What changed in this filing

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Item 1A. Risk Factors

2025-11-04 compared with 2025-07-30 · 155 added, 156 removed, 81 unchanged (79% of the section changed)

as described below, there have been no material changes from the risk factors previously disclosed in our 2024 Annual Report on Form 10-K

filed with the SEC on March 14, 2025.

as described below, there have been no material changes from the risk factors previously disclosed in our 2024 Annual Report on Form

10-K filed with the SEC on March 14, 2025.

The disclosure of risks identified below does not imply that the risk has not already materialized.

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including tariffs, trade agreements or other trade restrictions which may be imposed by the U.S.

or other governments with little or no

advance notice.

For example, the U.S.

government recently imposed tariffs on product imports from almost all countries.

Some tariff announcements

have been followed by the granting of limited exemptions and temporary pauses causing substantial uncertainty and volatility in financial

trade policy has and may continue to result in retaliatory measures on U.S.

If we are unable to navigate

further these unpredictable changes in U.S.

or international trade policy, it could have a material adverse impact on our business and

results of operations.

or other governments with little or

no advance notice.

In the recent past, U.S.

trade policy has resulted in retaliatory measures on U.S.

goods and may result in further

retaliatory measures.

Further changes to trade policy may result in additional retaliatory measures.

If we are unable to navigate further

these unpredictable changes in U.S.

or international trade policy, it could have a material adverse impact on our business and 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

some U.S manufacturers have recently asked the U.S.

government to extend increased steel tariff protections to mattress springs.

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.

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

and global financial and economic conditions and

commodity markets, declining consumer confidence, significant inflation, and diminished expectations for the economy, and ultimately may

reduce demand for our products.

Such conditions could have a material adverse impact on our business, results of operations and cash flows.

commodity markets, declining consumer confidence, significant inflation, and diminished expectations for the economy, and ultimately

may reduce demand for our products.

Such conditions could have a material adverse impact on our business, results of operations and cash

Also, disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital.

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various affirmative and negative covenants, including covenants regarding dispositions of property, investments, forming or acquiring

subsidiaries, business combinations or acquisitions, incurrence of additional indebtedness, paying dividends or making distributions and

transactions with affiliates, among other customary covenants.

subsidiaries, business combinations or acquisitions, incurrence of additional indebtedness, paying dividends or making distributions

and transactions with affiliates, among other customary covenants.

restrictions may prevent us from taking actions that we believe would be in the best interests of the business and complicate our ability

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to Section 2.18 of the Amended A&R Credit Agreement.

The 2025 Amendment also amended the Amended A&R Credit Agreement to (i) provide

for an additional term loan from the 2025 Term Loan Lenders (as defined in the 2025 Amendment) in an aggregate amount not to exceed $20.0

million, subject to the approval of the Required Lenders in their discretion, (ii) provide for the payment of substantial make-whole payments

in the event we prepay the loans prior to their maturity, and (iii) provide that the incremental term loan will be senior in right of

repayment to the initial term loan.

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.

The 2025 Amendment also amended the Amended A&R Credit Agreement to (i)

provide for an additional term loan from the 2025 Term Loan Lenders (as defined in the 2025 Amendment) in an aggregate amount not to

exceed $20.0 million, subject to the approval of the Required Lenders in their discretion, (ii) provide for the payment of substantial

make-whole payments in the event we prepay the loans prior to their maturity, and (iii) provide that the incremental term loan will be

senior in right of 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 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.

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or refinancing of our outstanding borrowings.

In connection with the preparation

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 those consolidated financial statements were issued.

However, there can be no assurance

that we will be able to maintain the liquidity necessary to fund our long-term operations and growth strategies, or repay our debt obligations

As a result, we may need to secure additional sources of liquidity to fund our long-term operating activities and capital expenditures.

However, there can be no assurance that we will be able to obtain additional financing as needed on terms favorable to us, or at all.

If we fail to meet liquidity and capital requirements, we may need to scale back or halt our growth plans, risking slower growth, losing

suppliers, failing to meet customer demands, and losing employees.

