Purple Innovation, Inc. 10-Q

prpl-20260630 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2026 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________ Commission File Number: 001-37523 PURPLE INNOVATION, INC. (Exact name of registrant as specified in its charter) Delaware 47-4078206 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 4100 NORTH CHAPEL RIDGE ROAD SUITE 200 LEHI , UTAH 84048 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (801) 756-2600 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, par value $0.0001 per share PRPL The NASDAQ Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of August 10, 2026, 4,353,109 shares of the registrant’s Class A common stock, $0.0001 par value per share, and 6,523 shares of the registrant’s Class B common stock, $0.0001 par value per share, were outstanding. PURPLE INNOVATION, INC. QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS Page Part I. Financial Information 1 Item 1. Financial Statements (Unaudited): 1 Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Operations 2 Condensed Consolidated Statements of Stockholders’ Equity 3 Condensed Consolidated Statements of Cash Flows 4 Notes to Condensed Consolidated Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3. Quantitative and Qualitative Disclosures About Market Risk 40 Item 4. Controls and Procedures 40 Part II. Other Information 41 Item 1. Legal Proceedings 41 Item 1A. Risk Factors 41 Item 5. Other Information 41 Item 6. Exhibits 42 Signatures 43 i PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PURPLE INNOVATION, INC. Condensed Consolidated Balance Sheets (unaudited – in thousands, except for par value) June 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 23,300 $ 24,345 Accounts receivable, net 26,229 41,272 Inventories 55,397 59,725 Prepaid expenses 4,131 5,487 Other current assets 5,418 5,891 Total current assets 114,475 136,720 Property and equipment, net 73,763 77,961 Operating lease right-of-use assets 64,424 67,271 Intangible assets, net 5,909 6,346 Other long-term assets 5,925 7,961 Total assets $ 264,496 $ 296,259 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 41,186 $ 40,312 Accrued compensation 3,818 7,673 Customer prepayments 4,035 5,276 Accrued rebates and allowances 11,633 13,416 Accrued warranty liabilities – current portion 8,135 7,141 Operating lease obligations – current portion 16,967 17,366 Related party debt – current portion 127,006 — Other current liabilities 6,934 10,339 Total current liabilities 219,714 101,523 Related party debt, net of current portion — 111,305 Accrued warranty liabilities, net of current portion 20,030 19,570 Operating lease obligations, net of current portion 71,209 75,616 Warrant liabilities 15,715 16,150 Other long-term liabilities 1,628 1,764 Total liabilities 328,296 325,928 Commitments and contingencies (Note 13) Stockholders’ equity (deficit): Class A common stock; $ 0.0001 par value, 210,000 shares authorized; 4,353 issued and outstanding at June 30, 2026 and 4,330 issued and outstanding at December 31, 2025 4 4 Class B common stock; $ 0.0001 par value, 90,000 shares authorized; 7 issued and outstanding at June 30, 2026 and at December 31, 2025 — — Additional paid-in capital 595,280 595,589 Accumulated deficit ( 659,051 ) ( 625,280 ) Total stockholders’ equity (deficit) attributable to Purple Innovation, Inc. ( 63,767 ) ( 29,687 ) Noncontrolling interest ( 33 ) 18 Total stockholders’ equity (deficit) ( 63,800 ) ( 29,669 ) Total liabilities and stockholders’ equity (deficit) $ 264,496 $ 296,259 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 PURPLE INNOVATION, INC. Condensed Consolidated Statements of Operations (unaudited – in thousands, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues, net $ 98,270 $ 105,100 $ 194,000 $ 209,271 Cost of revenues: Cost of revenues 53,857 62,509 109,366 120,101 Cost of revenues - restructuring related charges — 77 — 995 Total cost of revenues 53,857 62,586 109,366 121,096 Gross profit 44,413 42,514 84,634 88,175 Operating expenses: Marketing and sales 33,733 35,447 70,316 76,688 General and administrative 12,445 14,991 30,478 29,478 Research and development 2,485 2,178 4,933 4,630 Restructuring, impairment and other related charges — 4,137 — 6,097 Total operating expenses 48,663 56,753 105,727 116,893 Operating loss ( 4,250 ) ( 14,239 ) ( 21,093 ) ( 28,718 ) Other income (expense): Interest expense ( 7,812 ) ( 7,457 ) ( 16,031 ) ( 12,221 ) Other income, net 1,455 1 2,946 70 Change in fair value – warrant liabilities 7,393 4,378 435 4,427 Total other income (expense), net 1,036 ( 3,078 ) ( 12,650 ) ( 7,724 ) Net loss before income taxes ( 3,214 ) ( 17,317 ) ( 33,743 ) ( 36,442 ) Income tax expense ( 32 ) ( 54 ) ( 79 ) ( 95 ) Net loss ( 3,246 ) ( 17,371 ) ( 33,822 ) ( 36,537 ) Net loss attributable to noncontrolling interest ( 16 ) ( 26 ) ( 51 ) ( 55 ) Net loss attributable to Purple Innovation, Inc. $ ( 3,230 ) $ ( 17,345 ) $ ( 33,771 ) $ ( 36,482 ) Net loss per share: Basic $ ( 0.74 ) $ ( 4.01 ) $ ( 7.77 ) $ ( 8.45 ) Diluted $ ( 0.74 ) $ ( 4.01 ) $ ( 7.77 ) $ ( 8.45 ) Weighted average common shares outstanding: Basic 4,353 4,329 4,344 4,317 Diluted 4,360 4,329 4,351 4,317 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 PURPLE INNOVATION, INC. Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited – in thousands) Class A Class B Additional Total Stockholders’ Equity (Deficit) attributable to Purple Total Common Stock Common Stock Paid-in Accumulated Innovation, Noncontrolling Equity Shares Par Value Shares Par Value Capital Deficit Inc. Interest (Deficit) Balance – December 31, 2025 4,330 $ 4 7 $ — $ 595,589 $ ( 625,280 ) $ ( 29,687 ) $ 18 $ ( 29,669 ) Net loss — — — — — ( 30,541 ) ( 30,541 ) ( 35 ) ( 30,576 ) Stock-based compensation — — — — 156 — 156 — 156 Issuance of stock under equity compensation plans 16 — — — ( 51 ) — ( 51 ) — ( 51 ) Balance – March 31, 2026 4,346 $ 4 7 $ — $ 595,694 $ ( 655,821 ) $ ( 60,123 ) $ ( 17 ) $ ( 60,140 ) Net loss — — — — — ( 3,230 ) ( 3,230 ) ( 16 ) ( 3,246 ) Stock-based compensation — — — — ( 377 ) — ( 377 ) — ( 377 ) Issuance of stock under equity compensation plans 7 — — — ( 37 ) — ( 37 ) — ( 37 ) Balance – June 30, 2026 4,353 $ 4 7 — $ 595,280 $ ( 659,051 ) ( 63,767 ) ( 33 ) ( 63,800 ) Total Class A Common Stock Class B Common Stock Additional Paid-in Accumulated Stockholders’ Equity Noncontrolling Total Equity Shares Par Value Shares Par Value Capital Deficit (Deficit) Interest (Deficit) Balance – December 31, 2024 4,302 $ 4 7 $ — $ 594,060 $ ( 573,866 ) $ 20,198 $ 11 $ 20,209 Net loss — — — — — ( 19,137 ) ( 19,137 ) ( 29 ) ( 19,166 ) Stock-based compensation — — — — 368 — 368 — 368 Issuance of stock under equity compensation plans 16 — — — ( 81 ) — ( 81 ) — ( 81 ) Impact of transactions affecting NCI — — — — ( 8 ) — ( 8 ) 8 — Balance – March 31, 2025 4,318 $ 4 7 $ — $ 594,339 $ ( 593,003 ) $ 1,340 $ ( 10 ) $ 1,330 Net loss — — — — — ( 17,345 ) ( 17,345 ) ( 26 ) ( 17,371 ) Stock-based compensation — — — — 477 — 477 — 477 Issuance of stock under equity compensation plans 12 — — — ( 100 ) — ( 100 ) — ( 100 ) Accrued Distribution True-up — — — — 85 — 85 — 85 Impact of transactions affecting NCI — — — — ( 96 ) — ( 96 ) 96 — Balance – June 30, 2025 4,330 $ 4 7 $ — $ 594,705 $ ( 610,348 ) $ ( 15,639 ) $ 60 $ ( 15,579 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 PURPLE INNOVATION, INC. Condensed Consolidated Statements of Cash Flows (unaudited – in thousands) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $ ( 33,822 ) $ ( 36,537 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 8,888 9,881 Non-cash interest 6,797 5,656 Paid-in-kind interest 9,249 6,797 Non-cash restructuring, impairment and other related charges — 3,816 Loss on disposal of property and equipment 152 224 Change in fair value – warrant liabilities ( 435 ) ( 4,427 ) Stock-based compensation ( 221 ) 845 Changes in operating assets and liabilities: Accounts receivable 15,043 11,974 Inventories 4,328 ( 4,040 ) Prepaid expenses and other assets 3,755 2,671 Operating leases, net ( 1,960 ) ( 1,018 ) Accounts payable 947 ( 17,111 ) Accrued compensation ( 3,855 ) ( 2,783 ) Customer prepayments ( 1,241 ) 2,079 Accrued rebates and allowances ( 1,783 ) ( 2,572 ) Accrued warranty liabilities 1,454 514 Other accrued liabilities ( 3,660 ) ( 3,031 ) Net cash provided by (used in) operating activities 3,636 ( 27,062 ) Cash flows from investing activities: Sale of property and equipment — 363 Purchase of property and equipment ( 3,557 ) ( 5,222 ) Investment in intangible assets ( 778 ) ( 285 ) Net cash used in investing activities ( 4,335 ) ( 5,144 ) Cash flows from financing activities: Proceeds from related party loan — 39,000 Payments for debt issuance costs ( 346 ) ( 1,557 ) Net cash (used in) provided by financing activities ( 346 ) 37,443 Net (decrease) increase in cash and cash equivalents ( 1,045 ) 5,237 Cash and cash equivalents, beginning of the period 24,345 29,011 Cash and cash equivalents, end of the period $ 23,300 $ 34,248 Supplemental disclosures of cash flow information: Cash paid during the period for interest, net of amounts capitalized $ 23 $ 81 Cash paid during the period for income taxes $ 191 $ 165 Supplemental schedule of non-cash investing and financing activities: Property and equipment included in accounts payable $ 434 $ 435 Warrants issued $ — $ 17,284 Amendment fee added to principal of loan $ 1,286 $ 1,215 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 1. Organization The mission of Purple Innovation, Inc. (the “Company” or “Purple Inc.”) is to deliver the greatest sleep ever invented. The Company, collectively with its subsidiary Purple Innovation, LLC (“Purple LLC”) is an omni-channel business that began as a digitally-native vertical brand founded on comfort product innovation with premium offerings, and have since expanded into brick & mortar stores as a true omni-channel brand. The Company offers 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 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. 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Purple Inc., its controlled subsidiary Purple LLC, and Purple LLC’s wholly owned subsidiary Advanced Comfort Technologies, Inc., dba Intellibed (“Intellibed”). All intercompany balances and transactions have been eliminated in consolidation. As of June 30, 2026, Purple Inc. held 99.85 % of the common units of Purple LLC and Purple LLC Class B Unit holders held 0.15 % of the common units in Purple LLC. The accompanying unaudited condensed 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”) regarding interim financial reporting and reflect the financial position, results of operations and cash flows of the Company. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (all of which were considered of normal recurring nature) considered necessary to present fairly the Company’s financial results. The results of the three and six months ended June 30, 2026 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2026 or for any other interim period or other future year. 5 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Liquidity and Going Concern 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 unaudited condensed consolidated financial statements for the three and six months ended June 30, 2026, 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 $ 23.3 million and an accumulated deficit of $ 659.1 million at June 30, 2026. The Company had a net loss of $ 33.8 million and net cash provided by operating activities and used in investing activities was $ 3.6 million and $ 4.3 million, respectively, for the six months ended June 30, 2026. The Company has a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund its operations, invest in the business to expand sales and marketing efforts and invest in innovation. Debt service has consisted primarily of re-financing or extending the maturity date of the debt as well as paying-in-kind interest payments. As disclosed in Note 10 - Debt, the Company has elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement and on March 24, 2026, the Company executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. In addition, certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements were waived (see Note 10 – Debt ). Management has implemented plans to both increase its revenues from the sales of its products and to achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, the Company cannot guarantee that it will have sufficient cash flow to meet the debt obligations when they become due within the next twelve months. The Company will need to raise additional capital or secure alternative financing arrangements, both of which are uncertain and not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The Company has taken a number of actions to increase cash flow and support its operations and strategies. In August 2024, the Company implemented the Restructuring Plan (as defined below) to consolidate manufacturing operations resulting in cost savings. The Company has realized and plans to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. The Company has delivered direct material cost savings from its supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. The Company has been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. The Company has also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, management’s plans include additional actions intended to improve liquidity and reduce costs, including a planned optimization of advertising spending, pacing the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. In the latter part of the second quarter of 2026, the Company announced a pricing action to increase the sales price of our various products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. The Company is currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings. The consolidated financial statements do not include any adjustments that may result from the outcome of these uncertainties. Revenue Recognition – Consideration Payable to Customers There have been no material changes to the Company’s revenue recognition policies as described in the Company’s Annual Report on Form 10-K, except for the following application of accounting guidance to certain arrangements with third-party manufacturers. The Company enters into arrangements with third-party manufacturers, including manufacturers under common control with certain customers, to produce mattress products sold to those customers. The Company evaluates these arrangements to determine whether payments to such manufacturers represent consideration payable to a customer or payments for goods or services received, in accordance with ASC 606— Revenue from Contracts with Customers. For certain customer-specific or exclusive product arrangements, the Company has concluded that payments to a manufacturer under common control with a customer are economically linked to the underlying customer arrangement and represent consideration payable to that customer. Accordingly, revenue for these arrangements is presented net of payments made to the third-party manufacturers. Reclassification of Merchant and Financing Fees In the second quarter of 2026, the Company changed the presentation of costs associated with merchant credit card processing fees and third-party consumer financing fees. These costs were previously presented within cost of revenues and are now presented within marketing and sales. The Company believes this presentation will enhance the comparability of our financial statements with those of our industry peers. 