CarParts.com, Inc.

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 and mobile app provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,682,000 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 and mobile app provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,738,000 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

2.*U.S. vehicle fleet expanding and aging.*The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.8 years in 2025, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs. In many cases we believe these older vehicles are driven by Do-It-Yourself (“DIY”) car owners who are more likely to handle any necessary repairs themselves rather than taking their car to the professional repair shop.

Current wording

2.*U.S. vehicle fleet expanding and aging.*The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.9 years in 2026, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs. In many cases we believe these older vehicles are driven by Do-It-Yourself (“DIY”) car owners who are more likely to handle any necessary repairs themselves rather than taking their car to the professional repair shop.

Previous wording

For the second quarter of 2026, we generated net sales of $135,640, compared with $151,949 for the second quarter of 2025, representing a decrease of 10.7%. We incurred a net loss of $3,222 for the second quarter of 2026 compared to a net loss of $12,711 for the second quarter of 2025. Our net loss before interest expense, net, income tax provision (benefit), depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, workforce transition costs, gain on sale of subsidiary and strategic alternatives exploration costs (“Adjusted EBITDA”) was $1,763 in the second quarter of 2026 compared to $(3,116) in the second quarter of 2025. 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 EBITDA and a reconciliation from net loss.

Current wording

For the third quarter of 2026, we generated net sales of $129,331, compared with $127,769 for the third quarter of 2025, representing an increase of 1.2%. We incurred a net loss of $4,107 for the third quarter of 2026 compared to a net loss of $10,885 for the third quarter of 2025. Our net loss before interest expense, net, income tax provision (benefit), depreciation and amortization expense, amortization of intangible assets, plus share-based compensation expense, workforce transition costs, gain on sale of subsidiary, strategic alternatives exploration costs and distribution center costs (“Adjusted EBITDA”) was $1,042 in the third quarter of 2026 compared to $(2,495) in the third quarter of 2025. 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 EBITDA and a reconciliation from net loss.

Previous wording

Total expenses, which primarily consisted of cost of sales and operating expense, decreased in the second quarter of 2026 compared to the same period in 2025. 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 2026 compared to the same period in 2025. 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 expense, net; income tax provision (benefit); depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, gain on sale of subsidiary 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, net; income tax provision (benefit); depreciation and amortization expense; amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, gain on sale of subsidiary, strategic alternatives exploration costs and distribution center costs.

Previous wording

Thirteen and Twenty-Six Weeks Ended July 4, 2026 Compared to the Thirteen and Twenty-Six Weeks Ended June 28, 2025

Current wording

Thirteen and Thirty-Nine Weeks Ended October 3, 2026 Compared to the Thirteen and Thirty-Nine Weeks Ended September 27, 2025

Previous wording

Net sales decreased $16,309, or 10.7%, for the second quarter of 2026 compared to the same period in 2025. Net sales decreased $31,726, or 10.6%, for the twenty-six weeks ended July 4, 2026 (“YTD Q2 2026”) compared to the same period in 2025. The net sales decrease for the second quarter of 2026, and YTD Q2 2026, was primarily attributable to initiatives to improve profitability, including the rationalization of marketing spend through reduced investment in lower-margin customers and customers with LTVs.

Current wording

Net sales increased $1,562, or 1.2%, for the third quarter of 2026 compared to the same period in 2025. Net sales decreased $30,164, or 7.1%, for the thirty-nine weeks ended October 3, 2026 (“YTD Q3 2026”) compared to the same period in 2025. The net sales increase for the third quarter of 2026 was primarily attributable to an increase in consumer demand, while still maintaining our focus on advertising spend optimization. The net sales decrease for YTD Q3 2026 was attributable to initiatives to improve profitability, including the rationalization of advertising spend through reduced investment in lower-margin customers and customers with lower lifetime values (“LTVs”).

Previous wording

Gross profit decreased $4,723, or 9.5%, for the second quarter of 2026 compared to the same period in 2025, and decreased $9,128, or 9.4%, in YTD Q2 2026 compared to the same period in 2025. Gross margin increased 40 basis points to 33.2% in the second quarter of 2026 compared to 32.8% in the second quarter of 2025, and gross margin increased 50 basis points to 32.9% in YTD Q2 2026 compared to the same period of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs.

