumptions including, but not limited to, estimates that affect revenue recognition, accounts receivable and the allowance for credit losses, valuation of inventories, sales returns, warranty returns, fair value of assets acquired and liabilities assumed in a business combination, impairment reviews of long-lived assets and definite-lived intangible assets, warrant liabilities, stock based compensation, the recognition and measurement of loss contingencies, the recognition and measurement of restructuring and related charges, estimates of current and deferred income taxes, deferred income tax valuation allowances, and amounts associated with the Company’s tax receivable agreement with InnoHold, LLC (“InnoHold”). Predicting future events is inherently an imprecise activity and, as such, requires the use of judgment. Actual results could differ materially from those estimates. F- 9 Restructuring Restructuring actions may result in various costs, including employee-related costs, accelerated depreciation expense, write-downs of long-lived assets and inventory, impairment of long-lived and indefinite-lived assets, contract termination costs and other associated costs. Employee-related costs represent one-time termination benefits for severance and other post-employment costs that are recognized as incurred upon communication of the plan to the identified employees. If the employee must provide future service beyond a minimum retention period, the benefits are expensed ratably over the future service period. Accelerated depreciation expense represents additional expense resulting from shortening the useful lives of production and other assets to coincide with the end of production and other activities under an approved restructuring plan. Write-downs of long-lived assets represent losses on assets expected to be disposed of or equipment in progress that will not be put in service. Costs to terminate contracts are recognized upon entering a termination agreement with the provider. Other associated restructuring costs are expensed as incurred. Any impairment or write-down of assets resulting from restructuring activities are recognized immediately in the period the related plan is approved. Refer to Note 5 –Restructuring, Impairment and Other Related Charges for more information. Business Combinations The Company accounts for business combinations using the acquisition method of accounting, in accordance with ASC 805, Business Combinations. The Company records an acquisition based on the fair value of the consideration transferred and then allocates the purchase price to the identifiable assets acquired and liabilities assumed based on their respective preliminary estimated fair values as of the acquisition date. Goodwill on the acquisition date is measured as the excess of the fair value of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While best estimates and assumptions are used to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, the Company’s estimates are inherently uncertain and subject to refinement. If the Company obtains new information within the measurement period (up to one year from the acquisition date) about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are reflected in the consolidated statement of operations. In the event an acquisition involves an entity with which the Company has a preexisting relationship, the Company will generally recognize a gain or loss within the consolidated statement of operations to settle that relationship as of the acquisition date. Transaction costs associated with business combinations are expensed as incurred. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value because of the short-term maturity of those instruments. F- 10 Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded net of an allowance for expected losses and consist primarily of receivables from wholesale customers and receivables from third-party consumer financing partners and credit card processors. The allowance is recognized in an amount equal to anticipated future write-offs over the expected life of the receivables . Management estimates the allowance for credit losses based on historical experience, customer payment practices and current economic trends. Actual credit losses could differ from those estimates . Account balances are charged-off against the allowance when management believes it is probable the receivable will not be recovered. The Company had the following activity in its allowance for credit losses (in thousands): Years Ended December 31, 2024 2023 2022 Balance at beginning of period $ 26 $ 1 $ 20 Additions charged to expense 1,075 25 — Reductions to allowance, net ( 1 ) — ( 19 ) Balance at end of period $ 1,100 $ 26 $ 1 Inventories Inventories are comprised of raw materials, work-in-process and finished goods and are stated at the lower of cost or net realizable value. Manufactured inventory consists of raw material, direct labor and manufacturing overhead costs. Inventory cost is calculated using a method that approximates average cost. The Company reviews the components of its inventory on a regular basis for excess and obsolete inventory and makes appropriate adjustments when necessary. Once established, the original cost of the inventory less the related inventory reserves represents the new cost basis of such products. Property and Equipment Property and equipment are stated at cost, net of depreciation. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the respective assets, ranging from 1 to 17 years, as follows: Years Equipment 5 - 10 Furniture and fixtures 2 - 7 Office equipment 3 - 5 Leasehold improvements 1 - 17 Major renewals and betterments that increase value or extend useful life are capitalized. The Company records depreciation and amortization in cost of sales for long-lived assets used in the manufacturing process, and within each line item of operating expenses for all other long-lived assets. Leasehold improvements are amortized over the shorter of the useful life of the leasehold improvements or the contractual term of the lease, with consideration of lease renewal options if exercise is reasonably certain. The cost and related accumulated depreciation of assets sold or retired is removed from the accounts with any resulting gain or loss included in the consolidated statement of operations. Estimated useful lives of property and equipment are periodically reviewed and, when appropriate, changes are made and accounted for prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts. As a result of initiating closure of its two Utah manufacturing facilities in August 2024, the Company shortened the estimated useful lives of the production equipment at these two facilities to reflect the remaining period these assets will remain in service. Closure of these two facilities is expected to be completed during the first quarter of 2025. Reducing the estimated useful lives of these assets increased both depreciation expense and the Company’s net loss in 2024 by $ 11.2 million. Refer to Note 5 –Restructuring, Impairment and Other Related Charges for more information. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. Capitalized interest is added to the cost of the underlying assets and is amortized over the useful lives of the assets. When no debt is specifically identified as being incurred in connection with a construction project, the Company capitalizes interest on amounts expended on the project using the weighted average cost of the Company’s outstanding borrowings. F- 11 Leases The Company determines if an agreement contains a lease at the inception of a contract. For leases with an initial term greater than 12 months, a related lease liability is recorded on the balance sheets at the present value of future payments discounted at the estimated fully collateralized incremental borrowing rate (discount rate) corresponding with the lease term. In addition, a right-of-use (“ROU”) asset is recorded as the initial amount of the lease liability, plus any lease payments made to the lessor before or at the lease commencement date and any initial direct costs incurred, less any tenant improvement allowance incentives received. The Company elected not to separate lease and non-lease components for all real estate leases. The Company calculates the present value of future payments using its incremental borrowing rate when the discount rate implicit in the lease is not known. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. The Company determines the applicable incremental borrowing rate at the lease commencement date based on the rates of its secured borrowings, which is then adjusted for the appropriate lease term and risk premium. In determining the Company’s ROU assets and corresponding lease liabilities, the Company applies these incremental borrowing rates to the minimum lease payments within each lease agreement. Lease expense is recognized on a straight-line basis over the lease term. Tenant incentive allowances received from the lessor are amortized through the ROU asset as a reduction of rent expense over the lease term. Any variable lease costs are expensed as incurred. Leases with an initial term of 12 months or less (short-term leases) are not recorded as ROU assets and corresponding lease liabilities. Short-term lease expense is recognized on a straight-line basis over the lease term. ROU assets are assessed for impairment as part of long-lived assets, which is performed whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Goodwill The Company accounts for goodwill in a business combination as the excess of the cost over the fair value of net assets acquired and is assigned to the reporting unit in which the acquired business will operate. The Company does not amortize goodwill but tests it for impairment each fiscal year or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The recoverability of goodwill is measured at the reporting unit level by comparing the reporting unit’s carrying amount, including goodwill, to the fair value of the reporting unit. The Company may elect to perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired. If the qualitative assessment is not performed or if the Company determines that it is not more likely than not that the fair value of the reporting unit exceeds the carrying value, the Company determines the fair value of its reporting units based on an average weighting of both projected discounted future results and the use of comparative market multiples. If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired and a loss recognized in the amount equal to that excess. During the year ended December 31, 2023, the Company determined goodwill was impaired and recorded an impairment charge to write off the entire $ 6.9 million balance of goodwill. Refer to Note 4— Acquisition for more information . Intangible Assets Intangible assets include a customer relationship intangible associated with the Intellibed acquisition, developed technologies by Purple and Intellibed, trade names and trademarks, internal-use software, domain name costs, intellectual property and other patent and trademark related costs. Definite-lived intangible assets are being amortized using the straight-line method over their estimated lives, ranging from two to 15 years . For software developed or obtained for internal use, the Company capitalizes direct external costs associated with developing or obtaining internal-use software. In addition, the Company capitalizes certain payroll and payroll-related costs for employees who are directly involved with the development of such applications. Capitalized costs related to internal-use software under development are treated as construction-in-progress until the program, feature or functionality is ready for its intended use, at which time amortization commences. Capitalized software costs are amortized on a straight-line basis over three years . F- 12 Asset Impairment Charges Long-Lived Assets and Definite-lived Intangible Assets – The Company reviews its long-lived assets and definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets and definite-lived intangible assets for potential impairment, the Company first determines if there are any indicators of impairment and if the carrying amount of the long-lived assets and definite-lived intangible assets might not be recoverable. If there are indicators of impairment, then the Company performs a recoverability test by comparing the carrying value of the assets to the estimated future cash flows (undiscounted and without interest charges - plus proceeds expected from disposition, if any). If the estimated undiscounted cash flows are less than the carrying value of the assets, the Company calculates an impairment loss. The impairment loss calculation compares the carrying value of its assets to the assets’ estimated fair value. When the Company recognizes an impairment loss, the carrying amount of the impaired assets are reduced to estimated fair value based on discounted cash flows, quoted market prices or other valuation techniques. Assets to be disposed of are reported at the lower of the carrying amount of the asset or fair value less costs to sell. If the Company recognizes an impairment loss for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset. The Company concluded there were indicators of impairment that existed at December 31, 2024 and a recoverability test was required. Based on the results of this recoverability test, the Company determined its long-lived and definite-lived assets were not impaired as of December 31, 2024 and no resultant impairment charges were recorded. There were no impairment charges realized on long-lived assets and definite-lived intangible assets during the years ended December 31, 2023 and 2022. In conjunction with a restructuring action initiated in August 2024, the Company recorded impairment charges of $ 2.5 million on various long-lived assets associated with entering into a sublease on one of the Utah manufacturing facilities that is expected to close during the first quarter of 2025. Refer to Note 5 –Restructuring, Impairment and Other Related Charges for more information. Indefinite-lived Intangible Assets – Intangible assets that have indefinite lives are not amortized but are reviewed for impairment annually or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Accounting guidance provides for the performance of either a quantitative assessment or a qualitative assessment before calculating the fair value of an asset. If events or market conditions affect the estimated fair value to the extent that an indefinite-lived intangible asset is impaired, the Company will adjust the carrying value of these assets in the period in which impairment occurs. The restructuring action initiated by the Company in August 2024 was determined to be a triggering event for potential impairment of intellectual property that was being accounted for as an indefinite-lived intangible asset. The resultant impairment assessment performed by the Company determined this asset no longer had any supportable value and an $ 8.5 million impairment charge to write off the entire balance of the asset was recorded in 2024. Revenue Recognition The Company markets and sells its products through the DTC channel, which includes Purple.com (direct-to-consumer e-commerce), Purple showrooms, their customer contact center and online marketplaces, and the wholesale channel through retail brick-and-mortar and online wholesale partners. Revenue is recognized when the Company satisfies its performance obligations under the contract which involves transferring the promised products to the customer. This principle is achieved in the following steps: Identify the contract with the customer. A contract exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the goods to be transferred and identifies the payment terms related to these goods, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for the goods that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company does not have significant costs to obtain contracts with customers. Identify the performance obligations in the contract . The Company’s contracts with customers do not include multiple performance obligations to be completed over a period of time. The performance obligations generally relate to delivering products to a customer, subject to the shipping terms of the contract. The Company has made an accounting policy election to account for shipping and handling activities performed after a customer obtains control of the goods, including “white glove” delivery services, as activities to fulfill the promise to transfer the goods. The Company does not offer extended warranty or service plans. The Company does not provide an option to its customers to purchase future products at a discount and therefore there are no material option rights. F- 13 Determine the transaction price . Payment for sale of products through the direct-to-consumer e-commerce channel and Purple showrooms is collected at point of sale in advance of shipping the products. Amounts received for unshipped products are recorded as customer prepayments. Payment by traditional wholesale customers is due under customary fixed payment terms. None of the Company’s contracts contain a significant financing component. Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns, volume rebates, wholesale warranty returns, and other adjustments. The estimates of variable consideration are based on historical return experience, historical and projected sales data, and current contract terms. Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. Allocate the transaction price to performance obligations in the contract. The Company’s contracts with customers do not include multiple performance obligations. Therefore, the Company recognizes revenue upon transfer of the product to the customer’s control at contractually stated pricing. Recognize revenue when or as we satisfy a performance obligation. The Company satisfies performance obligations at a point in time upon either shipment or delivery of goods, in accordance with the terms of each contract with the customer. With the exception of third-party “white glove” delivery and certain wholesale partners, revenue generated from product sales is recognized at shipping point, the point in time the customer obtains control of the products. Revenue generated from sales through third-party “white glove” delivery is recognized at the point in time when the product is delivered to the customer. Revenue generated from certain wholesale partners is recognized at a point in time when the product is shipped or when it is delivered to the wholesale partner’s warehouse. The Company does not have service revenue. Sales Returns The Company’s policy provides customers up to 100-days to return a mattress, pet bed or pillow and up to 30-days to return all other products (except power bases) for a full refund. Estimated sales returns, which are recorded as a reduction of revenue at the time of sale and recorded in other current liabilities on the consolidated balance sheets, are based on historical trends and product return rates and are adjusted for any current or expected trends as appropriate. Actual sales returns could differ from these estimates. The Company regularly assesses and adjusts the estimate of accrued sales returns by updating the return rates for actual trends and projected costs. The Company classifies the estimated sales returns as a current liability as they are expected to be paid out in less than one year. The Company had the following activity for accrued sales returns (in thousands): Years Ended December 31, 2024 2023 2022 Balance at beginning of period $ 5,404 $ 5,107 $ 7,116 Additions that reduced net revenue 38,913 34,090 35,479 Deduction from reserves for current year returns ( 37,802 ) ( 33,793 ) ( 37,488 ) Balance at end of period $ 6,515 $ 5,404 $ 5,107 F- 14 Accrued Warranty Liabilities The Company provides a limited warranty on most of the products it sells. The estimated warranty costs associated with products sold through DTC channels are expensed at the time of sale and included in cost of revenues. The estimated warranty return costs associated with products sold through the wholesale channel are recorded at the time of sale and included as an offset to net revenues. Estimates for warranty costs are based on the results of historical trends and warranty claim rates incurred, and are adjusted for any current or expected trends as appropriate. Actual warranty claim costs could differ from these estimates. The Company regularly assesses and adjusts the estimate of accrued warranty claims by updating claims rates for actual trends and projected claim costs. The Company expects the estimated warranty liability to continue to increase as the Company has not reached a full 10 years of history on its 10-year mattress warranty. The Company classifies estimated warranty costs expected to be paid beyond a year as a long-term liability. The Company had the following activity for accrued warranty liabilities (in thousands): Years Ended December 31, 2024 2023 2022 Balance at beginning of period $ 35,591 $ 24,463 $ 16,241 Additions charged to cost of sales 3,291 5,866 9,856 Additions that reduced net revenue 6,288 11,996 3,453 Deduction from reserves for current year claims ( 12,965 ) ( 6,734 ) ( 5,087 ) Balance at end of period $ 32,205 $ 35,591 $ 24,463 Cost of Revenues Costs associated with net revenues are recorded as cost of revenues in the same period in which related sales have been recorded. Cost of revenues includes the costs of receiving, producing, inspecting, warehousing, insuring, and shipping goods during the period, as well as depreciation and amortization of long-lived assets used in these processes. Cost of sales also includes shipping and handling costs associated with the delivery of goods to customers. In conjunction with a restructuring action initiated in August 2024, the Company recorded restructuring charges of $ 15.4 million in cost of revenues for accelerated depreciation of production equipment and inventory write-downs. Refer to Note 5 –Restructuring, Impairment and Other Related Charges for more information. Cooperative Advertising, Rebate and Other Promotion Programs The Company enters into programs with certain wholesale partners to provide funds for advertising and promotions as well as volume and other rebate programs. When sales are made to these customers, the Company records liabilities pursuant to these programs. The Company periodically assesses these liabilities based on actual sales to determine whether all the cooperative advertising earned will be used by the customer or whether the customer will meet the requirements to receive rebate funds. Estimates are required at any point in time regarding the ultimate reimbursement to be claimed by the customers. Subsequent revisions to the estimates are recorded and charged to earnings in the period in which they are identified. Rebates and certain cooperative advertising amounts are classified as a reduction of revenue and presented within net revenues in the accompanying consolidated statements of operations. Cooperative advertising expenses that can be identified as a distinct good or service and for which fair value can be reasonably estimated are recorded, when incurred, as components of marketing and sales expense in the accompanying consolidated statements of operations. Marketing and sales expense in 2024, 2023 and 2022 included $ 2.3 million, $ 2.0 million and $ 4.1 million, respectively, related to shared advertising costs that the Company incurred under its cooperative advertising programs. F- 15 Advertising Costs The Company incurs advertising costs associated with print, digital and broadcast advertisements. Advertising costs are expensed when the advertisements are run for the first time and included in marketing and selling expenses in the accompanying consolidated statements of operations. Advertising expense was $ 65.2 million, $ 72.4 million and $ 66.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. Debt Issuance Costs and Discounts Debt issuance costs and discounts that relate to borrowings are presented in the consolidated balance sheets as a direct reduction from the carrying amount of the related debt liability and are amortized into interest expense using an effective interest rate over the duration of the debt. Debt issuance costs that relate to revolving lines of credit are carried as an asset in the consolidated balance sheets and amortized to interest expense on a straight-line basis over the term of the related line of credit facility. Refer to Note 12 – Debt for more information. Warrant Liabilities The Company issued warrants to purchase 20.0 million shares of the Company’s Class A common stock to the lenders associated with a related party credit agreement entered into in January 2024. These warrants contain a repurchase provision which, upon the occurrence of a fundamental transaction as defined in the warrant agreement, could give rise to an obligation of the Company to pay cash to the warrant holders. In addition, other provisions may lead to a reduction in the exercise price of the warrants. The fundamental transaction provisions of the warrants resulted in them being recorded as a liability at fair value on their issue date, with the corresponding offset included in debt issuance costs. The initial liability is subsequently re-measured to fair value at each reporting date or exercise date with changes in the fair value included in earnings. The Company uses a Monte Carlo Simulation model to determine the fair value of the liability associated with these warrants. The model uses various key assumptions and inputs, including exercise price of the warrants, fair market value of the Company’s common stock, risk free interest rate, warrant life, expected volatility and the probability of a warrant re-price event. Refer to Note 12 – Debt and Note 13 – Warrant Liabilities for more information. The Company issued 12.8 million sponsor warrants pursuant to a private placement conducted simultaneously with its initial public offering. The Company recorded its sponsor warrants as liabilities since they did not meet the criteria for equity classification. Because the sponsor warrants met the definition of a derivative, these warrants were measured at fair value at inception and at each reporting date thereafter with changes in fair value recognized in earnings in the period of change. The Company used the Black-Scholes model to determine the fair value of the liability associated with the sponsor warrants. The model used key assumptions and inputs such as exercise price, fair market value of common stock, risk free interest rate, warrant life and expected volatility. Unexercised sponsor warrants totaling 1.9 million expired in February 2023 and were cancelled pursuant to the terms of the warrant agreement. These sponsor warrants had no fair value on the date of expiration. Fair Value Measurements The Company uses the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, essentially an exit price, based on the highest and best use of the asset or liability. The levels of the fair value hierarchy are: Level 1—Quoted market prices in active markets for identical assets or liabilities; Level 2—Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable, such as interest rate and yield curves, and market-corroborated inputs); and Level 3—Unobservable inputs in which there is little or no market data, which require the reporting unit to develop its own assumptions. The classification of fair value measurements within the established three-level hierarchy is based upon the lowest level of input that is significant to the measurements. Financial instruments, although not recorded at fair value on a recurring basis include cash, cash equivalents and restricted cash, receivables, accounts payable, and the Company’s debt obligations. The carrying amounts of cash, cash equivalents and restricted cash, accounts receivable and accounts payable approximate fair value because of the short-term nature of these accounts. The estimated fair value of the Company’s debt arrangements are based on Level 2 inputs, which include observable inputs estimated using discounted cash flows and market-based expectations for interest rates, credit risk and the contractual terms of debt instruments is shown in the table below (in thousands): December 31, Level 2024 2023 2023 Credit Agreement 2 $ — $ 30,000 2024 Credit Agreement 2 56,617 — F- 16 The warrants issued in 2024 and the sponsor warrants (refer to Note 12 – Warrant Liabilities for more information.) are Level 3 instruments and use internal models to estimate fair value based on certain significant unobservable inputs which require determination of relevant inputs and assumptions. Accordingly, changes in these unobservable inputs may have a significant impact on fair value. Such inputs include risk free interest rate, expected average life, expected dividend yield, and expected volatility. These Level 3 liabilities generally decrease (increase) in value based upon an increase (decrease) in risk free interest rate and expected dividend yield. Conversely, the fair value of these Level 3 liabilities generally increase (decrease) in value if the expected average life or expected volatility increases (decreases). The following table presents information about the Company’s liabilities that are measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands): December 31, Level 2024 Warrants 3 $ 16,067 Unexercised sponsor warrants totaling 1.9 million expired in February 2023 and were cancelled pursuant to the terms of the warrant agreement. These sponsor warrants had no fair value on the date of expiration. The following table summarizes the Company’s total Level 3 liability activity for the years ended December 31, 2024, 2023 and 2022 (in thousands): Sponsor Warrants Warrants Total Level 3 Liabilities Fair value as of December 31, 2021 $ 4,343 $ — $ 4,343 Change in valuation inputs (1) ( 4,343 ) — ( 4,343 ) Fair value as of December 31, 2022 $ — $ — $ — Change in valuation inputs (1) — — — Fair value as of December 31, 2023 $ — $ — $ — Initial measurement at time of issuance — 19,571 19,571 Change in valuation inputs (1) — ( 3,504 ) ( 3,504 ) Fair value as of December 31, 2024 $ — $ 16,067 $ 16,067 (1) Changes in valuation inputs are recognized as the change in fair value – warrant liabilities in the consolidated statement of operations. Stock Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation—Stock Compensation . This standard requires the Company to record an expense associated with the fair value of stock-based compensation over the requisite service period. During 2023 and 2022, the Company granted stock options under the Company’s 2017 Equity Incentive Plan (the “2017 Equity Incentive Plan”) to certain officers, executives and employees of the Company. The fair value for these awards was determined using the Black-Scholes option valuation model at the date of grant. Stock based compensation on these awards is expensed on a straight-line basis over the vesting period. Option pricing models require the input of subjective assumptions including the expected term of the stock option, the expected price volatility of the Company’s common stock over the period equal to the expected term of the grant, and the expected risk-free rate. Changes in these assumptions can materially affect the fair value estimate. The Company recognizes forfeitures of stock option awards as they occur. There were no stock options granted in 2024. During 2023 and 2022, the Company granted stock awards under the 2017 Equity Incentive Plan to independent directors on the Company’s board of directors (the “Board”) for services performed. Since all of these awards vested immediately, stock-based compensation was recorded on the grant date using the publicly quoted closing price of the Company’s common stock on that date as fair value. There were no stock awards granted to independent directors in 2024. F- 17 During 2024, 2023 and 2022, the Company granted restricted stock units under the Company’s 2017 Equity Incentive Plan to certain employees of the Company. A portion of the restricted stock units granted included a market vesting condition. The estimated fair value of the restricted stock units that do not have the market vesting condition is recognized on a straight-line basis over the vesting period. The estimated fair value of the stock units that included a market vesting condition was measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporated the probability of vesting occurring. The estimated fair value of these awards is recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. Income Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. The Company’s effective tax rate is primarily impacted by changes in its valuation allowance. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the accompanying consolidated statements of operations. The Company files U.S. federal and certain state income tax returns. The income tax returns of the Company are subject to examination by U.S. federal and state taxing authorities for various time periods, depending on those jurisdictions’ rules, generally after the income tax returns are filed. Tax Receivable Agreement In connection with the Business Combination, the Company entered into a tax receivable agreement with InnoHold, which provides for the payment by the Company to InnoHold of 80 % of the net cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing as a result of (i) any tax basis increases in the assets of Purple LLC resulting from the distribution to InnoHold of the cash consideration, (ii) the tax basis increases in the assets of Purple LLC resulting from the redemption by Purple LLC or the exchange by the Company, as applicable, of Class B Paired Securities or cash, as applicable, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, payments it makes under the agreement. As noncontrolling interest holders exercise their right to exchange or cause Purple LLC to redeem all or a portion of its Class B Units, a liability under the tax receivable agreement may be recorded based on 80 % of the estimated future cash tax savings that the Company may realize as a result of increases in the basis of the assets of Purple LLC attributed to the Company as a result of such exchange or redemption. The amount of the increase in asset basis, the related estimated cash tax savings and the attendant liability to be recorded will depend on the price of the Company’s Class A common stock at the time of the relevant redemption or exchange. The estimation of liability under the agreement is imprecise and subject to significant assumptions regarding the amount and timing of future taxable income. Segment Information Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”). The role of the CODM is to make decisions about allocating resources and assessing performance. The Company’s operations are based on an omni-channel distribution strategy that allows the Company to offer a seamless shopping experience to its customers across multiple sales channels. The Company concluded its business operates in one operating segment as all the Company’s sales channels are complementary and analyzed in the same manner. Also, the CODM reviews financial information presented on a consolidated basis for the purpose of allocating resources and evaluating financial performance as the Company does not accumulate discrete financial information with respect to separate divisions and does not have distinct operating or reportable segments . Since the Company operates in one operating segment, most of the required financial segment information can be found throughout the consolidated financial statements. The Company’s chief executive officer has been identified as its CODM. Refer to Note 21 – Segment Information and Concentrations for more information. F- 18 Net Loss Per Share Basic net loss per common share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of Class A common stock outstanding during each period. Diluted net loss per share reflects the weighted-average number of common shares outstanding during the period used in the basic net loss computation plus the effect of common stock equivalents that are dilutive. The Company uses the “if-converted” method to determine the potential dilutive effect of conversions of its outstanding Class B common stock, and the treasury stock method to determine the potential dilutive effect of its outstanding warrants and share-based payment awards. Recent Accounting Pronouncements Disclosure Improvements In October 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative . This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification. For SEC registrants, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company will monitor the removal of various requirements from the current regulations in order to determine when to adopt the related amendments but does not anticipate the adoption of the new guidance will have a material impact on the Company’s Consolidated Financial Statements. The Company will continue to evaluate the impact of this guidance on its consolidated financial statements. Enhanced Segment Disclosures In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities, including those that have a single reportable segment, to provide enhanced disclosures about significant expenses. The ASU requires disclosure to include significant segment expenses that are regularly provided to the CODM, a description of other segment items by reportable segment, and any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The update is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. This standard was adopted by the Company beginning with its 2024 consolidated financial statements. The adoption of this standard resulted in the addition of required segment disclosures for 2024 and all prior periods included in these consolidated financial statements. Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU amends existing income tax disclosure guidance, primarily requiring more detailed disclosures for income taxes paid and the effective tax rate reconciliation. This ASU is effective for fiscal years beginning after December 15, 2024, may be applied prospectively or retrospectively, and allows for early adoption. The Company is currently evaluating the impact this update will have on the income tax disclosures in its consolidated financial statements. Expense Disaggregation Disclosures In November 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires disclosure of certain costs and expenses on an interim and annual basis in the notes to the consolidated financial statements. The prescribed cost and expense categories requiring disaggregated disclosures include purchases of inventory, employee compensation, depreciation and intangible asset amortization, along with certain other expense disclosures already required by GAAP that would need to be integrated within the new tabular disaggregated expense disclosures. Additionally, the amendments also require the disclosure of total selling expenses and an entity’s definition of those expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The guidance is to be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the potential impact this update will have on its expense disclosures in the notes to the consolidated financial statements. F- 19 3. Underwritten Offerings of Class A Common Stock In February 2023, the Company completed an underwritten offering of 13.4 million shares of Class A common stock at a price of $ 4.50 per share. The underwriters did not exercise their over-allotment option. The aggregate net proceeds received by the Company from the offering, after deducting offering fees and expenses of $ 3.3 million, totaled $ 57.0 million. In March 2022, the Company completed an underwritten offering of 16.1 million shares of Class A common stock, which included the underwriters exercising their over-allotment option in full to purchase an additional 2.1 million shares. The underwriters purchased the Class A common stock from the Company at a price of $ 5.65 per share, except that any shares sold by the underwriters to Coliseum Capital Partners, L.P. (“CCP”) and Blackwell Partners LLC – Series A (“Blackwell”), up to an aggregate of 29.81 % of the shares of Class A common stock pursuant to the offering, were purchased from the Company by the underwriters at a price of $ 6.10 per share. The aggregate net proceeds received by the Company from the offering, after deducting offering fees and expenses of $ 5.3 million, totaled $ 92.9 million. 4. Acquisition On August 31, 2022, pursuant to the Merger Agreement, the Company acquired Intellibed, a premium sleep and health wellness company, offering gel-based mattresses scientifically designed for maximum back support, spinal alignment and pressure point relief. The addition of Intellibed increased product offerings to customers, expanded market opportunities, capitalized on synergies of the combined companies, and increased opportunities for innovation. In addition, the acquisition allowed the Company to consolidate ownership of its intellectual property licensed to Intellibed and more fully capitalize on growing demand for products with gel technologies. The acquisition date fair value of the consideration transferred for Intellibed was $ 28.2 million, which consisted of the following (in thousands): Fair value of Class A common stock issued at closing $ 23,069 Fair value of Class A common stock held in escrow 1,349 Fair value of contingent consideration 1,471 Fair value of effective settlement of preexisting relationships 1,672 Transaction expenses paid on behalf of Intellibed 546 Due to seller 75 Fair value of total purchase consideration $ 28,182 The fair value of common stock issued at closing consisted of approximately 8.1 million shares of Class A common stock valued using the acquisition date closing price of $ 2.86 . The fair value of common stock held in escrow consisted of 0.5 million shares of Class A common stock valued using the acquisition date closing price of $ 2.86 . These shares were originally held in escrow pending resolution of net working capital adjustments and certain indemnification matters. Contingent consideration represents the fair value of 1.5 million shares of Class A common stock issuable to Intellibed security holders if the closing price of the Company’s stock did not equal or exceed certain thresholds during the period beginning on the six-month anniversary of the closing date and ending on the 18-month anniversary of the closing date. The contingent shares were valued using a Monte-Carlo simulation model. Because the contingent consideration was payable with a fixed number of shares of the Company’s Class A common stock, it was classified as equity and did not require remeasurement in subsequent periods. During March 2024, the Company issued 1.5 million shares of Class A common stock to Intellibed security holders since the Company’s stock price did not meet any of the indicated thresholds during the contingency period. The fair value of effective settlement of preexisting relationships included $ 1.4 million related to the fair value of a preexisting legal matter with Intellibed that was effectively settled on the acquisition date and $ 0.3 million related to the fair value of a preexisting royalty liability owed by Intellibed to the Company that was also effectively settled on the acquisition date. As a result of effectively settling the preexisting legal matter with Intellibed, the Company recorded a gain of $ 1.4 million as other income (expense), net in the consolidated statement of operations for the year ended December 31, 2022. As a result of effectively settling the preexisting royalty liability, the Company and Intellibed recorded a corresponding receivable and payable, respectively, for the same $ 0.3 million amount that was then eliminated in consolidation. F- 20 During the measurement period that ended August 31, 2023, the Company finalized the determination of the working capital adjustments and the fair values allocated to various assets and liabilities, income tax provision, intangible assets and the residual amount allocated to goodwill. The table below reflects final measurement period adjustments made to various assets acquired and liabilities assumed based on updated information, and revisions to reflect the final fair value analysis associated with the two intangible assets. The corresponding offsets for these final measurement period adjustments was goodwill. The $ 0.1 million decrease in the acquisition date fair value of net assets acquired and liabilities assumed reflected the impact of certain Class A common shares initially held in escrow being returned to the Company upon final determination of the working capital adjustments. The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition, the final measurement period adjustments and the final adjusted balances (in thousands): Net tangible assets (liabilities): At Date of Acquisition Measurement Period Adjustments Final Adjusted Balances Cash, cash equivalents and restricted cash $ 4,194 $ ( 418 ) $ 3,776 Accounts receivable 5,051 ( 443 ) 4,608 Inventory 4,182 ( 1,135 ) 3,047 Other current assets 126 200 326 Property and equipment 7,000 — 7,000 Operating lease right-of-use assets 5,491 — 5,491 Other long-term assets 68 — 68 Accounts payable ( 2,285 ) ( 460 ) ( 2,745 ) Other current liabilities ( 2,818 ) ( 313 ) ( 3,131 ) Operating lease obligations ( 4,373 ) — ( 4,373 ) Deferred tax liabilities ( 3,868 ) ( 416 ) ( 4,284 ) Net tangible assets (liabilities) 12,768 ( 2,985 ) 9,783 Goodwill 6,441 438 6,879 Customer relationships 8,476 2,400 10,876 Developed technology 615 29 644 Net assets acquired and liabilities assumed $ 28,300 $ ( 118 ) $ 28,182 The amount of goodwill that resulted from the purchase price allocation was attributed to expected synergies from the assembled workforce, an increase in development capabilities, increased offerings to customers, expanded market opportunities, and enhanced opportunities for growth and innovation. Goodwill was not being amortized but instead tested for impairment at least annually or more frequently if certain indicators of impairment were present. The goodwill recorded was not deductible for income tax purposes. F- 21 The ongoing decline in the Company’s market capitalization, along with other qualitative considerations was determined to be a triggering event for potential goodwill impairment. Accordingly, the Company performed a goodwill impairment analysis as of September 30, 2023. The Company, considered as a single reporting unit, estimated the implied fair value of its goodwill using a variety of valuation methods, including both the income and market approaches. As a result of the impairment assessment performed, the Company determined goodwill was impaired and recorded an impairment charge to write off the entire $ 6.9 million balance of goodwill. The impairment charge was recorded in the 2023 consolidated statement of operations as a loss on impairment of goodwill. The two identified definite lived intangible assets, comprised of customer relationships and developed technology, are being amortized over their estimated useful lives of 10 and two years , respectively. The customer relationships intangible asset represents the estimated fair value of the underlying relationships with Intellibed customers, valued utilizing the multi-period excess earnings method. The developed technology intangible represents the fair value of Intellibed industry-specific cloud and mobile software and related technologies, valued using the cost to recreate method. The acquired cash, cash equivalents and restricted cash balance included $ 1.7 million of cash deposited by Intellibed in a separate account pursuant to an escrow agreement with the Company. The purpose of the escrow cash amount was to cover Intellibed’s estimated state income tax liabilities, sales tax liabilities and related filing expenses that existed prior to the acquisition date. If the actual liabilities were less than estimated, any excess cash was to be returned to the previous shareholders of Intellibed. If payments for these items exceeded the escrow balance, the Company would have been required to pay the excess. The Company recorded the escrow account balance of $ 1.7 million as an acquired restricted cash balance on the date of acquisition and used $ 0.9 million of the escrow account balance for actual expenses incurred. The excess escrow balance of $ 0.8 million was returned by the Company to the previous shareholders of Intellibed during the third quarter of 2023. The Company included the financial results of Intellibed in its consolidated financial statements from the date of acquisition and recorded net revenues and pre-tax income of $ 9.7 million and $ 1.6 million, respectively, for the period from August 31, 2022 through December 31, 2022. The $ 3.9 million of transaction costs associated with the acquisition were recorded as general and administrative expense in the consolidated statement of operations for the year ended December 31, 2022. The following table provides unaudited pro forma financial information as if Intellibed had been acquired by the Company as of January 1, 2022. The unaudited pro forma information reflects adjustments for transaction and litigation expenses, immediate restructuring savings and additional depreciation and amortization resulting from the fair value adjustments to assets acquired. The pro forma results do not include any other anticipated cost synergies or effects of the combined companies. Accordingly, the following pro forma amounts for the year ended December 31, 2022 are not necessarily indicative of the results to be expected had the acquisition been completed on the date indicated, nor is it indicative of the future results of operations of the combined company (in thousands): Net revenues $ 603,739 Net (loss) income ( 86,119 ) The unaudited pro forma amounts above include the following adjustments: ● A $ 4.4 million decrease in operating expenses to eliminate costs directly related to the acquisition that do not have a continuing impact on results of operations. ● A $ 1.5 million decrease in operating expenses to eliminate costs directly related to immediate restructuring that do not have a continuing impact on results of operations. ● A $ 2.2 million increase in operating expenses to reflect the additional depreciation and amortization expense related to the increase in property and equipment assets and definite lived intangible assets. ● The combined pro forma results were tax effected using the Company’s effective tax rate for the period. F- 22 5. Restructuring, Impairment and Other Related Charges In August 2024, the Company initiated a restructuring plan to strategically realign the Company’s focus on the achievement of operational efficiencies that are expected to improve profitability and provide for reinvesting in technology and marketing initiatives (the “Restructuring Plan”). The Company’s Restructuring Plan includes the permanent closure of its Grantsville and Salt Lake City, Utah manufacturing facilities to consolidate mattress production in its Georgia plant, and a headcount reduction at the Company’s Utah headquarters to drive additional operating efficiencies. Closure of the two Utah manufacturing facilities will be completed by the end of the first quarter of 2025 while consolidation into the Georgia facility was finalized in December 2024. The reduction in workforce at the Utah headquarters was completed in August 2024. The following table summarizes the restructuring, impairment and other related charges the Company recognized in the 2024 consolidated statement of operations (in thousands): Cost of Revenues Operating Expenses Restructuring, Impairment and Other Related Charges Total Cash charges: Employee-related costs $ 241 $ 942 $ 3,098 $ 4,281 Other costs — — 528 528 Total cash charges 241 942 3,626 4,809 Non-cash charges: Accelerated depreciation 11,175 — 135 11,310 Inventory write-downs 4,026 — — 4,026 Write-down of long-lived assets — — 5,245 5,245 Impairment of assets — — 10,967 10,967 Total non-cash charges 15,201 — 16,347 31,548 Total restructuring, impairment and other related charges $ 15,442 $ 942 $ 19,973 $ 36,357 Accelerated depreciation primarily represents $ 11.2 million of increased depreciation expense associated with shortening the useful lives of the production equipment at the two Utah manufacturing facilities that are being closed to reflect the remaining period these assets will remain in service. The $ 5.2 million write-down of long-lived assets represents the write-down to salvage value of other property and equipment located at the two Utah manufacturing facilities that are being closed. Impairment of assets included impairment charges of $ 2.5 million associated with entering into a sublease for the Salt Lake City, Utah manufacturing facility that is being closed and related impairment charges associated with certain leasehold improvements of the property. The fair values of the impaired assets were determined by the Company to be Level 3 under the fair value hierarchy (refer to Note 2— Fair Value Measurements for the definition of Level 3 inputs) and were estimated based on internal expertise related to current marketplace conditions and estimated future discounted cash flows. These assets were adjusted to their estimated fair values at the time of impairment. If estimated fair values subsequently decline, the carrying values of the assets will be adjusted accordingly. F- 23 Impairment of assets also included the write-off of an $ 8.5 million indefinite-lived intangible asset. Initiating the Restructuring Plan was determined to be a triggering event for potential impairment of this asset. As a result of the impairment assessment performed, the Company determined this indefinite-lived intangible asset was impaired and recorded an impairment charge to write off the entire $ 8.5 million balance. The lease for the Company’s Grantsville, Utah manufacturing facility included a five-year renewal option that was reasonably certain of being exercised and included in the lease term when the ROU asset and lease liability were originally measured. Because of the expected closure of this facility as part of the Restructuring Plan, the renewal option was no longer deemed reasonably certain of being exercised and a reassessment of the lease terms was completed. As a result, the original lease term was shortened and the Company recorded a $ 10.5 million reduction to the ROU asset and corresponding lease liability in the 2024 consolidated balance sheet, using the applicable discount rate at the effective date of the reassessment. The following table summarizes 2024 activity associated with employee-related and other costs recorded pursuant to the Restructuring Plan, as presented in the indicated line item of the consolidated statement of operations, that will be settled in cash and are included in accounts payable or accrued compensation on the condensed consolidated balance sheets (in thousands): Balance at December 31, 2023 $ — Employee-related costs – cost of revenues 241 Employee-related costs – operating expenses 942 Employee-related costs – restructuring charges 3,098 Other costs – restructuring charges 528 Cash paid ( 3,816 ) Balance at December 31, 2024 $ 993 The following table summarizes the estimated restructuring and other related charges associated with the Restructuring Plan to be recognized in the future (in thousands): Cost of Revenues Operating Expenses Restructuring, Impairment and Other Related Charges Total Cash charges $ — $ — $ 2,926 $ 2,926 Non-cash charges 1,592 — 64 1,656 Total estimated charges to be recognized in future (a) $ 1,592 $ — $ 2,990 $ 4,582 (a) These charges include certain estimates that are provisional and include management judgments and assumptions that could change materially as the Company completes the execution of the Restructuring Plan. Actual results may differ from these estimates, and the completion of the plan could result in additional restructuring, impairment or other related charges not reflected above. 