6 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) The table below presents the effect of the reclassification on the Company’s previously issued financial statements. This change in presentation had no impact on previously reported revenues, operating loss, net loss, or earnings per share. Additionally, the reclassifications did not impact the historical balance sheets or statement of cash flows. Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 (In thousands, except per share amounts) As Previously Presented Reclassification As Reclassified As Previously Presented Reclassification As Reclassified Cost of revenues $ 67,340 $ ( 4,831 ) $ 62,509 $ 129,547 $ ( 9,446 ) $ 120,101 Total cost of revenues 67,417 ( 4,831 ) 62,586 130,542 ( 9,446 ) 121,096 Gross profit 37,683 4,831 42,514 78,729 9,446 88,175 Marketing and sales 30,616 4,831 35,447 67,242 9,446 76,688 Total operating expenses 51,922 4,831 56,753 107,447 9,446 116,893 The reclassifications have been reflected in all applicable financial information presented in these financial statements, including the related notes. Refund of Tariffs On February 20, 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). On March 6, 2026, the Company filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of all IEEPA tariffs that the Company has paid to the United States. In addition, the Company filed for qualifying refunds of tariffs with the CBP. During May and June 2026, the Company received $ 5.5 million in refunds, including interest, representing all refunds applied for. These refunds related to cost of inventory that was sold in a prior period. Accordingly, the Company recorded $ 5.3 million of the recovery as a reduction of cost of sales and $ 0.2 million as interest income in other non-operating income for the three and six months ended June 30, 2026 in the accompanying unaudited condensed consolidated financial statements. Reverse Stock Split On July 2, 2026, the Company’s stockholders approved a reverse stock split of its Class A common stock and Class B common stock (collectively, the “common stock”) at a ratio ranging from any whole number between 1-for-10 to 1-for-30, with the exact ratio determined by the Company’s Board of Directors. On July 6, 2026, the Company’s Board of Directors approved a 1-for-25 reverse stock split (“Reverse Stock Split”) of the Company’s common stock that became effective on July 19, 2026. Following the effectiveness of the Reverse Stock Split, every 25 shares of the Company’s common stock that were issued and outstanding, automatically converted into one outstanding share of common stock. All stock awards and warrants of the Company outstanding immediately prior to the Reverse Stock Split were proportionally adjusted. Unless otherwise indicated, all other share and per share amounts in this quarterly report reflect the effect of the Reverse Stock Split as though the Reverse Stock Split has been effected prior to all periods presented. The Reverse Stock Split did not change the Company’s authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore, the Company reclassified an amount equal to the reduction in the number of shares of common stock at par value to additional paid-in capital. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional share that would otherwise result from the Reverse Stock Split were rounded up to the next whole share of common stock. Proportionate adjustments were made to the number of shares authorized under the Company’s equity incentive plans, the number of shares subject to any award or purchase right under the Company’s equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant. 7 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 June 30, 2026, Purple Inc. had a 99.85 % economic interest in Purple LLC and consolidated 100 % of Purple LLC’s assets, liabilities and results of operations in the Company’s unaudited condensed consolidated financial statements contained herein. The holders of Class B Units of Purple LLC (“Class B Units”) held 0.15 % of the economic interest in Purple LLC as of June 30, 2026. For further discussion see Note 15 — Stockholders’ Equity . Use of Estimates The preparation of the unaudited condensed 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 disclose contingent assets and liabilities as of the date of the unaudited condensed 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, 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. Segment Information The Company operates in one operating segment. This is consistent with the organizational structure and internal reporting evaluated regularly by the Company’s Chief Executive Officer who is our chief operating decision maker (“CODM”) when making operational decisions and allocating resources. For additional information regarding the Company’s segment reporting, refer to Note 20 – Segment Information and Concentrations . Recent Accounting Pronouncements 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. Accounting for Internal-Use Software In September 2025, the FASB issued ASU No. 2025-06, “Intangible - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The ASU removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project, and it is probable that the project will be completed and the software will be used for its intended purpose. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this update will have on its consolidated financial statements and related disclosures. 8 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Interim Reporting: Narrow-Scope Improvements In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-scope Improvements.” The ASU indicates that SEC registrants must continue to follow SEC rules for condensed financial statements. The ASU also compiles a comprehensive list of required interim disclosures for condensed statements from across the Codification. In addition, the ASU reinforces a disclosure principle requiring entities to provide interim disclosures for significant events or transactions that have a material effect since the most recent year-end, such as changes in accounting principles, key estimates, financing arrangements, long-term contracts, or the reporting entity. The amendments in this ASU are effective for public business entities for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2025-11 on its interim reporting once the ASU is adopted. As part of the ongoing evaluation, following the adoption of the ASU, the Company will ensure that the interim disclosure checklists are up-to-date and accurately reflect the required disclosures as outlined. 3. 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. The consolidation into the Georgia facility was finalized in December 2024 and the closure of the two Utah manufacturing facilities was completed in May 2025. The reduction in workforce at the Utah headquarters was completed in August 2024. All restructuring activities were completed in the third quarter of 2025. The following table summarizes the restructuring, impairment and other related charges the Company recognized during the three and six months ended June 30, 2025 in the unaudited condensed consolidated statement of operations (in thousands): Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 Restructuring, Restructuring, Impairment Impairment and Other and Other Cost of Related Cost of Related Revenues Charges Total Revenues Charges Total Cash charges: Employee-related costs $ — $ 183 $ 183 $ — $ 354 $ 354 Other costs — 625 625 688 1,779 2,467 Total cash charges — 808 808 688 2,133 2,821 Non-cash charges: Accelerated depreciation 77 148 225 307 148 455 Write-down of long-lived assets — 232 232 — 867 867 Impairment of assets — 2,949 2,949 — 2,949 2,949 Total non-cash charges 77 3,329 3,406 307 3,964 4,271 Total restructuring, impairment and other related charges $ 77 $ 4,137 $ 4,214 $ 995 $ 6,097 $ 7,092 Accelerated depreciation of $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2025, respectively, primarily represents increased depreciation expense associated with shortening the useful lives of the production equipment at the two Utah manufacturing facilities that were closed to reflect the remaining period these assets remained in service. The write down of long-lived assets of $ 0.2 million and $ 0.9 million for the three and six months ended June 30, 2025, respectively, represents the write-down to salvage value of other property and equipment located at the two Utah manufacturing facilities that were closed. Impairment of assets included impairment charges of $ 2.9 million for the three and six months ended June 30, 2025 associated with the closing and subleasing of the Salt Lake City, Utah and Grantsville, Utah manufacturing facilities and related impairment charges associated with certain leasehold improvements of the property. 9 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 4. 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 (i.e., 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, accounts receivables, accounts payable, and the Company’s debt obligations. The carrying amounts of cash, cash equivalents, 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 related party debt is based on Level 2 and Level 3 inputs. Level 2 inputs include observable inputs such as market-based expectations for interest rates, credit risk and volatility. The unobservable Level 3 inputs are associated with the required rate of return for the security implied by the various issuances of debt bundled with warrants, which were valued using a Monte Carlo model and the timing and probability of a warrant reprice event, like a strategic alternative transaction. The estimated fair value of the Company’s related party debt was $ 122.7 million and $ 90.3 million as of June 30, 2026 and 2025, respectively. The warrant liabilities (see Note 11 — Warrant Liabilities for more information) are Level 3 instruments and use internal models to estimate fair value using 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. Significant inputs, certain of which are unobservable, include risk free interest rate, expected average life, expected dividend yield, expected volatility and the timing and probability of a warrant reprice event. 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 increases (decreases) in value if the expected average life or expected volatility were to increase (decrease). The following table summarizes the Company’s total Level 3 liability activity for the six months ended June 30, 2026 (in thousands): Warrants Total Level 3 Liabilities Fair value as of December 31, 2025 $ 16,150 $ 16,150 Change in valuation inputs (1) ( 435 ) ( 435 ) Fair value as of June 30, 2026 $ 15,715 $ 15,715 (1) Changes in valuation inputs are recognized as the change in fair value – warrant liabilities in the unaudited condensed consolidated statement of operations. 10 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 5. Revenue from Contracts with Customers The Company markets and sells its products through direct-to-consumer e-commerce channels, Purple showrooms, retail brick-and-mortar wholesale partners, 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. Disaggregated Revenue The Company classifies revenue as either direct-to-consumer (“DTC”) or wholesale revenue. DTC revenues include the e-commerce channel which sells directly to consumers who purchase online, through the contact center, and through online marketplaces and the showrooms channel that sells directly to consumers who purchase at a Purple 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. The following tables present the Company’s revenue disaggregated by sales channel (in thousands): Three Months Ended June 30, Six Months Ended June 30, Sales Category 2026 2025 2026 2025 e-commerce $ 42,460 $ 43,084 $ 83,056 $ 88,481 Showrooms 18,393 15,769 37,240 33,755 Wholesale 37,417 46,247 73,704 87,035 Revenues, net $ 98,270 $ 105,100 $ 194,000 $ 209,271 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 $ 4.0 million and $ 5.3 million at June 30, 2026 and December 31, 2025, respectively. During the six months ended June 30, 2026, the Company recognized all of the revenue that was deferred in customer prepayments at December 31, 2025. 6. Inventories Inventories consisted of the following (in thousands): June 30, December 31, 2026 2025 Raw materials $ 18,780 $ 23,420 Work-in-process 6,689 6,355 Finished goods 29,928 29,950 Inventories $ 55,397 $ 59,725 11 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 7. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): June 30, December 31, 2026 2025 Equipment $ 87,539 $ 80,999 Equipment in progress 2,158 7,218 Leasehold improvements 59,428 58,862 Furniture and fixtures 31,391 30,744 Office equipment 1,624 1,624 Total property and equipment 182,140 179,447 Accumulated depreciation ( 108,377 ) ( 101,486 ) Property and equipment, net $ 73,763 $ 77,961 Equipment in progress reflects equipment, primarily related to mattress manufacturing, which is being constructed and was not in service at June 30, 2026 or December 31, 2025. Interest capitalized on borrowings during the active construction period of major capital projects was de minimis during the three and six months ended June 30, 2026, respectively, and totaled $ 0.1 million and $ 0.3 million during the three and six months ended June 30, 2025, respectively. Depreciation expense was $ 3.8 million and $ 7.6 million during the three and six months ended June 30, 2026, respectively, and was $ 4.1 million and $ 8.3 million during the three and six months ended June 30, 2025, respectively. Included in depreciation expense for the three and six months ended June 30, 2025, was $ 0.1 million and $ 0.4 million, respectively, related to accelerated depreciation associated with the Restructuring Plan. See Note 3— Restructuring and Impairment Charges for further discussion. 