Current wording

Gross profit increased $906, or 2.1%, for the third quarter of 2026 compared to the same period in 2025, and decreased $8,222, or 5.9%, in YTD Q3 2026 compared to the same period in 2025. Gross margin increased 30 basis points to 33.4% in the third quarter of 2026 compared to 33.1% in the third quarter of 2025, and gross margin increased 40 basis points to 33.0% in YTD Q3 2026 compared to the same period of 2025. The increase in gross margin was primarily driven by favorable freight costs, in addition to the impact from the tariff refunds in YTD Q3 2026.

Previous wording

Operating expense decreased $13,918, or 22.4%, and decreased $30,416 or 24.4%, for the second quarter of 2026 and YTD Q2 2026, respectively, compared to the same periods in 2025. The decrease in operating expense was primarily attributable to favorable marketing spend and favorable payroll costs due to headcount reductions, in addition to the gain on sale of the Philippines subsidiary during YTD Q2 2026 that occurred in January 2026.

Current wording

Operating expense decreased $5,359, or 10.2%, and decreased $35,775 or 20.2%, for the third quarter of 2026 and YTD Q3 2026, respectively, compared to the same periods in 2025. The decrease in operating expense was primarily attributable to lower distribution center costs, favorable advertising spend and favorable payroll costs due to headcount reductions.

Previous wording

Total other income (expense), net, increased $211, or 103.4%, and decreased $70, or 34.8%, for the second quarter of 2026 and YTD Q2 2026, respectively, compared to the same periods in 2025. The second quarter change was primarily driven by an increase in other income during the quarter, offset by interest expense from the Convertible Notes that were issued by the Company in September 2025. The YTD Q2 2026 change was primarily driven by interest expense from the Convertible Notes that we issued in September 2025.

Current wording

Total other expense, net, decreased $528, or 67.0%, and decreased $458, or 46.3%, for the third quarter of 2026 and YTD Q3 2026, respectively, compared to the same periods in 2025. The third quarter change and YTD Q3 2026 change were primarily driven by interest expense from the Convertible Notes that we issued in September 2025, partially offset by an increase in other income.

Previous wording

For the thirteen and twenty-six weeks ended July 4, 2026, our effective tax rate was (0.2)% and 21.1%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, 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, the write-off of an accrued withholding tax associated with the disposition of the Philippines subsidiary, 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 October 3, 2026, our effective tax rate was (1.8)% and 12.4%, respectively. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, 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, the write-off of an accrued withholding tax associated with the disposition of the Philippines subsidiary, 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 28, 2025, our effective tax rate 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, our effective tax rate 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

We account 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, our 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 July 4, 2026, there was no material change from the fiscal year ended January 3, 2026 in the amount of our deferred tax assets that are not considered to be more likely than not to be realized in future years.

Current wording

We account 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, our 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 October 3, 2026, there was no material change from the fiscal year ended January 3, 2026 in the amount of our deferred tax assets that are not considered to be more likely than not to be realized in future years.

Previous wording

During the twenty-six weeks ended July 4, 2026, we primarily funded our operations with cash and cash equivalents generated from operations and issuance of common stock for $8,000 of gross proceeds (see “Note 3 - Stockholders’ Equity and Share-Based Compensation”). As of July 4, 2026 and January 3, 2026, our outstanding revolving loan balance under our Credit Facility was $0 and $0, respectively. We had cash and cash equivalents of $38,171 as of July 4, 2026, representing a $12,350 increase from $25,821 of cash as of January 3, 2026. 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 October 3, 2026, we primarily funded our operations with cash and cash equivalents generated from operations and issuance of common stock for $8,000 of gross proceeds (see “Note 3 - Stockholders’ Equity and Share-Based Compensation”). As of October 3, 2026 and January 3, 2026, our outstanding revolving loan balance under our Credit Facility was $0 and $0, respectively. We had cash and cash equivalents of $33,779 as of October 3, 2026, representing a $7,958 increase from $25,821 of cash as of January 3, 2026. 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).

Previous wording

As of July 4, 2026 and January 3, 2026, our working capital was $55,816 and $53,817, 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 October 3, 2026 and January 3, 2026, our working capital was $52,673 and $53,817, 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 July 4, 2026 and June 28, 2025 (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 October 3, 2026 and September 27, 2025 (in thousands):

Previous wording

Net cash provided by (used in) operating activities for the twenty-six weeks ended July 4, 2026 and June 28, 2025 was $10,643 and ($20,060), respectively. The increase was primarily driven by a lower net loss in the twenty-six weeks ended July 4, 2026 and a higher net cash inflow from the change in working capital.

