What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-07-30 compared with 2025-05-06 · 104 added, 93 removed, 133 unchanged (60% of the section changed)

18 unchanged sentences

results of operations.

of our products require materials that may be subject to these recent

tariffs, especially our products requiring textiles.

Any imposition of or increase in tariffs on imports of these products or components,

as well as corresponding price increases for such materials available domestically, could increase our costs.

To the extent that we are

unsuccessful in finding alternative suppliers that are subject to smaller or no tariffs, negotiating sharing these costs with our suppliers,

or failing to pass cost increases on to our customers, such cost increases could adversely affect our business and results of operations.

Higher costs could also inhibit our ability to develop new products and innovations.

of our products require materials that may be subject to these recent tariffs, especially our products requiring textiles.

Any imposition

of or increase in tariffs on imports of these products or components, as well as corresponding price increases for such materials available

domestically, could increase our costs.

To the extent that we are unsuccessful in finding alternative suppliers that are subject to smaller

or no tariffs, negotiating sharing these costs with our suppliers, or failing to pass cost increases on to our customers, such cost increases

could adversely affect our business and results of operations.

Higher costs could also inhibit our ability to develop new products and

or other trade restrictions may lead to continuing uncertainty and volatility in U.S.

39 unchanged sentences

repayment to the initial term loan.

the Amended and Restated Credit Agreement, we have mandatory prepayment obligations, including upon certain asset dispositions, equity

issuances, debt incurrences and extraordinary receipts of cash.

As amended by the 2025 Amendment, we may be required to make substantial

“make-whole” payments to the Lenders.

If required to prepay or pay such make-whole payments, we may lack the liquidity to

do so, resulting in default.

Prepayments, including make-whole payments, would also divert resources from operating expenses, potentially

harming relationships with suppliers, hindering growth strategies, and jeopardizing our business continuity.

In addition, such payments

could result in holders of our Class A Stock not receiving any consideration in a sale of our business, or if we were to liquidate, dissolve,

or wind-up, either voluntarily or involuntarily.

Under the Amended and Restated Credit Agreement, we have mandatory

prepayment obligations, including upon certain asset dispositions, equity issuances, debt incurrences and extraordinary receipts of cash.

As amended by the 2025 Amendment, we may be required to make substantial “make-whole” payments to the Lenders.

to prepay or pay such make-whole payments, we may lack the liquidity to do so, resulting in default.

Prepayments, including make-whole

payments, would also divert resources from operating expenses, potentially harming relationships with suppliers, hindering growth strategies,

and jeopardizing our business continuity.

In addition, such payments could result in holders of our Class A common stock not receiving

any consideration in a sale of our business, or if we were to liquidate, dissolve, or wind-up, either voluntarily or involuntarily.

may need additional funds to execute our business plan, maintain our liquidity, repay our debt and fund our operations.

be able to obtain such funds on acceptable terms or at all.

We may not be

able to obtain such funds on acceptable terms or at all.

have experienced recurring operating losses and negative cash flows and may continue to generate operating losses and consume significant

13 unchanged sentences

of our 2024 financial statements, we undertook a going concern assessment and concluded the Company will have sufficient liquidity for

its operations for at least one year from the date these consolidated financial statements are issued.

its operations for at least one year from the date those consolidated financial statements were issued.

However, there can be no assurance

18 unchanged sentences

In addition, on March 12, 2025, we issued to the 2025 Lenders, as partial

consideration for their entering into the 2025 Amendment, warrants to purchase 6.2 million shares of our Common Stock, on May 2, 2025

consideration for their entering into the 2025 Amendment, warrants to purchase 6.2 million shares of our common stock, and on May 2, 2025

we issued to the 2025 Lenders, as partial consideration for their entering into the Second 2025 Amendment, warrants to purchase 6.6 million

18 unchanged sentences

We may also struggle to maintain or develop these relationships and may not be able to secure new ones on favorable terms.

sell products through wholesale partnerships and may seek to expand these relationships.

However, these wholesale partnerships may not

be profitable and could incur additional costs compared to our DTC operations.

In addition, an expansion of these relationships may concentrate

our business with one customer resulting in greater reliance on that customer, which could adversely affect our ability to grow our business

and compete in our industry Wholesale relationships may be terminated or modified, or wholesale partners may reduce orders or fail to

meet their obligations, resulting in lost sales and adversely affecting our financial performance, results of operations and financial

Disputes with partners or the termination or amendment of agreements could lead to expenses, delayed payments, liabilities,

and distractions from our strategic objectives.

If we cannot renew or replace agreements on favorable terms, it could harm our business.

partners may also compete against us in key channels, harming our business.

Maintaining these relationships may require significant resources

and could limit our sales channels, adversely affecting other areas of our business.

We sell products through wholesale partnerships and may seek to expand

these relationships.