8. 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 totaled $ 0.6 million and $ 0.6 million at June 30, 2026 and December 31, 2025, respectively. The following table presents the Company’s lease costs (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Operating lease costs $ 4,552 $ 4,569 $ 9,092 $ 9,349 Variable lease costs 917 1,162 2,043 2,204 Short term lease cost 111 63 221 105 Sublease income ( 1,169 ) ( 637 ) ( 2,431 ) ( 932 ) Total lease costs $ 4,411 $ 5,157 $ 8,925 $ 10,726 12 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 unaudited condensed consolidated balance sheet at June 30, 2026 (in thousands): 2026 (excluding the six months ended June 30, 2026) (1) $ 8,715 2027 21,495 2028 21,192 2029 18,418 2030 12,626 Thereafter 25,819 Total operating lease payments 108,265 Less – lease payments representing interest ( 20,089 ) Present value of operating lease payments $ 88,176 (1) Amount consists of $ 9.3 million of undiscounted cash flows offset by $ 0.6 million of tenant improvement allowances which are expected to be fully utilized in fiscal 2026. As of June 30, 2026 and December 31, 2025, the weighted-average remaining term of operating leases was 6.0 years and 6.3 years, respectively, and the weighted-average discount rate of operating leases was 6.94 % and 6.79 %, respectively. The following table provides supplemental information related to the Company’s unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2026 and 2025 (in thousands): Six Months Ended June 30, 2026 2025 Cash paid for amounts included in present value of operating lease liabilities (1) $ 11,040 $ 11,041 Right-of-use assets obtained in exchange for operating lease liabilities 2,193 7,305 (1) Operating cash flows paid for operating leases are included within the change in operating leases, net within the unaudited condensed consolidated statement of cash flows offset by non-cash ROU asset amortization and lease liability accretion. 9. Other Current Liabilities Other current liabilities consisted of the following (in thousands): June 30, December 31, 2026 2025 Accrued sales returns $ 3,289 $ 4,492 Accrued sales, use and property tax 1,924 2,264 Asset retirement obligation 1,132 1,132 Insurance financing — 1,676 Other 589 775 Total other current liabilities $ 6,934 $ 10,339 13 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 10. Debt Debt consisted of the following (in thousands): June 30, December 31, 2026 2025 Related party loan $ 137,232 $ 126,697 Less: unamortized debt issuance costs ( 10,226 ) ( 15,392 ) Total related party debt 127,006 111,305 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 Coliseum Capital Partners (“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 Company has elected for interest to be capitalized and added to the principal amount of the loan. 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. In connection with the Amended and Restated Credit Agreement, the Company issued 0.8 million warrants (the “2024 Warrants”) to the Lenders (see Note 11 – Warrant Liabilities ) and incurred additional fees and expenses of $ 3.5 million that were recorded as debt issuance costs in the first quarter of 2024 and are being amortized over the life of the loan. 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 June 30, 2025, the Company was in compliance with all covenants under the Amended and Restated Credit Agreement. 14 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 2025 Amendment On March 12, 2025, the Loan Parties, entered into the First Amendment to the Amended and Restated Credit Agreement (the “2025 Amendment” and the Amended and Restated Credit Agreement as so amended, the “Amended A&R Credit Agreement”) with CCP and Blackwell Partners LLC – Series A (“Blackwell”) (collectively the “2025 Lenders”), which amends the Amended and Restated Credit Agreement. The 2025 Amendment, among other things, provides for an increase in the initial principal amount of the Related Party Loan by $ 19.0 million (the “First Incremental Loan”) from an initial Related Party Loan principal amount of $ 61.0 million to an initial aggregate principal amount of $ 80.0 million, pursuant to Section 2.18 of the Amended and Restated Credit Agreement, and allows the Loan Parties to request one or more additional term loans from the 2025 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 First Incremental Loan will bear interest at the same rate as the Initial Loan (as defined in the Amended and Restated Credit Agreement), which may be paid in cash or in kind at the Company’s option. The 2025 Amendment also provides that (i) the First Incremental Loan shall be senior in right of repayment to the Related Party Loan and (ii) in any voluntary or mandatory prepayment in part or in full of the First 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 First 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 First Incremental Loan, plus (y) the present value at such date of all remaining scheduled interest payments due on such First 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 2025 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 First Incremental Loan on such prepayment date. The 2025 Amendment requires prepayment from certain amounts of proceeds received by the Company related to asset dispositions, equity issuances, incurrence of indebtedness, and extraordinary receipts. Additionally, upon an event of default, the 2025 Lenders may declare all or any portion of the term loan then outstanding to be accelerated and due and payable, immediately, including the prepayment premium. The Company determined that these features qualify as a derivative and must be bifurcated from the debt, but such value is de minimis. The Company will reassess whether the derivative has more than a de minimis value at each reporting period. The 2025 Amendment also includes contingent interest upon an event of default at a rate of 2 %. Certain non-credit related factors qualify as a derivative and must be bifurcated from the debt, but such value is de minimis. In addition, the Company also paid (i) an amendment fee equal to 2 % of the outstanding principal and accrued and unpaid interest under the Related Party Loan held by the 2025 Lenders, paid in kind and (ii) a 2 % work fee of the initial aggregate principal amount of the First Incremental Loan paid to the 2025 Lenders, deducted from the proceeds at closing. Total fees and expenses of $ 2.1 million were recorded as a debt discount upon issuance of the Incremental Loan and are being amortized over the life of the loan. In connection with the 2025 Amendment, the Company issued to the 2025 Lenders, warrants (the “2025 Warrants”) to purchase 0.2 million shares of the Company’s Class A common stock at a price of $ 37.50 per share, subject to certain adjustments (see Note 11 – Warrant Liabilities ). These 2025 Warrants include full-ratchet anti-dilution protections, subject to a floor of $ 17.45 with respect to adjustments to the exercise price and expire on March 12, 2035 . The 2025 Warrants had a fair value of $ 5.4 million upon issuance and were recorded as a debt discount upon issuance of the Incremental Loan and is being amortized over the life of the loan. The 2025 Amendment was evaluated and determined to be a modification of debt as the effective borrowing rate was not reduced, therefore the 2025 Lenders did not grant a concession, and the 2025 Amendment terms were not substantially different from the Amended and Restated Credit Agreement. 15 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Second 2025 Amendment On May 2, 2025, the Loan Parties entered into a Second Amendment to the Amended and Restated Credit Agreement (the “Second 2025 Amendment”) with the 2025 Lenders, which amends the Amended A&R Credit Agreement. The Second 2025 Amendment, among other things, provides for a commitment increase in the initial principal amount of the senior secured term loan facility by $ 20.0 million (the “Second Incremental Loan”) from an aggregate principal amount of up to $ 80.0 million (the “Existing Loan”) to an initial aggregate principal amount of up to $ 100.0 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 A&R Credit Agreement). The Second Incremental Loan will bear interest at the same rate as the Existing Loan, which may be paid in cash or in kind at the Company’s option. The Second 2025 Amendment also provides that (i) the Second Incremental Loan shall be senior in right of repayment to the initial $ 61.0 million loan under the Amended and Restated Credit Agreement and pari passu with the First Incremental Loan and (ii) in any voluntary or mandatory prepayment in part or in full of the Second Incremental Loan for any reason, the Company will be required to pay an amount equal to the greater of (a) the Make-Whole Premium (as defined below) and (b) 2.5 % of the aggregate principal amount of the Second 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 Second Incremental Loan, plus (y) the present value at such date of all remaining scheduled interest payments due on such Second 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 Second 2025 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 Second Incremental Loan on such prepayment date. In addition, the Company also paid (i) an amendment fee equal to 0.25 % of the outstanding principal and accrued and unpaid interest under the Existing Loan held by the 2025 Lenders, paid in kind to the 2025 Lenders, (ii) a work fee equal to 0.1 % of the outstanding principal and accrued and unpaid interest under the Existing Loan, paid in cash to the Required Lenders, (iii) a waiver fee, to induce the Required Lenders to waive certain preemptive and right of first refusal rights, equal to 0.15 % of the outstanding principal and accrued and unpaid interest under the Existing Loan, paid in cash to the Required Lenders, and (iv) a commitment fee equal to $ 0.2 million, paid in cash to the Required Lenders. In connection with the Second 2025 Amendment, the Company issued to the 2025 Lenders, warrants (the “2025 Additional Warrants”) to purchase 0.3 million shares of the Company’s Common Stock at a price of $ 37.50 per share, subject to certain adjustments (see Note 11 – Warrant Liabilities ). These 2025 Additional Warrants include full-ratchet anti-dilution protections, subject to a floor of $ 17.45 with respect to adjustments to the exercise price and expire on March 12, 2035. The 2025 Additional Warrants had a fair value of $ 5.4 million upon issuance and were recorded as a debt discount upon issuance of the Incremental Loan and is being amortized over the life of the loan. The Second 2025 Amendment was evaluated and determined to be a modification of debt since the 2025 Lenders did not grant a concession, as the effective borrowing rate was not reduced, and the 2025 Amendment terms were not substantially different from the Amended and Restated Credit Agreement. 16 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Third Amendment to the Amended A&R Credit Agreement On March 24, 2026, the Loan Parties entered into a Third Amendment to the Amended A&R Credit Agreement with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $ 1.6 million, equal to 1.25 % pro rata based on each Lender’s outstanding principal amount (the “Amendment Fee”). Of the Amendment Fee, approximately $ 1.3 million was payable-in-kind by adding such amount to the 2025 Lenders’ outstanding principal amount. The remaining $ 0.3 million of the Amendment Fee was paid in cash to the other lenders. In connection with the Third Amendment, the Loan Parties also agreed to reimburse the 2025 Lenders for certain expenses in the amount of $ 0.3 million. Pursuant to the Third Amendment to the Amended A&R Credit Agreement, the Loan Parties waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. Accordingly, the Company is in compliance as of June 30, 2026, with all covenants under the Amended A&R Credit Agreement. The Company determined that it was experiencing financial difficulty and that the extension represented a concession granted by the Lenders as the effective borrowing rate was reduced. Accordingly, the Company accounted for the Third Amendment as a troubled debt restructuring. Since the undiscounted future cash payments were more than the carrying amount of the existing instrument, no gain was recognized. The impact of the revised terms, including the extension and associated amendment fee, has been reflected in the carrying amount of the debt and is being recognized through interest expense prospectively using a revised effective interest rate. The Company has elected to have interest paid-in-kind and added to the principal amount of the loans. Interest expense under the Related Party Loan, the First Incremental Loan and the Second Incremental Loan for the three and six months ended June 30, 2026, consisted of paid-in-kind interest of $ 4.7 million and $ 9.2 million, respectively, and debt issuance cost amortization of $ 3.1 million and $ 6.8 million, respectively. Interest expense under the Related Party Loan for the three and six months ended June 30, 2025, consisted of paid-in-kind interest of $ 4.0 million and $ 6.8 million, respectively, and debt issuance cost amortization of $ 3.5 million and $ 5.7 million, respectively. The effective interest rate was 14.0 % and 14.02 % for the three and six months ended June 30, 2026, respectively, and 14.67 % and 14.68 % for the three and six months ended June 30, 2025, respectively. 