6. Revenue from Contracts with Customers The Company markets and sells its products through direct-to-consumer e-commerce channels, retail brick-and-mortar wholesale partners, Purple showrooms, and third-party online retailers. Revenue is recognized when the Company satisfies its performance obligations under the contract which involves transferring the promised products to the customer, subject to shipping terms, as described in Note 2 – Summary of Significant Accounting Policies . Disaggregated Revenue The Company classifies revenue into two categories: DTC and wholesale. The DTC category is comprised of the e-commerce channel that sells directly to consumers who purchase online and through the contact center, online marketplaces, and the Purple showrooms channel that sells directly to consumers who purchase at a Company showroom location. The wholesale channel includes all product sales to the Company’s retail brick and mortar and online wholesale partners where consumers make purchases at their retail locations or through their online channels. F- 24 The following tables present the Company’s revenue disaggregated by sales channel (in thousands): Years Ended December 31, Channel 2024 2023 2022 e-commerce $ 206,300 $ 223,607 $ 267,370 Wholesale 204,214 213,843 242,698 Showrooms 77,363 73,091 63,133 Revenues, net $ 487,877 $ 510,541 $ 573,201 Contract Balances Payments for the sale of products through the direct-to-consumer e-commerce channel, Purple showrooms and our contact center are collected at point of sale in advance of shipping the products. The amounts received for unshipped products are recorded as customer prepayments. Customer prepayments totaled $ 6.4 million and $ 5.7 million at December 31, 2024 and 2023, respectively. During 2024, 2023 and 2022, the Company recognized all of the revenue that was deferred in customer prepayments at December 31, 2023, 2022 and 2021, respectively. 7. Inventories Inventories consisted of the following (in thousands): As of December 31, 2024 2023 Raw materials $ 20,193 $ 23,232 Work-in-process 6,602 5,962 Finished goods 30,068 37,684 Inventories $ 56,863 $ 66,878 8. Property and Equipment Property and equipment consisted of the following (in thousands): As of December 31, 2024 2023 Equipment $ 70,900 $ 72,424 Equipment in progress 13,130 15,077 Leasehold improvements 57,936 60,563 Furniture and fixtures 32,699 31,084 Office equipment 1,611 2,737 Total property and equipment 176,276 181,885 Accumulated depreciation ( 82,402 ) ( 53,224 ) Property and equipment, net $ 93,874 $ 128,661 F- 25 Equipment in progress reflects equipment, primarily related to mattress manufacturing, which is being constructed and was not in service at December 31, 2024 or 2023. Interest capitalized on borrowings during the active construction period of major capital projects totaled $ 1.1 million, $ 1.5 million and $ 0.7 million during the years ended December 31, 2024, 2023 and 2022, respectively. Depreciation expense was $ 31.0 million, $ 19.7 million and $ 16.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Included in depreciation expense for the year ended December 31, 2024 was $ 11.3 million of accelerated depreciation recorded in conjunction with the Restructuring Plan. Refer to Note 5— Restructuring and Impairment Charges for more information. 9. Leases The Company leases its manufacturing and distribution facilities, corporate offices, Purple showrooms and certain equipment under non-cancelable operating leases with various expiration dates through 2036. The Company’s office and manufacturing leases provide for initial lease terms up to 16 years, while Purple showrooms have initial lease terms of up to 10 years. Certain leases may contain options to extend the term of the original lease. The exercise of lease renewal options is at the Company’s discretion. Any lease renewal options are included in the lease term if exercise is reasonably certain at lease commencement. The Company also leases vehicles and other equipment under both operating and finance leases with initial lease terms of three to five years . The ROU asset for finance leases was $ 1.0 million and $ 0.7 million as of December 31, 2024 and 2023, respectively. The following table presents the Company’s lease costs (in thousands): Years Ended December 31, 2024 2023 2022 Operating lease costs $ 19,460 $ 19,466 $ 15,743 Variable lease costs 4,338 4,121 2,311 Short-term lease costs — — 11 Total lease costs $ 23,798 $ 23,587 $ 18,065 The table below reconciles the undiscounted cash flows for each of the first five years and total remaining years to the operating lease liabilities recorded on the consolidated balance sheet at December 31, 2024 (in thousands): Year ended December 31, 2025 $ 21,361 2026 20,623 2027 18,012 2028 17,661 2029 14,502 Thereafter 33,215 Total operating lease payments 125,374 Less – lease payments representing interest ( 22,641 ) Present value of operating lease payments $ 102,733 F- 26 As of December 31, 2024 and 2023, the weighted-average remaining term of operating leases was 6.8 years and 8.0 years, respectively, and the weighted-average discount rate was 6.09 % and 5.77 %, respectively, for operating leases recognized on the consolidated balance sheets. The following table provides supplemental information related to the Company’s consolidated statement of cash flows (in thousands): Years Ended December 31, 2024 2023 2022 Cash paid for amounts included in present value of operating lease liabilities (b) $ 23,033 $ 20,817 $ 15,109 ROU assets obtained in exchange for operating lease liabilities 8,516 8,435 38,599 (b) – Operating cash flows paid for operating leases are included within the change in operating leases, net within the Consolidated Statements of Cash Flows offset by non-cash ROU asset amortization and lease liability accretion. 10. Intangible Assets The following table provides the components of intangible assets (in thousands, except useful life): As of December 31, 2024 As of December 31, 2023 Useful life Gross Accumulated Net Carrying Gross Accumulated Net Carrying (years) Cost Amortization Impairment Value Cost Amortization Value Indefinite-lived non-amortizing: Intellectual property $ 8,456 $ — $ ( 8,456 ) $ — $ 8,456 $ — $ 8,456 Trademarks 30 — — 30 30 — 30 Definite-lived amortizing: Internet domain 15 900 ( 430 ) — 470 900 ( 370 ) 530 Customer relationships 10 10,876 ( 4,492 ) — 6,384 10,876 ( 2,286 ) 8,590 Developed technology 2 644 ( 644 ) — — 644 ( 429 ) 215 Internal-use software 3 7,746 ( 5,740 ) — 2,006 8,423 ( 4,048 ) 4,375 Intangible assets, net $ 28,652 $ ( 11,306 ) $ ( 8,456 ) $ 8,890 $ 29,329 $ ( 7,133 ) $ 22,196 Amortization expense for intangible assets was $ 4.2 million, $ 5.3 million and $ 1.2 million for the years ended December 31, 2024, 2023 and 2022, respectively. Estimated amortization expense for definite-lived intangible assets is expected to be as follows for the next five years (in thousands): Year ended December 31, 2025 $ 3,035 2026 2,111 2027 1,391 2028 791 2029 570 Thereafter 962 Total future amortization for definite-lived intangible assets $ 8,860 F- 27 11. Other Current Liabilities The Company’s other current liabilities consisted of the following (in thousands): As of December 31, 2024 2023 Accrued sales returns $ 6,515 $ 5,404 Accrued sales and use tax 2,994 1,949 Long-term debt and unamortized issuance costs - current portion — 2,129 Asset retirement obligation 1,440 — Insurance financing 1,328 1,079 Accrued interest — 506 Other 473 1,423 Total other current liabilities $ 12,750 $ 12,490 12. Debt Debt consisted of the following (in thousands): As of December 31, 2024 2023 Related party loan $ 70,679 $ — Term loan — 25,000 Revolving line of credit — 5,000 Less: unamortized debt issuance costs ( 15,285 ) ( 962 ) Total debt 55,394 29,038 Current portion of debt and unamortized issuance costs (c) — ( 2,129 ) Debt, net of current portion $ 55,394 $ 26,909 (c) – Amount is included in other current liabilities in the consolidated balance sheet s. 2024 Credit Agreement On January 23, 2024, Purple LLC, Purple Inc. and Intellibed (collectively, the “Loan Parties”) entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”), which amended and restated the then existing term loan agreement (“Term Loan Agreement”), with CCP and other lenders (collectively, the “Lenders”) and Delaware Trust Company, as administrative agent. The Lenders agreed to assume the Loan Parties’ obligations under the Term Loan Agreement and refinance their existing obligations. A term loan in the amount of $ 61.0 million (the “Related Party Loan”) was funded by the Lenders that repaid in full the $ 25.0 million of term loans outstanding, repaid in full the $ 5.0 million of asset based lending loans outstanding, paid fees, premiums and expenses incurred in connection with this transaction, and provided net proceeds to the Company (after payments of outstanding debt, unpaid accrued interest and expenses) equal to approximately $ 27.0 million. Interest on the Related Party Loan is payable each month and the principal outstanding matures and is due on December 31, 2026. The Related Party Loan bears interest at a rate equal to (i) the secured overnight financing rate as administered by the Federal Reserve Bank of New York plus 0.10 %, with a floor of 3.5 % per annum, plus (ii) 8.25 % per annum (or, if Purple LLC elects to pay interest in kind to reduce it cash obligations, 10.25 % per annum). Any prepayments of principal on or after August 7, 2024 but before August 7, 2025 are subject to a prepayment penalty of 1.25 %, and any prepayments of principal on or after August 7, 2025 are subject to a prepayment penalty of 2.50 %. The Loan Parties may request an additional term loan from the Lenders in an aggregate amount not to exceed $ 19.0 million on terms requested by them to the extent agreed to by the Lenders at their discretion. The Amended and Restated Credit Agreement also removed restrictions and requirements typically associated with an asset-based loan. The Amended and Restated Credit Agreement and agreements ancillary thereto provide for certain remedies to the Lenders in the event of customary events of default. There were no events of default at December 31, 2024 and therefore the debt is classified as long-term in the consolidated balance sheets. In connection with the Amended and Restated Credit Agreement, the Company issued to the Lenders warrants to purchase 20.0 million shares of the Company’s Class A common stock (Refer to Note 13 – Warrant Liabilities for more information) and incurred fees and expenses of $ 3.5 million that were recorded as debt issuance costs in the first quarter of 2024. The Company has elected for interest to be capitalized and added to the principal amount of the loan. For the year ended December 31, 2024, interest expense under the Related Party Loan consisted of paid-in-kind interest of $ 9.7 million and debt issuance cost amortization of $ 7.2 million. There was no interest expense incurred under the Amended and Restated Credit Agreement in 2023 and 2022. F- 28 The Amended and Restated Credit Agreement granted a security interest to the Lenders in substantially all of the assets (subject to certain limited exceptions) of the Loan Parties to secure the Loan Parties’ loans and other obligations under the Amended and Restated Credit Agreement, including a security interest in the intellectual property owned by the Loan Parties. The Loan Parties (other than Purple LLC) provided an unconditional guaranty of the payment of all obligations and liabilities of Purple LLC under the Amended and Restated Credit Agreement. The Amended and Restated Credit Agreement also provides for standard indemnification of the Lenders and contains representations, warranties and certain covenants of the Loan Parties. While any amounts are outstanding under the Amended and Restated Credit Agreement, the Loan Parties are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, investments, forming or acquiring subsidiaries, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The Loan Parties are also restricted from paying dividends or making other distributions or payments on their capital stock, subject to limited exceptions. As of December 31, 2024, the Company was in compliance with all covenants under the Amended and Restated Credit Agreement. 2023 Credit Agreements On August 7, 2023, the Loan Parties entered into the Term Loan Agreement. Also, on August 7, 2023, the Loan parties entered into a separate financing arrangement with a group of financial institutions (collectively the “ABL Lenders”) that provided for a revolving asset-based credit facility (the “ABL Agreement”). Pursuant to entering into these agreements (collectively, the “2023 Credit Agreements”), the Company incurred fees and expenses of $ 3.1 million that were recorded as debt issuance costs in the third quarter of 2023. The Term Loan Agreement provided for up to $ 25.0 million of term loans, with up to $ 5.0 million of incremental term loans available, subject to certain conditions (collectively, the “Term Loans”). Proceeds from the Term Loans were used for general corporate purposes. The borrowing rates under the Term Loan Agreement were based on SOFR, plus a credit spread adjustment of 0.15 % per annum, plus 8.5 % per annum, with a SOFR floor of 2.0 % per annum. The Term Loans were to be repaid at the earlier of (a) a three-year amortization schedule ending on August 7, 2026 or (b) the payment in full of the ABL Agreement. The Term Loans could be prepaid in whole or in part at any time, but subject to a prepayment premium. There were also potential mandatory prepayment obligations based on certain asset dispositions, casualty events and extraordinary receipts. Once repaid, no portion of the Term Loans could be reborrowed. The ABL Agreement provided for up to $ 50.0 million of revolving loans subject to a borrowing base calculation and minimum availability requirements (with sub-facilities for swing line loans and the issuance of letters of credit), with incremental increases available up to $ 20.0 million (the “ABL Loans”), subject to certain conditions, availability reserves, minimum availability requirements, borrowing base calculations, and restrictive covenants. In October 2023, the ABL Lenders implemented an availability reserve of $ 5.0 million, which reduced the amount available under the borrowing base. Outstanding principal and accrued interest on the ABL Loans were to be repaid on August 7, 2026. F- 29 Term loans totaling $ 25.0 million were fully drawn at closing and, subsequent to the closing in August 2023, the Company executed $ 17.0 million in ABL loan draws and then repaid $ 12.0 million of those borrowings prior to the end of 2023. The outstanding balance of ABL Loans totaled $ 5.0 million at December 31, 2023. In connection with the Amended and Restated Credit Agreement, all obligations under the 2023 Credit Agreements were paid in full and the agreements were terminated. The termination was accounted for as an extinguishment of debt and $ 3.4 million of unamortized debt issuance costs related to the 2023 Credit Agreements were recorded as a loss on extinguishment of debt in the first quarter of 2024. Interest expense under the 2023 Credit Agreements was $ 0.4 million and $ 2.1 million for the years ended December 31, 2024 and 2023, respectively. There was no interest expense incurred under the 2023 Credit Agreements in 2022. 