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What changed in Purple Innovation, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Purple Innovation, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+350 added−335 removedSource: 10-K (2026-03-31) vs 10-K (2025-03-14)

Top changes in Purple Innovation, Inc.'s 2025 10-K

350 paragraphs added · 335 removed · 198 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSolely for convenience, we may refer to our trademarks in this Annual Report without the ™ or ® symbol, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks. 8 In addition, we maintain copyrights, many registered, to past and present versions of purple.com, onpurple.com, equapressure.com, wondergel.com, marketing content, blogs, logos, graphics, videos and other marketing and promotional materials promoting our products.
Biggest changeMany of the common law marks have registrations pending with the USPTO and other international jurisdictions. Solely for convenience, we may refer to our trademarks in this Annual Report without the ™ or ® symbol, but such references are not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights to our trademarks.
We believe this will be achieved by selectively recruiting outstanding talent, tailoring development plans for employees, implementing an accelerated leadership development program for promising individuals, and building cross-functional career maps. Improve organizational performance We attempt to drive efficiency, effectiveness, and business success through strategic people initiatives.
We believe this will be achieved by selectively recruiting outstanding talent, tailoring development plans for employees, implementing an accelerated leadership development program for promising individuals, and building cross-functional career maps. 9 Improve organizational performance We attempt to drive efficiency, effectiveness, and business success through strategic people initiatives.
Our sheet sets include pillowcases that also maximize the unique functionality of our pillows and come in both standard and deep pocket sizes. ● Waterproof Mattress Protector— Like our sheets, our new Purple Waterproof Mattress Protector mattress is designed to optimize the functionality of our Gelflex Grid in our mattress. Our premium mattress protector is stretchy, breathable and waterproof.
Our sheet sets include pillowcases that also maximize the unique functionality of our pillows and come in both standard and deep pocket sizes. ● Waterproof Mattress Protector— Like our sheets, our Purple Waterproof Mattress Protector mattress is designed to optimize the functionality of our Gelflex Grid in our mattress. Our premium mattress protector is stretchy, breathable and waterproof.
We now sell mattresses through Ashley Furniture, Big Sandy, City Furniture, Costco, Denver Mattress, HOM Furniture, Living Spaces, Mathis Brothers, Mattress Firm, Mattress Warehouse and Raymour & Flanigan, among others. We typically have four to five mattress models on the floor.
We now sell mattresses through Ashley Furniture, Big Sandy, Costco, Denver Mattress, HOM Furniture, Living Spaces, Mathis Brothers, Mattress Firm, Mattress Warehouse and Raymour & Flanigan, among others. We typically have four to five mattress models on the floor.
In 2025, Purple’s human resources team is focusing on four pillars that drive our people strategy: (i) acquire, retain, and develop great people; (ii) improve organizational performance; (iii) deliver competitive and meaningful pay and benefits; and (iv) celebrate our people. Acquire, retain, and develop great people We attempt to strategically acquire, keep and cultivate a talented, motivated, and high-caliber workforce.
In 2026, Purple’s human resources team is focusing on four pillars that drive our people strategy: (i) acquire, retain, and develop great people; (ii) improve organizational performance; (iii) deliver competitive and meaningful pay and benefits; and (iv) celebrate our people. Acquire, retain, and develop great people We attempt to strategically acquire, keep and cultivate a talented, motivated, and high-caliber workforce.
We make available, free of charge on our Investor Relations website, investors.purple.com, all of our reports filed with or furnished to the Securities and Exchange Commission (“SEC”). The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov.
Available Information Our website address is www.purple.com. We make available, free of charge on our Investor Relations website, investors.purple.com, all of our reports filed with or furnished to the Securities and Exchange Commission (“SEC”). The SEC also maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov.
The newly launched Purple DreamLayer Pillow uses an all-new version of the Gelflex Grid combined with MicroAir Foam for a dreamy, melt-in comfort that provides contour-hugging support without the heat and delay of a traditional memory foam. The Purple Harmony Anywhere Pillow has all of the advantages and feel of the Purple Harmony Pillow in a portable, take-anywhere travel size.
The Purple DreamLayer Pillow uses an all-new version of the Gelflex Grid combined with MicroAir Foam for a dreamy, melt-in comfort that provides contour-hugging support without the heat and delay of a traditional memory foam. The Purple Harmony Anywhere Pillow has all of the advantages and feel of the Purple Harmony Pillow in a portable, take-anywhere travel size.
We operate 58 Purple showrooms across the United States where consumers can experience our brand, learn and engage with our technology and purchase our products. Over time, we plan to strategically expand our showroom footprint across the United States. Wholesale Channel We sell our assortment of products through brick-and-mortar and online wholesale partners.
We operate 55 Purple showrooms across the United States where consumers can experience our brand, learn and engage with our technology and purchase our products. Over time, we plan to strategically expand our showroom footprint across the United States. Wholesale Channel We sell our assortment of products through brick-and-mortar and online wholesale partners.
We are re-launching the Rejuvenate collection (Rejuvenate 2.0) in the second quarter of 2025 with a newly innovated grid technology. In general, direct-to-consumer mattress companies offer convenience, flexible shipping and returns, and low prices, while leveraging third-party manufacturing and distribution.
We re-launched the Rejuvenate collection (Rejuvenate 2.0) in the second quarter of 2025 with a newly innovated grid technology. In general, direct-to-consumer mattress companies offer convenience, flexible shipping and returns, and low prices, while leveraging third-party manufacturing and distribution.
We continue to strategically open new showrooms and anticipate continued expansion of our showrooms in the future. 1 Industry and Competition Our portfolio of products is driven by our commitment to innovating real comfort solutions that meaningfully help people sleep, feel and live better.
We continue to strategically operate showrooms and anticipate continued expansion of our showrooms in the future. 1 Industry and Competition Our portfolio of products is driven by our commitment to innovating real comfort solutions that meaningfully help people sleep, feel and live better.
As of December 31, 2024 we operate 58 Purple showrooms across the United States as compared to 60 Purple showrooms at the end of 2023 and 55 Purple showrooms at the end of 2022.
As of December 31, 2025 we operate 55 Purple showrooms across the United States as compared to 58 Purple showrooms at the end of 2024 and 60 Purple showrooms at the end of 2023.
The Purple Harmony Pillow is the world’s first pillow with a full wrap of honeycomb Gelflex® Grid surrounding a soft, responsive latex core for blissfully cool comfort and responsive airy support. The newly launched Purple Freeform Pillow features the honeycomb Gelflex Grid with an all-new MicroFlex™ Moon Foam fill interior for luxurious, moldable comfort.
The Purple Harmony Pillow is the our first pillow with a full wrap of honeycomb Gelflex® Grid surrounding a soft, responsive latex core for blissfully cool comfort and responsive airy support. The Purple Freeform Pillow features the honeycomb Gelflex Grid with an all-new MicroFlex™ Moon Foam fill interior for luxurious, moldable comfort.
In order to facilitate further innovation and development, we opened a 61,000 square foot facility in August 2023 located in Draper, Utah that serves as our innovation center. Intellectual Property We rely on patent and trademark protection laws to protect our intellectual property and maintain our competitive position in the marketplace.
In order to facilitate further innovation and development, we have a dedicated 61,000 square foot facility located in Draper, Utah that serves as our innovation center. Intellectual Property We rely on patent and trademark protection laws to protect our intellectual property and maintain our competitive position in the marketplace.
Our people initiatives are strategically crafted to enhance the professional growth and overall satisfaction of our employees, with the overarching goal of making Purple the best place they’ve ever worked. As of March 7, 2025, we had approximately 1,200 employees engaged in manufacturing, research and development, general corporate functions, wholesale, e-commerce, and Purple showrooms.
Our people initiatives are strategically crafted to enhance the professional growth and overall satisfaction of our employees, with the overarching goal of making Purple the best place they’ve ever worked. As of March 30, 2026, we had approximately 1,100 employees engaged in manufacturing, research and development, general corporate functions, wholesale, e-commerce, and Purple showrooms.
We launched our elevated brand positioning in 2023 with the launch of our new products and we believe our premium brand position will allow us to increase our market share of the premium mattress category going forward. 6 Our Sales Channels We sell our products via our DTC channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces, and our wholesale channel through retail brick-and-mortar and online wholesale partners.
We believe our elevated brand positioning with our premium brand will allow us to continue to increase our market share of the premium mattress category going forward. 6 Our Sales Channels We sell our products via our DTC channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces, and our wholesale channel through retail brick-and-mortar and online wholesale partners.
The Restructuring Plan is comprised of the permanent closure of both Utah manufacturing facilities to consolidate mattress production in our Georgia plant. Closure of the two Utah manufacturing facilities is planned to be completed in the second quarter of 2025.
The Restructuring Plan included the permanent closure of both Utah manufacturing facilities to consolidate mattress production in our Georgia plant. Closure of the two Utah manufacturing facilities was completed in the second quarter of 2025.
Hutchings 58 Chief Innovation Officer Jeffery S. Kerby 56 Chief of Owned Retail Officer John J. Roddy IV 57 Chief People Officer Executive Officers Robert T. DeMartini has served as Chief Executive Officer since January 2022. Prior to joining the Company, Mr. DeMartini, served as president and chief executive officer of USA Cycling, Inc., the official U.S.
Kerby 57 Chief of Owned Retail Officer 10 Executive Officers Robert T. DeMartini has served as Chief Executive Officer since January 2022. Prior to joining the Company, Mr. DeMartini, served as president and chief executive officer of USA Cycling, Inc., the official U.S.
The resulting real-time feedback cycle is a key differentiator compared to other competitors that outsource many of these functions and lack an integrated approach. In August 2023, we opened an innovation center near our headquarters in Utah to support and accelerate our ongoing research and development. Growth Strategies ● Focus on pioneering new technologies to maintain our competitive advantage.
The resulting real-time feedback cycle is a key differentiator compared to other competitors that outsource many of these functions and lack an integrated approach. Our innovation center is near our headquarters in Utah to support and accelerate our ongoing research and development. Growth Strategies ● Knowing Our Customer.
For the year ended December 31, 2024, our DTC sales accounted for 58.1% of our net revenues, as compared to 58.1% for 2023 and 57.7% for 2022, and wholesale sales accounted for 41.9% of net revenues, as compared to 41.9% for 2023 and 42.3% for 2022.
For the year ended December 31, 2025, our DTC sales accounted for 55.8% of our net revenues, as compared to 58.1% for 2024 and 58.1% for 2023, and wholesale sales accounted for 44.2% of net revenues, as compared to 41.9% for 2024 and 41.9% for 2023.
We also manage our production labor and capacity utilization to promote efficient use of our manufacturing facilities. We believe our McDonough factory provides ample room to accommodate our future growth and expansion plans for the near term.
We continually strive to improve our manufacturing processes and create efficiencies in production through new equipment and process designs and resources. We also manage our production labor and capacity utilization to promote efficient use of our manufacturing facilities. We believe our McDonough factory provides ample room to accommodate our future growth and expansion plans for the near term.
Information About Our Executive Officers As of the date of this report, our executive officers are as follows: Name Age Title Robert T. DeMartini 63 Director, Chief Executive Officer Todd E. Vogensen 56 Chief Financial Officer and Treasurer Tricia S. McDermott-Spikes 53 Chief Legal Officer and Secretary Eric S. Haynor 61 Chief Operating Officer Jeffrey L.
Information About Our Executive Officers As of the date of this report, our executive officers are as follows: Name Age Title Robert T. DeMartini 64 Director, Chief Executive Officer Todd E. Vogensen 57 Chief Financial Officer and Treasurer Eric S. Haynor 62 Chief Operating Officer Jeffrey L. Hutchings 59 Chief Innovation Officer Jeffery S.
Our issued United States patents that are significant to our operations are expected to expire at various dates up to 2042. We have several trademarks registered with the U.S. Patent and Trademark Office (USPTO). Applications are pending for registration of additional trademarks and some of these listed trademarks for additional classes of goods both in the United States and internationally.
Our issued United States patents that are significant to our operations are expected to expire at various dates up to 2042. 8 We have several trademarks registered with the U.S. Patent and Trademark Office (USPTO).
With our premium mattress collections, the Restore Collection and the Rejuvenate Collection, launched in 2023, we now have three collections that come in a variety of feels and price points to appeal to a wide range of consumers with high satisfaction and delivering best sleep. ● Pillows— We currently sell eight pillow models, all designed to deliver various sleep preferences and needs.
With our Essential, Restore and Rejuvenate collections we offer mattresses in a variety of comfort levels and price points to appeal to a wide range of consumers with high satisfaction and delivering best sleep. ● Pillows— We currently sell eight pillow models, all designed to deliver various sleep preferences and needs.
These savings will enable us to reinvest in innovation and marketing to drive growth. 4 Our Products Our current product portfolio is as follows: ● Mattresses— Our mattresses utilize the unique benefits of our patented Gelflex Grid technology creating a one-of-a-kind sleep solution that regulates body temperature, allowing you to sleep cooler through the night and soft enough to cradle pressure points while also providing support through localized buckling columns.
As a result, the operating discipline we put in place over the past year is now showing up in our margins and profitability. 4 Our Products Our current product portfolio is as follows: ● Mattresses— Our mattresses utilize the unique benefits of our patented Gelflex Grid technology creating a one-of-a-kind sleep solution that regulates body temperature, allowing you to sleep cooler through the night and soft enough to cradle pressure points while also providing support through localized buckling columns.
Haynor spent most of his career with Ecolab, a supplier of cleaning, sanitizing and maintenance products and services for the institutional, hospitality, healthcare and industrial markets, in a variety of end-to-end supply chain roles.