11. Warrant Liabilities On January 23, 2024, in connection with the Amended and Restated Credit Agreement, the Company issued 0.8 million 2024 Warrants to the Lenders, on March 12, 2025, in connection with the 2025 Amendment, the Company issued 0.2 million 2025 Warrants to the 2025 Lenders, on May 2, 2025, in connection with the Second 2025 Amendment, the Company issued 0.3 million 2025 Additional Warrants to the 2025 Lenders, and on May 2, 2025, in connection with the SGI Agreements (as defined below), the Company issued to SGI warrants to purchase 0.3 million shares of the Company’s Common Stock (the “SGI Warrants,” collectively, the “Warrants”). Each Warrant entitles the registered holder to purchase one share of the Company’s Class A common stock at a price of $ 37.50 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 $ 0.25 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 $ 600.00 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. 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 an 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 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. 17 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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: June 30, December 31, 2026 2025 Trading price of common stock on measurement date $ 9.00 $ 17.25 Exercise price $ 37.50 $ 37.50 Risk free interest rate 4.24 – 4.29 % 3.95 – 4.03 % Warrant life in years 7.57 – 8.70 8.06 – 9.20 Expected volatility 87.0 % 88.0 % Expected dividend yield — — Probability of an event causing a warrant re-price 20.0 % 70.0 % Estimated date of event causing a warrant re-price June 2027 May 2026 The Warrants had a fair value of $ 15.7 million as of June 30, 2026. The Company recognized a $ 7.3 million and a $ 0.4 million benefit in the unaudited condensed consolidated statement of operations for the three months and six months ended June 30, 2026, respectively related to an increase in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants at the end of 2025. The Company recognized a $ 4.4 million gain in its unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2025 related to a net decrease in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants at previous measurement dates. 12. Other Long-Term Liabilities Other long-term liabilities consist of the following (in thousands): June 30, December 31, 2026 2025 Asset retirement obligations $ 1,192 $ 1,160 Other 436 604 Total other long-term liabilities $ 1,628 $ 1,764 13. Commitments and Contingencies Warranty Liabilities The Company provides a limited warranty on most of the products it sells. The estimated warranty return 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 DTC warranty costs are based primarily on historical warranty claims, estimated warranty costs and the estimate warranty claim rate. Estimates for wholesale warranty costs are based primarily on the historical warranty claim amounts and the estimated claim rate and may be 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 classifies estimated warranty costs expected to be paid beyond a year as a long-term liability. The Company has accrued $ 28.2 million and $ 26.7 million in estimated future warranty costs as of June 30, 2026 and December 31, 2025, respectively. 18 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Chief Executive Officer Cash Bonus Award On January 26, 2024, the Company’s board of directors (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 required 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 bonus award expired on June 30, 2026 with no payout threshold achieved. The Company recorded no compensation expense in the unaudited condensed consolidated statement of operations for the three months ended June 30, 2026 and a de minimis reduction in the unaudited condensed consolidated statement of operations for the six months ended June 30, 2026 and the three and six months ended June 30, 2025 related to this bonus program. 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 % was paid in February 2025, and the remaining 70 % was to be paid in August 2025. Certain members of the Company’s senior leadership team agreed to postpone their August 2025 payment until January 2026 for a 15 % premium on the amount that was due to be paid in August 2025. The final bonus payment was made in January 2026. Related to this bonus payment, the Company recorded no compensation expense for the three and six months ended June 30, 2026 and a $ 0.8 million compensation expense for the three and six months ended June 30, 2025 in the unaudited condensed consolidated statement of operations. Long-Term Incentive Cash Bonus Awards On July 17, 2025, the Board unanimously approved a long-term incentive cash award to those employees eligible to participate in the Company’s 2017 Plan. The incentive award payment is based on a combination of time-based payments over a three-year period and performance-based payments paid in three years if certain financial performance targets are met. On June 20, 2024, the Board unanimously approved a performance long-term incentive cash award to those employees eligible to participate in the Company’s 2017 Plan. The incentive award payment is based on a performance goal of the volume weighted average price per share of the Company’s 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 unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026 and 2025 related to these future award payments. 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 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 2025 Warrants, the shares of Common Stock issuable upon the exercise of the Warrants, and the Common Stock held by the Holders as of such date (the “Registrable Securities”). 19 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) On May 2, 2025 in connection with the issuance of the 2025 Additional Warrants, the Company entered into a Third Amended and Restated Registration Rights Agreement (the “Third Amended Registration Rights Agreement”) with the Holders, providing for the registration under the Securities Act of the 2025 Additional Warrants, the shares issuable upon the exercise of the 2025 Additional Warrants, other warrants held by the Holders (and shares issuable upon exercise thereof) and the Common Stock held by the Holders as of such date (the “2025 Additional Registrable Securities”), subject to customary terms and conditions. On May 2, 2025 in connection with the issuance of the SGI Warrants, the Company entered into a Registration Rights Agreement (the “SGI Registration Rights Agreement” and collectively with the 2025 Registration Rights Agreement and the Third Amended Registration Rights Agreement, the “Registration Rights Agreements”) with SGI, providing for the registration under the Securities Act of the SGI Warrants, the shares issuable upon the exercise of the SGI Warrants, and the Common Stock held by SGI as of such date (the “SGI Registrable Securities” and collectively with the 2025 Registrable Securities and 2025 Additional Registrable Securities, the “Registrable Securities”), subject to customary terms and conditions. The Registration Rights Agreements entitle the investors party thereto 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, 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 statement filed on May 23, 2025, which registered the Registrable Securities, was declared effective by the SEC on May 30, 2025. SGI Commercial Arrangements On May 2, 2025, the Company entered into a Second Amendment to Master Retailer Agreement (the “MRA Amendment”) with Mattress Firm, Inc. (“Mattress Firm”) , a business unit of SGI, which provides that SGI, through its Mattress Firm stores, will expand its inventory of the Company’s products across its national store network from approximately 5,000 mattress slots to a minimum of 12,000 mattress slots. The agreement includes a $ 3.5 million fee to be paid by the Company to reimburse Mattress Firm for certain costs in transitioning to the product placement required by the agreement. The fee is accounted for under the provisions of ASC 606— Revenue from Contracts with Customers as consideration payable to a customer as a reduction of revenue over the life of the contract and is included in accrued rebates and allowances on the audited consolidated balance sheets. The Company recorded $ 0.3 million and $ 0.6 million as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026, respectively. The Company recorded $ 0.2 million as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2025. Also on May 2, 2025, the Company entered into an Amended and Restated Master Vendor Supply and Services Agreement (the “Sherwood Agreement” and together with the MRA Amendment the “SGI Agreements”) with Tempur Sherwood, LLC, a subsidiary of Tempur Sealy. The Sherwood Agreement provides that Tempur Sherwood, LLC will have the exclusive right to assemble certain product lines, specifically Purple Royale, that the Company sells to Mattress Firm. The SGI Agreements expire on December 31, 2027. Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606— Revenue from Contracts with Customers . Under the guidance, payments to Tempur Sherwood, LLC are evaluated to determine whether they are economically linked to the underlying customer arrangement. The Company has concluded that payments to Tempur Sherwood, LLC are economically linked to the Mattress Firm MRA Amendment and therefore represent consideration payable to a customer. As a result of the Purple Royale launch in 2026, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. The Company recorded $ 0.5 million and $ 5.4 million in consideration paid to Tempur Sherwood, LLC as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026, respectively. In connection with the SGI Agreements, the Company issued to SGI the SGI Warrants to purchase 0.3 million shares of the Company’s Class A common stock at a strike price of $ 37.50 per share. The SGI Warrants include full-ratchet anti-dilution protections, subject to a floor of $ 17.45 with respect to adjustments to the exercise price and expire on March 12, 2035. The Company determined the warrants are required to be accounted for as a liability at the fair value of $ 6.5 million on the date of the transaction (see Note 11 – Warrant Liabilities ). The fair value of the warrants on the date of the transaction is accounted for under the provisions of ASC 606— Revenue from Contracts with Customers and deemed to be consideration payable to a customer as a reduction of revenue over the life of the contract. The Company recorded $ 0.6 and $ 1.3 million as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2026. The Company recorded $ 0.4 million as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three and six months ended June 30, 2025. 20 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 appealed. After oral arguments, on April 3, 2025, the Utah Court of Appeals ordered the case return to the District Court for further fact finding. The Utah Supreme Court declined to hear the case, sending back for further action at the trial court that we expect will continue throughout 2026. 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. A trial date has been set for October 2026. The outcome of the litigation cannot be predicted at this stage in the proceedings. Purple LLC denies all allegations and intends to vigorously defend against these claims. 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. Fact discovery is scheduled to conclude in 2026. The court has not yet set a date for trial. 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. Purple LLC and the plaintiffs mediated the claims on May 8, 2025, which resulted in the parties agreeing to a settlement. The settlement agreement has been signed by the parties and are currently waiting for the California Superior Court to approve the settlement. 21 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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. 14. 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 10— Debt for more information on the Related Party Loan and amendments . 15. 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 June 30, 2026, 4.4 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 Class B Units 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 June 30, 2026, a de minimis number of shares of Class B common stock were outstanding. 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. On June 27, 2024, a de minimis number of 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”). In conjunction with the termination of the NOL Rights Plan, the Company filed a Certificate of Elimination eliminating the Series C Junior Participating Preferred Stock, effective May 7, 2025. At June 30, 2026, there were no shares of preferred stock outstanding 22 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) Warrants The Company issued warrants in connection with various financing transactions and agreements. The Company had the following warrants outstanding at June 30, 2026 and December 31, 2025 (in thousands): June 30, December 31, 2026 2025 2024 Warrants 800 800 2025 Warrants 249 249 2025 Additional Warrants 262 262 SGI Warrants 320 320 Total Warrants 1,631 1,631 The following table provides the exercise price and expiration date for each warrant tranche as of June 30, 2026: Warrant Share Equivalent (000’s) Exercise Price (1) Expiration Date 2024 Warrants 800 $ 37.50 January 23, 2034 2025 Warrants 249 $ 37.50 March 12, 2035 2025 Additional Warrants 262 $ 37.50 March 12, 2035 SGI Warrants 320 $ 37.50 March 12, 2035 (1) 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 $ 0.25 per share of common stock issuable upon exercise of the Warrants upon not less than 45 days’ prior written notice of redemption to each holder. This redemption right is only available if the reported last sale price of the Common Stock equals or exceeds $ 600.00 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 Common Stock outstanding immediately after giving effect to such exercise. Noncontrolling Interest Noncontrolling interest (“NCI”) is the membership interest in Purple LLC held by holders other than the Company. At June 30, 2026 and December 31, 2025, the combined NCI percentage in Purple LLC was 0.15 % and 0.15 %, respectively. 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. 