2020 Credit Agreement On September 3, 2020, Purple LLC entered into a financing arrangement with a group of financial institutions (the “2020 Credit Agreement”). The 2020 Credit Agreement provided for a $ 45.0 million term loan and a $ 55.0 million revolving line of credit. The term loan was to be repaid in accordance with a five-year amortization schedule or prepaid in whole or in part at any time without premium or penalty, subject to reimbursement of certain costs. The revolving credit facility had a term of five years and carried the same interest provisions as the term debt. A commitment fee was due quarterly based on the applicable margin applied to the unused total revolving commitment. In connection with the Company’s execution of the 2023 Credit Agreements, the Company terminated its 2020 Credit Agreement. The Company had no outstanding borrowings under the 2020 Credit Agreement at the time of termination. On February 17, 2023, the Company entered into a fifth amendment to the 2020 Credit Agreement. The amendment, among other things, revised various covenants associated with the 2020 Credit Agreement. As a condition of entering into the amendment, the Company repaid the $ 24.7 million outstanding balance on the term loan plus accrued interest. Pursuant to this amendment, the Company incurred fees and expenses of $ 2.9 million that were recorded as debt issuance costs in the consolidated balance sheets. The amendment was accounted for as an extinguishment of debt and $ 1.2 million of unamortized debt issuance costs related to the term loan were recorded as loss on extinguishment of debt in the 2023 consolidated statement of operations. Interest expense under the 2020 Credit Agreement totaled $ 1.3 million and $ 4.1 million for the years ended December 31, 2023 and 2022, respectively. There was no interest expense incurred under the 2020 Credit Agreement in 2024. As of December 31, 2024, the scheduled maturities of debt outstanding for each of the next five years and thereafter are as follows (in thousands): Year ended December 31, Total 2025 $ — 2026 70,679 2027 — 2028 — 2029 — Thereafter — Total $ 70,679 13. Warrant Liabilities On January 23, 2024, in connection with the Amended and Restated Credit Agreement, the Company issued to the Lenders warrants to purchase 20.0 million shares of the Company’s Class A common stock (the “Warrants”). Each Warrant entitles the registered holder to purchase one share of the Company’s Class A common stock at a price of $ 1.50 per share, subject to adjustment. The Warrants will expire on the 10 -year anniversary of issuance, or earlier upon redemption. The holders do not have the rights or privileges of holders of Class A common stock or any voting rights until they exercise their Warrants. After the issuance of shares of Class A common stock upon exercise of the Warrants, each holder will be entitled to one vote for each share of Class A common stock held on all matters to be voted on by stockholders generally. A holder of the Warrants will not have the right to exercise its Warrants, to the extent that after giving effect to such exercise, the holder (together with its affiliates) would beneficially own in excess of 49.9 % of the shares of Class A common stock outstanding immediately after giving effect to such exercise. The Warrants contain a repurchase provision which, upon the occurrence of a fundamental transaction as defined in the warrant agreement, could give rise to an obligation of the Company to pay cash to the warrant holders. In addition, other provisions may lead to a reduction in the exercise price of the Warrants. The Warrants also include full-ratchet anti-dilution protections, subject to certain conditions, which could result in the Warrants becoming exercisable for a significantly greater number of shares if we engage in a dilutive financing. The Company determined the fundamental transaction provisions require the Warrants to be accounted for as a liability at fair value on the date of the transaction, with changes in fair value recognized in earnings in the period of change. As a result, the liability for these Warrants was recorded at fair value on the date of issuance with the offset included in debt issuance costs. This liability is subsequently re-measured to fair value at each reporting date or exercise date with changes in the fair value included in earnings. F- 30 The Company used a Monte Carlo Simulation model to determine the fair value of the liability associated with the Warrants. The model used key assumptions and inputs, such as exercise price, fair market value of common stock, risk free interest rate, warrant life, expected volatility and the probability of a warrant re-price event. The following are the assumptions used in calculating fair value of the Warrants on the date of issuance: Trading price of common stock on measurement date $ 0.82 Exercise price $ 1.50 Risk free interest rate 4.14 % Warrant life in years 10.0 Expected volatility 88.62 % Expected dividend yield — Probability of an event causing a warrant re-price 25.0 % The following are the assumptions used in calculating fair value of the Warrants on December 31, 2024: Trading price of common stock on measurement date $ 0.78 Exercise price $ 1.50 Risk free interest rate 4.45 % Warrant life in years 9.1 Expected volatility 88.00 % Expected dividend yield — Probability of an event causing a warrant re-price 25.0 % The Warrants had a fair value of $ 16.1 million as of December 31, 2024. The Company recognized a gain of $ 3.5 million in its consolidated statement of operations for the year ended December 31, 2024 related to a decrease in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants on the date of issuance. The Company issued 12.8 million sponsor warrants pursuant to a private placement conducted simultaneously with its initial public offering. Each of these warrants entitled the registered holder to purchase one-half of one share of the Company’s Class A common stock at a price of $ 5.75 per half share ($ 11.50 per full share), subject to adjustment pursuant to the terms of the warrant agreement. These sponsor warrants contained certain provisions that did not meet the criteria for equity classification and therefore were recorded as liabilities. The liability for these warrants was recorded at fair value on the date of the Business Combination and subsequently re-measured to fair value at each reporting date or exercise date with changes in the fair value included in earnings. Unexercised sponsor warrants totaling 1.9 million expired in February 2023 and were cancelled pursuant to the terms of the warrant agreement. These sponsor warrants had no fair value on the date of expiration. The 1.9 million sponsor warrants outstanding at December 31, 2022 had a negligible fair value and no sponsor warrants were exercised in 2022. The Company determined the fair value of the sponsor warrants on December 31, 2022 using a Black-Scholes model with the following assumptions: Trading price of common stock on measurement date $ 4.79 Exercise price $ 5.75 Risk free interest rate 4.04 % Warrant life in years 0.1 Expected volatility 80.59 % Expected dividend yield — During the year ended December 31, 2022, the Company recognized a gain of $ 4.3 million in its consolidated statement of operations related to a decrease in the fair value of the sponsor warrants that were outstanding at the end of the period. F- 31 14. Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): December 31, December 31, 2024 2023 Asset retirement obligations $ 1,098 $ 2,230 Other 911 5 Total other long-term liabilities $ 2,009 $ 2,235 The Company’s asset retirement obligations (“ARO”) relate to two manufacturing facilities that are leased. One of the properties is the Company’s manufacturing facility in Grantsville, Utah which is expected to be closed in the first quarter of 2025 (For further discussion see Note 5— Restructuring, Impairment and Other Related Charges ). The ARO liabilities represent future estimated costs associated with the restoration of the facilities to their original state at the end of the respective lease terms. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using a credit-adjusted-risk-free interest rate, with a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. These liabilities are accreted each period, and the capitalized cost is depreciated over the useful life of the related asset. Revisions to estimated ARO liabilities result in an adjustment to the related capitalized asset and corresponding liability. Because the Company utilizes unobservable inputs in the estimation of its ARO liabilities, the fair values were determined to be Level 3 under the fair value hierarchy (For further discussion regarding the definition of Level 3 inputs see Note 2— Fair Value Measurements ). The Company had the following activity for its ARO liabilities (in thousands): Years Ended December 31, 2024 2023 Balance at beginning of period $ 2,230 $ 2,099 Revisions in estimated retirement obligations 277 — Accretion expense 133 131 Payments ( 102 ) — Balance at end of period 2,538 2,230 ARO liability classified as other current liabilities ( 1,440 ) — ARO liability classified as other long-term liabilities $ 1,098 $ 2,230 15. Commitments and Contingencies Chief Executive Officer Cash Bonus Award On January 26, 2024, the Board approved an amendment to the Chief Executive Officer’s employment agreement. Under the amendment, the Company agreed that, among other things, the Chief Executive Officer will be eligible to earn a cash payment of up to $ 5.0 million, less tax and other required withholdings, based on the volume weighted average price per share of the Company’s Class A common stock on NASDAQ during the period from March 16, 2026 through June 30, 2026 subject to his continued employment with the Company. The amount earned will be payable in quarterly installments commencing with the first payroll period following June 30, 2026. The Company determined the provisions surrounding the future bonus payment require it to be accounted for as a liability at fair value on the date of the transaction, with changes in fair value recognized in earnings in the period of change. The Company recorded a de minimis amount of compensation expense in its 2024 consolidated statement of operations related to the fair value of the future bonus payment. Senior Leadership Team Special Recognition Bonus On January 26, 2024, the Board unanimously approved a special recognition bonus payment to certain members of the Company’s senior leadership team. The bonus was awarded to incentivize retention and continued engagement with the Company during these challenging times in the bedding industry. Each participant is eligible to earn a special recognition bonus payment equal to 15 months of their regular salary. The special recognition bonus payment is paid as follows, subject to the employee’s continued employment with the Company: 10 % was paid in August 2024, 20 % is to be paid in February 2025, and the remaining 70 % is to be paid in August 2025. The Company recorded compensation expense of $ 3.1 million in its 2024 consolidated statement of operations related to this special recognition bonus. F- 32 Performance Cash Long-Term Incentive Award On June 20, 2024, the Board unanimously approved a performance cash long-term incentive award to those employees eligible to participate in the Company’s Long-Term Incentive Plan. The incentive award payment is based on a performance goal of the volume weighted average price per share of the Company’s Class A common stock on NASDAQ on March 31, 2027. The Company determined the provisions surrounding the performance cash long-term incentive award require it to be accounted for as a liability at fair value at each reporting period, with changes in fair value recognized in earnings in the period of change. The Company recorded a de minimis amount of compensation expense in the 2024 consolidated statement of operations related to this future award payment. Settlement of Insurance Claim In 2024, the Company received two payments totaling $ 11.6 million for full settlement of a previously filed business interruption claim which was recorded as other income, net in the 2024 consolidated statement of operations. Rights of Securities Holders On January 23, 2024, in connection with the issuance of the 2024 Warrants, the Company entered into an amended and restated registration rights agreement with holders of the Warrants (the “Holders”), providing for the registration under the Securities Act of 1933, as amended, of the 2024 Warrants, the shares issuable upon the exercise of the 2024 Warrants and Class A common stock held by the Holders as of such date, subject to customary terms and conditions. On March 12, 2025 in connection with the issuance of the 2025 Warrants, the Company entered into a Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) with the Holders, providing for the registration of the Warrants, the shares of Common Stock issuable upon the exercise of the Warrants, and the Class A Common Stock held by the Holders as of such date (the “Registrable Securities”). The Registration Rights agreement entitles the Holders to demand registration of the Registrable Securities and to piggyback on the registration of securities by the Company and other Company securityholders. The Company will be responsible for the payment of the Holders’ expenses in connection with any offering or sale of Registrable Securities by the Holders, including underwriting discounts or selling commissions, placement agent or broker fees or similar discounts, commissions or fees relating to the sale of certain Registrable Securities. NOL Rights Plan On June 27, 2024, the Board adopted and the Company entered into a limited-duration stockholder rights agreement (the “NOL Rights Plan”) with a stated expiration date of June 30, 2025. The Board adopted the NOL Rights Plan to protect stockholder value by attempting to safeguard the Company’s ability to use its June 30, 2024 estimated $ 238 million of net operating losses (the “Current NOLs”) to reduce potential future federal income tax obligations from becoming substantially limited by future ownership changes in the Company’s common stock under Code Section 382. On October 15, 2024, at a special meeting of stockholders (the “Special Meeting”), the Company’s stockholders ratified the NOL Rights Plan. Refer to Note 17 – Stockholders’ Equity – NOL Rights Plan for more information. NOL Protective Charter Amendment To further safeguard the Company’s ability to use its Current NOLs, on July 27, 2024, the Board adopted and recommended that the Company’s stockholders approve an amendment to the Company’s Certificate of Incorporation (the “NOL Protective Charter Amendment”) that adds an additional layer of protection of the Current NOLs until June 30, 2025 by voiding certain transfers of common stock that could result in an ownership change under Code Section 382. At the Special Meeting, the Company’s stockholders approved the NOL Protective Charter Amendment. Refer to Note 17 – Stockholders’ Equity – NOL Protective Charter Amendment for more information. F- 33 Non-Income Related Taxes The U.S. Supreme Court ruling in South Dakota v. Wayfair, Inc. , No.17-494, reversed a longstanding precedent that remote sellers are not required to collect state and local sales taxes. The Company cannot predict the effect of these and other attempts to impose sales, income or other taxes on e-commerce. The Company currently collects and reports on sales tax in all states in which it does business. However, the application of existing, new or revised taxes on the Company’s business, in particular, sales taxes, value-added tax and similar taxes would likely increase the cost of doing business online and decrease the attractiveness of selling products over the internet. The application of these taxes on the Company’s business could also create significant increases in internal costs necessary to capture data and collect and remit taxes. There have been, and will continue to be, substantial ongoing costs associated with complying with the various indirect tax requirements in the numerous markets in which the Company conducts or will conduct business. Legal Proceedings On December 16, 2022, Purple’s founders filed a complaint against Purple Inc. in the Fourth Judicial District Court in the State of Utah. In that suit, the plaintiffs alleged that they each entered into employment agreements with Purple LLC in February 2018. The plaintiffs contended that certain corporate transactions reduced their “ownership interest and voting power in Purple” and that, as a result, they should have continued to be paid a salary when they retired from Purple LLC. The plaintiffs calculated that they were each owed “no less than $ 500,000 ” in unpaid salary. In October 2023, the Court granted Purple Inc.’s motion and ordered that the claims brought by the plaintiffs be dismissed in full, with prejudice. The Court entered a final judgment dismissing the case in January 2024. The plaintiffs have filed an appeal to the Utah Court of Appeals. The parties argued before the Utah Court of Appeals on January 23, 2025. The Court’s decision is anticipated in the second quarter of 2025. The Company maintains insurance to cover the costs of defending against claims of this nature and intends to continue to vigorously defend against these claims in the course of the plaintiffs’ appeal. On April 3, 2023, Purple’s founders filed a complaint against Purple LLC in the Delaware Court of Chancery. The complaint alleges that Purple LLC breached the limited liability company agreement of Purple LLC by failing to pay the full amount of tax distributions owed under the agreement. The plaintiffs seek damages of approximately $ 3.0 million in allegedly unpaid tax distributions as well as legal fees and expenses incurred in connection with the litigation. On June 13, 2023, Purple LLC filed an answer to the complaint denying the plaintiffs’ allegations, setting forth its affirmative defenses, and requesting dismissal of all claims and entry of judgment in Purple LLC’s favor. The outcome of the litigation cannot be predicted at this early stage in the proceedings. Purple LLC denies all allegations and intends to vigorously defend against these claims. On January 17, 2024, two customers filed a punitive class action lawsuit (the “Class Action Lawsuit”) against Purple LLC in California Superior Court in the County of San Francisco alleging unlawful marketing and pricing practices, fraud and unjust enrichment. The suit sought damages and other relief on behalf of all persons who purchased Purple LLC products during the applicable statutory periods in California. On July 15, 2024, the Company entered into a settlement agreement (the “Settlement Agreement”) with the plaintiffs in connection with the Class Action Lawsuit. On August 16, 2024 the United States District Court for the Northern District of California dismissed the Class Action Lawsuit and approved the Settlement Agreement. Upon receipt of the executed release of all claims by the plaintiffs, the Company made a cash payment pursuant to the Settlement Agreement. On April 16, 2024, Purple’s founders, in their capacity as a former landlord of Purple LLC, brought a lawsuit against Purple LLC, as lessee, for amounts allegedly owed under a real estate lease which the parties terminated effective September 30, 2023. In the suit, the plaintiffs allege approximately $ 2.5 million in damages, based primarily on a dispute regarding whether Purple LLC left the premises in the condition required by the lease. The plaintiffs further claim approximately $ 0.8 million in holdover rent, as well as unspecified amounts in interest, late fees, liquidated damages, attorney fees and costs. Purple LLC denies all allegations and intends to vigorously defend against these claims. On July 24, 2024, a former part-time employee filed a class action lawsuit against Purple LLC in California Superior Court in the County of Alameda alleging failure to pay all wages, failure to pay overtime pay rate, failure to provide all meal periods, and other employment-related causes of action. The suit seeks damages, interest, attorneys’ fees, costs and other relief on behalf of all non-exempt California employees of Purple LLC during the applicable statutory periods. On September 30, 2024, the plaintiffs filed an amended complaint adding a claim for penalties under California’s Private Attorneys General Act. Subsequent to this, Purple LLC and the plaintiffs agreed to mediate the claims and to stay formal discovery pending mediation, which is currently scheduled to take place on May 8, 2025. Purple LLC denies all allegations and intends to vigorously defend against these claims. F- 34 The Company is from time to time involved in various other claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any such pending or threatened proceedings, or any amount that the Company might be required to pay by reason thereof, would have a material adverse effect on the financial condition or future results of the Company. 