CarParts.com, Inc.

Previous wording

Driven by our commitment to providing unparalleled customer experience, we use world-class design principles and the latest technology to power our user-friendly website and app. Our vision of “Empowering Drivers Along Their Journey” underscores our mission to create a trusted platform that simplifies the historically stressful experience of vehicle maintenance & repair with “Quality Parts. Priced Right.”

Current wording

Driven by our commitment to providing unparalleled customer experience, we use world-class design principles and the latest technology to power our user-friendly website and app. Our vision of “Empowering Drivers Along Their Journey” underscores our mission to create a trusted platform that simplifies the historically stressful experience of vehicle maintenance and repair with “Quality Parts. Priced Right.”

Previous wording

To this end, we are continually working to enhance our fulfillment center footprint, capacity and productivity. In June 2024, we openedour new state-of-the-art fulfillment center in Las Vegas, Nevada, expanding from 125,000 sq. ft. to over 200,000 sq. ft., which we expect to reduce last-mile transportation expenses to the West Coast and enhance customer service through expedited delivery. The semi-automated center is integrated with cutting-edge AI capabilities designed to optimize operations, improve safety, and expand product availability. Furthermore, we continuously expand our technological capabilities, product offerings, and service portfolio to stay ahead of competitive pressures. By investing in new categories, brands, customer types, and revenue streams across both premium and value segments, we seek to maximize gross profit and capture a larger market share.

Current wording

In June 2024, we openedour new state-of-the-art fulfillment center in Las Vegas, Nevada, expanding from 125,000 sq. ft. to over 200,000 sq. ft., which we expect to reduce last-mile transportation expenses to the West Coast and enhance customer service through expedited delivery. The semi-automated center is integrated with cutting-edge AI capabilities designed to optimize operations, improve safety, and expand product availability. Furthermore, we continuously expand our technological capabilities, product offerings, and service portfolio to stay ahead of competitive pressures. By investing in new categories, brands, customer types, and revenue streams across both premium and value segments, we seek to maximize gross profit and capture a larger market share.

Previous wording

1.*Number of SKUs required to serve the market.*The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,578,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.

Current wording

1.*Number of SKUs required to serve the market.*The number of automotive SKUs has grown dramatically over the last several years. In today’s market, unless the consumer is driving a high volume produced vehicle and needs a simple maintenance item, the part they need is not typically on the shelf at a brick-and-mortar store. We believe our user-friendly flagship website provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,690,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods.

Previous wording

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed inPart II, Item IA, of this report, in*Part I, Item IA,in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 and inPart II, Item IA,*of our Quarterly Report on Form 10-Q for the period ended March 29, 2025.

Current wording

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed inPart II, Item IA, of this report, in*Part I, Item IA,in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024 and inPart II, Item IA,*of our Quarterly Reports on Form 10-Q for the periods ended March 29, 2025 and June 28, 2025.

Previous wording

For the second quarter of 2025, the Company generated net sales of $151,949, compared with $144,270 for the second quarter of 2024, representing an increase of 5.3%. The Company incurred a net loss of $12,711 for the second quarter of 2025 compared to a net loss of $8,687 for the second quarter of 2024. The Company’s net loss before interest income, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, workforce transition costs, distribution center costs and strategic alternatives exploration costs (“Adjusted EBITDA”) of $(3,116) in the second quarter of 2025 compared to $(118) the second quarter of 2024. Adjusted EBITDA is not a Generally Accepted Accounting Principle (“GAAP”) measure. See the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBTIDA and a reconciliation from net loss.

Current wording

For the third quarter of 2025, the Company generated net sales of $127,769, compared with $144,751 for the third quarter of 2024, representing a decrease of 11.7%. The Company incurred a net loss of $10,885 for the third quarter of 2025 compared to a net loss of $10,018 for the third quarter of 2024. The Company’s net loss before interest expense (income), net, income tax provision, depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, workforce transition costs, distribution center costs and strategic alternatives exploration costs (“Adjusted EBITDA”) of $(2,168) in the third quarter of 2025 compared to $(1,162) in the third quarter of 2024. Adjusted EBITDA is not a Generally Accepted Accounting Principle (“GAAP”) measure. See the section below titled “Non-GAAP measures” for information regarding our use of Adjusted EBTIDA and a reconciliation from net loss.