Eric S. Haynor has served as the Chief Operating Officer of the Company since June 2022. Prior to joining the Company, Mr. Haynor spent most of his career with Ecolab, a supplier of cleaning, sanitizing and maintenance products and services for the institutional, hospitality, healthcare and industrial markets, in a variety of end-to-end supply chain roles.
Our manufacturing facility in McDonough, Georgia provides 844,000 square feet of manufacturing and distribution space where we manufacture our proprietary Hyper-Elastic Polymer cushioning used in our mattress, pillow and seat cushion products.
Our manufacturing facility in McDonough, Georgia provides 844,000 square feet of manufacturing and distribution space where we manufacture our proprietary Hyper-Elastic Polymer cushioning used in our mattress, pillow and seat cushion products. We also have a 198,000 square foot distribution facility in Salt Lake City, Utah, that in addition to the McDonough facility, will assemble, package and ship our products.
Kerby grew from director to associate vice president, head of stores for Bath and Body Works. Mr. Kerby holds a Bachelor of Science degree from Washington State University’s School of Communications. John J. Roddy IV has served as Chief People Officer of the Company since October 2021. Mr.
Kerby grew from director to associate vice president, head of stores for Bath and Body Works. Mr. Kerby holds a Bachelor of Science degree from Washington State University’s School of Communications. 11
The Purple Cloud Pillow features the same fill as the Purple Twin Cloud Pillow, but a simpler, single chamber design for classic, cloud-like comfort. The Kids Purple Pillow is made entirely of Gelflex Grid, similar to the Purple Pillow, but is smaller and softer for smaller sleepers.
The Purple Cloud Pillow features the same fill as the Purple Twin Cloud Pillow, but a simpler, single chamber design for classic, cloud-like comfort.
Celebrate our people We attempt to continue to focus on maintaining a culture of recognition where we actively acknowledge and honor the achievements, contributions, and milestones of our people.
Celebrate our people We attempt to continue to focus on maintaining a culture of recognition where we actively acknowledge and honor the achievements, contributions, and milestones of our people. Through thoughtful and authentic celebration, we not only create a culture of gratitude, but we will also foster a sense of belonging and motivation, ultimately strengthening our team cohesion and morale.
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Our strategy focuses on offering a differentiated product that provides unique benefits and higher customer satisfaction, all fueled by our proprietary flexible gel technology. Advancements and innovation in our grid technology has led to a new grid technology marking a significant advancement in our product lineup.
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Over the past year, we’ve sharpened our focus on understanding who our customers are, what matters most to them, and how they make their purchase decisions across the channels. Our Less Pain, Better Sleep positioning continues to resonate, providing a consistent, consumer-led message that translates across ecommerce, retail, and wholesale channels.
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Our new DreamLayer grid, stacked with our original grid, creates a unique combination that continues to differentiate us in the market while driving superior comfort and support for an even more premium sleep experience. This upgrade will result in a refresh of our current Rejuvenate line.
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Importantly, we are focused on reaching our customers with the right message, in the right place, at the right point in their decision journey. We also saw strong results from the “Sleep Easy” co-marketing campaign with Mattress Firm which drove sales conversion and improved awareness scores. ● Delivering Better Sleep.
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The new Rejuvenate 2.0 collection launches in the second quarter 2025 through our direct-to-consumer channels, followed by a full wholesale roll-out expected to be complete by the third quarter 2025. In addition, we significantly expanded our distribution of pillows by launching our renowned DreamLayer and Freeform pillows into our wholesale channel. ● Drive sales by promoting our product differentiation.
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Innovation remains at the core of Purple’s differentiation, and we believe our Rejuvenate 2.0 collection continues to validate that approach. Performance exceeded our expectations in 2025, with strong traction across both showrooms and wholesale as retail partners expanded Rejuvenate 2.0 placement on their floors.
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We started as a brand built on differentiation. In recent years, the category has relied extensively on discount messaging to attract customers, with less focus on product benefits. Our goal is to refocus our messaging to lead with our product differentiation.
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We also continued development work on Purple Royale, a new premium offering developed in close partnership with Mattress Firm. We continue to focus on delivering a differentiated end-to-end customer experience, anchored by compelling in-store presentations across our corporate stores and wholesale partners.
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We intend to effectively articulate the unique qualities of sleeping on our gel grid layer to be more effective and reach more consumers.
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We are also continuing to strengthen white glove delivery services and service execution to ensure that Purple shows up consistently and credibly wherever the customer chooses to engage. This focus is strengthening the brand and improving conversion by reinforcing the value of our technology across channels. ● Executing with Financial Discipline.
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In our selling channels, we expect refocusing our messaging on promoting our differentiation will drive more and better quality traffic while improving conversion both online and in stores, and increase our share of retailer sales in our wholesale channel. ● Prioritize gross margin improvements.
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Last year, our focus was on right sizing the business so we could operate profitably at the current scale. We are increasingly focused on driving growth from a stronger foundation of lower cost structure and improved margins.
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We expect continued gross margin gains to come from driving cost savings through plant consolidation efficiency gains, supplier diversification efforts, and improved scrap and yield results from continuous improvements efforts.
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In owned retail, we plan to open seven new stores this year following the closure of four underperforming stores last year, reflecting a disciplined approach to fleet optimization.
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We are also ramping up in-house pillow production, changing vendors for key mattress components like coils and mattress covers and improving our delivery program to drive cost improvements and better deliveries.
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Gross margin improvement remains a key focus, and we continue to see the benefits of the actions we’ve taken to simplify the business and improve efficiency across sourcing, operations, fulfillment, and quality improvements. Mix has become an increasingly important tailwind, led by the growth of Rejuvenate 2.0.
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The Purple Harmony™ Pillow, the Purple Freeform™ Pillow, the Purple DreamLayer™ Pillow, the Purple Harmony Anywhere™ Pillow, the Purple Pillow®, the Purple Twin Cloud® Pillow, the Purple Cloud® Pillow and the Kids Pillow®.
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The shift toward higher-ticket products combined with strong attachment rates for adjustable smart bases and pillows, is driving higher average transaction values and incremental profit dollars.
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We also have recently opened a 198,000 square foot distribution facility in Salt Lake City, Utah, that in addition to the McDonough facility, will assemble, package and ship our products. We continually strive to improve our manufacturing processes and create efficiencies in production through new equipment and process designs and resources.
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The newly launched Purple GridCloud® pillow, the Purple Harmony™ Pillow, the Purple Freeform™ Pillow, the Purple DreamLayer™ Pillow, the Purple Harmony Anywhere™ Pillow, the Purple Pillow®, the Purple Twin Cloud® Pillow and the Purple Cloud® Pillow. The Purple GridCloud® Pillow combines premium down-alt fill with a single side of honeycomb grid for plush, down-like softness enhanced with GelFlex Grid support.
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Many of the common law marks have registrations pending with the USPTO and other international jurisdictions.
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Applications are pending for registration of additional trademarks and some of these listed trademarks for additional classes of goods both in the United States and internationally.
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Through thoughtful and authentic celebration, we not only create a culture of gratitude, but we will also foster a sense of belonging and motivation, ultimately strengthening our team cohesion and morale. 9 Available Information Our website address is www.purple.com.
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In addition, we maintain copyrights, many registered, to past and present versions of purple.com, onpurple.com, equapressure.com, wondergel.com, marketing content, blogs, logos, graphics, videos and other marketing and promotional materials promoting our products.
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Tricia S. McDermott-Spikes joined Purple in October 2023 and serves as Chief Legal Officer and Corporate Secretary responsible for strategic oversight of the legal organization, corporate governance, compliance intellectual property, licensing, litigation, insurance and government affairs. Ms. McDermott-Spikes is a skilled executive, attorney and business leader who brings more than 25 years of expertise in global retail and manufacturing environments.
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Prior to joining the Company, from February 2021 to October 2023, Ms. McDermott-Spikes served as the chief legal & risk officer and secretary at Shoe Show, Inc. Previously, from December 2011 to February 2021, Ms.
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McDermott-Spikes was with Perry Ellis International, Inc., where she served in roles of increasing responsibility and last served as general counsel and secretary from November 2017 to February 2021. Ms.
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McDermott-Spikes is active in her community, having previously served on the boards of Teach for America (Miami-Dade), Family Promise of Palm Beach County, the Association of Corporate Counsel (Charlotte), and the U.S. Patent & Trademark Office, Trademark Public Advisory Committee as an appointee of the U.S. Secretary of State. Ms.
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McDermott-Spikes continues her service on the Board of Trustees of the Blumenthal Performing Arts Center in Charlotte, NC, as chair of the Talent, Development & Retention Committee and member of the Governance Committee. Ms.
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McDermott-Spikes received a Bachelor of Arts degree in English and a Juris Doctor degree from Rutgers University along with a certificate in Accelerated Management from Yale University School of Management. 10 Eric S. Haynor has served as the Chief Operating Officer of the Company since June 2022. Prior to joining the company, Mr.
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Roddy brings to the Company over 20 years of experience in culture transformation, talent development, organization design and change leadership. Prior to joining the Company, Mr. Roddy served as the chief people officer for VASA Fitness, a fitness club operator, from 2018 to October 2021.
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Prior to that he was the chief human resources officer for SeaWorld Parks and Entertainment, a theme park and entertainment company, from 2016 to 2018. From 2012 to 2016, Mr. Roddy was the senior vice president of human resources for Luxottica Group.
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Prior to joining Luxottica Group, he was the vice president of human resources for Starbucks Corporation from 2004 to 2012. Mr. Roddy holds a Master’s degree from Columbia University in Organizational Psychology and a Bachelor’s degree in Organizational Behavior from Brigham Young University – Hawaii. 11

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, on March 12, 2025, we issued to the Lenders, as partial consideration for their entering into the 2025 Amendment, warrants (the “2025 Warrants” and together with the 2024 Warrants, the “Warrants”) to purchase 6.2 million shares of our Common Stock (approximately 6% of our currently outstanding Common Stock) at a price of $1.50 per share, subject to certain adjustments.
Biggest changeIn addition, on May 2, 2025, we issued to the 2025 Lenders under the Second 2025 Amendment additional warrants (the “2025 Additional Warrants”) to purchase 6.6 million shares of our common stock at a price of $1.50 per share, subject to adjustments and on May 2, 2025, we issued to Somnigroup International, Inc. as partial consideration for their entering into various agreements with Somnigroup International, Inc. entities, warrants to purchase 8.0 million shares of our common stock at a price of $1.50 per share, subject to adjustments.
Non-compliance could lead to defaults, which could materially adversely affect our financial condition and results of operations, including possible acceleration of our debt and, as well as other cross-defaulting debt obligations. Additionally, defaults could significantly impair our ability to secure alternative financing and limit our business strategies.
Non-compliance could lead to defaults, which could materially adversely affect our financial condition and results of operations, including possible acceleration of our debt, as well as other cross-defaulting debt obligations. Additionally, defaults could significantly impair our ability to secure alternative financing and limit our business strategies.
The exercise of the Warrants will dilute the value of Class A common stock and stockholder voting power. In addition, the Warrants include full-ratchet anti-dilution protections, subject to certain conditions, which could result in the Warrants becoming exercisable for a significantly greater number of shares if we engage in a dilutive financing.
The exercise of warrants will dilute the value of Class A common stock and stockholder voting power. In addition, the warrants include full-ratchet anti-dilution protections, subject to certain conditions, which could result in the warrants becoming exercisable for a significantly greater number of shares if we engage in a dilutive financing.
A large portion of our gross profit comes from mattress products. If we fail to develop or successfully market new models, such as those introduced in recent years, our results of operations and business could be harmed. We rely on effective marketing messages and efficient advertising to drive consumer awareness and sales.
A large portion of our gross profit comes from mattress products. If we fail to develop or successfully market new models, such as those introduced in recent years, our results of operations and business could be harmed. 17 We rely on effective marketing messages and efficient advertising to drive consumer awareness and sales.
Infringement claims could also result in injunctions preventing distribution of our products or forcing us to alter our designs if licensing terms are unavailable or unreasonable. We previously licensed certain intellectual property to EdiZONE, LLC (“EdiZONE”), for the purpose of enabling EdiZONE to meet its contractual obligations to licensees.
Infringement claims could also result in injunctions preventing distribution of our products or forcing us to alter our designs if licensing terms are unavailable or unreasonable. 21 We previously licensed certain intellectual property to EdiZONE, LLC (“EdiZONE”), for the purpose of enabling EdiZONE to meet its contractual obligations to licensees.
We own U.S. and foreign patents for product designs, function, formulas, materials, and technologies, along with trademarks, trade secrets, trade dress, and copyrights. Our success relies on protecting these intellectual property rights and avoiding infringement on third-party rights. 20 Despite our efforts, we may not fully protect our intellectual property and proprietary rights.
We own U.S. and foreign patents for product designs, function, formulas, materials, and technologies, along with trademarks, trade secrets, trade dress, and copyrights. Our success relies on protecting these intellectual property rights and avoiding infringement on third-party rights. Despite our efforts, we may not fully protect our intellectual property and proprietary rights.
As of December 31, 2024, we completed a study to assess whether an ownership change has occurred, as defined by IRC Section 382, or whether there have been ownership changes since the Company’s formation. The results of this study indicate that we experienced one ownership change on December 31, 2021.
In 2024, we completed a study to assess whether an ownership change has occurred, as defined by IRC Section 382, or whether there have been ownership changes since the Company’s formation. The results of this study indicate that we experienced one ownership change on December 31, 2021.
Conflicting regulations could raise costs, change manufacturing processes, and harm product performance, negatively affecting our business. We could be subject to additional sales tax or other indirect tax liabilities. We are subject to sales tax or other indirect tax obligations as imposed by the various states and jurisdictions in the United States.
Conflicting regulations could raise costs, change manufacturing processes, and harm product performance, negatively affecting our business. 20 We could be subject to additional sales tax or other indirect tax liabilities. We are subject to sales tax or other indirect tax obligations as imposed by the various states and jurisdictions in the United States.
Shipping costs and delays have in the past risen and may again in the future rise due to port closures, congestion, and shortages of containers and ships. Future disruptions, such as pandemics, geopolitical conflicts, and increased duties and tariffs, could worsen delays and increase material costs.
Shipping costs and delays have in the past risen and may again in the future rise due to regional conflicts, port closures, congestion, and shortages of containers and ships. Future disruptions, such as pandemics, geopolitical conflicts, and increased duties and tariffs, could worsen delays and increase material costs.
Our preliminary exploration of potential strategic alternatives may not be successful, which may adversely affect our ability to compete with larger, including combined, competitors. We regularly engage in dialogue with market participants regarding potential business combinations, partnerships and other strategic alternatives.
Our exploration of potential strategic alternatives may not be successful, which may adversely affect our ability to compete with larger, including combined, competitors. We regularly engage in dialogue with market participants regarding potential business combinations, partnerships and other strategic alternatives.
Our competitiveness may depend on our ability to innovate and adapt to these changes and failure to keep pace may adversely affect our results of operations. Timely product delivery affects our competitiveness. Failure to maintain or enhance our delivery processes and infrastructure could negatively impact our ability to compete.
Our competitiveness may depend on our ability to innovate and adapt to these changes and failure to keep pace may adversely affect our results of operations. 15 Timely product delivery affects our competitiveness. Failure to maintain or enhance our delivery processes and infrastructure could negatively impact our ability to compete.
This risk could be mitigated by redesigning our Hyper-Elastic Polymer material using existing or new technologies. However, there is no guarantee that any of our future sales in the European Union won’t be challenged by EdiZONE’s licensee, and any such redesigned mattresses may not succeed. If challenged, we are required to indemnify EdiZONE.
This risk could be mitigated by redesigning our Hyper-Elastic Polymer material using existing or new technologies. However, there is no guarantee that any of our future sales in the European Union or in the medical industry won’t be challenged by EdiZONE’s licensee, and any such redesigned mattresses may not succeed. If challenged, we are required to indemnify EdiZONE.
EdiZONE agreed not to modify, extend, or enter new third-party licenses, with all rights reverting to us as these licenses expire. One of EdiZONE’s prior licenses grants exclusivity to a third party of an earlier technology that could prevent us from selling a mattress made from that earlier technology in the European Union.
EdiZONE agreed not to modify, extend, or enter new third-party licenses, with all rights reverting to us as these licenses expire. One of EdiZONE’s prior licenses grants exclusivity to a third party of an earlier technology that could prevent us from selling a mattress made from that earlier technology in the European Union or in the medical industry.
This liability may increase if we realize future tax benefits, face changes in tax rates, or if payments are accelerated. However, since we have not been profitable recently, we determined as of December 31, 2024, that the likelihood of incurring a liability was not probable and no liability was recorded.
This liability may increase if we realize future tax benefits, face changes in tax rates, or if payments are accelerated. However, since we have not been profitable recently, we determined as of December 31, 2025, that the likelihood of incurring a liability was not probable and no liability was recorded.
Risks from legal, economic, political, or health issues, as well as disruptions in global trade, including due to tariffs or trade wars, could impact production and result in inadequate inventory levels. Sourcing challenges, particularly from China, due to trade tensions, tariffs or other geopolitical factors, will also increase costs and disrupt supply.
Risks from legal, economic, political, or health issues, as well as disruptions in global trade, including due to tariffs or trade wars, could impact production and result in inadequate inventory levels. Sourcing challenges due to trade tensions, tariffs or other geopolitical factors, will also increase costs and disrupt supply.
The 2025 Amendment also amended the Amended and Restated Credit Agreement to (i) provide for an additional term loan from the 2025 Term Loan Lenders (as defined in the 2025 Amendment) in an aggregate amount not to exceed $20.0 million, subject to the approval of the Required Lenders in their discretion, (ii) provide for the payment of substantial make-whole payments in the event we prepay the loans prior to their maturity, and (iii) provide that the incremental term loan will be senior in right of repayment to the initial term loan.
The 2025 Amendment also amended the Amended A&R Credit Agreement to (i) provide for an additional term loan from the 2025 Term Loan Lenders (as defined in the 2025 Amendment) in an aggregate amount not to exceed $20.0 million, subject to the approval of the Required Lenders in their discretion, (ii) provide for the payment of substantial make-whole payments in the event we prepay the loans prior to their maturity, and (iii) provide that the incremental term loan will be senior in right of repayment to the initial term loan.
We may be involved in legal proceedings arising in the ordinary course of business, including commercial, product liability, employment and intellectual property claims. Litigation is unpredictable, and it is possible that the outcome of future claims asserted, or adverse publicity resulting from litigation, could adversely affect our business, reputation, results of operations or financial condition.
We may be involved in legal proceedings arising in the ordinary course of business, including commercial, product liability, employment, intellectual property claims, and claims brought by shareholders. Litigation is unpredictable, and it is possible that the outcome of future claims asserted, or adverse publicity resulting from litigation, could adversely affect our business, reputation, results of operations or financial condition.
In addition, if one or more of the analysts who cover us adversely change their recommendation regarding our stock, the market price of our Common Stock could decline. 13 Coliseum Capital Management, LLC is our largest stockholder and Lender, and exercises substantial control over our Board composition, management team members and strategies.
In addition, if one or more of the analysts who cover us adversely change their recommendation regarding our stock, the market price of our Common Stock could decline. 13 Coliseum Capital Management, LLC (“Coliseum”) is our largest stockholder and Lender, and exercises substantial control over our Board of Directors (“Board”) composition, management team members and strategies.
Our compliance with these covenants will depend on successfully implementing our business strategy, as breaches could lead to defaults and acceleration of our debt, potentially forcing us into bankruptcy or liquidation.
Our compliance with these covenants will depend on successfully implementing our business strategies, as breaches could lead to defaults and acceleration of our debt, potentially forcing us into bankruptcy or liquidation.
The 2025 Amendment (as defined below) also added certain make-whole payments with respect to our borrowings under the Amended and Restated Credit Agreement, which would require substantial payments in connection with certain pre-payments or refinancing of our outstanding borrowings.
The 2025 Amendment also added certain make-whole payments with respect to our borrowings under the Amended and Restated Credit Agreement, which would require substantial payments in connection with certain pre-payments or refinancing of our outstanding borrowings.
The lump sum payment of $131.1 million required upon early termination of the Tax Receivable Agreement in the event of a change in control could negatively impact liquidity, delay or prevent business transactions, and reduce the value of our Common Stock.
The lump sum payment of $137.5 million required upon early termination of the Tax Receivable Agreement in the event of a change in control could negatively impact liquidity, delay or prevent business transactions, and reduce the value of our Common Stock.
We cannot ensure that the IRS or another taxing authority will not claim in the future that we experienced an ownership change under Code Section 382 and attempt to reduce the benefit of our Current NOLs and other tax benefits available, even if the NOL Protective Charter Amendment is in place.
We cannot ensure that the IRS or another taxing authority will not claim in the future that we experienced an ownership change under Code Section 382 and attempt to reduce the benefit of our Current NOLs and other tax benefits available, even if the NOL Protective Charter Amendment is in place. 26 Item 1B. Unresolved Staff Comments None.
The Restructuring Plan, which consolidated our manufacturing operations into one plant, may heighten the risk of disruption, particularly from regional economic downturns, hurricanes, pandemics, utility shortages, or other events affecting our Georgia plant, potentially harming our business.
The consolidation of our manufacturing operations into one plant, may heighten the risk of disruption, particularly from regional economic downturns, hurricanes, pandemics, utility shortages, or other events affecting our Georgia plant, potentially harming our business.
Our Tax Receivable Agreement with our founders requires us to pay 80% of certain tax benefits realized from increases in asset tax basis and other tax benefits. As of December 31, 2024, our preliminary estimate of liability under the agreement was $169.0 million.
Our Tax Receivable Agreement with our founders requires us to pay 80% of certain tax benefits realized from increases in asset tax basis and other tax benefits. As of December 31, 2025, our preliminary estimate of liability under the agreement was $170.5 million.
For example, under the Amended and Restated Credit Agreement, as amended by the 2025 Amendment, the Lenders, which include Coliseum, have loaned to us an aggregate of $80.0 million and we have issued Warrants to Coliseum and the other Lenders to purchase an aggregate of 26.2 million shares of our common stock at $1.50 per share.
For example, under the Amended and Restated Credit Agreement, as amended by the 2025 Amendment, the Second 2025 Amendment, and the Third Amendment, the Lenders, which include Coliseum, have loaned to us an aggregate of $100.0 million and we have issued Warrants to Coliseum and the other Lenders to purchase an aggregate of 32.8 million shares of our common stock at $1.50 per share.
Shortages of widely used components like foam and spring units, due to factors like increased demand, weather events, or supply chain issues, could impact our production and operations. If a supplier fails to deliver, we will need to find replacements, potentially on unfavorable terms.
Shortages of widely used components like foam and spring units, due to factors like increased demand, weather events, or supply chain issues, could impact our production and operations. If a supplier fails to deliver, we will need to find replacements, potentially on unfavorable terms. Any disruption in component supply could significantly interrupt production and raise costs.
The market price of our Common Stock is volatile and may decline regardless of our results of operations, and Stockholders may not be able to resell shares at or above their purchase price. The market price of our Common Stock has been highly volatile, and stockholders may not be able to resell shares at or above their purchase price.
The market price of our Common Stock has been highly volatile, and stockholders may not be able to resell shares at or above their purchase price.
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.
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. 22 The market price of our Common Stock is volatile and may decline regardless of our results of operations, and Stockholders may not be able to resell shares at or above their purchase price.
Any disruption in component supply could significantly interrupt production and raise costs. 15 Even with timely access to raw materials, supply chain constraints, inflation, increased duties and tariffs, and other factors will increase shipping, labor, and production costs. Rising costs for materials, transportation, and labor could impact our production efficiency, reduce gross margins, and negatively affect our results of operations.
Even with timely access to raw materials, supply chain constraints, inflation, increased duties and tariffs, and other factors will increase shipping, labor, and production costs. Rising costs for materials, transportation, and labor could impact our production efficiency, reduce gross margins, and negatively affect our results of operations.
As of December 31, 2024, the amount of our Current NOLs has not been audited or validated by the Internal Revenue Service (the “IRS”). The IRS could challenge the amount of our Current NOLs, which could result in an increase in our future liability for income taxes.
The IRS may challenge our Current NOLs and other tax benefits . As of December 31, 2025, the amount of our Current NOLs has not been audited or validated by the Internal Revenue Service (the “IRS”). The IRS could challenge the amount of our Current NOLs, which could result in an increase in our future liability for income taxes.
On November 11, 2024, we received written notice from NASDAQ that we were not in compliance with Nasdaq minimum share price rule, since the closing price of our Common Stock had been below $1.00 per share for 30 consecutive business days. However, we regained such compliance on February 3, 2025.
On November 5, 2025, we received written notice from NASDAQ that we were not in compliance with Nasdaq minimum share price rule, since the closing price of our Common Stock had been below $1.00 per share for 30 consecutive business days.
In connection with the preparation of our 2024 financial statements, we undertook a going concern assessment and concluded the Company will have sufficient liquidity for its operations for at least one year from the date these consolidated financial statements are issued.
In connection with the preparation of our 2025 financial statements, we undertook a going concern assessment and concluded we will have sufficient liquidity for its operations for at least one year from the date those consolidated financial statements were issued.
Competitors are expanding their distribution channels, with many offering direct-to-consumer sales online. Major retailers like Mattress Firm, Amazon, and Walmart also sell competing products. Additionally, foreign retailers may vertically integrate by acquiring U.S. mattress manufacturers or other retailers. Many of our competitors have greater financial resources, technical expertise, larger customer bases, established industry relationships, and more mature distribution channels.
Major retailers like Mattress Firm, Amazon, and Walmart also sell competing products. Additionally, foreign retailers may vertically integrate by acquiring U.S. mattress manufacturers or other retailers. Many of our competitors have greater financial resources, technical expertise, larger customer bases, established industry relationships, and more mature distribution channels.
Consumer Product Safety Commission (CPSC) and other jurisdictions have fire retardancy standards for the mattress industry, with some states and Congress considering stricter regulations. These standards require fire retardant materials, quality assurance programs, random product testing, and documentation retention, which can be costly.
The U.S. Consumer Product Safety Commission (CPSC) and other jurisdictions have fire retardancy standards for the mattress industry, and some jurisdictions may consider stricter regulations. These standards require fire retardant materials, quality assurance programs, random product testing, and documentation retention, which can be costly.
For example, in February 2023 we issued 13.4 million shares of Common Stock pursuant to a public offering, on January 23, 2024, we issued to the Lenders under the Amended and Restated Credit Agreement the 2024 Warrants to purchase 20.0 million shares of our Common Stock at a price of $1.50 per share, subject to adjustments, and on March 12, 2025, we issued to the Lenders under the 2025 Amendment the 2025 Warrants to purchase 6.2 million shares of our Common Stock at a price of $1.50 per share, subject to adjustments.
For example, on January 23, 2024, we issued to the Lenders under the Amended and Restated Credit Agreement the warrants to purchase 20.0 million shares of our common stock at a price of $1.50 per share (the “2024 Warrants”), subject to adjustments, and on March 12, 2025, we issued to the 2025 Lenders under the 2025 Amendment the 2025 Warrants to purchase 6.2 million shares of our common stock at a price of $1.50 per share, subject to adjustments.