16. Related-Party Transactions The Company has engaged in various transactions with entities or individuals which are considered related parties. Coliseum Capital Management LLC Immediately following the Business Combination, Adam Gray was appointed to the Board. Mr. Gray is a manager of Coliseum Capital, LLC, which is the general partner of CCP and Coliseum Co-Invest Debt Fund, L.P. (“CDF”), and he is also a managing partner of Coliseum Capital Management, LLC (“CCM”), which is the investment manager of Blackwell and also manages investment funds and accounts. Mr. Gray has voting and dispositive control over securities held by CCP, CDF and Blackwell. In April 2023, Adam Gray was appointed Chairman of the Board of the Company as part of an agreement to resolve litigation that had been brought by Coliseum against the Company. Refer to Note 12— Debt — 2024 Credit Agreement for more information on the Related Party Loan . Purple Founder Entities Purple LLC began leasing its Alpine facility from entities controlled by the Purple Founders in 2010. On September 3, 2021, in accordance with the terms of that original lease, Purple LLC gave notice that it intended to exercise its right to an early termination of the lease to occur on September 30, 2022. On July 20, 2022, the Company entered into an amendment to its Alpine facility lease agreement that rescinded the Company’s previous notice of termination and extended the lease term to remain in effect until September 30, 2023. The Company vacated the Alpine facility and returned the property back to its owner on September 30, 2023, in accordance with the terms of the lease agreement and notice of termination. In conjunction with leasing the Alpine facility, Purple LLC incurred rent expense of $ 0.8 million and $ 1.0 million for the years ended December 31, 2023 and 2022, respectively. Refer to Note 15— Commitments and Contingencies—Legal Proceedings for information regarding a complaint filed by Purple’s founders regarding this matter. 17. Stockholders’ Equity Class A Common Stock The Company has 210.0 million shares of Class A common stock authorized. Holders of the Company’s Class A common stock are entitled to one vote for each share held on all matters to be voted on by the stockholders. Holders of Class A common stock and holders of Class B common stock voting together as a single class have the exclusive right to vote for the election of directors and on all other matters properly submitted to a vote of the stockholders. At December 31, 2024, 107.5 million shares of Class A common stock were outstanding. Class B Common Stock The Company has 90.0 million shares of Class B common stock authorized. Holders of the Company’s Class B common stock will vote together as a single class with holders of the Company’s Class A common stock on all matters properly submitted to a vote of the stockholders. Shares of Class B common stock may be issued only to InnoHold, their respective successors and assigns, as well as any permitted transferees of InnoHold. A holder may transfer their shares of Class B common stock to any transferee (other than the Company) only if such holder also simultaneously transfers an equal number of such holder’s shares of Class B common stock to such transferee. The Class B common stock is not entitled to receive dividends, if declared by the Board, or to receive any portion of any such assets in respect of their shares upon liquidation, dissolution, distribution of assets or winding-up of the Company in excess of the par value of such stock. At December 31, 2024, 0.2 million shares of Class B common stock were outstanding. F- 35 Preferred Stock The Company has 5.0 million shares of preferred stock authorized. The preferred stock may be issued from time to time in one or more series. The Board is expressly authorized to provide for the issuance of shares of the preferred stock in one or more series and to establish from time to time the number of shares to be included in each such series and to fix the voting rights, designations and other special rights or restrictions. At December 31, 2024, there were no shares of preferred stock outstanding. On June 27, 2024, 0.3 million shares of the Company’s authorized shares of preferred stock were designated as Series C Junior Participating Preferred Stock, par value $ 0.0001 per share (“Series C Preferred Shares”). NOL Rights Plan On June 27, 2024, the Board adopted and the Company entered into the NOL Rights Plan, which is designed to preserve approximately $ 238 million of the Company’s Current NOLs under Section 382 of the of the Internal Revenue Code of 1986, as amended (“Code Section 382”). At the Special Meeting, the Company’s stockholders ratified the NOL Rights Plan. The Company’s ability to use the Current NOLs to offset future taxable income may be significantly limited if the Company experiences an “ownership change” under Code Section 382, which occurs if one or more stockholders or groups of stockholders that is deemed to own at least 5 % of the Company’s common stock increases their aggregate ownership by more than 50 percentage points over its lowest ownership percentage within a rolling three-year period. The NOL Rights Plan is intended to prevent an ownership change by acting as a deterrent to any Person (as such term is defined in the NOL Rights Plan) acquiring 4.9 % or more of the outstanding common stock of the Company (or, in the case of a Grandfathered Person (as such term is defined in the NOL Rights Plan), an additional one-half of one percentage point of the outstanding common Stock of the Company above their current ownership percentage). Any Person that acquires shares of the Company’s common Stock in violation of the limitations of the NOL Rights Plan is known as an “Acquiring Person.” For purposes of the NOL Rights Plan, “common stock” includes (i) the Class A common stock; (ii) the Class B common stock; and (iii) any interest that would be treated as “stock” of the Company pursuant to Treasury Regulation § 1.382-2T(f)(18). Notwithstanding the foregoing, the NOL Rights Plan allows for the exercise of currently outstanding conversion rights, exchange rights, warrants or options, or otherwise, without triggering the NOL Rights Plan. Refer to Note 13 – Warrant Liabilities for further discussion of the Company’s outstanding warrants. The NOL Rights Plan provided for the issuance of a dividend of one preferred share purchase right (a “Right”) for each share of common stock outstanding on July 26, 2024. Each Right entitles the holder to purchase from the Company one one-thousandth of a share of Series C Preferred Share for a purchase price of $ 2.75 , subject to adjustment as provided in the NOL Rights Plan. Each Series C Preferred Share is designed to be the economic equivalent of one share of common stock. Unless the Board determines to effect an exchange (as discussed below), each Right will become exercisable on the “Distribution Time”, which is the earlier to occur of (i) the tenth day following a public announcement, or the public disclosure of facts indicating, that a Person has become an Acquiring Person or (ii) the tenth business day (or such later date as may be determined by action of the Board prior to such time as any Person becomes an Acquiring Person) following the commencement of a tender offer or exchange offer the consummation of which would result in a Person becoming an Acquiring Person. After the Distribution Time, any Rights held by an Acquiring Person will be void and will not be exercisable. As a result, any Acquiring Person will be subject to significant dilution upon the occurrence of the Distribution Time. At any time after a Person becomes an Acquiring Person, but before such Acquiring Person holds more than 50 % of the common stock, the Board, in its sole discretion, may instead extinguish the Rights by exchanging one share of Class A common stock for each Right, other than Rights held by the Acquiring Person. The Rights will expire on the earliest to occur of (i) the close of business on June 30, 2025; (ii) the time at which the Rights are redeemed (as discussed below) or exchanged by the Company; (iii) the repeal of Code Section 382, if the Board determines that the NOL Rights Plan is no longer necessary for the preservation of the Current NOLs; or (v) the beginning of a taxable year of the Company to which the Board determines that no Current NOLs may be carried forward. At any time prior to the expiration of the NOL Rights Plan, the Company may redeem the Rights in whole, but not in part, at a price of $ 0.0001 per Right (subject to adjustment and payable in cash, Class A common stock or other consideration deemed appropriate by the Board). Immediately upon the action of the Board authorizing any redemption or at a later time as the Board may establish for the effectiveness of the redemption, the Rights will terminate and the only right of the holders of Rights will be to receive the redemption price. The initial issuance of the Rights as a dividend had no tax, financial accounting or reporting impact. The fair value of the Rights is nominal, since the Rights were not exercisable when issued and no value is attributable to them. Additionally, the Rights do not meet the definition of a liability under GAAP and therefore are not being accounted for as a long-term obligation. Accordingly, unless the Rights become exercisable upon the occurrence of the Distribution Time as discussed above, the NOL Rights Plan and the Rights issued thereunder have no impact on the Company’s consolidated financial statements. F- 36 NOL Protective Charter Amendment On June 27, 2024, concurrently with the adoption of NOL Rights Plan, the Board adopted, and recommended that the Company’s stockholders approve at the Special Meeting, the NOL Protective Charter Amendment that adds an additional layer of protection of the Current NOLs until June 30, 2025 by voiding any transfer of common stock that results in any Person holding 4.9 % or more of the outstanding common stock of the Company (or, in the case of a Person already holding more than 4.9 % of the outstanding common stock of the Company as of the date of the NOL Protective Charter Amendment, one-half of one percentage point of the outstanding common stock of the Company above their current ownership percentage). At the Special Meeting, the Company’s stockholders approved the NOL Protective Charter Amendment. Any acquisition of common stock in violation of the NOL Protective Charter Amendment will be void as of the date it is attempted. Upon the Company’s written demand, the purported acquiring stockholder must transfer the excess acquired common stock to the Company’s transfer agent (along with any dividends or other distributions paid with respect to such excess acquired common stock). The Company’s transfer agent is then required to sell such excess acquired common stock in an arm’s-length transaction (or series of transactions) that would not constitute a violation under the NOL Protective Charter Amendment. The net proceeds of the sale together with any other distributions with respect to such excess acquired common stock received by the Company’s transfer agent, after deduction of all costs incurred by the transfer agent, will be transferred first to the purported transferee in an amount, if any, up to the cost (or in the case of gift, inheritance or similar transfer, the fair market value of the excess securities on the date of the prohibited transfer) incurred by the purported transferee to acquire such excess securities, and the balance of the proceeds, if any, will be transferred to a charitable beneficiary. Further, the Company may hold any stockholder liable, to the fullest extent of the law, for any intentional violation of the NOL Protective Charter Amendment. Warrants In connection with the Amended and Restated Credit Agreement, the Company issued to the Lenders Warrants to purchase 20.0 million shares of the Company’s Class A common stock. Each Warrant entitles the registered holder to purchase one share of the Company’s Class A common stock at a price of $ 1.50 per share, subject to adjustment. While the Warrants are exercisable, the Company may call the Warrants for redemption in whole and not in part at any time at a price of $ 0.01 per share of Class A common stock issuable upon exercise of the Warrants upon not less than 45 days’ prior written notice of redemption to each holder, provided that this redemption right is only available if the reported last sale price of the Class A common stock equals or exceeds $ 24.00 per share on each of 20 trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the holders. A holder of the Warrants will not have the right to exercise its Warrants, to the extent that after giving effect to such exercise, the holder (together with its affiliates) would beneficially own in excess of 49.9 % of the shares of Class A common stock outstanding immediately after giving effect to such exercise. Sponsor Warrants There were 12.8 million sponsor warrants issued pursuant to a private placement simultaneously with the Company’s initial public offering. Unexercised sponsor warrants totaling 1.9 million expired in February 2023 and were cancelled pursuant to the terms of the warrant agreement. These sponsor warrants had no fair value on the date of expiration. Noncontrolling Interest Noncontrolling interest (“NCI”) is the membership interest in Purple LLC held by holders other than the Company. At both December 31, 2024 and 2023, the combined NCI percentage in Purple LLC was 0.2 %. The Company has consolidated the financial position and results of operations of Purple LLC and reflected the proportionate interest held by all such Purple LLC Class B Unit holders as NCI. F- 37 18. Net Loss Per Common Share The following table sets forth the calculation of basic and diluted weighted average shares outstanding and loss per share for the periods presented (in thousands, except per share amounts): Years Ended December 31, 2024 2023 2022 Numerator: Net loss attributable to Purple Innovation, Inc. – basic $ ( 97,897 ) $ ( 120,757 ) $ ( 92,470 ) Less: Net loss attributable to noncontrolling interest ( 201 ) ( 458 ) — Net loss attributable to Purple Innovation, Inc. – diluted $ ( 98,098 ) $ ( 121,215 ) $ ( 92,470 ) Denominator Weighted average shares – basic 107,139 103,602 81,779 Add: Dilutive effect of Class B shares 185 334 — Weighted average shares – diluted 107,324 103,936 81,779 Net loss per common share: Basic $ ( 0.91 ) $ ( 1.17 ) $ ( 1.13 ) Diluted $ ( 0.91 ) $ ( 1.17 ) $ ( 1.13 ) The Company excludes from the diluted net loss per common share computation potentially dilutive securities related to warrants, equity awards and convertible shares of Class B common stock when their exercise or performance vesting price is greater than the average market price of the Company’s common stock or they are otherwise anti-dilutive. Potentially dilutive securities that have been excluded from the calculation of diluted net loss per common share are as follows (in thousands): Years Ended December 31, 2024 2023 2022 Warrants 20,000 — — Sponsor warrants — 928 928 Restricted stock units 2,006 1,423 679 Stock options 529 863 819 Class B common stock — — 448 19. Equity Compensation Plans 2017 Equity Incentive Plan The 2017 Equity Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock and other stock-based awards. Directors, officers and other employees and subsidiaries and affiliates, as well as others performing consulting or advisory services for the Company and its subsidiaries, will be eligible for grants under the 2017 Equity Incentive Plan. The aggregate number of shares of common stock which may be issued or used for reference purposes under the 2017 Equity Incentive Plan or with respect to which awards may