16. Income Taxes 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 are 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 income tax burden on the earnings taxed to the noncontrolling interest holders is not reported by the Company in its consolidated financial statements under GAAP. The Company reported $ 0.1 million in income tax expense on a pretax loss of $ 33.7 million for the six months ended June 30, 2026 as compared to $ 0.1 million in income tax expense on pretax loss of $ 36.4 million for the six months ended June 30, 2025. This resulted in an effective tax rate of ( 0.23 %) for the six months ended June 30, 2026 as compared to ( 0.26 %) for the six months ended June 30, 2025. The Company’s effective tax rate for the six months ended June 30, 2026 differs from the statutory federal rate of 21 % primarily due to the impact of the full valuation allowance recorded against the Company’s deferred tax assets at June 30, 2026. 23 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 tax receivable agreement 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. 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 sheet. As of June 30, 2026, the Company had unrecognized tax benefits of $1.1 million. 17. Net Loss Per Common Share Basic net income (loss) per common share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of Class A common stock outstanding during each period. Diluted net income (loss) per share reflects the weighted-average number of common shares outstanding during the period used in the basic net income (loss) computation plus the effect of common stock equivalents that are dilutive. The following table sets forth the calculation of basic and diluted weighted average shares outstanding and net loss per share for the periods presented (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Numerator: Net loss attributable to Purple Innovation, Inc. – basic $ ( 3,230 ) $ ( 17,345 ) $ ( 33,771 ) $ ( 36,482 ) Less – net loss attributed to noncontrolling interest ( 16 ) — ( 51 ) — Net income (loss) attributable to Purple Innovation, Inc. – diluted $ ( 3,246 ) $ ( 17,345 ) $ ( 33,822 ) $ ( 36,482 ) Denominator: Weighted average shares—basic 4,353 4,329 4,344 4,317 Add – dilutive effect of Class B common stock 7 — 7 — Weighted average shares—diluted 4,360 4,329 4,351 4,317 Net loss per common share: Basic $ ( 0.74 ) $ ( 4.01 ) $ ( 7.77 ) $ ( 8.45 ) Diluted $ ( 0.74 ) $ ( 4.01 ) $ ( 7.77 ) $ ( 8.45 ) 24 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Warrants 1,631 1,631 1,631 1,631 Restricted stock units 14 128 14 128 Stock options 20 20 20 20 Class B common stock — 7 — 7 18. Equity Compensation Plans 2017 Equity Incentive Plan The Purple Innovation, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) provides for grants of stock options, stock appreciation rights, restricted stock units and other stock-based awards. Directors, officers and other employees, as well as others performing consulting or advisory services for the Company and its subsidiaries, are eligible for grants under the 2017 Plan. As of June 30, 2026, an aggregate of 0.1 million shares remain available for issuance or use under the 2017 Plan. Employee Stock Options The following table summarizes the Company’s total stock option activity for the six months ended June 30, 2026: Options (in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term in Years Intrinsic Value (in thousands) Options outstanding as of January 1, 2026 20 $ 170.50 1.3 $ — Granted — — — — Exercised — — — — Forfeited — — — — Options outstanding as of June 30, 2026 20 $ 170.50 0.8 $ — 25 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) The estimated fair value of Company stock options is amortized over the options vesting period on a straight-line basis. All outstanding stock options were vested as of January 1, 2026 and there was no remaining unrecognized stock compensation cost. There was no stock option expense for the three and six months ended June 30, 2026 and was de minimis for the three and six months ended June 30, 2025. Employee Restricted Stock Units The following table summarizes the Company’s restricted stock unit activity for the six months ended June 30, 2026: Number Outstanding (in thousands) Weighted Average Grant Date Fair Value Nonvested restricted stock units as of January 1, 2026 126 $ 31.25 Granted — — Vested ( 28 ) 34.75 Forfeited ( 84 ) 32.00 Nonvested restricted stock units as of June 30, 2026 14 $ 19.50 The Company recorded restricted stock unit expense recapture benefit of $ 0.4 million and $ 0.2 million during the three and six months ended June 30, 2026, respectively, and a restricted stock unit expense of $ 0.4 million and $ 0.8 million during the three and six months ended June 30, 2025, respectively. For restricted stock units outstanding as of June 30, 2026, there were $ 0.2 million of total unrecognized stock compensation costs with a remaining recognition period of 1.1 years. Aggregate Non-Cash Stock-Based 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 following table summarizes the aggregate non-cash stock-based compensation recognized in the statement of operations for stock awards, employee stock options and employee restricted stock units (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Cost of revenues $ ( 78 ) $ 100 $ ( 95 ) $ 203 Marketing and sales 7 66 15 ( 109 ) General and administrative ( 322 ) 246 ( 159 ) 608 Research and development 16 65 18 143 Total non-cash stock-based compensation $ ( 377 ) $ 477 $ ( 221 ) $ 845 19. Employee Retirement Plan In July 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’s matching contribution expense was $ 0.7 million and $ 1.5 million for the three and six months ended June 30, 2026, respectively, and $ 0.7 million and $ 1.9 million for the three and six months ended June 30, 2025, respectively. 20. 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. 26 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 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 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): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues, net $ 98,270 $ 105,100 $ 194,000 $ 209,271 Reductions (additions): Cost of revenues 53,857 62,509 109,366 120,101 Cost of revenues – restructuring related charges — 77 — 995 Advertising expense 9,729 7,672 21,070 22,274 Marketing sales expense 9,322 11,312 19,480 23,112 Wholesale marketing and sales expense 3,956 4,980 8,889 9,304 Showrooms marketing and sales expense 10,726 11,483 20,877 21,998 General and administrative expense 12,445 14,991 30,478 29,478 Research and development expense 2,485 2,178 4,933 4,630 Restructuring, impairment and other related charges — 4,137 — 6,097 Other segment items, net (1) ( 1,036 ) 3,078 12,650 7,724 Income tax expense 32 54 79 95 Net loss attributable to noncontrolling interest ( 16 ) ( 26 ) ( 51 ) ( 55 ) Net reductions 101,500 122,445 227,771 245,753 Segment net loss $ ( 3,230 ) $ ( 17,345 ) $ ( 33,771 ) $ ( 36,482 ) (1) Other segment items, net include interest expense, other (income) expense, net, 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 the three and six months ended June 30, 2026 and 2025 sales of other products accounted for less than 3.0 % of net revenues. The Company defines international revenues as sales to customers located outside of the United States. In the three and six months ended June 30, 2026 and 2025 international customers accounted for less than 1.0 % of net revenues. The Company had one individual customer that accounted for approximately 52.4 % and 19.3 % of accounts receivable at June 30, 2026 and 2025, respectively, and approximately 13.8 % and 11.1 % of net revenue during the three months and six months ended June 30, 2026, respectively and approximately 14.8 % and 13.4 % of net revenue during the three and six months ended June 30, 2025, respectively. 27 PURPLE INNOVATION, INC. Notes to Condensed Consolidated Financial Statements (unaudited) 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 exceeds 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. 21. Subsequent Events Amendment to Mr. DeMartini’s employment agreement On July 4, 2026, the Board and Robert T. DeMartini, the Company’s Chief Executive Officer entered into an amendment to the amended and restated employment agreement of Mr. DeMartini (the “Amendment”). Under the Amendment, the Company agreed that Mr. DeMartini will be eligible to earn an incremental aggregate cash bonus equal to $ 1.0 million that will vest 10 % on October 31, 2026, 20 % on February 28, 2027, and 70 % on June 30, 2027, provided he continues to be employed by the Company and subject to certain restrictions in the event his employment is terminated for cause prior to June 30, 2027. In addition, under the Amendment, in the event of Mr. DeMartini’s retirement, subject to certain conditions, all of Mr. DeMartini’s time-based vesting restricted stock units (“RSUs”) then outstanding and unvested will vest in accordance with the remaining schedule as if Mr. DeMartini remained employed for an additional twelve (12) months and all of Mr. DeMartini’s outstanding performance-based vesting RSUs (“PSUs”) then outstanding will be eligible to vest on a pro-rata basis, subject to the performance achieved at the same time as active Company employees with the same type of PSUs. Nasdaq Matters On August 7, 2026, the Company was formally notified by The Nasdaq Stock Market LLC (“Nasdaq”) that the Company has demonstrated compliance with the $ 1.00 bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) and all other applicable criteria for continued listing on The Nasdaq Global Select Market. Accordingly, the previously disclosed listing matter before the Nasdaq Hearing Panel (the “Panel”) has been closed. The Panel has imposed a Mandatory Panel Monitor for a period of one year, through August 7, 2027. If during the monitoring period, the Company’s closing bid price falls below $ 1.00 per share for 30 consecutive business days, the Company will not be eligible for a 180-day compliance period otherwise available under the Nasdaq Listing Rules. Rather, Nasdaq would issue a delist determination, which the Company could then appeal by requesting a hearing before the Panel. The Company’s securities may be at that time delisted from Nasdaq. 28 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is intended to provide a review of the operating results and financial condition of Purple Innovation, Inc. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in “Part I. Item 1. Financial Statements.” Capitalized terms used in this “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and not otherwise defined shall have the meanings set forth in “Part I. Item. 1 Financial Statements.” FORWARD-LOOKING STATEMENTS This quarterly report on Form 10-Q (this “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (“the “Exchange Act”), that represent our current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “project,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. All forward-looking statements included in this Quarterly Report are made only as of the date hereof. It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses (including the discussion under the heading “Outlook for Growth”), and other characterizations of future events or circumstances are forward-looking statements. We caution and advise readers that these statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict, including those included in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2026. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements and investors are cautioned not to place undue reliance on any such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Overview of Our Business Our mission is to deliver the greatest sleep ever invented. We began as a digitally native vertical brand founded on comfort product innovation with premium offerings, and have since expanded into brick & mortar stores as a true omni-channel brand. We offer a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, bases, sheets and more. Our products are the result of decades of innovation and investment in proprietary and patented comfort technologies and the development of our own manufacturing processes. Our proprietary Hyper-Elastic Polymer gel technology underpins many of our comfort products and provides a range of benefits that differentiate our products from our competitors. Specially engineered to relieve pressure, maintain an ideal body temperature, and provide instantly adaptive support, Purple’s patented technology has been tested rigorously within medical and consumer applications for over 30 years. Originally designed for use in hospital beds and wheelchairs, we adapted this unique pressure-relieving material for our mattresses, pillows and other cushion products. We market and sell our products via our direct-to-consumer channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces (collectively “DTC”), and our wholesale channel through retail brick-and-mortar and online wholesale partners. Organization Our business consists of Purple Inc. and its consolidated subsidiary, Purple LLC. 