Tax Risks Relating to our Structure Obligations under the Tax Receivable Agreement could materially adversely affect our future cash flow if we become profitable and begin paying income taxes. Payments under the Tax Receivable Agreement may be accelerated or significantly exceed the actual benefits we realize.
Additionally, it could erode investor confidence and negatively affect our stock price. 25 Tax Risks Relating to our Structure Obligations under the Tax Receivable Agreement could materially adversely affect our future cash flow if we become profitable and begin paying income taxes. Payments under the Tax Receivable Agreement may be accelerated or significantly exceed the actual benefits we realize.
We currently estimate the liability associated with this lump-sum payment as of December 31, 2024, to be approximately $131.1 million on a discounted basis.
We currently estimate the liability associated with this lump-sum payment as of December 31, 2025, to be approximately $137.5 million on a discounted basis.
We rely on external suppliers for key raw materials like polyurethane foam, oil, spring units, and our Hyper-Elastic Polymer® ingredients. Any supply issues, quality concerns, or price fluctuations could raise costs and hinder our ability to meet customer demand.
We rely on external suppliers for key raw materials like polyurethane foam, oil, spring units, and our Hyper-Elastic Polymer® ingredients. Any supply issues, quality concerns, or price fluctuations could raise costs and hinder our ability to meet customer demand. Oil price increases from conflicts in the Middle East or elsewhere could increase the cost of freight or raw materials.
Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3, which may also impair our ability to raise capital, execute business strategies, or issue shares for acquisitions. Additionally, it could erode investor confidence and negatively affect our stock price.
Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3, which may also impair our ability to raise capital, execute business strategies, or issue shares for acquisitions.
For example, (i) one of our competitors is purchasing one of our wholesale partners, which could disrupt our relationship or prevent us from continuing to sell our products in favorable placements alongside the competitor’s products or at all in the wholesale partner’s stores, and (ii) one of our competitors owns a manufacturing company with which we have a manufacturing relationship, and that competitor could disrupt that relationship to harm our manufacturing efforts.
For example, (i) the industry leader has acquired one of our wholesale partners, which could disrupt our relationship or prevent us from continuing to sell our products in favorable placements alongside the competitor’s products or at all in the wholesale partner’s stores, (ii) the industry leader owns a manufacturing company with which we have a manufacturing relationship, and that competitor could disrupt that relationship to harm our manufacturing efforts, (iii) the industry leader is attempting to purchase one of our key suppliers, and (iv) the industry leader is attempting to get the U.S.
If we lose members of the leadership team we may not be able to run our business effectively. Our success depends on attracting and retaining key personnel in areas like executive leadership, marketing, sales, innovation, and operations.
These delays may hinder our ability to meet product demand and deliver on time, negatively impacting our business and results of operations. If we lose members of the leadership team we may not be able to run our business effectively. Our success depends on attracting and retaining key personnel in areas like executive leadership, marketing, sales, innovation, and operations.
We may not be able to obtain such funds on acceptable terms or at all. We have experienced recurring operating losses and negative cash flows and may continue to generate operating losses and consume significant cash resources in the future.
We may need additional funds to execute our business plan, maintain our liquidity, repay our debt and fund our operations. We may not be able to obtain such funds on acceptable terms or at all. We have experienced recurring operating losses and negative cash flows and may continue to generate operating losses and consume significant cash resources in the future.
Additionally, such cost saving measures may adversely affect our ability to generate additional revenue in the future. We have in the past experienced and may in the future experience significant fluctuations in our results of operations, which could make our future results of operations difficult to predict or cause our results of operations to fall below analysts’ and investors’ expectations.
We have in the past experienced and may in the future experience significant fluctuations in our results of operations, which could make our future results of operations difficult to predict or cause our results of operations to fall below analysts’ and investors’ expectations.
Many of our significant competitors, including established manufacturers, retailers, and new entrants, offer products directly competing with ours. This increasing competition from both domestic and international sources, including competitors that source from low-cost locations such as China and Vietnam, could adversely affect our business, financial condition and results of operations.
Many of our significant competitors, including established manufacturers, retailers, and new entrants, offer products directly competing with ours. This increasing competition from both domestic and international sources, including competitors that source from low-cost locations, could adversely affect our business, financial condition and results of operations. Competitors are expanding their distribution channels, with many offering direct-to-consumer sales online.
We may also need to restructure our obligations or pursue other measures to address any liquidity deficiency. 12 Under the Amended and Restated Credit Agreement, we can request additional loans, but the Lenders may deny requests, limiting our access to future funds and adversely affecting our liquidity, financial condition and results of operations.
Under the Amended and Restated Credit Agreement, we can request additional loans, but the Lenders may deny requests, limiting our access to future funds and adversely affecting our liquidity, financial condition and results of operations.
We cannot ensure whether we will have future taxable income or, if we do, whether such income or our Current NOLs or other tax benefits at such time will exceed any potential limitation under Code Section 382. 25 The IRS may challenge our Current NOLs and other tax benefits .
Use of our Current NOLs and other tax benefits depends on our ability to generate taxable income in the future. We cannot ensure whether we will have future taxable income or, if we do, whether such income or our Current NOLs or other tax benefits at such time will exceed any potential limitation under Code Section 382.
These new technologies may be superior to the technologies we currently use in our products and services. Adopting new technologies could be hindered by industry standards, regulations, resistance from clients, expense, or third-party intellectual property rights.
Technological changes, such as advances in artificial intelligence, may render our current technologies obsolete or require costly updates. These new technologies may be superior to the technologies we currently use in our products and services. Adopting new technologies could be hindered by industry standards, regulations, resistance from clients, expense, or third-party intellectual property rights.
Our Second Amended and Restated Certificate of Incorporation could make it very difficult for an investor to bring any legal actions against us, our directors, or our officers and may limit our stockholders’ ability to obtain a favorable judicial forum.
These obligations could also limit the price that investors might be willing to pay in the future for our Common Stock. 23 Our Second Amended and Restated Certificate of Incorporation could make it very difficult for an investor to bring any legal actions against us, our directors, or our officers and may limit our stockholders’ ability to obtain a favorable judicial forum.
In addition, such payments could result in holders of our Class A Stock not receiving any consideration in a sale of our business, or if we were to liquidate, dissolve, or wind-up, either voluntarily or involuntarily. We may need additional funds to execute our business plan, maintain our liquidity, repay our debt and fund our operations.
In addition, such payments could result in holders of our Class A common stock not receiving any consideration in a sale of our business, or if we were to liquidate, dissolve, or wind-up, either voluntarily or involuntarily.
As reported by Coliseum in its Schedule 13D/A filed on January 23, 2024, Coliseum Capital Management LLC (“Coliseum”) beneficially owns 58.5 million shares of Common Stock (which includes 46.9 million shares of Common Stock currently owned and 11.6 million shares of Common Stock that could be acquired upon exercise of its Warrants).
As reported by Coliseum in its Schedule 13D/A filed on May 6, 2025, Coliseum beneficially owns 61.1 million shares of Common Stock (which includes 46.9 million shares of Common Stock currently owned and 14.2 million shares of Common Stock that could be acquired upon exercise of its warrants).
Any shortages or delays in meeting demand could harm customer satisfaction, results of operations and financial condition. We rely on key suppliers, some of which are our only sources for certain products, materials, or services. While alternative suppliers may be available, disruptions or cost increases in the supply of materials could negatively affect our results of operations and financial condition.
Any shortages or delays in meeting demand could harm customer satisfaction, results of operations and financial condition. 19 We rely on key suppliers, some of which are our only source or one of few sources for certain products, materials, or services.
There can be no assurance that any of such preliminary exploratory activities will result in our engaging in a strategic alternative transaction, or even if we do so, that any such strategic alternative transaction will result in favorable terms and conditions for us or our shareholders.
There can be no assurance that any of such preliminary exploratory activities will result in our engaging in a strategic alternative transaction, or even if we do so, that any such strategic alternative transaction will result in favorable terms and conditions for us or our shareholders. 14 We may not be able to successfully anticipate consumer trends and demand and our failure to do so may lead to a loss of consumer acceptance of the products we sell.
Continued inflation may reduce consumer discretionary spending, negatively affecting demand for our products. Disruption of our manufacturing has and could increase our costs of doing business or lead to delays in shipping and could materially adversely affect our business, our results of operations, and our financial condition.
Disruption of our manufacturing has and could increase our costs of doing business or lead to delays in shipping and could materially adversely affect our business, our results of operations, and our financial condition.
We have previously sold and may in the future sell additional shares of our Common Stock or convertible securities at prices that are lower than the prices paid by existing stockholders, and investors purchasing shares or other securities could have rights superior to existing stockholders, which could result in substantial dilution of existing stockholders.
Our Second Amended and Restated Certificate of Incorporation allows us to issue up to 300 million shares of our common stock, including 210 million shares of Class A common stock and 90 million shares of Class B common stock, and up to five million shares of undesignated preferred stock. 24 We have previously sold and may in the future sell additional shares of our common stock or convertible securities at prices that are lower than the prices paid by existing stockholders, and investors purchasing shares or other securities could have rights superior to existing stockholders, which could result in substantial dilution of existing stockholders.
For the years ended December 31, 2024, and 2023, we had negative cash flow from operating activities of $18.0 million and $54.7 million, respectively.
For the years ended December 31, 2025, and 2024, we had negative cash flow from operating activities of $33.8 million and $17.9 million, respectively.
Additionally, changes in a supplier’s financial condition could delay their product delivery to us. Shipping delays from port closures, congestion, and shortages of containers or ships could disrupt manufacturing, supply of materials, and inventory management. These delays may hinder our ability to meet product demand and deliver on time, negatively impacting our business and results of operations.
While alternative suppliers may be available, disruptions or cost increases in the supply of materials could negatively affect our results of operations and financial condition. Additionally, changes in a supplier’s financial condition could delay their product delivery to us. Shipping delays from port closures, congestion, and shortages of containers or ships could disrupt manufacturing, supply of materials, and inventory management.
Advertising costs on social media platforms such as Facebook have risen significantly, reducing efficiency, and we expect costs to keep increasing. We rely on relationships with media partners, search engines, social media influencers, and e-commerce platforms to drive traffic and attract customers.
Advertising costs on social media platforms such as Meta have in the past and may in the future rise significantly, which could reduce efficiency. We rely on relationships with media partners, search engines, social media influencers, and e-commerce platforms to drive traffic and attract customers.
If we misjudge market trends, we may significantly overstock inventory and be forced to take significant inventory markdowns, which would have a negative impact on our gross profit and cash flow.
If we misjudge market trends, we may significantly overstock inventory and be forced to take significant inventory markdowns, which would have a negative impact on our gross profit and cash flow. Conversely, shortages of inventory or increases in time for fulfillment of our products that prove popular could also reduce our sales.
Negative public perception or climate-related litigation could harm our reputation and business. 19 Regulatory requirements relating to the manufacture and disposal of mattresses may increase our product costs and increase the risk of disruption to our business. The U.S.
Laws addressing climate change could impose stricter standards, raise our costs, disrupt our business and negatively impact our financial condition and results of operations. Negative public perception or climate-related litigation could harm our reputation and business. Regulatory requirements relating to the manufacture and disposal of mattresses may increase our product costs and increase the risk of disruption to our business.
Reduced credit availability from economic changes, regulatory shifts, terminated agreements, or competitors offering better terms could negatively impact our results of operations and financial condition. 18 Over or under supply of raw material inventory and finished products could leave us vulnerable to shortages or shrinkage that may harm our ability to satisfy consumer demand and could adversely affect our results of operations.
Over or under supply of raw material inventory and finished products could leave us vulnerable to shortages or shrinkage that may harm our ability to satisfy consumer demand and could adversely affect our results of operations.
The Cooperation Agreement terminated on the date following our 2024 annual meeting of stockholders. Under the terms of the Cooperation Agreement, our current Chair of the Board, Mr. Gray, and four of our other current directors, Mr. Darling, Mr. Pate, Mr. Peterson and Ms. Serow, were appointed or nominated to serve on our Board.
Under the terms of the Cooperation Agreement, our current Chair of the Board, Mr. Gray, and some of our other current directors were appointed or nominated to serve on our Board.
In addition, on March 12, 2025, we entered into an Amendment to the Amended and Restated Credit Agreement (the “2025 Amendment”), pursuant to which the Lenders agreed to provide us with an incremental term loan of $19.0 million.
In addition, 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”), pursuant to which the 2025 Lenders agreed to provide us with an incremental term loan of $19.0 million pursuant to Section 2.18 of the Amended and Restated Credit Agreement.
Currently, our stock price has been below $1.00 since February 19, 2025. 21 If we are unable to comply with NASDAQ’S continued listing requirements, our Common Stock may be subject to delisting.
If we are unable to comply with NASDAQ’S continued listing requirements, our common stock may be subject to delisting.
As a result, stockholders may not have the opportunity to participate in or realize a potential control premium for shares pursuant to such a change of control transaction. These obligations could also limit the price that investors might be willing to pay in the future for our Common Stock.
As a result, stockholders may not have the opportunity to participate in or realize a potential control premium for shares pursuant to such a change of control transaction.
Consolidation among retailers may result in fewer sales channels or more restrictive terms for standalone brands. If we are unable to adapt to these industry shifts, our growth, results of operations, and market share could be adversely impacted. Technological changes, such as advances in artificial intelligence, may render our current technologies obsolete or require costly updates.
For example, the industry leader has recently made an offer to purchase one of our important suppliers. Consolidation among retailers may result in fewer sales channels or more restrictive terms for standalone brands. If we are unable to adapt to these industry shifts, our growth, results of operations, and market share could be adversely impacted.
We may also struggle to maintain or develop these relationships and may not be able to secure new ones on favorable terms. We sell products through wholesale partnerships and may seek to expand these relationships. However, these wholesale partnerships may not be profitable and could incur additional costs compared to our DTC operations.
Government to place import restrictions on an important international supplier. We may also struggle to maintain or develop these relationships and may not be able to secure new ones on favorable terms, 18 We sell products through wholesale partnerships and may seek to expand these relationships.
Disruptions to our manufacturing operations, whether from the Restructuring Plan, a pandemic, natural disasters, lease issues, or equipment failures, could increase costs, delay production and shipping, and negatively impact our business, operations, and financial condition.
Disruptions to our manufacturing operations, whether from a pandemic, natural disasters, lease issues, or equipment failures, could increase costs, delay production and shipping, and negatively impact our business, operations, and financial condition. Workplace injuries, industrial accidents, or violence could also lead to production suspensions and delays, affecting customer satisfaction, results of operations, financial condition including our cash flow.
On March 12, 2025, we borrowed an additional $19.0 million under the Amended and Restated Credit Agreement pursuant to the 2025 Amendment (as defined below), which will also become due on December 31, 2026.
On March 12, 2025, we borrowed an additional $19.0 million under the Amended and Restated Credit Agreement pursuant to the 2025 Amendment. On May 2, 2025, we borrowed an additional $20 million under the Amended and Restated Credit Agreement, pursuant to the Second 2025 Amendment. Pursuant to the Third Amendment these amounts will become due on April 30, 2027.
Expanding into new markets or regions could expose us to additional regulations, leading to increased compliance and distribution costs. Our business could suffer if we are unsuccessful in making, integrating and maintaining commercial agreements, strategic alliances and other business relationships. We rely on commercial agreements and strategic relationships with suppliers, service providers, and wholesale partners.
Our business could suffer if we are unsuccessful in making, integrating and maintaining commercial agreements, strategic alliances and other business relationships. We rely on commercial agreements and strategic relationships with suppliers, service providers, and wholesale partners. Disruptions in these relationships or strategic decisions by partners could negatively affect our business.
Sales or the perception of future sales of a substantial number of shares of our Common Stock could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity or other convertible securities, regardless of any relationship between such sales and the performance of our business. 23 In connection with the issuance of Warrants pursuant to the Amended and Restated Credit Agreement and the 2025 Amendment, the Company entered into a Second Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) with CCP, Blackwell, Coliseum Capital Co-Invest III, L.P.
Sales or the perception of future sales of a substantial number of shares of our Common Stock could depress the market price of our Common Stock and impair our ability to raise capital through the sale of additional equity or other convertible securities, regardless of any relationship between such sales and the performance of our business.
(“Harvest Partners”), and HSCP Strategic IV, L.P. (“HSCP” and together with CCP, Blackwell, Harvest Master, and Harvest Partners, the “Lenders”). Upon entry into the Amended and Restated Credit Agreement, we received a term loan in the amount of $61.0 million.
Upon entry into the Amended and Restated Credit Agreement, we received a term loan in the amount of $61.0 million.
The accuracy of our financial reporting relies on effective internal controls, which can only provide reasonable assurance and may not detect all misstatements. Any failure in internal controls or disclosure procedures could undermine the accuracy and timeliness of our disclosures, potentially eroding investor confidence, requiring significant resources to fix, and exposing us to legal or regulatory actions.
Any failure in internal controls or disclosure procedures could undermine the accuracy and timeliness of our disclosures, potentially eroding investor confidence, requiring significant resources to fix, and exposing us to legal or regulatory actions. We continue to evaluate, design and implement controls and procedures designed to avoid material weaknesses.
As of December 31, 2024, we had unrestricted cash and cash equivalents of $29.0 million and borrowings of $70.7 million under our Amended and Restated Credit Agreement (as defined below), which will become due on December 31, 2026.
As of December 31, 2025, we had unrestricted cash and cash equivalents of $24.3 million and borrowings of $111.3 million under our Amended and Restated Credit Agreement, which pursuant to the Third Amendment will become due on April 30, 2027.
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain transactions with stockholders owning 15% or more of our outstanding voting stock or require us to obtain stockholder approval prior to engaging in such transactions. 22 As reported by Coliseum in its Schedule 13D/A filed on January 23, 2024, Coliseum beneficially owns 58.5 million shares of Common Stock (which includes 46.9 million shares of Common Stock currently owned and 11.6 million shares of Common Stock that could be acquired upon exercise of its Warrants).
In addition, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain transactions with stockholders owning 15% or more of our outstanding voting stock or require us to obtain stockholder approval prior to engaging in such transactions.
We may struggle to open additional Purple showrooms beyond those already established. Operating showrooms involves risks such as inventory shrinkage, increased expenses, lease obligations, distribution challenges, and employee management. If we fail to operate these stores profitably or if we close unprofitable stores, it could harm our reputation, limit growth, and negatively impact our business.
If these issues arise, they could harm our reputation, limit growth, and negatively impact our results of operations. Operating showrooms involves risks such as inventory shrinkage, increased expenses, lease obligations, distribution challenges, and employee management.
We offer consumer financing through third-party finance companies, with a significant portion of our sales financed in 2024. Macroeconomic factors and changes in credit lending criteria may reduce available credit, and we may face higher costs to maintain lending approvals. Additionally, federal regulations are placing more restrictions on consumer credit programs, including promotional credit offers.
Macroeconomic factors and changes in credit lending criteria may reduce available credit, and we may face higher costs to maintain lending approvals. Additionally, federal regulations place restrictions on consumer credit programs, including promotional credit offers. They control financing offers and credit standards and may provide better terms to our competitors or in channels outside our focus.
Ineffective marketing messages, inefficient advertising, or poorly targeted programs may harm brand awareness, consumer traffic, and our financial performance.
Ineffective marketing messages, inefficient advertising, or poorly targeted programs may harm brand awareness, consumer traffic, and our financial performance. Additionally, failure to prevent misleading information or negative sentiment on social media could also negatively impact our results of operations and financial condition.
Providing fixtures to wholesale partners could also pose challenges in recovery or reuse. Wholesale customers may not purchase at expected volumes, and gross profit from wholesale sales are lower than DTC. If these issues arise, they could harm our reputation, limit growth, and negatively impact our results of operations.
We may struggle to generate additional sales through wholesale channels, and extending credit terms to wholesale partners could expose us to the risk of unpaid or late invoices. Providing fixtures to wholesale partners could also pose challenges in recovery or reuse. Wholesale customers may not purchase at expected volumes, and gross profit from wholesale sales are lower than DTC.
The sleep products industry is highly competitive and fragmented, with competition from manufacturers (including those sourcing from low-cost countries), traditional retailers, and online direct-to-consumer brands. Competition centers on price, quality, brand recognition, availability, and performance across various distribution channels. This competitive environment exposes us to risks of losing market share, significant customers, margins, and new customer acquisition.
Competition centers on price, quality, brand recognition, availability, and performance across various distribution channels. This competitive environment exposes us to risks of losing market share, significant customers, margins, and new customer acquisition. If we fail to compete effectively with other manufacturers and retailers of our products, our sales, profitability, cash flow, and financial condition may be materially adversely affected.
Employees, contractors, or business partners could also intentionally or unintentionally compromise security. For example, we previously experienced an unauthorized intrusion involving a former contractor’s credentials, though no personal information was accessed. Future breaches could occur if there are weaknesses in our internal controls over financial reporting related to information technology systems.
Employees, contractors, or business partners could also intentionally or unintentionally compromise security. Future breaches could occur if there are weaknesses in our internal controls over financial reporting related to information technology systems. We and third-party partners have experienced and, in the future, may experience various cyber-attacks, including phishing, malware, and ransomware attacks. We expect continued exposure to similar threats.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management processes are being integrated into our overall risk management processes. We are making efforts to incorporate cybersecurity considerations as a part of our business processes. We engage with external cybersecurity experts, including assessors, consultants, and auditors, to enhance our cybersecurity measures and ensure compliance with industry best practices.
Biggest changeHe holds a B.S. in Information Technology from Utah Valley University. We maintain a cybersecurity risk management program designed to identify, assess, manage, mitigate, and respond to cybersecurity threats. Our cybersecurity risk management processes are being integrated into our overall risk management processes. We are making efforts to incorporate cybersecurity considerations as a part of our business processes.
In 2024, we did not identify any cybersecurity breaches that materially affected, or are reasonably likely to materially affect, our business strategy, results of operations, or financial condition. Management’s Role Our management team is responsible for monitoring, preventing, detecting, mitigating and remediating cybersecurity incidents.
In 2025, we did not identify any cybersecurity breaches that materially affected, or are reasonably likely to materially affect, our business strategy, results of operations, or financial condition. Management’s Role Our management team is responsible for monitoring, preventing, detecting, mitigating and remediating cybersecurity incidents.
The TRC consists of experts from various domains within our organization, including information technology security, compliance, legal, and operations. This TRC conducts assessments to ensure that any new software tools meet our standards for security, compliance and operational efficiency. 27 Board of Directors Oversight The oversight of our cybersecurity is assigned to the Audit Committee of our Board of Directors.
The TRC conducts assessments to ensure that any new software tools meet our standards for security, compliance, and operational efficiency. 27 Board of Directors Oversight The oversight of our cybersecurity is assigned to the Audit Committee of our Board of Directors.
In addition, management updates the Audit Committee as necessary regarding any material cybersecurity incidents as well as any incidents with lesser impact potential. The Audit Committee received one report from our Senior Director of Cybersecurity and Compliance in 2024.
In addition, management updates the Audit Committee as necessary regarding any material cybersecurity incidents as well as any incidents with lesser impact potential.
For example, a comprehensive cyber risk assessment, both physical and logical, was conducted by a third party, serving as an external penetration test to validate our security posture. We have established processes to oversee and manage cybersecurity risks associated with our use of third-party service providers, ensuring they adhere to our security standards.
We engage with external cybersecurity experts, including assessors, consultants, and auditors, to enhance our cybersecurity measures and ensure compliance with industry best practices. For example, a comprehensive cyber risk assessment, both physical and logical, was conducted by a third party, serving as an external penetration test to validate our security posture.
We review third-party service provider contracts to ensure they contain data privacy and security provisions, aligning with our standards and regulatory requirements. Additionally, we have established a Technology Review Committee (“TRC”) tasked with the role of evaluating new software tools and technologies before their implementation.
We have established processes to oversee and manage cybersecurity risks associated with our use of third-party service providers, ensuring they adhere to our security standards. We review third-party service provider contracts to ensure they contain data privacy and security provisions, aligning with our standards and regulatory requirements.
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Our chief technology officer has over 41 years of experience and has held various leadership roles in information technology, including serving as a chief information officer and chief technology officer for the last 13 years. He has successfully implemented and managed large enterprise resource planning systems, e-commerce websites, stores and enterprise infrastructure, both cloud-based and on-premise.
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Our Vice President of IT and Systems brings over 13 years of expertise, with a proven track record in various leadership roles, including Director of Software Delivery for the past two years. He has spearheaded the successful implementation and management of multiple website platforms, enterprise resource planning (ERP) systems, retail store infrastructures, and cloud-based enterprise solutions.
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His expertise extends to evaluating and hiring cybersecurity personnel and outsourced managed services, defining incident response plans, conducting tabletop exercises, and establishing communication protocols with internal executives, board members, and vendors. He has firsthand experience in responding to actual cybersecurity incidents, showcasing a deep understanding of the challenges and complexities within the cybersecurity landscape in the retail sector.
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In his current role, he oversees our cybersecurity team and outsourced managed services, while developing incident response plans and establishing clear communication protocols with internal executives and external vendors. Our Network Systems Associate Director brings over 15 years of expertise in enterprise IT, with a proven track record in various leadership roles, including 13 years in technical leadership roles.
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Our senior director of cybersecurity and compliance has a 16-year track record as an information technology and information security professional, complemented by an Executive MBA. His career is distinguished by a decade of leadership as the commander of the United States Army cyber protection team (174 CPT), where he gained cybersecurity experience at USCYBERCOM and ARCYBER.
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His distinguished career includes leading the transition to a managed NOC/SOC, spearheading email security initiatives, architecting the migration to Okta with multi-factor authentication (MFA) and automated user-access auditing, and designing robust showroom network infrastructure. He oversees end-user technology and security operations, encompassing endpoints and Microsoft 365, identity policies, vulnerability management, incident response, SOC and vendor collaboration, telecommunications, and SaaS platforms.
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He holds multiple professional certifications, including CISSP, PMP and multiple SANS certifications. Our chief technology officer and senior director of cybersecurity and compliance report to the Audit Committee on these matters. We maintain a cybersecurity risk management program designed to identify, assess, manage, mitigate, and respond to cybersecurity threats.
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Additionally, we have established a Technology Review Committee (“TRC”) tasked with the role of evaluating new software tools and technologies before their implementation. The TRC consists of experts from various domains within our organization, including information technology security, compliance, legal, and operations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Restructuring Plan is comprised of the permanent closure of two Utah manufacturing facilities to consolidate mattress production in our Georgia plant. The closure of the manufacturing facilities in Grantsville, Utah with 574,000 square feet and Salt Lake City, Utah with 67,000 square feet is planned to be completed in the second quarter 2025.
Biggest changeThe closure of the manufacturing facilities in Grantsville, Utah with 574,000 square feet and Salt Lake City, Utah with 67,000 square feet was completed in the second quarter 2025. We are currently subleasing the space in those building to other tenants.
In addition, we lease approximately 30,000 square-feet of office space in Lehi, Utah for our corporate headquarters. As of December 31, 2024, we had 58 Purple showrooms under lease with 12 located in California, six in Texas, four in Utah and 36 located in 23 other states throughout the United States.
As of December 31, 2025, we had 55 Purple showrooms under lease with 11 located in California, six in Texas, four in Utah and 34 located in 22 other states throughout the United States.
Our facility in Salt Lake City was acquired in the Intellibed acquisition in August 2022. In January 2025, we leased an approximately 198,000 square foot distribution and fulfillment facility in West Valley City, Utah, that will be opened in April 2025. We also lease a building with approximately 61,000 square feet in Draper, Utah that serves as our innovation center.
Item 2. Properties We lease a manufacturing facility in McDonough, Georgia with approximately 844,000 square feet. In January 2025, we leased an approximately 198,000 square foot distribution and fulfillment facility in West Valley City, Utah, that opened in April 2025.
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Item 2. Properties We lease a manufacturing facility in McDonough, Georgia with approximately 844,000 square feet. In August 2024, we initiated our Restructuring Plan to strategically realign our operational focus to achieve operations efficiencies that are expected to improve profitability and provide for reinvesting in technology and marketing initiatives.
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We also lease a building with approximately 61,000 square feet in Draper, Utah that serves as our innovation center and approximately 30,000 square-feet of office space in Lehi, Utah for our corporate headquarters. The Restructuring Plan included the permanent closure of two Utah manufacturing facilities to consolidate mattress production in our Georgia plant.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings Information regarding legal proceedings can be found in Note 13, “ Commitments and Contingencies ” and Note 23, “ Subsequent Events – Class Action Lawsuit ” of the Notes to our Consolidated Financial Statements, included in Part II, Item 8 of this Report, “Financial Statements and Supplementary Data,” and is incorporated herein by reference.
Biggest changeItem 3. Legal Proceedings Information regarding legal proceedings can be found in Note 13, “ Commitments and Contingencies ” and Note 21, “Subsequent Events” of the Notes to our Consolidated Financial Statements, included in Part II, Item 8 of this Annual Report, “Financial Statements and Supplementary Data,” and is incorporated herein by reference. Item 4.
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Mine Safety Disclosures Not applicable. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeA Holder of 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 We believe that such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation.
Biggest changeA holder of 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.
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.
After the issuance of shares of Common Stock upon exercise of the warrants, each holder will be entitled to one vote for each share of Common Stock held on all matters to be voted on by stockholders generally.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our Common Stock is listed on NASDAQ under the symbol “PRPL”. As of March 7, 2025, there were approximately 83 holders of record of shares of our Common Stock and 7 holders of record of shares of our Class B Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our Common Stock is listed on NASDAQ under the symbol “PRPL”. As of March 30, 2026, there were approximately 75 holders of record of shares of our Common Stock and six holders of record of shares of our Class B Stock.
The graph assumes $100 was invested on December 31, 2019 in each of our Common Stock, the S&P 500 Home Furnishings Index, and the NASDAQ Stock Market (U.S.) Index, and that any dividends were reinvested.
The graph assumes $100 was invested on December 31, 2020 in each of our Common Stock, the S&P 400 Consumer Discretionary Index, and the NASDAQ Stock Market (U.S.) Index, and that any dividends were reinvested.
Comparative Stock Performance The following graph illustrates the cumulative total return over the last five years from December 31, 2019 through December 31, 2024, for (i) our Common Stock, (ii) the Standard and Poor’s (S&P) 500 Home Furnishings Index, and (iii) the NASDAQ Stock Market (U.S.) Index.
Comparative Stock Performance The following graph illustrates the cumulative total return over the last five years from December 31, 2020 through December 31, 2025, for (i) our Common Stock, (ii) the Standard and Poor’s (S&P) 400 Consumer Discretionary Index, and (iii) the NASDAQ Stock Market (U.S.) Index.
On March 12, 2025, in connection with the 2025 Amendment, we issued Warrants to purchase 6.2 million shares of our Class A common stock to the Lenders. The Warrants will expire on the 10-year anniversary of their issuance, or earlier upon redemption.
On March 12, 2025, in connection with the 2025 Amendment, we issued warrants to the Lenders to purchase 6.2 million shares of our Common Stock.
The graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing with the SEC, except to the extent that the Company specifically incorporates it by reference into such filing. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Purple Innovation, Inc. $ 100.00 $ 378.19 $ 152.35 $ 54.99 $ 11.83 $ 8.96 S&P 500 Home Furnishings Index 100.00 96.04 109.06 61.16 61.96 71.32 The NASDAQ Stock Market (U.S.) Index 100.00 143.64 174.36 116.65 167.30 215.22 29 Recent Sales of Unregistered Securities On January 23, 2024, in connection with the Amended and Restated Credit Agreement, we issued Warrants to purchase 20.0 million shares of our Class A common stock to the Lenders.
The graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing with the SEC, except to the extent that the Company specifically incorporates it by reference into such filing. 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 Purple Innovation, Inc. $ 100.00 $ 40.29 $ 14.54 $ 3.13 $ 2.37 $ 2.09 S&P 400 Consumer Discretionary Index 100.00 126.74 98.73 121.14 131.12 122.28 The NASDAQ Stock Market (U.S.) Index 100.00 121.39 81.21 116.47 149.83 180.30 29 Recent Sales of Unregistered Securities On January 23, 2024, in connection with the Amended and Restated Credit Agreement, we issued warrants to the Lenders to purchase 20.0 million shares of our Common Stock.
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.
The warrants will expire on the 10-year anniversary of their issuance, or earlier upon redemption. The holders do not have the rights or privileges of holders of Common Stock or any voting rights until they exercise their warrants.
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Issuer Purchases of Equity Securities None. Item 6. [Reserved]
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On May 2, 2025, in connection with the Second 2025 Amendment, we issued warrants the Lenders to purchase 6.6 million shares of our Common Stock, and also on May 2, 2025, in connection with the SGI Agreements (as defined below), we issued warrants to SGI to purchase 8.0 million shares of our Common Stock.
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We believe that such issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. Issuer Purchases of Equity Securities None. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations for the Year Ended December 31, 2024 compared to the year ended December 31, 2023 The following table sets forth for the periods indicated, our results of operations and the percentage of total net revenues represented by each line item in our consolidated statements of operations: Years Ended December 31, 2024 % of Net Revenues 2023 % of Net Revenues Revenues, net $ 487,877 100.0 % $ 510,541 100.0 % Cost of revenues: Cost of revenues 291,303 59.7 338,716 66.3 Cost of revenues - restructuring related charges 15,442 3.2 — — Total cost of revenues 306,745 62.9 338,716 66.3 Gross profit 181,132 37.1 171,825 33.7 Operating expenses: Marketing and sales 171,263 35.1 182,313 35.7 General and administrative 69,117 14.2 84,446 16.5 Research and development 12,962 2.7 11,898 2.3 Restructuring, impairment and other related charges 19,973 4.1 — — Loss on impairment of goodwill — — 6,879 1.3 Total operating expenses 273,315 56.0 285,536 55.9 Operating loss (92,183 ) (18.9 ) (113,711 ) (22.3 ) Other income (expense): Interest expense (17,510 ) (3.6 ) (1,967 ) (0.4 ) Other income (expense), net 11,548 2.4 (1,198 ) (0.2 ) Loss on extinguishment of debt (3,394 ) (0.7 ) (4,331 ) (0.8 ) Change in fair value – warrant liabilities 3,504 0.7 — — Total other expense, net (5,852 ) (1.2 ) (7,496 ) (1.5 ) Net loss before income taxes (98,035 ) (20.1 ) (121,207 ) (23.7 ) Income tax expense (63 ) — (8 ) — Net loss (98,098 ) (20.1 ) (121,215 ) (23.7 ) Net loss attributable to noncontrolling interest (201 ) — (458 ) (0.1 ) Net loss attributable to Purple Innovation, Inc. $ (97,897 ) (20.1 ) $ (120,757 ) (23.7 ) 36 Revenues, Net Net revenues decreased $22.7 million, or 4.4%, to $487.9 million in 2024 compared to $510.5 million in 2023.
Biggest changeA separate discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 14, 2025. 38 Results of Operations for the Year Ended December 31, 2025 compared to the year ended December 31, 2024 The following table sets forth for the periods indicated, our results of operations and the percentage of total net revenues represented by each line item in our consolidated statements of operations: Years Ended December 31, 2025 % of Net Revenues 2024 % of Net Revenues Revenues, net $ 468,725 100.0 % $ 487,877 100.0 % Cost of revenues: Cost of revenues 279,171 59.6 291,303 59.7 Cost of revenues - restructuring related charges 995 0.2 15,442 3.2 Total cost of revenues 280,166 59.8 306,745 62.9 Gross profit 188,559 40.2 181,132 37.1 Operating expenses: Marketing and sales 147,040 31.4 171,263 35.1 General and administrative 63,557 13.6 69,117 14.2 Research and development 9,604 2.0 12,962 2.7 Restructuring, impairment and other related charges 11,387 2.4 19,973 4.1 Total operating expenses 231,588 49.4 273,315 56.0 Operating loss (43,029 ) (9.2 ) (92,183 ) (18.9 ) Other income (expense): Interest expense (28,766 ) (6.1 ) (17,510 ) (3.6 ) Other income (expense), net 3,289 0.7 11,548 2.4 Loss on extinguishment of debt — — (3,394 ) (0.7 ) Change in fair value – warrant liabilities 17,202 3.7 3,504 0.7 Total other income (expense), net (8,275 ) (1.8 ) (5,852 ) (1.2 ) Net loss before income taxes (51,304 ) (10.9 ) (98,035 ) (20.1 ) Income tax expense (207 ) — (63 ) — Net loss (51,511 ) (11.0 ) (98,098 ) (20.1 ) Net loss attributable to noncontrolling interest (97 ) — (201 ) — Net loss attributable to Purple Innovation, Inc. $ (51,414 ) (11.0 ) $ (97,897 ) (20.1 ) 39 Revenues, Net Net revenues decreased $19.2 million, or 3.9%, to $468.7 million in 2025 compared to $487.9 million in 2024.
In connection with our preparation of our consolidated financial statements for the year ended December 31, 2024, 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.
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.
Recent Accounting Pronouncements For a description of accounting standards recently issued or adopted, including the respective dates of adoption and expected effects on our results of operations and financial condition, refer to Note 2 of our consolidated financial statements included in this Annual Report on Form 10-K. 40
Recent Accounting Pronouncements For a description of accounting standards recently issued or adopted, including the respective dates of adoption and expected effects on our results of operations and financial condition, refer to Note 2 of our consolidated financial statements included in this Annual Report on Form 10-K. 43
Registration Rights Agreements In connection with the issuance of the Warrants, we entered into the Registration Rights Agreement with holders of the Warrants (the “Holders”), providing for the registration of Registrable Securities, subject to customary terms and conditions.
Registration Rights Agreements In connection with the issuance of the Warrants, we entered into the Registration Rights Agreement with holders of the Warrants (the “Holders”), providing for the registration of Registrable Securities (as defined in the Registration Rights Agreement), subject to customary terms and conditions.
We regularly assess and adjust the estimate of accrued warranty claims by updating claims rates for any current or expected trends and changes in projected claim costs. We expect the estimated warranty liability to continue to increase as we have not yet reached the full 10 years of history on our 10-year mattress warranty.
We regularly assess and may adjust the estimate of accrued warranty claims for any current or expected trends and changes in projected claim costs. We expect the estimated warranty liability to continue to increase as we have not yet reached the full 10 years of history on our 10-year mattress warranty.
We market and sell our products via our DTC channel, which includes Purple.com (our direct-to-consumer e-commerce), Purple showrooms, our customer contact center and online marketplaces, 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.
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. 30 Organization Our business consists of Purple Inc. and its consolidated subsidiary, Purple LLC.
Our estimates of the amount and timing of sales returns, uncollectible accounts and variable consideration are based primarily on historical trends, product return rates and current contract terms. Accrued sales returns increased from $5.4 million at December 31, 2023 to $6.5 million as of December 31, 2024.
Our estimates of the amount and timing of sales returns, uncollectible accounts and variable consideration are based primarily on historical trends, product return rates and current contract terms. Accrued sales returns decreased from $6.5 million at December 31, 2024 to $4.5 million as of December 31, 2025.
Restructuring Activities In August 2024, we initiated the Restructuring Plan to strategically realign our operational focus to achieve efficiencies in our operations that are expected to improve profitability and provide for reinvesting in technology and marketing initiatives.
Restructuring Activities In August 2024, we initiated the Restructuring Plan to strategically realign our operational focus to achieve efficiencies in our operations to improve profitability and provide for reinvesting in technology and marketing initiatives.
Our capital expenditures in 2024 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities.
Our capital expenditures in 2025 have primarily consisted of additional investments made in our manufacturing operations and showroom facilities.
Refer to Note 9 of our consolidated financial statements for additional information on leases.
Refer to Note 7 of our consolidated financial statements for additional information on leases.
We classify as non-current those estimated warranty costs expected to be paid out in greater than one year. As of December 31, 2024, the current and non-current portions of our warranty liabilities were $6.1 million and $26.1 million, respectively, compared to $9.8 million and $25.8 million, respectively, at December 31, 2023.
We classify as non-current those estimated warranty costs expected to be paid out in greater than one year. As of December 31, 2025, the current and non-current portions of our warranty liabilities were $7.1 million and $19.6 million, respectively, compared to $6.1 million and $26.1 million, respectively, at December 31, 2024.
Capital expenditures of $7.5 million and $15.2 million in 2024 and 2023, respectively, consisted primarily of additional investments made to our manufacturing operations and showroom facilities. Net cash provided by financing activities totaled $27.5 million in 2024 compared to $55.8 million in 2023.
Capital expenditures of $8.1 million and $7.2 million in 2025 and 2024, respectively, consisted primarily of additional investments made to our manufacturing operations and showroom facilities. Net cash provided by financing activities totaled $37.4 million in 2025 compared to $27.5 million in 2024.
The non-cash adjustments primarily consisted of depreciation and amortization totaling $35.3 million, non-cash restructuring, impairment and other related charges of $20.2 million, paid-in-kind interest on the Related Party Loan of $9.7 million, non-cash interest from amortization of debt issuance costs of $7.2 million, and losses on the extinguishment of debt of $3.4 million.
The non-cash adjustments primarily consisted of depreciation and amortization totaling $35.4 million, restructuring, impairment and other related charges of $20.2 million, paid in kind and non-cash interest of $16.9 million, and losses on the extinguishment of debt of $3.4 million.
Our products are the result of over 30 years 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 offerings from other competitors’ products.
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.
Critical Accounting Policies and Estimates In connection with the preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”), we are required to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, sales, expenses and the related disclosures.
In addition, we may, in the future, adapt these focuses in response to changes in the market or our business. 37 Critical Accounting Policies and Estimates In connection with the preparation of our consolidated financial statements in conformity with United States generally accepted accounting principles (“GAAP”), we are required to make estimates and assumptions about future events and apply judgments that affect the reported amounts of assets, liabilities, sales, expenses and the related disclosures.
Income tax expense in 2024 was related to various state taxes. Noncontrolling Interest We calculate net income or loss attributable to noncontrolling interests on a quarterly basis using their weighted average ownership percentage. Net loss attributed to noncontrolling interests was $0.2 million and $0.5 million for 2024 and 2023, respectively.
The income tax expense amounts in 2025 and 2024 were related to various state taxes. Noncontrolling Interest We calculate net income or loss attributable to noncontrolling interests on a quarterly basis using their weighted average ownership percentage of approximately 0.2%.
Our cash and cash equivalents and working capital positions were $29.0 million and $25.4 million, respectively, as of December 31, 2024 compared to $26.9 million and $30.8 million, respectively, as of December 31, 2023. Cash used for capital expenditures decreased from $15.2 million in 2023 to $7.4 million in 2024.
Our cash and cash equivalents and working capital positions were $24.3 million and $35.2 million, respectively, as of December 31, 2025 compared to $29.0 million and $25.4 million, respectively, as of December 31, 2024. Cash used for capital expenditures increased from $7.2 million in 2024 to $8.1 million in 2025.
Based on certain recent preliminary inquiries, the Board has formed a special committee of independent directors and we have engaged a financial advisor to support them in evaluating any indications of interest and exploring other potential strategic alternatives.
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.
In January 2024, we entered into the Amended and Restated Credit Agreement that terminated and paid off the outstanding borrowings under our 2023 Credit Agreement. This termination was accounted for as an extinguishment of debt and $3.4 million of unamortized debt issuance costs were recorded as loss on extinguishment of debt.
Loss on Extinguishment of Debt Loss on extinguishment of debt totaled $3.4 million in 2024. In January 2024, we entered into the Amended and Restated Credit Agreement that terminated and paid off the outstanding borrowings under our 2023 Credit Agreement.
Cash Flows for the year ended December 31, 2024 compared to the year ended December 31, 2023 The following summarizes our cash flows for the years ended December 31, 2024 and 2023 as reported in our consolidated statements of cash flows (in thousands): Years Ended December 31, 2024 2023 Net cash used in operating activities $ (17,850 ) $ (54,662 ) Net cash used in investing activities (7,530 ) (16,061 ) Net cash provided by financing activities 27,534 55,826 Net decrease in cash 2,154 (14,897 ) Cash, beginning of the period 26,857 41,754 Cash, end of the period $ 29,011 $ 26,857 Net cash used in operating activities was $17.9 million in 2024 compared to $54.7 million in 2023.
Cash Flows for the year ended December 31, 2025 compared to the year ended December 31, 2024 The following summarizes our cash flows for the years ended December 31, 2025 and 2024 as reported in our consolidated statements of cash flows (in thousands): Years Ended December 31, 2025 2024 Net cash used in operating activities $ (33,830 ) $ (17,850 ) Net cash used in investing activities (8,279 ) (7,530 ) Net cash provided by financing activities 37,443 27,534 Net increase (decrease) in cash (4,666 ) 2,154 Cash, beginning of the period 29,011 26,857 Cash, end of the period $ 24,345 $ 29,011 Net cash used in operating activities was $33.8 million in 2025 compared to $17.9 million in 2024.
Interest on the new loan is payable each month and the principal outstanding matures and is due on December 31, 2026. To reduce cash obligations, we have elected for interest to be capitalized and added to the principal amount of the loan.
Interest on the new loan is payable each month and, under the Third Amendment executed in March 2026 (see below), the principal outstanding matures and is due on April 30, 2027. To reduce cash obligations, we have elected for interest to be capitalized and added to the principal amount of the loan.
This discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in “Part II Item 8. Financial Statements.” Overview of Our Business Our mission is to help people feel and live better through innovative comfort solutions.
This discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in “Part II Item 8. Financial Statements.” Overview of Our Business Our mission is to deliver the greatest sleep ever invented.
Interest expense in 2023 was reduced by capitalized interest of $1.5 million. Other Income (Expense), Net Other income was $11.5 million in 2024 compared to other expense of $1.2 million in 2023. Other income in 2024 was primarily comprised of two payments totaling $11.6 million received in full settlement of a previously filed business interruption claim.
Other Income (Expense), Net Other income was $3.3 million in 2025 compared to $11.5 million in 2024. Other income in 2024 was primarily comprised of two payments totaling $11.6 million received in full settlement of a previously filed business interruption claim. Other income in 2025 consisted of $2.5 million in sub-lease rental income and other income of $0.8 million.
We do not believe there is a reasonable likelihood that a material change in the estimates or assumptions we use to calculate our warranty liability will occur.
We do not believe there is a reasonable likelihood that a material change in the estimates or assumptions we use to calculate our warranty liability will occur. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material.
The Restructuring Plan includes the permanent closure of both Utah manufacturing facilities to consolidate mattress production in our Georgia plant, and a headcount reduction at our Utah headquarters to drive additional operating efficiencies.
The Restructuring Plan included the permanent closure of both Utah manufacturing facilities to consolidate mattress production in our Georgia plant, and a headcount reduction at our Utah headquarters to drive additional operating efficiencies. Closure of the two Utah manufacturing facilities was completed in the second quarter of 2025 while consolidation into the Georgia facility was finalized in December 2024.
NOL Rights Plan On June 27, 2024, our Board of Directors (“Board”) adopted and we entered into a limited-duration stockholder rights agreement (the “NOL Rights Plan”) with a stated expiration date of June 30, 2025.
The registration statement filed on May 23, 2025, which registered the Registrable Securities, was declared effective by the SEC on May 30, 2025. 34 NOL Rights Plan On June 27, 2024, our Board adopted, and we entered into, a limited-duration stockholder rights agreement (the “NOL Rights Plan”) with a stated expiration date of June 30, 2025.
The growth in Purple showroom net revenues was primarily due to an increase in average selling prices related to both strategic price adjustments and a sizeable shift in product mix to our higher priced Rejuvenate Products. Net revenues also benefited in 2024 from a full year’s impact of five new Purple showrooms that opened in 2023.
Purple showroom increase in revenues was primarily due to an increase in average selling prices related to both strategic price adjustments and a sizeable shift in product mix to our higher priced Rejuvenate products.
The working capital changes were primarily comprised of an $11.1 million increase in accrued warranties, a $4.4 million increase in accounts payable accounts and a $5.9 million decrease in inventories. Net cash used in investing activities was $7.5 million in 2024 compared to $16.1 million in 2023.
The working capital changes were primarily comprised of a $4.7 million decrease in accounts receivable and a $6.0 million decrease in inventories, offset in part by a $6.4 million increase in accounts payable. Net cash used in investing activities was $8.3 million in 2025 compared to $7.5 million in 2024.
Warrants In connection with the Amended and Restated Credit Agreement, we issued to the Lenders the 2024 Warrants to purchase 20.0 million shares of our Class A Stock. Each 2024 Warrant entitles the registered holder to purchase one share of our Class A Stock at a price of $1.50 per share, subject to adjustment.
In connection with the 2025 Amendment, we issued to the 2025 Lenders the 2025 Warrants to purchase 6.2 million shares of our Common Stock. Each 2025 Warrant entitles the registered holder to purchase one share of our Common Stock at a price of $1.50 per share, subject to adjustment with a floor of $0.6979 and expire on March 12, 2035.
The estimated warranty costs associated with products sold through the wholesale channel are recorded at the time of sale and included as an offset to net revenues. Estimates for warranty costs are based primarily on historical trends and warranty claim rates incurred.
The estimated warranty costs associated with products sold through DTC channels are expensed at the time of sale and included in cost of revenues. The estimated warranty costs associated with products sold through the wholesale channel are recorded at the time of sale and included as an offset to net revenues.
We had cash and cash equivalents of approximately $29.0 million and an accumulated deficit of $573.9 million at December 31, 2024, and a net loss of $97.9 million and net cash used in operating and investing activities of $25.4 million for the year ended December 31, 2024.
We had cash and cash equivalents of approximately $24.3 million and an accumulated deficit of $625.3 million at December 31, 2025. We incurred a net loss of $51.4 million and net cash used in operating and investing activities was $33.8 million and $8.3 million, respectively, for the year ended December 31, 2025.
Our allowance for credit losses increased from a de minimis amount at December 31, 2023 to $1.1 million as of December 31, 2024.
Our allowance for credit losses decreased from $1.1 million at December 31, 2024 to $0.4 million as of December 31, 2025.
Within DTC in 2024, e-commerce net revenues decreased $17.3 million, or 7.7%, while Purple showroom net revenues increased $4.3 million, or 5.8%, as compared to 2023.
Within DTC in 2025, e-commerce net revenues decreased $23.4 million, or 11.4%, while Purple showroom net revenues increased $1.1 million, or 1.5%, as compared to 2024. Cost of Revenues Total cost of revenues decreased $26.6 million, or 8.7%, to $280.2 million in 2025 compared to $306.7 million in 2024.
Management believes the accounting estimates discussed below are the most critical because they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. 34 Revenue Recognition Our revenue recognition accounting methodology contains uncertainties because it requires management to make assumptions and to apply judgment to estimate the amount and timing of future sales returns, uncollectible accounts and variable consideration.
Management believes the accounting estimates discussed below are the most critical because they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain.
We recognized a gain of $3.5 million related to a decrease in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants on the date of issuance. 38 Income Tax Expense We had income tax expense of $0.1 million in 2024 compared to a de minimis amount of income tax expense in 2023.
For 2024, we recognized a $3.5 million gain due to the decrease in the fair value of the warrants from the January 2024 issuance. Income Tax Expense We had a $0.2 million income tax expense for 2025, compared to $0.1 million income tax expense for 2024.
We are an omni-channel company that began as a digitally-native vertical brand founded on comfort product innovation with premium offerings. We design and manufacture a variety of innovative, branded and premium comfort products, including mattresses, pillows, cushions, frames, sheets, duvets, duvet covers and other products.
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.
In connection with our execution of the Amended and Restated Credit Agreement, all obligations under the previously outstanding term loans and revolving credit facility were paid in full and the respective related agreements (collectively, the “2023 Credit Agreement”) were terminated. 31 On March 12, 2025, we entered into the 2025 Amendment, pursuant to which the 2025 Term Loan Lenders (as defined in the 2025 Amendment) agreed to provide us with an incremental term loan of $19.0 million.
In connection with our execution of the Amended and Restated Credit Agreement, all obligations under the previously outstanding term loans and revolving credit facility were paid in full and the respective related agreements (collectively, the “2023 Credit Agreement”) were terminated.
Net loss attributable to Purple Inc. was $97.9 million in 2024 compared to a net loss of $120.8 million in 2023. The $22.9 million decrease in net loss was primarily due to a $9.3 million increase in gross profit and a $12.2 million decrease in operating expenses.
Net loss attributable to Purple Inc. was $51.4 million in 2025 compared to a net loss of $97.9 million in 2024. The $46.5 million improvement in net loss was primarily due to a $41.7 million decrease in operating expenses and a $7.4 million increase in gross profit, partially offset by a $2.6 million increase in all other expenses and offsets.
The Restructuring Plan also provided for a headcount reduction at our Utah headquarters to drive additional operating efficiencies.
The Restructuring Plan also provided for a headcount reduction at our Utah headquarters to drive additional operating efficiencies. The reduction from 2024 is due to the completion of the Restructuring Plan in 2025 and the timing of when the various expenses were recorded.
Debt Financing s On January 23, 2024, Purple LLC, Purple Inc. and Intellibed (collectively, the “Loan Parties”) entered into the Amended and Restated Credit Agreement, which amended and restated the then existing term loan agreement (“Term Loan Agreement”), with CCP and other lenders (collectively, the “Lenders”) and Delaware Trust Company, as administrative agent.
In addition, we implemented additional cost savings measures in 2025 and 2026 beyond those implemented pursuant to our Restructuring Plan. 31 Debt Financings On January 23, 2024, Purple LLC, Purple Inc. and Intellibed entered into the Amended and Restated Credit Agreement, which amended and restated the then existing term loan agreement (“Term Loan Agreement”), with the Lenders and Delaware Trust Company, as administrative agent.
Research and Development Research and development costs increased $1.1 million, or 8.9%, to $13.0 million in 2024 compared to $11.9 million in 2023.
Research and Development Research and development costs decreased $3.4 million, or 25.9%, to $9.6 million in 2025 compared to $13.0 million in 2024.
For further discussion see Note 4 — Acquisition. 30 Recent Developments in Our Business Operational Developments During 2024, we have been realizing efficiencies with our media investments by targeting specific segments most likely to purchase Purple and by focusing more effort on those consumers currently in the market for a sleep product.
As a result, we exited 2025 with a lower cost structure and improved margins, which we believe position us to scale as demand improves. We have been realizing efficiencies with our media investments by targeting specific segments most likely to purchase Purple and by focusing more effort on those consumers currently in the market for a sleep product.
The NOL Rights Plan was ratified at a special meeting of our stockholders on October 15, 2024 (the “Special Meeting”). The NOL Rights Plan will automatically expire by its terms on June 30, 2025.
The NOL Rights Plan was ratified at a special meeting of our stockholders on October 15, 2024 (the “Special Meeting”). On May 6, 2025, the Board accelerated the termination of the NOL Rights Plan and the NOL Protective Charter Amendment, to May 7, 2025.
Change in Fair Value – Warrant Liabilities In January 2024, in connection with the Amended and Restated Credit Agreement, we issued to the Lenders Warrants to purchase 20.0 million shares of our Class A Stock. These Warrants contain certain provisions that do not meet the criteria for equity classification and therefore are recorded as liabilities.
Change in Fair Value – Warrant Liabilities We have 40.8 million warrants outstanding that contain certain provisions that do not meet the criteria for equity classification and therefore are recorded as liabilities with a re-measurement of fair value at each reporting date.
Other expense, net in 2024 included interest expense of $17.5 million associated primarily with the Related Party Loan, offset in part by other income of $11.5 million related to two payments received in full settlement of a previously filed business interruption claim.
This increase was due primarily to an $11.3 million increase in interest expense associated primarily with the Related Party Loan, a reduction of $11.6 million in other income related to two insurance payments received in 2024 for full settlement of a previously filed business interruption claim, partially offset by an increase of $13.7 million in the gain on the change in fair value of the warrant liabilities and a $6.8 million reduction in all other expenses.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. 35 Results of Operations A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
Results of Operations A discussion regarding our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below.
While the Company had no outstanding borrowings under the 2020 Credit Agreement at that time, the termination was accounted for as an extinguishment of debt and $3.1 million of unamortized debt issuance costs were recorded as loss on extinguishment of debt in 2023.
This termination was accounted for as an extinguishment of debt and $3.4 million of unamortized debt issuance costs were recorded as loss on extinguishment of debt.
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. 32 Executive Summary – Results of Operations Net revenues decreased $22.7 million, or 4.4%, to $487.9 million in 2024 compared to $510.5 million in 2023.
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.
In accordance with the terms of the Amended and Restated Credit Agreement and to manage our cash obligations, we have elected to pay interest in kind and have it added to the principal amount of the loan.
As disclosed above under “ Recent Developments in our Business – Debt Financing, ” we have elected to have interest paid-in-kind and added to the principal amount of the loans under the Amended and Restated Credit Agreement.
The working capital changes were primarily comprised of a $4.7 million decrease in accounts receivable and a $6.0 million decrease in inventories, offset in part by a $6.4 million decrease in accounts payable. Operating activities in 2023 reflected a net loss of $121.2 million offset in part by non-cash adjustments of $44.1 million and working capital changes of $22.4 million.
Operating activities in 2025 reflected a net loss of $51.5 million and a working capital decrease of $24.2 million, offset in part by non-cash adjustments of $41.9 million.
We entered into the 2025 Amendment, pursuant to which we received $19.0 million on March 12, 2025, in additional term loan proceeds from the 2025 Term Loan Lenders. We have also taken a number of other actions to increase cash flow. In August 2024, we implemented the Restructuring Plan to consolidate manufacturing operations to create efficiencies and cost savings.
We have taken a number of actions to increase cash flow and support our operations and strategies. In August 2024, we implemented the Restructuring Plan (as defined below) to consolidate manufacturing operations resulting in cost savings.
The 2024 Warrants will expire on the 10-year anniversary of issuance, or earlier upon redemption.
Each 2024 Warrant entitles the registered holder to purchase one share of our Class A Stock at a price of $1.50 per share, subject to adjustment. The 2024 Warrants will expire on the 10-year anniversary of issuance, or earlier upon redemption.
In connection with the 2025 Amendment, we issued to the Lenders the 2025 Warrants to purchase 6.2 million shares of our Class A Stock . The 2025 Warrants have the same terms as the 2024 Warrants, except that they expire on March 12, 2035 and certain adjustments to the exercise price are subject to a floor of $0.6979.
Total fees and expenses of $2.1 million were recorded as debt issuance costs in March 2025. In connection with the 2025 Amendment, we issued to the 2025 Lenders, the 2025 Warrants to purchase 6.2 million shares of our Common Stock at a price of $1.50 per share, subject to certain adjustments (see Note 11 – Warrant Liabilities ).
This increase was primarily due to a loss incurred on the write off of a software development project coupled with increased investment in new research and development initiatives. 37 Restructuring, Impairment and Other Related Charges In August 2024, we initiated a Restructuring Plan to permanently close our two Utah manufacturing facilities and consolidate mattress production in our Georgia plant.
Restructuring, Impairment and Other Related Charges Restructuring, impairment and other related charges decreased $8.6 million or 43.0%, to $11.4 million in 2025 compared to $20.0 million in 2024. In August 2024, we initiated a Restructuring Plan to permanently close our two Utah manufacturing facilities and consolidate mattress production in our Georgia plant.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. Impairment We review our long-lived assets and definite-lived intangible assets for impairment as of December 31 and whenever events or changes in circumstances indicate the carrying amount may not be recoverable.
However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material. Accrued Warranty Liabilities We provide a limited warranty on most of the products we sell. Our warranty liability assessment methodology includes estimates in both our DTC and wholesale channels.
The initial liability for these Warrants was recorded at a fair value of $19.6 million on the date of issuance with the offset included in debt issuance costs. This liability is being re-measured to fair value at each reporting date or exercise date with changes in the fair value included in earnings.
The warrant liability is subsequently re-measured to fair value at each reporting date with changes in the fair value included in earnings. During 2025, we recognized a gain of $17.2 million in our consolidated statement of operations for a decrease in the fair value of the warrants outstanding at December 31, 2025.
From a sales channel perspective in 2024, e-commerce net revenues decreased $17.3 million, or 7.7%, Purple showroom net revenues increased $4.3 million, or 5.8% and wholesale net revenues decreased $9.6 million, or 4.5%, as compared to 2023.
This decrease was primarily driven by the industry-wide demand softness for home-related products and softness in the e-commerce channel, partially offset by growth in our Mattress Firm and Costco programs. From a sales channel perspective in 2025, DTC net revenues decreased $22.3 million, or 7.9%, and wholesale net revenues increased $3.2 million, or 1.6%, as compared to 2024.
Liquidity and Capital Resources Our principal sources of funds are cash inflows generated from operations and cash and cash equivalents on hand, supplemented with borrowings made pursuant to our credit agreements and proceeds received from offerings of our equity capital. Principal uses of funds consist of capital expenditures, working capital needs, and operating lease payment obligations.
Net loss attributed to noncontrolling interests was $0.1 million and $0.2 million for 2025 and 2024, respectively. 41 Liquidity and Capital Resources Our 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.
At December 31, 2024, Purple Inc. had a 99.8% economic interest in Purple LLC while other Class B unit holders had the remaining 0.2%. On August 31, 2022, we acquired all the issued and outstanding stock of Intellibed to consolidate ownership of our licensed intellectual property while enhancing our innovation and manufacturing capabilities and financial profile.
At December 31, 2025, 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 During 2025, we continued to build on our Path to Premium Sleep strategy.
In addition to demand softness, our wholesale channel net revenues were negatively impacted in 2024 by intentionally exiting our relationship with certain customers. Gross profit increased $9.3 million, or 5.4%, to $181.1 million in 2024 compared to $171.8 million in 2023 and our gross profit percentage improved to 37.1% in 2024 from 33.7% in 2023.
Gross profit increased $7.4 million, or 4.1%, to $188.6 million in 2025 compared to $181.1 million in 2024 and our gross profit percentage improved to 40.2% in 2025 from 37.1% in 2024.
The 2025 Amendment also amended the Amended and Restated Credit Agreement to (i) provide for an additional term loan from the 2025 Term Loan Lenders in an aggregate amount not to exceed $20.0 million, subject to the approval of the Required Lenders in their discretion, (ii) provide for the payment of substantial make-whole payments in the event we prepay the loans prior to their maturity, and (iii) provide that the incremental term loan will be senior in right of repayment to the initial term loan.
The 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, and allows the Loan Parties to request one or more additional term loans from CCP, Blackwell and other 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).
During 2024, we recognized $36.4 million in costs relating to the Restructuring Plan., which included $4.3 million of employee-related costs, $11.3 million of accelerated depreciation, $9.3 million related to write-downs of inventory and long-lived assets to be disposed of or equipment in progress that will not be put in service, $11.0 million of impairment charges associated with entering into a sublease for one of the Utah manufacturing facilities to be closed and impairment of an intangible asset, and $0.5 million of other related costs.
The $11.4 million of restructuring and impairment charges recorded in operating expense during 2025 included $9.2 million incurred related to accelerated depreciation, write-down of long-lived assets and impairment of assets and $2.2 million of employee-related and other cash charges. 40 Operating Loss Operating loss decreased $49.2 million, or 53.3%, to $43.0 million in 2025 compared to $92.2 million in 2024.
Removed
Purple Inc. was incorporated in Delaware on May 19, 2015 as a special purpose acquisition company under the name of GPAC.
Added
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.
Removed
On February 2, 2018, we consummated a transaction structured similar to a reverse recapitalization (the “Business Combination”) pursuant to which Purple Inc. acquired an equity interest in Purple LLC as holder of all Class A units and became its sole managing member.
Added
While our revenues were down overall from 2024, we are encouraged by our performance in the second half of 2025 as our fourth quarter 2025 revenue increased 9.1% compared to last year, reflecting the continued execution of our strategic priorities.
Removed
Moreover, we believe consolidation of our manufacturing footprint pursuant to our Restructuring Plan is an important step to advance our grid innovation and build momentum to achieve positive operating cash flow and market share growth over the long- term. The fourth quarter 2024 was significant for us as we achieved profitability and positive cash flow.
Added
Wholesale revenue grew 39.8% in the fourth quarter compared to last year with our expanded Mattress Firm placements and an expansion with our Costco program, showroom revenue increased 4.5% reflecting the strength of our updated selling model and premium positioning and e-commerce was down 15.3%, reflecting a continuation of trends from earlier in the year.
Removed
This was the direct result of our disciplined execution, operational improvements and cost saving initiatives throughout the year. Other key highlights during the fourth quarter of 2024 included significant improvements in Purple showroom profitability and the successful launch of our product in Costco retail locations.
Added
Gross margin for the fourth quarter was 41.9% as we have realized the benefits of the continued improvement in lowering material costs from ongoing sourcing initiatives, plant efficiencies, restructuring benefits and actions to reduce our cost of warranty returns.
Removed
In 2025, we announced the re-launching of our Rejuvenate line in the second quarter 2025 through our DTC channels, followed by a full wholesale channel roll-out expected to be complete by the third quarter 2025.
Added
Operating expenses continue to decline with 2.9% reduction in the fourth quarter 2025 compared to last year as we have improved efficiency, implemented numerous cost reduction efforts and closely managed our expenses with disciplined cost controls.
Removed
The new Rejuvenate 2.0 will have a newly innovated grid technology that when stacked with our original Gelflex grid, creates a unique combination that continues to differentiate us in the market while driving superior comfort and support for an even more premium sleep experience.
Added
On May 2, 2025, we entered into the Second Amendment to Master Retailer Agreement with Mattress Firm (the “MRA Amendment”), a business unit of SGI, which provides that SGI, through its Mattress Firm stores, will expand its inventory of our products across its national store network from approximately 5,000 mattress slots to a minimum of 12,000 mattress slots.
Removed
Closure of the two Utah manufacturing facilities is projected to be completed in the second quarter of 2025 while consolidation into the Georgia facility was finalized in December 2024. The reduction in workforce at our Utah headquarters was completed in August 2024.
Added
This rollout is progressing well, with Purple products now being represented in Mattress Firm’s full store network. With the recent launch of Purple Royale, our exclusive Luxe product for Mattress Firm, we have expanded to all 12,000 committed slots.
Removed
We expect to record additional restructuring and other related charges in the amount of $4.6 million through the second quarter of 2025. These charges include certain estimates that are provisional and include management judgments and assumptions that could change materially as we complete the execution of our plans.
Added
Also on May 2, 2025, we entered into an Amended and Restated Master Vendor Supply and Services Agreement with Tempur Sherwood, LLC, a subsidiary of Tempur Sealy (the “Sherwood Agreement,” and together with the MRA Amendment, the “SGI Agreements”).
Removed
Actual results may differ from these estimates, and the completion of our plan could result in additional restructuring, impairment or other related charges not reflected. In addition, we plan to implement additional cost savings measures in 2025 beyond those implemented pursuant to our 2024 Restructuring Plan.
Added
The Sherwood Agreement provides that Tempur Sherwood, LLC has the exclusive right to assemble certain product lines that we sell to Mattress Firm. The new Rejuvenate 2.0 collection launched in the second quarter 2025 and is available across all of our showroom locations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe 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 December 31, 2024, we had $70.7 million of variable rate debt associated with the Related Party Loan.
Biggest changeThe Related Party Loan entered into in January 2024 along with the corresponding two amendments bears interest at a variable rate which exposes us to market risks relating to changes in interest rates. As of December 31, 2025, we had $126.7 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 $0.7 million over the next 12 months.
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 $1.3 million over the next 12 months.

Other PRPL 10-K year-over-year comparisons