However, these wholesale partnerships may not be profitable and could incur additional costs compared to our DTC

In addition, an expansion of these relationships may concentrate our business with one customer resulting in greater reliance

on that customer, which could adversely affect our ability to grow our business and compete in our industry.

Wholesale relationships may

be terminated or modified, or wholesale partners may reduce orders or fail to meet their obligations, resulting in lost sales and adversely

affecting our financial performance, results of operations and financial condition.

Disputes with partners or the termination or amendment

of agreements could lead to expenses, delayed payments, liabilities, and distractions from our strategic objectives.

If we cannot renew

or replace agreements on favorable terms, it could harm our business.

Wholesale partners may also compete against us in key channels,

harming our business.

Maintaining these relationships may require significant resources and could limit our sales channels, adversely

affecting other areas of our business.

are expanding Purple showrooms across the U.S., which may compete with our wholesale partners for customers.

6 unchanged sentences

credit to us.

We recently increased our use of third-party manufacturers to assemble

certain of our products using Company-made Hyper-Elastic Polymer material.

We depend on our third-party manufacturers to maintain high

levels of productivity and satisfactory delivery schedules.

These third-party manufacturers may experience difficulties assembling our

products, particularly in the early stages of their engagement as they develop expertise in assembling our products to our standards.

For example, we have experienced temporary issues with third-party manufacturers assembling our mattresses.

Though such issues were quickly

resolved, in the future if we do not remedy such problems our business could be harmed.

The ability of our suppliers to effectively satisfy

our production requirements could also be impacted by their financial difficulty or damage to their operations caused by fire, pandemic,

terrorist attack, natural disaster, or other events.

The failure of any supplier to perform to our expectations could result in supply

shortages or delays for certain products and components and harm our business.

may delist our securities from its exchange, which could harm our business and limit our stockholders ’ liquidity.

Common Stock is currently listed on NASDAQ, which has listing criteria.

We cannot assure that our Common Stock will continue to be listed

on NASDAQ in the future.

To continue listing our Common Stock on NASDAQ, we must maintain certain governance, financial, distribution

and stock price levels.

Generally, we must maintain a minimum amount in stockholders’ equity, a minimum number of holders of our

Common Stock, and a $1.00 minimum per share bid price for our Common Stock.

If we fail to maintain a $1.00 minimum per share bid price

for a period of 30 consecutive business days, we have 180 calendar days to maintain our Common Stock at a $1.00 minimum per share bid

price for 10 consecutive trading days.

If we do not regain compliance within 180 calendar days, NASDAQ may grant a second compliance period

of 180 calendar days or it may determine to delist our Common Stock, at which point we would have an opportunity to appeal the delisting

determination to a hearings panel.

On April 5, 2025, we received written notice from NASDAQ that we were not in compliance with Nasdaq

minimum share price rule, since the closing price of our Common Stock had been below $1.00 per share for 30 consecutive business days.

We have 180 calendar days, or until October 1, 2025, to regain compliance with the Nasdaq minimum share price rule.

To regain compliance,

the bid price of our Common Stock must close at $1.00 or more for a minimum of ten consecutive business days.

While we intend to actively

monitor the bid price of our Common Stock and will consider available options to regain compliance, there can be no guarantee that we

will be able to regain compliance or otherwise comply with NASDAQ’s other continued listing requirements.

we are unable to comply with NASDAQ’S continued listing requirements, our Common Stock may be subject to delisting.

If NASDAQ delists

our Common Stock from trading on its exchange or if we decide to voluntarily delist from NASDAQ and/or deregister our Common Stock under

the federal securities laws, we could face significant material adverse consequences, including but not limited to (i) a limited availability

of market quotations for our Common Stock;

(ii) reduced liquidity for our Common Stock;

(iii) a determination that our Common Stock is

a “penny stock” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly

result in a reduced level of trading activity in the secondary trading market for our securities;

(iv) a limited amount of news and analyst

coverage, and in the event of deregistration of our Common Stock, less public disclosure about us;

and (v) a decreased ability to issue

additional securities or obtain additional financing in the future.

Our common stock is currently listed on NASDAQ, which has listing criteria.

We cannot assure that our common stock will continue to be listed on NASDAQ in the future.

To continue listing our common stock on NASDAQ,

we must maintain certain governance, financial, distribution and stock price levels.

Generally, we must maintain a minimum amount in stockholders’

equity, a minimum number of holders of our common stock, and a $1.00 minimum per share bid price for our common stock.

If we fail to maintain

a $1.00 minimum per share bid price for a period of 30 consecutive business days, we have 180 calendar days to maintain our common stock

at a $1.00 minimum per share bid price for 10 consecutive trading days.

If we do not regain compliance within 180 calendar days, NASDAQ

may grant a second compliance period of 180 calendar days or it may determine to delist our common stock, at which point we would have

an opportunity to appeal the delisting determination to a hearings panel.