Current wording

Net cash provided by (used in) operating activities for the thirty-nine weeks ended October 3, 2026 and September 27, 2025 was $10,043 and ($26,477), respectively. The increase was primarily driven by a lower net loss in the thirty-nine weeks ended October 3, 2026 and a higher net cash inflow from the change in working capital.

Previous wording

For the twenty-six weeks ended July 4, 2026, net cash used in investing activities was primarily the result of additions to property and equipment of $4,405, which are mainly related to capitalized website and software development costs. 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.

Current wording

For the thirty-nine weeks ended October 3, 2026, net cash used in investing activities was primarily the result of additions to property and equipment of $7,553, which are mainly related to capitalized website and software development costs. 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.

Previous wording

Net cash provided by financing activities was $6,406 for the twenty-six weeks ended July 4, 2026, primarily due to $8,000 of gross proceeds from the issuance of common stock, partially offset by $1,411 of payments made on finance leases. 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 the revolving loan payable, offset by $1,786 of payments made on finance leases.

Current wording

Net cash provided by financing activities was $5,761 for the thirty-nine weeks ended October 3, 2026, primarily due to $8,000 of gross proceeds from the issuance of common stock, partially offset by $2,028 of payments made on finance leases. Net cash provided by financing activities was $32,372 for the thirty-nine weeks ended September 27, 2025, primarily due to the issuance of the Convertible Notes with an aggregate principal amount of $25,000 in addition to $10,733 of gross proceeds from the issuance of common stock, partially offset by $2,615 of payments on finance leases.

Previous wording

Total debt was $32,850 as of July 4, 2026 compared to $34,010 as of January 3, 2026 and primarily consists of Convertible Notes payable and right-of-use obligations – finance.

Current wording

Total debt was $32,365 as of October 3, 2026 compared to $34,010 as of January 3, 2026 and primarily consists of Convertible Notes payable and right-of-use obligations – finance.

Previous wording

On September 8, 2025, we entered into a Purchase Agreement with certain investors, pursuant to which the we issued Convertible Notes with an aggregate principal amount of $25,000. The Convertible Notes accrue interest quarterly at a rate of two percent (2%) per annum, payable in kind. The maturity date is September 10, 2028. The outstanding Convertible Notes principal balance, plus any unpaid and accrued interest, is convertible at the option of the investors into shares of our common stock at the maturity date, at a Conversion Price of $12.00 per share. As of July 4, 2026 and January 3, 2026, the Convertible Notes payable balance was $25,416 and $25,161, respectively.

Current wording

On September 8, 2025, we entered into a Purchase Agreement with certain investors, pursuant to which we issued Convertible Notes with an aggregate principal amount of $25,000. The Convertible Notes accrue interest quarterly at a rate of two percent (2%) per annum, payable in kind. The maturity date is September 10, 2028. The outstanding Convertible Notes principal balance, plus any unpaid and accrued interest, is convertible at the option of the investors into shares of our common stock at the maturity date, at a Conversion Price of $12.00 per share. As of October 3, 2026 and January 3, 2026, the Convertible Notes payable balance was $25,545 and $25,161, respectively.

Previous wording

We maintain a Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived primarily from cash and cash equivalents, certain receivables and inventory. On June 15, 2026, we entered into a Credit Agreement with FBSF providing for an asset-based revolving credit facility in an aggregate maximum principal amount of up to $25,000, secured by substantially all our assets. The Credit Facility matures on March 31, 2028.

Current wording

We maintain a Credit Facility that provides for, among other things, a revolving commitment, which is subject to a borrowing base derived primarily from cash and cash equivalents, certain receivables and inventory. On June 15, 2026, we entered into a Credit Agreement with FBSF providing for an asset-based revolving credit facility in an aggregate

Previous wording

As of July 4, 2026 and January 3, 2026, our outstanding revolving loan balance was $0 and $0, respectively. As of July 4, 2026 and January 3, 2026, the outstanding standby letters of credit balance was $0 and $680, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. Loans drawn under the Credit Facility bear interest at a per annum rate equal to the One-Month Term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin of 3.25% per annum.

Current wording

As of October 3, 2026 and January 3, 2026, our outstanding revolving loan balance was $0 and $0, respectively. As of October 3, 2026 and January 3, 2026, the outstanding standby letters of credit balance was $0 and $680, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets. Loans drawn under the Credit Facility bear interest at a per annum rate equal to the One-Month Term SOFR plus an applicable margin of 3.25% per annum.

Previous wording

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.

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.