be granted may not exceed 7.9 million shares. As of December 31, 2024, 2.4 million shares remain available for issuance under the 2017 Equity Incentive Plan. During the years ended December 31, 2024, 2023 and 2022, stock-based compensation associated with equity awards issued under the 2017 Equity Incentive Plan totaled $ 2.8 million, $ 4.9 million and $ 3.4 million, respectively, while the related tax benefits recognized on these awards were $ 0.9 million, $ 1.5 million and $ 0.9 million, respectively. F- 38 Class A Common Stock Awards There were no stock awards granted in 2024. In June 2023, the Company granted stock awards under the 2017 Equity Incentive Plan to non-executive directors on the Board. The stock awards vested immediately and the Company issued 0.2 million shares of Class A common stock and recognized $ 0.6 million in expense during the year ended December 31, 2023, which represented the fair value of the stock awards on the grant date. In May 2022, the Company granted stock awards under the 2017 Equity Incentive Plan to independent directors on the Board. The stock awards vested immediately and the Company issued 0.1 million shares of Class A common stock and recognized $ 0.6 million in expense during the year ended December 31, 2022, which represented the fair value of the stock awards on the grant date. Amended and Restated Grant Agreements On March 15, 2023, in accordance with the 2017 Equity Incentive Plan, the Company entered into amended and restated grant agreements relating to stock options and restricted stock unit awards previously granted to the Company’s chief executive officer in March 2022 and June 2022 . The amended agreements revised the vesting schedule of the awards included in each grant. Pursuant to these agreements, 0.3 million of restricted stock units and stock options fully vested on March 25, 2023, another 0.3 million of restricted stock units and stock options, which included conditionally granted awards that were approved by shareholders at the 2023 Annual Meeting, vested on March 25, 2024, and the remaining 0.3 million of conditionally granted awards approved by shareholders at the 2023 Annual Meeting will vest in full on March 25, 2025. These amendments resulted in the acceleration of $ 0.8 million of stock-based compensation expense into fiscal 2023 compared to the expense that would have been recorded based on vesting under the original agreements. Employee Stock Options There were no employee stock options granted in 2024. In June 2023, the 0.3 million of conditionally granted stock options to the Company’s chief executive officer were approved by shareholders. These stock options have an exercise price of $ 6.82 per option, expire in four years and vest over a two-year period. The fair value of this award, which was determined to be $ 0.1 million on the effective date, is being expensed over the vesting period on a straight-line basis. In March and June 2022, the Company granted 0.5 million and 0.1 million stock options, respectively, under the 2017 Equity Incentive Plan to its chief executive officer at an exercise price of $ 6.82 per option. The stock options expire in five years and were to vest over a three-year period. In April 2022, with the chief executive officer’s consent, the Company rescinded and cancelled 0.4 million of the stock options granted in March 2022 because of annual limits set forth in the 2017 Equity Incentive Plan. The Company determined the fair value of the net award of 0.2 million stock options to be $ 0.4 million which was expensed on a straight-line basis over the vesting period. F- 39 The following are the weighted average assumptions used in calculating the fair value of the total stock options granted in 2023 and 2022 using the Black-Scholes method: Year Ended December 31, 2023 2022 Weighted average grant date value $ 0.22 $ 2.02 Risk free rate 4.48 % 2.67 % Dividend yield — — Expected volatility 44.98 % 54.22 % Expected term in years 2.58 3.45 The following table summarizes the Company’s total stock option activity for the year ended December 31, 2024: Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Intrinsic Value $ (in thousands) Options outstanding as of December 31, 2023 863 $ 8.13 2.2 $ — Granted — — — — Forfeited — — — — Expired ( 334 ) 9.67 — — Options outstanding as of December 31, 2024 529 7.17 2.2 — Outstanding and exercisable stock options as of December 31, 2024 are as follows: Options Outstanding Options Exercisable Exercise Prices Number of Options Outstanding (in thousands) Weighted Average Remaining Life (Years) Number of Options Exercisable (in thousands) Weighted Average Remaining Life (Years) Intrinsic Value (in thousands) $ 6.82 500 2.3 333 2.3 $   — 13.12 29 0.4 29 0.4 — 529 2.2 362 2.1 $ — F- 40 The following table summarizes the Company’s unvested stock option activity for the year ended December 31, 2024: Options (in thousands) Weighted Average Grant Date Fair Value Nonvested options as of December 31, 2023 337 $ 0.41 Granted — — Vested ( 170 ) 0.59 Forfeited — — Nonvested options as of December 31, 2024 167 0.22 The Company recognized $ 0.5 million and $ 0.7 million in stock-based compensation expense related to stock options during the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2024, stock-based compensation expense related to stock options was de minimis. For stock options outstanding as of December 31, 2024, there was a de minimis amount of unrecognized stock compensation cost with a remaining recognition period of 0.3 years. Cash received and the total intrinsic value from the exercise of stock options in 2022 was $ 0.2 million and $ 0.1 million, respectively. There were no stock options exercised in 2024 and 2023. The tax benefit associated with the exercise of these stock options in 2022 was $ 0.4 million. There were no stock options exercised in 2024 and 2023. The fair value of stock options vested in 2024, 2023 and 2022 totaled $ 0.1 million, $ 0.6 million and $ 0.7 million, respectively. Employee Restricted Stock Units In 2024, 2023 and 2022, the Company granted 1.8 million, 2.4 million and 1.1 million, respectively, of restricted stock units under the 2017 Equity Incentive Plan to certain members of the Company’s management team. Of the restricted stock units granted in those years, 0.4 million, 1.2 million and 0.6 million, respectively, included a market vesting condition. The restricted stock awards granted in 2024, 2023 and 2022 that did not have a market vesting condition had weighted average grant date fair values of $ 1.00 , $ 2.75 and $ 5.53 per share, respectively. The estimated fair value of these awards is recognized on a straight-line basis over the vesting period. The restricted stock awards granted in 2024, 2023 and 2022 that did have a market vesting condition had weighted average grant date fair values of $ 1.13 , $ 1.92 and $ 3.71 per share, respectively. For these awards, the estimated fair value was measured on the grant date and incorporated the probability of vesting occurring. The estimated fair value is recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. The Company determined the weighted average grant date fair value of these awards using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model with the following weighted average assumptions: Year Ended December 31, 2024 2023 2022 Trading price of common stock on measurement date $ 1.50 $ 2.72 $ 5.33 Risk free interest rate 4.46 % 4.29 % 2.89 % Expected life in years 3.0 2.7 2.9 Expected volatility 97.1 % 89.9 % 85.1 % Expected dividend yield — — — F- 41 In March and June 2022, the Company granted 0.5 million and 0.1 million restricted stock units, respectively, under the 2017 Equity Incentive Plan to the Company’s chief executive officer. These restricted stock awards had a grant date fair value of $ 6.32 and $ 4.81 per share, respectively. In April 2022, with the chief executive officer’s consent, the Company rescinded and cancelled 0.4 million of the restricted stock units granted in March 2022 because of annual limits set forth in the 2017 Equity Incentive Plan. The Company determined the fair value of the net award of 0.2 million restricted stock units to be $ 1.2 million which is being expensed on a straight-line basis over the vesting period. The following table summarizes the Company’s restricted stock unit activity for the year ended December 31, 2024: Options (in thousands) Weighted Average Grant Date Fair Value Nonvested restricted stock units as of December 31, 2023 3,057 $ 2.97 Granted 1,828 1.03 Vested ( 571 ) 3.57 Forfeited ( 506 ) 3.31 Nonvested restricted stock units as of December 31, 2024 3,808 1.91 The Company recorded restricted stock unit expense of $ 2.8 million, $ 3.7 million and $ 2.1 million during the years ended December 31, 2024, 2023 and 2022, respectively. For restricted stock units outstanding as of December 31, 2024, there was $ 3.3 million of total unrecognized stock compensation cost with a remaining recognition period of 1.6 years. Aggregate Non-Cash Stock Compensation The Company has accounted for all stock-based compensation under the provisions of ASC 718 Compensation—Stock Compensation. This standard requires the Company to record a non-cash expense associated with the fair value of stock-based compensation over the requisite service period. The table below summarizes the aggregate non-cash stock compensation recognized in the statement of operations for stock awards, employee stock options and employee restricted stock units (in thousands). Years Ended December 31, 2024 2023 2022 Cost of revenues $ 398 $ 285 $ 305 Marketing and sales 489 616 863 General and administrative 1,621 3,730 2,033 Research and development 307 244 165 Total non-cash stock compensation $ 2,815 $ 4,875 $ 3,366 20. Employee Retirement Plan In 2018, the Company established a 401(k) plan that qualifies as a deferred compensation arrangement under Section 401 of the IRS Code. All eligible employees over the age of 18 and with 4 months’ service are eligible to participate in the plan. The plan provides for the Company to match employee contributions up to 5 % of eligible earnings. Company contributions immediately vest. The Company matching contribution expense was $ 3.9 million, $ 3.8 million and $ 3.6 million for the years ended December 31, 2024, 2023 and 2022, respectively. F- 42 21. Segment Information and Concentrations The Company designs and manufactures a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets, and other products. The Company has one reportable segment that operates an omni-channel distribution strategy which allows the Company to offer a seamless shopping experience to its customers across multiple sales channels. The Company’s one segment markets and sells products through its direct-to-consumer e-commerce channels, retail brick-and-mortar wholesale partners, Purple showrooms, and third-party online retailers. The accounting policies for the Company’s one segment are the same as those described in Note 2, Summary of Significant Accounting Policies . The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net income or loss as reported in the consolidated statement of operations. The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The Company does not have intra-entity sales or transfers. The CODM uses consolidated net income (loss) to evaluate earnings generated from segment assets (return on assets) in deciding whether to reinvest profits into its single reportable segment or into other parts of the entity, such as for acquisitions. Consolidated net income (loss) is also used to monitor budget versus actual results. The monitoring of budgeted versus actual results are used in assessing the segment’s performance and in establishing management’s compensation. The following table summarizes segment revenue, significant segment expenses, other segment items and segment profit or loss (in thousands): Year Ended December 31, 2024 2023 2022 Revenues, net $ 487,877 $ 510,541 $ 573,201 Reductions (additions): Cost of revenues 291,303 338,716 365,110 Cost of revenues – restructuring related charges 15,442 — — Advertising expense 65,198 72,372 66,645 Marketing sales expense 33,778 36,741 39,388 Wholesale marketing and sales expense 20,081 23,016 21,340 Showroom marketing and sales expense 52,206 50,184 38,015 General and administrative expense 69,117 84,446 76,702 Research and development expense 12,962 11,898 8,755 Restructuring, impairment and other related charges 19,973 — — Loss on impairment of goodwill — 6,879 — Other segment items, net (d) 5,852 7,496 ( 1,230 ) Tax receivable agreement income — — ( 161,970 ) Income tax expense 63 8 213,169 Net loss attributable to noncontrolling interest ( 201 ) ( 458 ) ( 253 ) Segment net loss $ ( 97,897 ) $ ( 120,757 ) $ ( 92,470 ) (d) Other segment items, net include interest expense, other (income) expense, net, loss on extinguishment of debt, and change in fair value of warrant liabilities. The Company classifies products into two major categories: sleep products and other. Sleep products include mattresses, platforms, adjustable bases, mattress protectors, pillows and sheets. Other products include cushions and various other products. In 2024, 2023 and 2022, sales of other products accounted for less than 3 % of net revenues. The Company defines international revenues as sales to customers located outside of the United States. In 2024, 2023 and 2022, international customers accounted for less than 2 % of net revenues. The Company had one individual customer that accounted for approximately 29 % and 23 % of accounts receivable at December 31, 2024 and 2023, respectively, and approximately 13 %, 10 % and 15 % of net revenue during the years ended December 31, 2024, 2023 and 2022, respectively. F- 43 The Company currently obtains materials and components used in production from outside sources. As a result, the Company is dependent upon suppliers that in some instances, are the sole source of supply. The Company is continuing efforts to dual-source key components. The failure of one or more of the Company’s suppliers to provide materials or components on a timely basis could significantly impact the results of operations. The Company believes that it can obtain these raw materials and components from other sources of supply in the ordinary course of business, although an unexpected loss of supply over a short period of time may not allow for the replacement of these sources in the ordinary course of business. The Company maintains its cash balances in financial institutions based in the United States that are insured by the Federal Deposit Insurance Corporation (FDIC) up to $ 250,000 for each financial institution per entity. At times, the Company’s cash balance deposited at financial institutions exceed the federally insured deposit limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to these deposits. 22. Income Taxes The Company’s (loss) income before income taxes of $( 98.0 ) million, $( 121.2 ) million and $ 120.4 million during the years ended December 31, 2024, 2023 and 2022, respectively, consisted entirely of income earned in the United States. Income tax expense for the years ended December 31, 2024, 2023 and 2022 consist of the following (in thousands): Year ended December 31, 2024 2023 2022 Current: Federal $ ( 114 ) $ ( 167 ) $ ( 1,030 ) State 177 217 344 Total current 63 50 ( 686 ) Deferred: Federal — ( 42 ) 169,180 State — — 44,675 Total deferred — ( 42 ) 213,855 Income tax expense $ 63 $ 8 $ 213,169 Income tax expense differs from the amount computed at the federal statutory corporate income tax rate as follows (in thousands): Year ended December 31, 2024 2023 2022 Tax (provision) benefit at Federal statutory rate $ ( 20,587 ) $ ( 25,454 ) $ 25,293 State income tax provision (benefit), net of federal benefit ( 5,238 ) ( 6,235 ) 292 Noncontrolling interest 44 96 59 Tax receivable agreement liability — — ( 34,014 ) Change in fair value – warrant liabilities ( 736 ) — ( 912 ) Change in valuation allowance 26,963 35,592 189,870 Remeasurement due to rate change ( 586 ) ( 31 ) 2,530 Research and development tax credits ( 482 ) ( 1,113 ) ( 1,763 ) Remeasurement of investment in Purple LLC — ( 4,028 ) 29,822 Nondeductible compensation 315 281 — Stock-based compensation 699 605 2,303 Other ( 329 ) 295 ( 311 ) Income tax expense $ 63 $ 8 $ 213,169 F- 44 Deferred income taxes at December 31, 2024 and 2023 consisted of the following (in thousands): 2024 2023 Basis difference in Purple LLC investment $ 153,872 $ 156,521 Tax over book basis in capital contributions 79,400 78,158 Start-up costs 361 405 Stock-based compensation 635 999 Interest carryforwards 6,503 2,314 Research and development tax credits 3,590 2,712 Charitable contribution carryforwards 159 121 Net operating losses 82,137 62,550 Total net deferred income tax asset 326,657 303,780 Less: Valuation allowance ( 326,657 ) ( 303,780 ) Net deferred income tax asset $ — $ — The Company’s sole material asset is Purple LLC, which is treated as a partnership for U.S. federal income tax purposes and for purposes of certain state and local income taxes. Purple LLC’s net taxable income and any related tax credits are passed through to its members and included in the members’ tax returns, even though such net taxable income or tax credits may not have actually been distributed. While the Company consolidates Purple LLC for financial reporting purposes, the Company will be taxed on its share of earnings of Purple LLC not attributed to the noncontrolling interest holders, which will continue to bear their share of income tax on its allocable earnings of Purple LLC. The primary factors impacting expected tax are tax exempt income from the tax receivable agreement, remeasurement of the deferred taxes associated with the investment in Purple LLC, and the impact of recording a valuation allowance. During 2022, the Company entered into a three-year cumulative loss position and determined that it would not be able to generate sufficient taxable income to utilize its deferred tax assets. Based on this and other negative evidence, the Company concluded it was more likely than not that its deferred tax assets would not be realized and that a full valuation allowance for its deferred tax assets was required. At both December 31, 2024 and 2023, the Company continued to maintain a full valuation allowance on its deferred tax assets based on its three-year cumulative loss position. In connection with the Business Combination, the Company entered into a tax receivable agreement with InnoHold, which provides for the payment by the Company to InnoHold of 80 % of the net cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the Closing as a result of (i) any tax basis increases in the assets of Purple LLC resulting from the distribution to InnoHold of the cash consideration, (ii) the tax basis increases in the assets of Purple LLC resulting from the redemption by Purple LLC or the exchange by the Company, as applicable, of Class B Paired Securities or cash, as applicable, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, payments it makes under the agreement. As noncontrolling interest holders exercise their right to exchange or cause Purple LLC to redeem all or a portion of their Class B Units, a liability may be recorded based on 80 % of the estimated future cash tax savings that the Company may realize as a result of increases in the basis of the assets of Purple LLC attributed to the Company as a result of such exchange or redemption. The amount of the increase in asset basis, the related estimated cash tax savings and the attendant liability to be recorded will depend on the price of the Company’s Class A common stock at the time of the relevant redemption or exchange. During 2022, the Company concluded that the tax receivable agreement liability was not probable and correspondingly reduced its tax receivable agreement liability to zero . As a result, the Company recognized tax receivable agreement income of $ 162.0 million in the Company’s consolidated statement of operations for the year ended December 31, 2022. There was no tax receivable agreement liability recorded during 2024 or 2023. F- 45 As of December 31, 2024, the Company estimates it will have approximately $ 65.2 million of tax-affected U.S. net operating loss carryforwards (“NOLs”), of which $ 64.7 million do not have an expiration date and $ 0.5 million expire in 2037. The Company also had approximately $ 16.9 million of tax-affected NOL carryforwards to reduce future state taxable income at December 31, 2024, which have various carryforward periods and begin to expire in 2026, if unused. Under Section 382 and related provisions of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change”, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Generally, an ownership change is defined as a change in its equity ownership by certain stockholders over a three-year period of greater than 50 percentage points (by value). If finalized, Treasury Regulations currently proposed under Section 382 of the Code may further limit our ability to utilize our pre-change NOLs or other tax attributes if we undergo a future ownership change. Thus, our ability to utilize carryforwards of our net operating losses, including net operating losses acquired from the Intellibed acquisition, and other tax attributes to reduce future tax liabilities may be substantially restricted. As of December 31, 2024, we completed a study to assess whether an ownership change has occurred, as defined by IRC Section 382, or whether there have been ownership changes since the Company’s formation. The results of this study indicate that we experienced one ownership change on December 31, 2021. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we generate taxable income, our ability to use our pre-change NOL and tax credits carryforwards to reduce U.S. federal and state taxable income may be subject to further limitations, which could result in increased future tax liabilities to us. Moreover, our federal NOLs from years prior to 2018 can be carried forward for a maximum of 20 years from the year in which the NOL was incurred, and our state NOLs are subject to carryforward limitations that vary from state to state; as a result, all or a portion of those carryforwards could expire before being available to reduce future income tax liabilities. Refer to Note 17 – Stockholders’ Equity – NOL Rights Plan for information on plan adopted by the Board to preserve Current NOLs. The Company estimates federal research and development (“R&D”) tax credit carryforwards will be approximately $ 2.6 million as of December 31, 2024, which begin to expire in 2042, if unused. The Company also had approximately $ 1.8 million of state tax credit carryforwards to reduce future state tax liability at December 31, 2024, which have various carryforward periods and begin to expire in 2030, if unused. The effects of uncertain tax positions are recognized in the consolidated financial statements if these positions meet a “more-likely-than-not” threshold. For those uncertain tax positions that are recognized in the consolidated financial statements, liabilities are established to reflect the portion of those positions it cannot conclude “more-likely-than-not” to be realized upon ultimate settlement. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties would be included on the related tax liability line in the consolidated balance sheets. The following table summarizes the Company’s unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 (in thousands): Unrecognized Tax Benefits Unrecognized tax benefits as of December 31, 2021 $ — Increase due to current year tax positions 177 Increase due to prior year tax positions 264 Increase due to acquisition 152 Unrecognized tax benefits as of December 31, 2022 593 Increase due to current year tax positions 215 Increase due to prior year tax positions 291 Decrease due to lapse of statute of limitations ( 153 ) Unrecognized tax benefits as of December 31, 2023 946 Increase due to current year tax positions 111 Increase due to prior year tax positions 109 Decrease due to lapse of statute of limitations ( 114 ) Unrecognized tax benefits as of December 31, 2024 $ 1,052 The Company remains subject to income tax examinations for its U.S. federal income taxes for 2018 through 2024. The Company also remains subject to income tax examinations for U.S. state and local income taxes generally for 2018 through 2024. F- 46 23. Subsequent Events New Lease Agreement In January 2025, the Company entered into a new lease agreement for a distribution and fulfilment center located in West Valley City, Utah. The lease term commenced in January 2025 and will expire in May 2030. Using the applicable discount rate, the new lease resulted in an ROU asset of $ 6.3 million and an increase to operating lease liabilities of $ 6.8 million. The landlord provided the Company with a tenant improvement allowance of $ 0.6 million in connection with the new lease agreement, for which the related expenditures to be paid by the Company will be reimbursed by the landlord. NASDAQ Listing Qualification Notice On February 4, 2025, the Company received written notice from the Listing Qualifications Department of The NASDAQ Stock Market LLC (“Nasdaq”) that it had regained compliance with Listing Rule 5550(a)(2) (“Bid Price Rule”) since the closing bid price of the Company’s common stock was at or above the $ 1.00 minimum price per share for a period of ten consecutive business days, from January 21, 2025, to February 3, 2025. As previously reported, the Company was notified on November 11, 2024, that it had fallen out of compliance with the Bid Price Rule, because its common stock failed to maintain the required minimum bid price of $ 1.00 per share for a period of 30 consecutive business days. Class Action Lawsuits On February 10, 2025, a shareholder of the Company filed a class action lawsuit in the Court of Chancery of the State of Delaware against Purple Inc. and the individual members of the Board alleging that Section 29 of the NOL Rights Plan violates Delaware General Corporate Law Sections 102(b)(7) and 141(a). The suit seeks declaratory relief, attorneys’ fees, costs, and other relief on behalf of the class. The Company denies all allegations and intends to vigorously defend against these claims. On February 26, 2025, a consumer filed a class action lawsuit in the U.S. District Court, Eastern District of New York, against Purple LLC alleging website accessibility violations under the ADA and state law. The lawsuit seeks declaratory relief, class certification, attorneys’ fees, costs, and other relief on behalf of the class. The Company denies all allegations and intends to vigorously defend against these claims. Amendment to Amended and Restated Credit Agreement On March 12, 2025, the Loan Parties entered into an Amendment to Amended and Restated Credit Agreement (the “Amendment”) with the 2025 Term Loan Lenders (as defined in the Amendment), which amends the Amended and Restated Credit Agreement. The Amendment, among other things, provides for an increase in the initial principal amount of the senior secured term loan facility by $ 19.0 million (the “Incremental Loan”) from an aggregate principal amount of up to $ 61.0 million (the “Initial Loan”) to an initial aggregate principal amount of up to $ 80.0 million (the “Loan”), and allows the Loan Parties to request one or more additional term loans from the Lenders in an initial aggregate principal amount not to exceed $ 20.0 million on terms to be agreed to by the parties and subject to the approval of the Required Lenders (as defined in the Amended and Restated Credit Agreement). The Incremental Loan will bear interest at the same rate as the Initial Loan, which may be paid in cash or in kind at the Company’s option. F- 47 The Amendment also provides that (i) the Incremental Loan shall be senior in right of repayment to the Initial Term Loan and (ii) in any voluntary or mandatory prepayment in part or in full of the Incremental Loan for any reason, the Company will be required to pay an amount equal to the greater of (i) the Make-Whole Premium (as defined below) and (ii) 2.50 % of the aggregate principal amount of the Incremental Loan so prepaid, replaced or assigned. The “Make-Whole Premium” is determined as follows: on the date of prepayment, the excess of (A) (x) 100 % of the principal amount of such Incremental Loan, plus (y) the present value at such date of all remaining scheduled interest payments due on such Incremental Loan from the prepayment date through the Maturity Date, assuming that all such interest accrues at the Make-Whole Premium Rate (as defined in the Amendment), computed using a discount rate equal to the Treasury Rate as of such prepayment date plus 50 basis points, over (B) the principal amount of such Incremental Loan on such prepayment date. In addition, the Company also paid fees of (i) 2 % of the outstanding principal and accrued and unpaid interest under the Initial Loan held by the 2025 Term Loan Lenders, paid in kind and (ii) 2 % of the initial aggregate principal amount of the Incremental Loan paid to the 2025 Term Loan Lenders, deducted from the proceeds at closing. In connection with the Amendment, the Company issued to the 2025 Term Loan Lenders warrants (the “Warrants”) to purchase 6,229,508 shares of the Company’s Class A Stock at a price of $ 1.50 per share, subject to certain adjustments. The warrants include full-ratchet anti-dilution protections, subject to a floor of $ 0.6979 with respect to adjustments to the exercise price. The Warrants expire on March 12, 2035 . The foregoing summary of the Warrants does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Warrants, a form of which is attached as Exhibit 10.42 to this report and is incorporated by reference herein. In connection with the issuance of the Warrants, on March 12, 2025, the Company entered into a Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) with CCP, Blackwell, and Coliseum Capital Co-Invest III, L.P., (the “Holders”), providing for the registration under the Securities Act of 1933, as amended (the “Securities Act”) of the Warrants, the shares issuable upon the exercise of the Warrants, other warrants held by the Holders (and shares issuable upon exercise thereof) and the Class A Stock held by the Holders as of such date (the “Registrable Securities”), subject to customary terms and conditions. The Registration Rights Agreement entitles the Holders to demand registration of the Registrable Securities and also to piggyback on the registration of Company securities by the Company and other Company securityholders. The Company will be responsible for the payment of the Holders’ expenses in connection with any offering or sale of Registrable Securities by the Holders, including underwriting discounts or selling commissions, placement agent or broker fees or similar discounts, commissions or fees relating to the sale of certain Registrable Securities. The Registration Rights Agreement provides that on or prior to April 10, 2025, or May 25, 2025 if Form S-3 is not then available to the Company, the Company will be required to prepare and file with the SEC pursuant to Rule 415 of the Securities Act a registration statement to register the resale of the Registrable Securities. F- 48 Special Incentive Bonus Equity Grants On March 12, 2025, the Board unanimously approved special incentive bonus equity grants to certain members of the Company’s senior leadership team, including, among others, Todd Vogensen, Chief Financial Officer, John J. Roddy, Chief Human Resources Officer, and Eric S. Haynor, Chief Operating Officer. Mr. Vogensen, Mr. Roddy, and Mr. Haynor will receive grants of 450,000 , 175,000 , and 350,000 restricted stock units, respectively, pursuant to the terms of restricted stock unit grant agreements and the Company’s 2017 Equity Incentive Plan. Such restricted stock units will vest at the sooner of (a) a change in control, as defined in the award agreements, or (b) March 12, 2028, provided that if the recipient’s employment with the Company is involuntarily terminated other than for cause, a pro rata number of restricted stock units will vest as of such termination date. Amendment to Senior Leadership Team Special Recognition Bonus On January 26, 2024, the Board unanimously approved a special recognition bonus payment to certain members of the Company’s senior leadership team, including, among others, Todd Vogensen, Chief Financial Officer, John J. Roddy, Chief People Officer, and Eric S. Haynor, Chief Operating Officer. Each participant is eligible to earn a special recognition bonus payment equal to 15 months of their regular salary. The special recognition bonus payment is payable, subject to the employee’s continued employment with the Company, 10 % on August 1, 2024, 20 % on February 1, 2025, and 70 % on August 1, 2025. On March 12, 2025, the Board amended the special recognition bonus payments and entered into letter agreements (the “Letter Agreements”) with the participants to provide that if a change in control occurs prior to August 1, 2025 and the participant remains employed with the Company until the consummation of the change in control, then 100 % of the remaining special recognition bonus payment for such participant shall vest and become payable upon the consummation of such change in control. Amendment to Chief Executive Officer Special Recognition Bonus On January 26, 2024, the Board unanimously approved an amendment to the amended and restated employment agreement of Robert T. DeMartini, the Company’s Chief Executive Officer (the “2024 CEO Amendment”). Under the 2024 CEO Amendment, the Company agreed that, among other things, Mr. DeMartini will be eligible to earn an incremental aggregate cash bonus equal to $ 850,000 that will vest 10 % on August 1, 2024, 20 % on February 1, 2025, and 70 % on August 1, 2025, provided he continues to be employed by the Company and subject to Mr. DeMartini’s obligation to repay any such bonus actually received in the event his employment is terminated other than by the Company without cause prior to June 30, 2026, subject to certain conditions. On March 12, 2025, the Board adopted an amendment (the “2025 CEO Amendment”) to Mr. DeMartini’s amended and restated employment agreement, as amended by the 2024 CEO Amendment (the “Amended and Restated Employment Agreement”), to provide that if a change in control occurs prior to August 1, 2025 and Mr. DeMartini remains employed by the Company until the consummation of the change in control, then 100 % of the unpaid cash bonus payment for Mr. DeMartini shall vest and become payable upon the consummation of such change in control and the bonus repayment condition tied to his employment with the Company until June 30, 2026 shall no longer be applicable. Other than the changes provided by the 2025 CEO Amendment, no other changes were made to Mr. DeMartini’s Amended and Restated Employment Agreement. F- 49 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Purple Innovation, Inc. March 13, 2025 By: /s/ Robert T. DeMartini Name: Robert T. DeMartini Title: Chief Executive Officer (Principal Executive Officer) POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert T. DeMartini and Tricia S. McDermott-Spikes, jointly and severally, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her, and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s/ Robert T. DeMartini Chief Executive Officer and Director March 13, 2025 Robert T. DeMartini (Principal Executive Officer) /s/ Todd E. Vogensen Chief Financial Officer March 13, 2025 Todd E. Vogensen (Principal Financial Officer) /s/ George T. Ulrich Vice President, Accounting and Financial Reporting March 13, 2025 George T. Ulrich (Principal Accounting Officer) /s/ Adam L. Gray Chairman of the Board of Directors March 13, 2025 Adam L. Gray /s/ S. Hoby Darling Director March 13, 2025 S. Hoby Darling /s/ Gary T. DiCamillo Director March 13, 2025 Gary T. DiCamillo /s/ Claudia Hollingsworth Director March 13, 2025 Claudia Hollingsworth /s/ R. Carter Pate Director March 13, 2025 R. Carter Pate /s/ D. Scott Peterson Director March 13, 2025 D. Scott Peterson /s/ Erika Serow Director March 13, 2025 Erika Serow 49