On April 5, 2025, we received written notice from NASDAQ that

we were not in compliance with Nasdaq minimum share price rule, since the closing price of our common stock had been below $1.00 per share

for 30 consecutive business days.

We have 180 calendar days, or until October 1, 2025, to regain compliance with the Nasdaq minimum share

To regain compliance, the bid price of our common stock must close at $1.00 or more for a minimum of ten consecutive business

While we intend to actively monitor the bid price of our common stock and will consider available options to regain compliance,

there can be no guarantee that we will be able to regain compliance or otherwise comply with NASDAQ’s other continued listing requirements.

If we are unable to comply with NASDAQ’S continued listing requirements,

our common stock may be subject to delisting.

If NASDAQ delists our common stock from trading on its exchange or if we decide to voluntarily

delist from NASDAQ and/or deregister our common stock under the federal securities laws, we could face significant material adverse consequences,

including but not limited to (i) a limited availability of market quotations for our common stock;

(ii) reduced liquidity for our common

(iii) a determination that our common stock is a “penny stock” which will require brokers trading in our common

stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for

our securities;

(iv) a limited amount of news and analyst coverage, and in the event of deregistration of our common stock, less public

disclosure about us;

and (v) a decreased ability to issue additional securities or obtain additional financing in the future.

stockholders may experience substantial dilution in the value of their investment or may otherwise have their interests impaired if we

6 unchanged sentences

preferred stock.

have previously sold and may in the future sell additional shares of our Common Stock or convertible securities at prices that are lower

than the prices paid by existing stockholders, and investors purchasing shares or other securities could have rights superior to existing

stockholders, which could result in substantial dilution of existing stockholders.

For example, in February 2023 we issued 13.4 million

shares of Common Stock pursuant to a public offering, on January 23, 2024, we issued to the Lenders under the Amended and Restated Credit

Agreement the 2024 Warrants to purchase 20.0 million shares of our Common Stock at a price of $1.50 per share, subject to adjustments,

and on March 12, 2025, we issued to the 2025 Lenders under the 2025 Amendment the 2025 Warrants to purchase 6.2 million shares of our

Common Stock at a price of $1.50 per share, subject to adjustments.

In addition, on May 2, 2025, we issued to the 2025 Lenders under the

Second 2025 Amendment the 2025 Additional Warrants to purchase 6.6 million shares of our Common Stock at a price of $1.50 per share, subject

to adjustments and on May 2, 2025, we issued to SGI as partial consideration for their entering into the SGI Agreement, warrants to purchase

8.0 million shares of our Common Stock at a price of $1.50 per share, subject to adjustments.

The exercise of the Warrants will dilute

the value of Class A common stock and stockholder voting power.

In addition, the Warrants 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 event of our liquidation, holders of our debt would receive distributions of our assets before distributions to holders of our Common

Stock, including substantial make-whole payments, and holders of securities senior to the Common Stock would receive distributions of

our assets before distributions to the holders of our Common Stock.

Because future debt and equity offerings may be influenced by market

conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings or

debt financings.

Market conditions could impose less favorable terms for the issuance of our securities in the future.

We have previously sold and may in the future sell additional shares

of our common stock or convertible securities at prices that are lower than the prices paid by existing stockholders, and investors purchasing

shares or other securities could have rights superior to existing stockholders, which could result in substantial dilution of existing

stockholders.

For example, in February 2023 we issued 13.4 million shares of common stock pursuant to a public offering, on January 23,

2024, we issued to the Lenders under the Amended and Restated Credit Agreement the 2024 Warrants to purchase 20.0 million shares of our

common stock at a price of $1.50 per share, subject to adjustments, and on March 12, 2025, we issued to the 2025 Lenders under the 2025

Amendment the 2025 Warrants to purchase 6.2 million shares of our common stock at a price of $1.50 per share, subject to adjustments.

In addition, on May 2, 2025, we issued to the 2025 Lenders under the Second 2025 Amendment the 2025 Additional Warrants to purchase 6.6

million shares of our common stock at a price of $1.50 per share, subject to adjustments and on May 2, 2025, we issued to SGI as partial

consideration for their entering into the SGI Agreement, warrants to purchase 8.0 million shares of our common stock at a price of $1.50

per share, subject to adjustments.

The exercise of the Warrants will dilute the value of Class A common stock and stockholder voting power.

addition, the Warrants 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.

In the event of our liquidation, holders of our debt would receive

distributions of our assets before distributions to holders of our common stock, including substantial make-whole payments, and holders

of securities senior to the common stock would receive distributions of our assets before distributions to the holders of our common stock.

Because future debt and equity offerings may be influenced by market conditions and other factors beyond our control, we cannot predict

or estimate the amount, timing or nature of our future offerings or debt financings.

Market conditions could impose less favorable terms

for the issuance of our securities in the future.

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

What changed 10-Q

Item 1A. Risk Factors