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. At June 30, 2026, Purple Inc. had a 99.85% economic ownership interest in Purple LLC while Class B unit holders had the remaining 0.15%. Recent Developments in Our Business Operational Developments We continue building on the progress we made in the past year and remain focused on where we believe we can make the most impact. The demand environment remained challenging in the second quarter of 2026, and we made progress in our showroom and E-commerce channels. Our showroom business was up 16.6% compared to last year. This was driven by improving traffic, stronger conversion and strength in our premium products. E-commerce was down slightly by 1.4% compared to last year, but we are moving in the right direction as we have had three consecutive quarters of sequential improvement. We are improving our management of the channel and the work we are doing across marketing and the website experience is contributing to that progress. Our performance in the wholesale channel remained challenged as revenues were down 19.1% compared to last year. This decrease is due to certain payments to customers and a manufacturer under common control with a customer which represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we experienced lower wholesale sales volumes related to lower industry demand. Operationally, we continue to see the benefits of previous actions taken in areas we can control, reflected in our improved profitability and cash generation, disciplined expense performance and inventory management. We continue to invest in innovation, advertising and consumer experience. Although the demand environment remains uncertain, we believe that we are operating from a stronger foundation. We expect to benefit from continued operational improvements, additional sourcing initiatives and the continued development of our premium product line. 29 Impact of Revenue Presentation for Certain Product Arrangements Revenue for certain product arrangements is presented differently depending on the nature of the underlying manufacturing relationships and the application of ASC 606— Revenue from Contracts with Customers . Under the guidance, payments to third-party manufacturers, including manufacturers under common control with certain customers, are evaluated to determine whether they are economically linked to an underlying customer arrangement. For certain customer-specific or exclusive product programs where the manufacturer is under common control with the customer, the we have concluded that payments to the manufacturer are economically linked to the customer relationship and therefore represent consideration payable to a customer. As a result, these payments are recorded as a reduction of revenue, and revenue is presented on a net basis. We recorded $0.5 million and $5.4 million in consideration paid as a reduction of revenue in the unaudited condensed consolidated statement of operations for the three months and six months ended June 30, 2026, respectively. This presentation results in reported revenue being lower than the gross amount billed to the customer. While the net presentation affects reported revenue, it does not impact gross profit dollars for these arrangements. The distinction reflects the application of GAAP to different fact patterns rather than a difference in the underlying economics of the transactions. Debt Financings On March 24, 2026, the Loan Parties entered into the Third Amendment with the Lenders, which revised the maturity date under the Amended A&R Credit Agreement from December 31, 2026, to April 30, 2027 and waived certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements. In connection with the Third Amendment, the Loan Parties agreed to pay to the Lenders an amendment fee in the aggregate amount of $1.6 million, equal to 1.25% pro rata based on each Lender’s outstanding principal amount (the “Amendment Fee”). Of the Amendment Fee, approximately $1.3 million was paid-in-kind by adding such amount to the 2025 Lenders’ outstanding principal amount. The remaining $0.3 million of the Amendment Fee was paid in cash to the other lenders. In connection with the Third Amendment, the Loan Parties also agreed to reimburse the 2025 Lenders for certain expenses in the amount of $0.3 million. Reclassification of Merchant and Financing Fees In the second quarter of 2026, we changed the presentation of costs associated with merchant credit card processing fees and third-party consumer financing fees. These costs were previously presented within cost of revenues and are now presented within marketing and sales. We believe this presentation will enhance the comparability of our financial statements with those of our industry peers. The tables below present the effect of the reclassification on our previously issued financial statements. This change in presentation had no impact on previously reported revenues, operating loss, net loss, or earnings per share. Additionally, the reclassifications did not impact the historical balance sheets or statement of cash flows. Three Months Ended March 31, 2026 Three Months Ended March 31, 2025 (In thousands, except per share amounts) As Previously Presented Reclassification As Reclassified As Previously Presented Reclassification As Reclassified Cost of revenues $ 60,535 $ (5,026 ) $ 55,509 $ 62,207 $ (4,615 ) $ 57,592 Total cost of revenues 60,535 (5,026 ) 55,509 63,125 (4,615 ) 58,510 Gross profit 35,195 5,026 40,221 41,046 4,615 45,661 Marketing and sales 31,557 5,026 36,583 36,626 4,615 41,241 Total operating expenses 52,038 5,026 57,064 55,525 4,615 60,140 Three Months Ended June 30, 2025 Six Months Ended June 30, 2025 (In thousands, except per share amounts) As Previously Presented Reclassification As Reclassified As Previously Presented Reclassification As Reclassified Cost of revenues $ 67,340 $ (4,831 ) $ 62,509 $ 129,547 $ (9,446 ) $ 120,101 Total cost of revenues 67,417 (4,831 ) 62,586 130,542 (9,446 ) 121,096 Gross profit 37,683 4,831 42,514 78,729 9,446 88,175 Marketing and sales 30,616 4,831 35,447 67,242 9,446 76,688 Total operating expenses 51,922 4,831 56,753 107,447 9,446 116,893 Three Months Ended September 30, 2025 Nine Months Ended September 30, 2025 (In thousands, except per share amounts) As Previously Presented Reclassification As Reclassified As Previously Presented Reclassification As Reclassified Cost of revenues $ 67,915 $ (5,642 ) $ 62,273 $ 197,462 $ (15,088 ) $ 182,374 Total cost of revenues 67,915 (5,642 ) 62,273 198,457 (15,088 ) 183,369 Gross profit 50,851 5,642 56,493 129,580 15,088 144,668 Marketing and sales 40,120 5,642 45,762 107,362 15,088 122,450 Total operating expenses 62,977 5,642 68,619 170,424 15,088 185,512 Year Ended December 31, 2025 (In thousands, except per share amounts) As Previously Presented Reclassification As Reclassified Cost of revenues $ 279,171 $ (21,618 ) $ 257,553 Total cost of revenues 280,166 (21,618 ) 258,548 Gross profit 188,559 21,618 210,177 Marketing and sales 147,040 21,618 168,658 Total operating expenses 231,588 21,618 253,206 30 Review of Strategic Alternatives We have engaged with multiple parties about a broad range of opportunities to maximize shareholder value, including, but not limited to, a merger, sale or other strategic or financial transaction. The Board has formed a special committee of independent directors and we have engaged a financial advisor to support them in evaluating a range of options and exploring other potential strategic alternatives. If we are unsuccessful in engaging in a favorable strategic alternative, then our ability to grow our business and compete with larger, including combined, competitors may be adversely affected. Impact of United States Tariff Policy We continue to actively manage the impact of recent United States tariff policies. Importantly, all of our mattresses are manufactured in the United States, and about 15% of our cost of goods is tied to products sourced from overseas. This limited exposure is primarily concentrated in the textile side of the business, which includes sheets and mattress covers, but also includes the import of bases and foundations. Tariffs impacted us by approximately $0.9 million and $1.8 million during the three and six months ended June 30, 2026, respectively, due to our mitigation efforts which have reduced the overall impact to our initial expectations. The tariff landscape remains fluid, and we are actively evaluating sourcing alternatives and pricing strategies on a case-by-case basis. We believe that our vertically integrated model and strong vendor relationships give us the flexibility to remain agile and responsive to changes in tariff policies, and we believe that we will be able to partially mitigate these impacts through a combination of supply chain repositioning, vendor collaborations, and selective pricing actions. On March 6, 2026, we filed a lawsuit in the U.S. Court of International Trade against the U.S. Customs and Border Protection (“CBP”), the CBP commissioner, and the United States of America seeking a full refund of the tariffs imposed under the International Emergency Economic Powers Act that the Company has paid to the United States. During the second quarter of 2026, we received $5.5 million in tariff refunds plus interest (See Note 2 – Summary of Significant Accounting Policies, Refund of Tariffs). Pricing Actions In the latter part of the second quarter of 2026, we announced a pricing action to increase the sales price of our products across all products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. We expect all price increases will be effective with all customers during the third quarter of 2026. Reverse Stock Split On July 2, 2026, our stockholders approved a reverse stock split of our Class A common stock and Class B common stock (collectively, the “common stock”) at a ratio ranging from any whole number between 1-for-10 to 1-for-30, with the exact ratio determined by the Company’s Board of Directors. On July 6, 2026, the Board of Directors approved a 1-for-25 reverse stock split (“Reverse Stock Split”) of the Company’s common stock that became effective on July 19, 2026. Following the effect of the Reverse Stock Split, every 25 shares of the Company’s common stock that were issued and outstanding automatically converted into one outstanding share of common stock. All stock awards and warrants of the Company outstanding immediately prior to the Reverse Stock Split were proportionally adjusted. The Reverse Stock Split did not change the Company’s authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock and, therefore the Company reclassified an amount equal to the reduction in the number of shares of common stock at par value to additional paid-in capital. No fractional shares of common stock were issued in connection with the Reverse Stock Split. Instead, any fractional share that would otherwise result from the Reverse Stock Split will be rounded up to the next whole share of common stock. Proportionate adjustments were made to the number of shares authorized under the Company’s equity incentive plans, the number of shares subject to any award or purchase right under the Company’s equity incentive plans, and the exercise price or purchase price with respect to any stock award or warrant. Executive Summary – Results of Operations Net revenues decreased $6.8 million, or 6.5%, to $98.3 million for the three months ended June 30, 2026 compared to $105.1 million for the three months ended June 30, 2025. The decrease in revenue was primarily driven by an $8.8 million or 19.1% decrease in our wholesale revenue due to an increase of $5.3 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $3.5 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues also decreased $0.6 million, or 1.4%. While down against the prior year’s period, E-commerce net revenues for the three months ended June 30, 2026 represented the third quarter of sequential improvement. These decreases were partially offset by a $2.6 million or 16.6% increase in showroom net revenues which continues to outperform the mattress industry. Gross profit increased $1.9 million, or 4.5%, to $44.4 million for the three months ended June 30, 2026 compared to $42.5 million for the three months ended June 30, 2025. Our gross profit increased due to the $5.3 million benefit from tariff refunds, partially offset by lower sales. Our gross profit percentage increased to 45.2% of net revenues in the second quarter of 2026 from 40.5% in the second quarter of 2025 primarily due to the tariff refund. 31 Operating expenses decreased $8.1 million, or 14.3% to $48.7 million for the three months ended June 30, 2026 compared to $56.8 million for the three months ended June 30, 2025. This decrease was driven by a $4.1 million decrease in restructuring related costs from last year, a $4.0 million decrease in employee related expenses and $2.1 million decrease in professional services and all other operating expenses, partially offset by a $2.1 million increase in advertising spending. Total other income (expense), net was $1.0 million net other income for the three months ended June 30, 2026, compared to $3.1 million net other expense for the three months ended June 30, 2025. The other income, net for the three months ended June 30, 2026 consists of $7.4 million gain from the change in the fair value of warrants, $1.4 million in other income, partially offset by $7.8 million in interest expense. The other expense, net in the three months ended June 30, 2025 consists of interest expense of $7.5 million, partially offset by $4.4 million in other income due to the gain on the change in the fair value of warrants. Net loss attributable to Purple Inc. was $3.2 million for the three months ended June 30, 2026 compared to a net loss of $17.3 million for the three months ended June 30, 2025. The $14.1 million decrease in net loss was primarily due to higher margins, reduced operating expenses and the increase in gain from change in fair value of the warrants. Outlook for Growth The way we think about the business today is fundamentally different than a year ago. Last year was about reshaping the business for a tougher market – right sizing our cost structure, strengthening the foundation and restoring profitability. Now, we are focused on growth with our strategic focus areas that build on what is already working and how we are running our business. We believe we are well positioned to grow our business given our new grid innovation, evolved messaging strategy, our new cost structure and other cost saving initiatives. Our Path to Premium Sleep strategy remains focused on the following three priorities to drive growth: ● Knowing Our Consumer. Knowing our consumer continues to shape how we show up across all channels. We remain focused on helping people understand why the Gelflex Grid is different, why it matters to sleep quality and which Purple product is right for them. We have shifted our marketing approach to place greater emphasis on brand building and consumer education outside of key holiday periods, while continuing to use targeting conversion marketing as consumers move closer to purchase. We believe that we have strong consumer awareness and an opportunity to turn that awareness into stronger purchase consideration. That means making the benefits of the GelFlex Grid easier to understand before consumers are ready to buy and making it simpler to choose the right Purple product when they enter the purchase process. This effort applies across the full consumer journey, from our showrooms and website to our wholesale partners, with the same objectives everywhere – to clearly answer, why Purple and which Purple mattress? ● Delivering Better Sleep. During the second quarter, our premium products continued to perform well, with Rejuvenate remaining the strongest-performing collections, particularly in our showroom channel. Within our showroom business, Rejuvenate 2.0 