Previous wording

Net sales increased in the second quarter of 2025 compared to the second quarter of 2024. The increase in net sales was primarily driven by an increase in consumer demand through our primary ecommerce sales channel,carparts.com*,*partially offset by continued softness in our marketplaces sales channel. Gross profit increased by 2.9% to $49,779 and gross margin decreased 70 basis points to 32.8% compared to 33.5% in the second quarter of 2024. The decrease in gross margin was primarily driven by product mix and the impact of tariffs.

Current wording

Net sales decreased by 11.7% to $127,769 in the third quarter of 2025 compared to the third quarter of 2024. The decrease in net sales was primarily driven by the Company’s efforts to increase profitability by rationalizing marketing spend. Gross profit decreased by 17.1% to $42,275 and gross margin decreased 210 basis points to 33.1% compared to 35.2% in the third quarter of 2024. The decrease in gross margin was primarily driven by product mix and the impact of tariffs, partially offset by pricing increases.

Previous wording

Total expenses, which primarily consisted of cost of sales and operating expense, increased in the second quarter of 2025 compared to the same period in 2024. The changes in both cost of sales and operating expense are described in further detail under — “Results of Operations” below.

Current wording

Total expenses, which primarily consisted of cost of sales and operating expense, decreased in the third quarter of 2025 compared to the same period in 2024. The changes in both cost of sales and operating expense are described in further detail under — “Results of Operations” below.

Previous wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before interest income, net; income tax provision; depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, distribution center costs and strategic alternatives exploration costs.

Current wording

Regulation G,“Conditions for Use of Non-GAAP Financial Measures,” and other provisions of the Exchange Act, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before interest expense (income), net; income tax provision; depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, distribution center costs and strategic alternatives exploration costs.

Previous wording

Net sales increased $7,679, or 5.3%, for the second quarter of 2025 compared to the second quarter of 2024. Net sales decreased $11,232, or 3.6%, for the twenty-six weeks ended June 28, 2025 (“YTD Q2 2025”) compared to the same period in 2024. The net sales increase for the second quarter of 2025 was primarily driven by an increase in consumer demand through our primary ecommerce sales channel,carparts.com*,*partially offset by continued softness in our marketplaces sales channel. The net sales decrease for YTD Q2 2025 was primarily driven by inclement weather in the first quarter of 2025.

Current wording

Net sales decreased $16,982, or 11.7%, for the third quarter of 2025 compared to the third quarter of 2024. Net sales decreased $28,214, or 6.2%, for the thirty-nine weeks ended September 27, 2025 (“YTD Q3 2025”) compared to the same period in 2024. The net sales decrease for the third quarter of 2025 was primarily driven by the Company’s efforts to increase profitability by rationalizing marketing spend. The net sales decrease for YTD Q3 2025 was primarily driven by the Company’s efforts to increase profitability by rationalizing marketing spend and inclement weather in the first quarter of 2025.

Previous wording

Gross profit increased $1,386, or 2.9%, for the second quarter of 2025 compared to the same period in 2024, and decreased $5,186, or 5.1%, in YTD Q2 2025 compared to the same period of 2024. Gross margin decreased 70 basis points to 32.8% in the second quarter of 2025 compared to 33.5% in the second quarter of 2024 and gross margin decreased 50 basis points to 32.4% in YTD Q2 2025 compared to the same period of 2024. The decrease in gross margin was primarily driven by product mix and the impact of tariffs.

Current wording

Gross profit decreased $8,707, or 17.1%, for the third quarter of 2025 compared to the same period in 2024, and decreased $13,893, or 9.1%, in YTD Q3 2025 compared to the same period of 2024. Gross margin decreased 210 basis points to 33.1% in the third quarter of 2025 compared to 35.2% in the third quarter of 2024, and gross margin decreased 110 basis points to 32.6% in YTD Q3 2025 compared to the same period of 2024. The decrease in gross margin was primarily driven by product mix and the impact of tariffs, partially offset by pricing increases.

Previous wording

Operating expense increased $5,075, or 8.9%, and increased $7,132, or 6.1%, for the second quarter of 2025 and YTD Q2 2025, respectively, compared to the same periods in 2024. Operating expense as a percent of net sales increased 130 basis points to 40.9% and increased 380 basis points to 41.7% in the second quarter of 2025 and YTD Q2 2025, respectively, compared to the same periods in 2024. The increase was primarily related to an unfavorable marketing spend, in addition to the impact of one-time fees related to our ongoing exploration of strategic alternatives in 2025.