We may also need to restructure our obligations or pursue other measures

to address any liquidity deficiency.

Under the Amended and Restated

Credit Agreement, we can request additional loans, but the Lenders may deny requests, limiting our access to future funds and adversely

affecting our liquidity, financial condition and results of operations.

As a condition to providing future funds, the Lenders may require

other revisions to the Amended and Restated Credit Agreement, such as increasing prepayment or make-whole payments or including additional

restrictive covenants, which could adversely affect our business and financial condition.

Future equity or debt financings

may involve issuing securities likely to be dilutive to our existing stockholders, such as warrants, as we did on January 23, 2024 when

we issued to the Lenders, as partial consideration for their entering into the Amended and Restated Credit Agreement, warrants (the “2024

Warrants”) to purchase 20.0 million shares of our common stock (approximately 19% of our currently outstanding common stock) at

a price of $1.50 per share, subject to certain adjustments.

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, 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

shares of our common stock 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 certain adjustments.

The exercise of such

warrants and/or any additional similar securities in the future would dilute the value and amount of our common stock.

Similarly, any

new securities we may issue may carry preferences, superior voting rights, or additional terms that could adversely affect shareholders

of our common stock.

Future capital raising efforts may incur substantial costs, such as investment banking, legal, and accounting fees,

and could lead to non-cash expenses that negatively impact our financial condition.

connection with the preparation 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 those consolidated financial statements were issued.

However, there can be no assurance that we will be able to maintain the liquidity necessary to fund our long-term operations and growth

strategies, or repay our debt obligations when due.

As a result, we may need to secure additional sources of liquidity to fund our long-term

operating activities and capital expenditures.

However, there can be no assurance that we will be able to obtain additional financing

as needed on terms favorable to us, or at all.

If we fail to meet liquidity and capital requirements, we may need to scale back or halt

our growth plans, risking slower growth, losing suppliers, failing to meet customer demands, and losing employees.

We may also need to

restructure our obligations or pursue other measures to address any liquidity deficiency.

the Amended and Restated Credit Agreement, we can request additional loans, but the Lenders may deny requests, limiting our access to

future funds and adversely affecting our liquidity, financial condition and results of operations.

As a condition to providing future

funds, the Lenders may require other revisions to the Amended and Restated Credit Agreement, such as increasing prepayment or make-whole

payments or including additional restrictive covenants, which could adversely affect our business and financial condition.

equity or debt financings may involve issuing securities likely to be dilutive to our existing stockholders, such as warrants, as we

did on January 23, 2024 when we issued to the Lenders, as partial consideration for their entering into the Amended and Restated Credit

Agreement, warrants (the “2024 Warrants”) to purchase 20.0 million shares of our common stock (approximately 19% of our currently

outstanding common stock) at a price of $1.50 per share, subject to certain adjustments.

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, 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 shares of our common stock 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 certain

The exercise of such warrants and/or any additional similar securities in the future would dilute the value and amount of

our common stock.

Similarly, any new securities we may issue may carry preferences, superior voting rights, or additional terms that

could adversely affect shareholders of our common stock.

Future capital raising efforts may incur substantial costs, such as investment

banking, legal, and accounting fees, and could lead to non-cash expenses that negatively impact our financial condition.

business could suffer if we are unsuccessful in making, integrating and maintaining commercial agreements, strategic alliances and other

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

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.

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.

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

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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.

recently increased our use of third-party manufacturers to assemble certain of our products using Company-made Hyper-Elastic Polymer

We depend on our third-party manufacturers to maintain high levels of productivity and satisfactory delivery schedules.

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 recently experienced temporary issues with certain

third-party manufacturers assembling our mattresses.

Although such issues were resolved, the occurrence of such issues in the future

would materially harm our business.

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.

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.

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.

While we are currently in compliance with the minimum bid price requirement, there can be

no guarantee that we will be able to maintain such compliance.

Currently, the minimum bid price of our common stock has closed below

$1.00 every trading day since September 24, 2025.

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.

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.

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.

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.

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