continues to account for over 50% of total mattress revenue, underscoring the strength of our premium positioning and consumers’ willingness to invest in better sleep products. Beyond mattresses, our pillow business continued to deliver strong results, reinforcing the broader appeal of the Purple brand and providing additional opportunities to introduce new consumers to our GelFlex Grid technology. While the overall mattress category remained under pressure, we continue to believe our premium innovation positions us well for long-term growth. Beyond the product itself, we are continuing to invest in the customer experience across every touchpoint. Our showrooms are the clearest proof point for our product. When consumers experience the GelFlex Grid in person and our teams can explain the difference, we see better conversion and a stronger premium mix. That was evident again in the second quarter, with showroom sales up compared to the prior year. Expanding and strengthening our distribution network remains an important component of our long-term growth strategy. Our owned retail footprint expanded during the quarter with the opening of one new showroom and the relocation of another, both of which are performing well. As we expand our showrooms, we continue to deepen our presence with key wholesale partners. The rollout of Purple Royale at Mattress Firm was completed during the second quarter. Costco continued to perform well during the second quarter and remains one of our strongest wholesale relationships. Volume was well ahead of last year, and we continue to see meaningful opportunity with them. Amazon also had another strong quarter, delivering double-digit growth as we further optimized our product assortment and fulfillment strategy. ● Executing with Financial Discipline. Over the past year, we have taken meaningful steps to improve the efficiency of our business. Those efforts continue to support improved profitability. During the second quarter of 2026, we delivered higher gross margin and profitability above last year despite lower sales. We took pricing actions in June to help offset commodity and logistics inflation and preserve gross margins. We are making continued progress in our underlying cost structure, particularly across sourcing, operations, and fulfillment, supported by ongoing productivity initiatives and supply chain optimization efforts. Our sourcing teams continue to identify additional opportunities to improve costs through supplier diversification and operational efficiencies. There is no guarantee that we will be able to effectively execute on these initiatives, which are subject to risks, uncertainties, and assumptions that are difficult to predict, including the risks described in the “Risk Factors” section of this Quarterly Report and in our Annual Report on Form 10-K filed with the SEC on March 31, 2026 and our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2026. Therefore, actual results may differ materially and adversely from those described above. In addition, we may, in the future, adapt these focuses in response to changes in the market or our business. 32 Operating Results for the Three Months Ended June 30, 2026 and 2025 The following table sets forth for the periods indicated, our results of operations and the percentage of total revenue represented in our unaudited condensed consolidated statements of operations (dollars in thousands): Three Months Ended June 30, 2026 % of Net Revenues 2025 % of Net Revenues Revenues, net $ 98,270 100.0 % $ 105,100 100.0 % Cost of revenues: Cost of revenues 53,857 54.8 62,509 59.5 Cost of revenues - restructuring related charges — — 77 — Total cost of revenues 53,857 54.8 62,586 59.5 Gross profit 44,413 45.2 42,514 40.5 Operating expenses: Marketing and sales 33,733 34.3 35,447 33.7 General and administrative 12,445 12.7 14,991 14.3 Research and development 2,485 2.5 2,178 2.1 Restructuring, impairment and other related charges — — 4,137 3.9 Total operating expenses 48,663 49.5 56,753 54.0 Operating loss (4,250 ) (4.3 ) (14,239 ) (13.5 ) Other income (expense): Interest expense (7,812 ) (7.9 ) (7,457 ) (7.1 ) Other income, net 1,455 1.5 1 — Change in fair value – warrant liabilities 7,393 7.5 4,378 4.2 Total other income (expense), net 1,036 1.1 (3,078 ) (2.9 ) Net loss before income taxes (3,214 ) (3.3 ) (17,317 ) (16.5 ) Income tax expense (32 ) — (54 ) — Net loss (3,246 ) (3.3 ) (17,371 ) (16.5 ) Net loss attributable to noncontrolling interest (16 ) — (26 ) — Net loss attributable to Purple Innovation, Inc. $ (3,230 ) (3.3 ) $ (17,345 ) (16.5 ) Revenues, Net Net revenues decreased $6.8 million, or 6.5%, to $98.3 million for the three months ended June 30, 2026 compared to $105.1 million for the three months ended June 30, 2025. The decrease in revenue was primarily driven by an $8.8 million or 19.1% decrease in our wholesale revenue due to an increase of $5.3 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $3.5 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues also decreased $0.6 million, or 1.4%. While down against the prior year’s period, E-commerce net revenues for the three months ended June 30, 2026 represented the third quarter of sequential improvement. These decreases were partially offset by a $2.6 million or 16.6% increase in showroom net revenues which continues to outperform the mattress industry. 33 Total Cost of Revenues Total cost of revenues decreased $8.7 million, or 14.0%, to $53.9 million for the three months ended June 30, 2026, compared to $62.6 million for the three months ended June 30, 2026. This decrease was due primarily to a $5.3 million benefit from our tariff rebates that we received during the quarter, $2.3 million in lower tariff payments and $1.1 million reduction in other costs. Our gross profit percentage increased to 45.2% of net revenues in the second quarter of 2026 from 40.5% in the second quarter of 2025, due mainly to the tariff refund. Marketing and Sales Marketing and sales expense decreased $1.7 million, or 4.8%, to $33.7 million for the three months ended June 30, 2026 compared to $35.4 million for the three months ended June 30, 2025. This decrease primarily consisted of a $2.3 million decrease in various marketing activities and professional services, a $1.2 million decrease in employee-related expenses due to headcount reductions and $0.3 million decrease in all other marketing and sales expenses, partially offset by a $2.1 million increase in advertising spending. General and Administrative General and administrative expense decreased $2.5 million, or 17.0%, to $12.4 million for the three months ended June 30, 2026 compared to $15.0 million for the three months ended June 30, 2025. This decrease was due to a $2.7 million decrease in employee related costs due to headcount reductions and $0.5 million reduction in strategic alternative costs, partially offset by a $0.7 million increase in all other general and administrative costs. Research and Development Research and development expense increased $0.3 million, or 14.1%, to $2.5 million for the three months ended June 30, 2026 compared to $2.2 million for the three months ended June 30, 2025. The increase is due to an increase in professional service expenses. Restructuring, Impairment and Other Related Charges There were no restructuring, impairment and other related charges for the three months ended June 30, 2026 as all restructuring activities were completed in 2025. We incurred $4.1 million of restructuring, impairment and other related charges during the three months ended June 30, 2025. Operating Loss Operating loss decreased $9.9 million, or 70.1%, to $4.3 million, for the three months ended June 30, 2026 compared to $14.2 million for the three months ended June 30, 2025. This decrease in our operating loss is the result of a higher gross profit percent, lower operating expenses and no restructuring costs in 2026. Interest Expense Interest expense totaled $7.8 million for the three months ended June 30, 2026 compared to $7.5 million for the three months ended June 30, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months along with additional debt issuance costs to amortize over the life of the loan. 34 Other Income, Net Other income was $1.5 million for the three months ended June 30, 2026 compared to a de minimis amount for the three months ended June 30, 2025. This increase was mainly due to $1.2 million received for sublease rent payments on facilities we are no longer using and have subleased to other parties. Change in Fair Value – Warrant Liabilities Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $7.4 million gain on the change in fair value of our warrant liabilities for the three months ended June 30, 2026 related to the decrease in fair value from the previous reporting date, due mainly to the reduction in stock price. For the three months ended June 30, 2025, we recognized a $4.4 million gain related to the decrease in fair value of the warrant liability during that period. Income Tax (Expense) Benefit We had a de minimis income tax expense for the three months ended June 30, 2026 and 2025. The income tax expense amounts in both the second quarter of 2026 and 2025 were related to various state taxes. Noncontrolling Interest We calculate net loss attributable to noncontrolling interests on a quarterly basis using their weighted average ownership percentage. Net loss attributed to noncontrolling interests was negligible for the three months ended June 30, 2026 and 2025. Operating Results for the Six Months Ended June 30, 2026, and 2025 The following table sets forth for the periods indicated, our results of operations and the percentage of total revenue represented in our unaudited condensed consolidated statements of operations (dollars in thousands): Six Months Ended June 30, 2026 % of Net Revenues 2025 % of Net Revenues Revenues, net $ 194,000 100.0 % $ 209,271 100.0 % Cost of revenues: Cost of revenues 109,366 56.4 120,101 57.4 Cost of revenues - restructuring related charges — — 995 0.5 Total cost of revenues 109,366 56.4 121,096 57.9 Gross profit 84,634 43.6 88,175 42.1 Operating expenses: Marketing and sales 70,316 36.2 76,688 36.6 General and administrative 30,478 15.7 29,478 14.1 Research and development 4,933 2.5 4,630 2.2 Restructuring, impairment and other related charges — — 6,097 2.9 Total operating expenses 105,727 54.5 116,893 55.9 Operating loss (21,093 ) (10.9 ) (28,718 ) (13.7 ) Other income (expense): Interest expense (16,031 ) (8.3 ) (12,221 ) (5.8 ) Other income, net 2,946 1.5 70 — Change in fair value – warrant liabilities 435 0.2 4,427 2.1 Total other income (expense), net (12,650 ) (6.5 ) (7,724 ) (3.7 ) Net loss before income taxes (33,743 ) (17.4 ) (36,442 ) (17.4 ) Income tax expense (79 ) — (95 ) — Net loss (33,822 ) (17.4 ) (36,537 ) (17.5 ) Net loss attributable to noncontrolling interest (51 ) — (55 ) — Net loss attributable to Purple Innovation, Inc. $ (33,771 ) (17.4 ) $ (36,482 ) (17.4 ) 35 Revenues, Net Net revenues decreased $15.3 million, or 7.3%, to $194.0 million for the six months ended June 30, 2026, compared to $209.3 million for the six months ended June 30, 2025. This decrease was primarily driven by a $13.3 million or 15.3% decrease in our wholesale revenue due to an increase of $11.1 million in certain payments to customers and a manufacturer under common control with a customer. These payments represent consideration paid to a customer and are recorded as a reduction of revenue. In addition, we had a $2.2 million decrease in wholesale sales volume related to lower industry demand. E-commerce net revenues decreased $5.4 million, or 6.1% and showroom net revenues increased $3.5 million, or 10.3%. Total Cost of Revenues Total cost of revenues decreased $11.7 million, or 9.7%, to $109.4 million for the six months ended June 30, 2026, compared to $121.1 million for the six months ended June 30, 2025. This decrease was due primarily to a $5.3 million credit for tariff refunds we received in the second quarter, costs of $5.4 million to a manufacturer under common control that were booked against revenues, $3.0 million in lower tariff payments and a $1.0 million reduction in restructuring costs as the plan ended in 2025. These costs were offset by a $3.0 million increase in material and other costs, primarily logistics due to higher fuel costs and reduced driver supply. Our gross profit percentage increased to 43.6% for the first six months in 2026 from 42.1% in the first six months of 2025. Marketing and Sales Marketing and sales expense decreased $6.4 million, or 8.3%, to $70.3 million for the six months ended June 30, 2026, compared to $76.7 million for the six months ended June 30, 2025. This decrease is due to a decrease of $2.6 million for payroll related costs, a decrease of $1.2 million in advertising spending, and a decrease of $2.6 million in all other marketing expenses. General and Administrative General and administrative expense increased $1.0 million, or 3.4%, to $30.5 million for the six months ended June 30, 2026, compared to $29.5 million for the six months ended June 30, 2025. This increase was primarily due to $3.8 million increase in strategic alternative costs, increase in facilities and other expenses of $1.3 million, partially offset by a $4.1 million decrease in employee related expenses due to headcount reductions. Research and Development Research and development expense increased $0.3 million, or 6.5%, to $4.9 million for the six months ended June 30, 2026, compared to $4.6 million for the six months ended June 30, 2025. This increase is due to an increase in professional services during the period. Restructuring, Impairment and Other Related Charges There were no restructuring, impairment and other related charges for the six months ended June 30, 2026 as all restructuring activities were completed in 2025. We incurred $6.1 million of restructuring, impairment and other related charges during the six months ended June 30, 2025. 