Current wording

Operating expense decreased $8,587, or 14.1%, and decreased $1,455, or 0.8%, for the third quarter of 2025 and YTD Q3 2025, respectively, compared to the same periods in 2024. The decrease in the third quarter was primarily related to favorable marketing spend and favorable payroll costs due to headcount reductions. Operating expense as a percent of net sales increased 220 basis points to 41.4% in YTD Q3 2025, compared to the same period in 2024. The increase was primarily related to an unfavorable marketing spend in the first half of 2025 and the impact of one-time fees related to our exploration of strategic alternatives in 2025, partially offset by favorable payroll costs due to headcount reductions.

Previous wording

Total other income, net, decreased $272, or 400.0%, and decreased $406, or 198.1%, for the second quarter of 2025 and YTD Q2 2025, respectively, compared to the same periods in 2024, primarily driven by a decrease in interest income due to a lower cash balance throughout 2025.

Current wording

Total other (expense) income, net, decreased $823, or 2,351.4%, and decreased $1,229, or 512.1%, for the third quarter of 2025 and YTD Q3 2025, respectively, compared to the same periods in 2024. The decrease was primarily driven by an increase in interest expense due to higher borrowings on the revolving loan payable and a decrease in interest income due to a lower cash balance throughout 2025.

Previous wording

For the thirteen and twenty-six weeks ended June 28, 2025, the effective tax rate for the Company was (0.7)% and (0.8)%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Current wording

For the thirteen and thirty-nine weeks ended September 27, 2025, the effective tax rate for the Company was (0.5)% and (0.7)%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Previous wording

For the thirteen and twenty-six weeks ended June 29, 2024, the effective tax rate for the Company was (0.3)% and (0.8)%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Current wording

For the thirteen and thirty-nine weeks ended September 28, 2024, the effective tax rate for the Company was (1.4)% and (1.0)%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, income of our Philippines subsidiary that is subject to different effective tax rates, share-based compensation that is either not deductible for tax purposes or for which the tax deductible amount is different than the financial reporting amount, and a change in the valuation allowance that offset the tax of the current period pre-tax loss.

Previous wording

The Company accounts for income taxes in accordance with ASC Topic 740 –Income Taxes(“ASC 740”). Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets. We currently have a full valuation allowance against our deferred tax assets. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. For the twenty-six weeks ended June 28, 2025, there was no material change from fiscal year ended December 28, 2024 in the amount of the Company's deferred tax assets that are not considered to be more likely than not to be realized in future years.

Current wording

The Company accounts for income taxes in accordance with ASC Topic 740 –Income Taxes(“ASC 740”). Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets. We currently have a full valuation allowance against our deferred tax assets. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. For the thirty-nine weeks ended September 27, 2025, there was no material change from fiscal year ended December 28, 2024 in the amount of the Company's deferred tax assets that are not considered to be more likely than not to be realized in future years.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S. which contains a broad range of tax reform provisions affecting businesses. We are evaluating the full effects of the legislation on our estimated annual effective tax rate and cash tax position, but we expect that the legislation will likely not have a material impact on our consolidated financial statements. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our consolidated results of operations for the twenty-six weeks ended June 28, 2025.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S. which contains a broad range of tax reform provisions affecting businesses. The effects of the legislation on our estimated annual effective tax rate and tax provision were included in our consolidated statements of operations for the thirteen and thirty-nine weeks ended September 27, 2025.

Previous wording

During the twenty-six weeks ended June 28, 2025, we primarily funded our operations with cash and cash equivalents generated from operations and borrowings from our revolving loan. As of June 28, 2025, our outstanding revolving loan balance under our Credit Facility was $10,000. Subsequent to June 28, 2025, we borrowed an additional $10,000 from the revolving loan under the Credit Facility. We had cash and cash equivalents of $19,774 as of June 28, 2025, representing a $16,623 decrease from $36,397 of cash as of December 28, 2024. Based on our current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “Debt and Available Borrowing Resources” and “Funding Requirements” below).

Current wording

During the thirty-nine weeks ended September 27, 2025, we primarily funded our operations with cash and cash equivalents generated from operations, borrowings from our revolving loan, issuance of common stock for $10,733 of gross proceeds (see “Note 3 - Stockholders’ Equity and Share-Based Compensation”), and the issuance of the Convertible Notes with an aggregate principal amount of $25,000 (see “Note 2 - Borrowings”). As of September 27, 2025 and December 28, 2024, our outstanding revolving loan balance under our Amended Credit Facility was $0. During the thirty-nine weeks ended September 27, 2025, we borrowed, and subsequently paid down, $20,565 from the revolving loan under the Amended Credit Facility. We had cash and cash equivalents of $36,011 as of September 27, 2025, representing a $386 decrease from $36,397 of cash as of December 28, 2024. Based on our current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Amended Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “Debt and Available Borrowing Resources” and “Funding Requirements” below).

