What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2026-04-28 compared with 2025-11-04 · 4 added, 236 removed, 0 unchanged (100% 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.

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

trade policy including the impact of tariffs are having and may continue to have a material adverse effect on our business and

results of operations.

business and results of operations are being and may continue to be adversely affected by uncertainty and changes in U.S.

trade policies,

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.

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.

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

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

Such adverse changes could increase our costs of capital and limit our access to financing sources, which could in turn reduce our cash

flow and limit our ability to pursue growth opportunities.

indebtedness, related covenants, and certain prepayment obligations, including make-whole payments, could limit operational and financial

flexibility and adversely affect our business if we breach such covenants or default on such indebtedness.

January 23, 2024, to refinance existing obligations, we entered into the Amended and Restated Credit Agreement.

Upon entry into the Amended

and Restated Credit Agreement, we received a term loan in the amount of $61.0 million.

The Amended and Restated Credit Agreement imposes

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.

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

to execute our business strategy or compete with less restricted companies.

If we fail to comply with the covenants under the Amended

and Restated Credit Agreement, we may need to seek future amendments or waivers and/or alternative liquidity sources, such as subordinated

debt, which may not be favorable or available.

Before taking any action requiring a waiver under the Amended and Restated Credit Agreement,

we must first obtain approval from the Lenders, which may cause us to incur additional costs and may not be granted.

Non-compliance could

lead to defaults, which could materially adversely affect our financial condition and results of operations, including possible acceleration

of our debt, as well as other cross-defaulting debt obligations.

Additionally, defaults could significantly impair our ability to secure

alternative financing and limit our business strategies.

Our compliance with these covenants will depend on successfully implementing

our business strategies, as breaches could lead to defaults and acceleration of our debt, potentially forcing us into bankruptcy or liquidation.

addition, on March 12, 2025, we entered into the 2025 Amendment, pursuant to which the 2025 Lenders agreed to provide us with an incremental

term loan of $19.0 million pursuant to Section 2.18 of the Amended and Restated Credit Agreement.

On May 2, 2025, we entered into the

2025 Second Amendment, pursuant to which the 2025 Lenders agreed to provide us with an incremental term loan of $20.0 million pursuant

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.

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.

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

cash resources in the future.

For the years ended December 31, 2024, and 2023, we had negative cash flow from operating activities of

$18.0 million and $54.7 million, respectively.

As of December 31, 2024, we had unrestricted cash and cash equivalents of $29.0 million

and borrowings of $70.7 million under our Amended and Restated Credit Agreement, which will become due on December 31, 2026.

March 12, 2025, we borrowed an additional $19.0 million under the Amended and Restated Credit Agreement pursuant to the 2025 Amendment,

which will also become due on December 31, 2026.

On May 2, 2025, we borrowed an additional $20 million under the Amended and Restated

Credit Agreement, pursuant to the 2025 Second Amendment.

The 2025 Amendment also added certain make-whole payments with respect to our

borrowings under the Amended and Restated Credit Agreement, which would require substantial payments in connection with certain pre-payments

or refinancing of our outstanding borrowings.

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

business relationships.

rely on commercial agreements and strategic relationships with suppliers, service providers, and wholesale partners.

Disruptions in these

relationships or strategic decisions by partners could negatively affect our business.

For example, (i) one of our competitors has acquired

one of our wholesale partners, which could disrupt our relationship or prevent us from continuing to sell our products in favorable placements

alongside the competitor’s products or at all in the wholesale partner’s stores, and (ii) one of our competitors owns a manufacturing

company with which we have a manufacturing relationship, and that competitor could disrupt that relationship to harm our manufacturing

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.

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

This omni-channel strategy

carries the risk of diminishing sales in other channels, increasing costs, and the potential loss of wholesale partners.

Managing this

omni-channel strategy may require significant resources, potentially impacting other areas of our business.

If our financial performance

falls short of expectations, we may struggle to secure favorable payment terms or obtain credit from commercial partners that have extended

credit to us.

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.

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

issue additional debt or equity securities or securities convertible into equity securities, as well as due to the exercise of the currently

outstanding Warrants.

may attempt to increase our capital by entering additional secured or unsecured debt or debt-like financing, or by issuing additional

debt or equity securities, including issuances of secured or unsecured notes, preferred stock, hybrid securities or convertible securities.

Our Second Amended and Restated Certificate of Incorporation allows us to issue up to 300 million shares of our common stock, including

210 million shares of Class A common stock and 90 million shares of Class B common stock, and up to five million shares of undesignated

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.

Company’s business, reputation, results of operations, financial condition and stock price can be materially and adversely affected

by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A of the 2025 Annual Report on

Form 10-K filed with the SEC on March 31, 2026 under the heading “Risk Factors.” There have been no material changes

from the risk factors previously disclosed in our 2025 Annual Report on Form 10-K filed with the SEC on March 31, 2026.

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