36 Operating Loss Operating loss decreased $7.6 million, or 26.5%, to $21.1 million, for the six months ended June 30, 2026, compared to $28.7 million for the six months ended June 30, 2025. This decrease in our operating loss is the result of the reduced marketing and sales expenses and no restructuring and impairment charges in 2026, partially offset by reduced gross profit due to lower revenues and increases in other operating expenses. Interest Expense Interest expense totaled $16.0 million for the six months ended June 30, 2026, compared to $12.2 million for the six months ended June 30, 2025. This increase was primarily due to additional interest incurred on a higher principal balance on the Related Party Loan as the Company elected the paid-in-kind option on monthly interest over the past 12 months. Change in Fair Value – Warrant Liabilities Our warrants contain certain provisions that did not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date. We incurred a $0.4 million gain on the change in the fair value of our warrant liabilities for the six months ended June 30, 2026. For the six months ended June 30, 2025, we recognized a $4.4 million gain related to the decrease in fair value of the warrant liability during that period. Income Tax (Expense) Benefit We had a $0.1 million income tax expense for the six months ended June 30, 2026, compared to $0.1 million income tax expense for the six months ended June 30, 2025. The income tax expense amounts in the six months ended June 30, 2026 and 2025 were related to various state taxes. Noncontrolling Interest We calculate net income or loss attributable to noncontrolling interests on a quarterly basis using the weighted average ownership percentage. Net loss attributed to noncontrolling interests was de minimis for the six months ended June 30, 2026 and 2025. Liquidity and Capital Resources Our historical principal sources of funds are cash flows from operations and cash and cash equivalents on hand, supplemented with borrowings made pursuant to various loan agreements. Principal uses of funds consist of capital expenditures, working capital needs, operating lease payment obligations and investing in innovation. In accordance with the terms of our various loan agreements, we have elected to pay interest in kind on our loans to reduce cash obligations. Our working capital needs depend largely upon the timing of cash receipts from product sales, payments to vendors and others, changes in inventories, and operating lease payment obligations. Our cash and cash equivalents and working capital positions were $23.3 million and $(105.2) million, respectively, as of June 30, 2026 compared to $24.3 million and $35.2 million, respectively, as of December 31, 2025. The change in working capital position at June 30, 2026 is due to our debt maturity date now within the next 12 months. We had an accumulated deficit of $659.1 million at June 30, 2026. We incurred a net loss of $33.8 million for the six months ended June 30, 2026, with net cash provided by operating activities of $3.6 million. Cash used for capital expenditures was $3.6 million for the six months ended June 30, 2026. Our capital expenditures in 2026 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities. Additional details regarding our current debt are described above in Note 10 - Debt . 37 We have a history of recurring net losses and cash used in operations, an accumulated deficit, and requiring additional capital to fund our operations, invest in the business to expand sales and marketing efforts and invest in innovation. Our 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, 2025, we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt as to our ability to continue as a going concern within one year after the date of the issuance of such financial statements. Debt service has consisted primarily of re-financing or extending the maturity date of the debt as well as paying-in-kind interest payments. As disclosed in Note 10 - Debt, the Company has elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement and on March 24, 2026, the Company executed the Third Amendment to the Amended and Restated Credit Agreement (the “Third Amendment”) with the Lenders to extend the maturity date of the Amended and Restated Credit Agreement from December 31, 2026 to April 30, 2027. In addition, certain requirements and events of default relating to the going concern qualification in our December 31, 2025 financial statements were waived (see Note 10 – Debt ). Management has implemented plans to both increase its revenues from the sales of its products and to achieve cost savings within the next year, sufficient to generate positive operating cash flow levels. However, the Company cannot guarantee that it will have sufficient cash flow to meet the debt obligations when they become due within the next twelve months. The Company will need to raise additional capital or secure alternative financing arrangements, both of which are uncertain and not within the control of the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern. The Company has taken a number of actions to increase cash flow and support its operations and strategies. In August 2024, the Company implemented the Restructuring Plan to consolidate manufacturing operations resulting in cost savings. The Company has realized and plans to continue to realize direct material cost savings by concentrating efforts on driving gross margin improvement through various methods such as pricing actions, continued mix shift towards the Restore and Rejuvenate collections, and by driving cost savings through supply chain initiatives and manufacturing efficiency. The Company has delivered direct material cost savings from its supplier diversification efforts, improved scrap and yield results from continuous improvements, and outbound freight costs reflect cost improvements along with improved delivery reliability. The Company has been successful in subleasing the two manufacturing facilities that were vacated as part of the Restructuring Plan. The Company has also taken additional cost-saving initiatives in 2025 and the beginning of 2026 to reduce headcount and streamline responsibilities and reporting structure. Further, management’s plans include additional actions intended to improve liquidity and reduce costs, including a planned optimization of advertising spending, pacing the number of new store openings, efforts to mitigate tariff impacts by managing the country of origin, and other cost-saving initiatives. In the latter part of the second quarter of 2026, the Company announced a pricing action to increase the sales price of our various products to offset the impact of materials and logistics inflation related to the rise of fuel prices and to maintain gross margins. The Company is currently evaluating potential strategic alternatives and opportunities to achieve additional liquidity through one or more future debt refinancings. Other Contractual Obligations Other material contractual obligations primarily include operating lease payment obligations. See Note 8 - Leases of the unaudited condensed consolidated financial statements for additional information on leases. 38 Cash Flows for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025 The following summarizes our cash flows for the six months ended June 30, 2026 and 2025 as reported in our unaudited condensed consolidated statements of cash flows (in thousands): Six Months Ended June 30, 2026 2025 Net cash provided by (used in) operating activities $ 3,636 $ (27,062 ) Net cash used in investing activities (4,335 ) (5,144 ) Net cash (used in) provided by financing activities (346 ) 37,443 Net (decrease) increase in cash (1,045 ) 5,237 Cash, beginning of the period 24,345 29,011 Cash, end of the period $ 23,300 $ 34,248 Cash provided by operating activities was $3.6 million for the six months ended June 30, 2026 compared to cash used in operating activities of $27.1 million for the six months ended June 30, 2025. The $30.7 million increase in year-over-year cash provided by operating activities included a $26.4 million increase in cash provided from the changes in operating assets and liabilities, a $2.7 million decrease in net loss and a $1.6 million increase in non-cash cash adjustments. Cash used in investing activities reflected net capital expenditures of $3.6 million and $5.2 million for the six months ended June 30, 2026 and 2025, respectively. Capital expenditures in 2026 consisted primarily additional investments made in our manufacturing operations and showroom facilities. Cash used in financing activities was $0.3 million for the six months ended June 30, 2026 compared to cash provided by financing activities of $37.4 million during the six months ended June 30, 2025. Cash used in financing activities for 2026 consist of amendment fess paid in cash to certain lenders for the Third Amendment. Financing activities during the first six months of 2025 included $39.0 million of proceeds from the additional financing in 2025 offset in part by $1.6 million in payments for debt issuance costs. Critical Accounting Estimates We discuss our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K filed with the SEC on March 31, 2026. There have been no significant changes in our critical accounting policies since the end of fiscal 2025. Available Information Our website address is www.purple.com. We make available free of charge on the Investor Relations portion of our website, investors.purple.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website. We also use the Investor Relations portion of our website, investors.purple.com, as a channel of distribution of additional Company information that may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference. 39 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our operating results are subject to risk from interest rate fluctuations on the outstanding borrowings. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. The proceeds we received from the Related Party Loan entered into in January 2024 bears interest at a variable rate which exposes us to market risks relating to changes in interest rates. As of June 30, 2026, we had $137.2 million of variable rate debt associated with the Related Party Loan. Based on this debt level, an increase of 100 basis points in the effective interest rate on the outstanding debt amount would result in an increase in interest expense of approximately $1.4 million over the next 12 months. We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future. ITEM 4. CONTROLS AND PROCEDURES (a) Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO” and together with the CEO, the “Certifying Officers”), 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 June 30, 2026 at the reasonable assurance level. (b) Changes in Internal Controls Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 40 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is from time to time involved in various claims, legal proceedings and complaints arising in the ordinary course of business. Please refer to Note 13 — Commitments and Contingencies to the unaudited condensed consolidated financial statements contained in this report for certain information regarding our legal proceedings. ITEM 1A. RISK FACTORS The 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 below and 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, except as set forth below. Risks Relating to our Common Stock Nasdaq 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. We have in the past experienced, and may experience in the future, noncompliance with Nasdaq’s continued listing requirements. While we are currently in compliance with the continued listing requirements, we cannot guarantee that we will be able to maintain such compliance in the future. 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 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. ITEM 5. OTHER INFORMATION Nasdaq Matters On August 7, 2026, the Company was formally notified by The Nasdaq Stock Market LLC (“Nasdaq”) that the Company has demonstrated compliance with the $1.00 bid price requirement set forth in Nasdaq Listing Rule 5450(a)(1) and all other applicable criteria for continued listing on The Nasdaq Global Select Market. Accordingly, the previously disclosed listing matter before the Nasdaq Hearing Panel (the “Panel”) has been closed. The Panel has imposed a Mandatory Panel Monitor for a period of one year, through August 7, 2027. If during the monitoring period, the Company’s closing bid price falls below $1.00 per share for 30 consecutive business days, the Company will not be eligible for a 180-day compliance period otherwise available under the Nasdaq Listing Rules. Rather, Nasdaq would issue a delist determination, which the Company could then appeal by requesting a hearing before the Panel. The Company’s securities may be at that time delisted from Nasdaq. 10b5-1 Trading Plans During the second quarter of 2026, none of our directors or executive officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K. 41 ITEM 6. EXHIBITS Number Description 3.1 Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the SEC on November 6, 2019). 3.2 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 filed with the SEC on October 16, 2024). 3.3 Certificate of Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 16, 2026). 10.1+ Offer Letter entered into between Purple Innovation, LLC and Robert G. Lucian dated April 24, 2026 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 28, 2026). 10.2+ Amendment to the Amended and Restated Employment Agreement dated July 4, 2026, 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 with the SEC on July 6, 2026). 31.1* Certification by Robert T. DeMartini, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification by Robert G. Lucian, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification by Robert T. DeMartini, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification by Robert G. Lucian, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Link base 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––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. * Filed herewith. ** Furnished herewith. + Indicates management contract or compensatory plan. 42 SIGNATURE Pursuant to the requirements of the Securities Exchange 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. Date: August 11, 2026 By: /s/ Robert T. DeMartini Robert T. DeMartini Chief Executive Officer (Principal Executive Officer) Date: August 11, 2026 By: /s/ Robert G. Lucian Robert G. Lucian Chief Financial Officer (Principal Financial Officer) Date: August 11, 2026 By: /s/ George T. Ulrich George T. Ulrich VP Accounting and Financial Reporting (Principal Accounting Officer) 43