Previous wording

As of June 28, 2025 and December 28, 2024, our working capital was $40,266 and $48,445, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital.

Current wording

As of September 27, 2025 and December 28, 2024, our working capital was $59,679 and $48,445, respectively. The historical seasonality in our business during the year can cause cash and cash equivalents, inventory and accounts payable to fluctuate, resulting in changes in our working capital.

Previous wording

The following table summarizes the key cash flow metrics from our consolidated statements of cash flows for the twenty-six weeks ended June 28, 2025 and June 29, 2024 (in thousands):

Current wording

The following table summarizes the key cash flow metrics from our consolidated statements of cash flows for the thirty-nine weeks ended September 27, 2025 and September 28, 2024 (in thousands):

Previous wording

Net cash (used in) provided by operating activities for the twenty-six weeks ended June 28, 2025 and June 29, 2024 was ($20,060) and $18, respectively. The decrease was primarily driven by a higher net loss in YTD Q2 2025, in addition to the higher net cash outflow from the change in working capital, mainly attributable to the increase of our inventory position as a result of the continued uncertainty from tariffs.

Current wording

Net cash (used in) provided by operating activities for the thirty-nine weeks ended September 27, 2025 and September 28, 2024 was ($26,477) and $8,542, respectively. The decrease was primarily driven by a higher net loss in YTD Q3 2025, in addition to the higher net cash outflow from the change in working capital, mainly attributable to the second quarter increase of our inventory position due to the uncertainty from tariffs.

Previous wording

For the twenty-six weeks ended June 28, 2025, net cash used in investing activities was primarily the result of additions to property and equipment of $4,408, which are mainly related to capitalized website and software development costs. For the twenty-six weeks ended June 29, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $14,567, which are mainly related to leasehold improvements, capitalized website and software development costs, and machinery and equipment.

Current wording

For the thirty-nine weeks ended September 27, 2025, net cash used in investing activities was primarily the result of additions to property and equipment of $6,281, which are mainly related to capitalized website and software development costs. For the thirty-nine weeks ended September 28, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $18,146, which are mainly related to leasehold improvements, capitalized website and software development costs, and machinery and equipment.

Previous wording

Net cash provided by financing activities was $7,845 for the twenty-six weeks ended June 28, 2025, primarily due to $10,000 of net borrowings from our revolving loan, partially offset by $1,786 of payments on finance leases. Net cash used in financing activities was $2,384 for the twenty-six weeks ended June 29, 2024, primarily due to $2,157 of payments on finance leases.

Current wording

Net cash provided by financing activities was $32,372 for the thirty-nine weeks ended September 27, 2025, primarily due the issuance of the Convertible Notes with an aggregate principal amount of $25,000 and $10,733 of gross proceeds from the issuance of common stock, partially offset by $2,615 of payments on finance leases. Net cash used in financing activities was $3,345 for the thirty-nine weeks ended September 28, 2024, primarily due to $3,243 of payments on finance leases.

Previous wording

Total debt was $20,514 as of June 28, 2025 compared to $12,313 as of December 28, 2024 and primarily consists of right-of-use obligations – finance and our outstanding revolving loan balance.

Current wording

Total debt was $34,706 as of September 27, 2025 compared to $12,313 as of December 28, 2024 and primarily consists of Convertible Notes payable and right-of-use obligations – finance.

Previous wording

The Company maintains a Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived from certain receivables, inventory and property and equipment. The Credit Facility provides for the revolving commitment in an aggregate principal amount of up to $75,000 and allows for an uncommitted ability to increase the aggregate principal amount by an additional $75,000 to $150,000, subject to certain terms and conditions. The Credit Facility matures on June 17, 2027. As of June 28, 2025 and December 28, 2024, our outstanding revolving loan balance was $10,000 and $0, respectively. As of June 28, 2025 and December 28, 2024, the outstanding standby letters of credit balance was $680, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. We use the trade letters of credit in the ordinary course of business to satisfy certain vendor obligations.

Current wording

The Company maintains an Amended Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived from certain receivables, inventory and property and equipment. On September 8, 2025, the Company and JPMorgan Chase Bank entered into the First Amendment to the Company’s existing Amended and Restated Credit Agreement, dated as of June 17, 2022. The First Amendment provides for the revolving commitment in an aggregate principal amount of $25,000 (formerly $75,000), a sublimit of $2,500 for the issuance of letters of credit and allows for an uncommitted ability to increase the revolving commitment by an additional $125,000, subject to certain terms and conditions. The Amended Credit Facility now matures on September 8, 2026 (formerly June 17, 2027).

Previous wording

Loans drawn under the Credit Facility bear interest at a per annum rate equal to either (a) SOFR plus an applicable margin of 1.50% to 2.00% per annum based on the Company’s fixed charge coverage ratio, or (b) an “alternate prime base rate” subject to an increase from 0.00% to 0.50% per annum based on the Company’s fixed charge coverage ratio. As of June 28, 2025, the Company’s SOFR based interest rate was 6.43% and the Company’s prime based rate was 8.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly. Under the terms of the Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement. The cash dominion period is triggered in an event of default or if “excess availability,” as defined under the Credit Agreement, is less than $9,000 for three consecutive business days and will continue until, during the preceding 45 consecutive days, no event of default existed and excess availability has been greater than $9,000 at all times (with the trigger subject to adjustment based on the Company’s revolving commitment). In addition, in the event that the Company’s required excess availability related to the “Covenant Testing Trigger Period” (as defined under the Credit Agreement) is less than $7,500 for three consecutive business days, the Company shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, and continuing until excess availability has been greater than or equal to $7,500 at all times for 45 consecutive days (with the trigger subject to adjustment based on the Company’s revolving commitment).

Current wording

Loans drawn under the Amended Credit Facility bear interest, at the Company’s option, at a per annum rate equal to either (a) Adjusted Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 3.00% per annum, or (b) an “alternate prime base rate” plus an applicable margin of 1.50% per annum. As of September 27, 2025, the Company’s SOFR based interest rate was 7.26% and the Company’s prime based rate was 8.75%. A commitment fee, based upon unused availability under the Amended Credit Facility bearing interest at a rate of 0.50% per annum, is payable monthly. The Covenant Testing Trigger Period (as defined under the Amended Credit Agreement) means the period commencing on any day that excess availability is less than $5,000 for three consecutive business days and will continue until excess availability has been greater than, or equal to, $5,000 at all times for 45 consecutive days. In addition, upon the occurrence of a Covenant Testing Trigger Period, the Company shall be required to maintain a minimum fixed charge coverage ratio of 1.0 to 1.0, continuing until excess availability has been greater than or equal to $5,000 for 45 consecutive days.

Previous wording

Our Credit Agreement requires us to satisfy certain financial covenants which could limit our ability to react to market conditions or satisfy extraordinary capital needs and could otherwise restrict our financing and operations. If we are unable to satisfy the financial covenants and tests at any time, we may as a result cease being able to borrow under the Credit Facility or be required to immediately repay loans under the Credit Facility, and our liquidity and capital resources and ability to operate our business could be severely impacted, which would have a material adverse effect on our financial condition and results of operations. In those events, we may need to sell assets or seek additional equity or additional debt financing or attempt to modify our existing Credit Agreement. There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Credit Agreement.

Current wording

Facility, and our liquidity and capital resources and ability to operate our business could be severely impacted, which would have a material adverse effect on our financial condition and results of operations. In those events, we may need to sell assets or seek additional equity or additional debt financing or attempt to modify our existing Amended Credit Agreement. There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Amended Credit Agreement.

Previous wording

continued or worsened economic conditions, worsening operating performance by us, or other events, including those described in “Risk Factors” included in this report and any other reports we filed with the SEC may force us to sell assets or seek additional debt or equity financings in the future, including the issuance of additional common stock under a registration statement. As such, there can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all. If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations.

Current wording

Based on our current operating plan, we believe that our existing cash, cash equivalents, investments, cash flows from operations and available debt financing will be sufficient to finance our operational cash needs through at least the next twelve months. Our future capital requirements may, however, vary materially from those now planned or anticipated. Changes in our operating plans, lower than anticipated net sales or gross margins, increased expenses, continued or worsened economic conditions, worsening operating performance by us, or other events, including those described in “Risk Factors” included in this report and any other reports we filed with the SEC may force us to sell assets or seek additional debt or equity financings in the future, including the issuance of additional common stock under a registration statement. As such, there can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all. If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations.