CarParts.com, Inc.

(In Thousands, Except Per Share Data)

Note 1 – Basis of Presentation and Description of Company

CarParts.com, Inc. (including its subsidiaries) is a leading online provider of aftermarket auto parts and accessories. The Company sells its products primarily to individual consumers through its flagship website located atwww.carparts.com**,our mobile app, online marketplaces and offline to professional installers and wholesale customers through its wholesale platform. Our corporate website is also located atwww.carparts.com/investor. References to the “Company,” “we,” “us,” or “our” refer to CarParts.com, Inc. and its consolidated subsidiaries.

The Company’s house brands and marketplace brands are positioned to serve distinct customer segments and sales channels:

•JC Whitney® serves as the Company’s primary private label house brand, offering replacement, maintenance, performance and specialty automotive products.

•Evan Fischer® products are sold primarily through the eBay marketplace channel, with a focus on core replacement and maintenance components.

• Garage-Pro® products are offered primarily through Amazon, serving value-oriented consumers seeking dependable replacement parts.

The Company’s product categories consist of:

Replacement Parts. The replacement parts category primarily consists of parts for the exterior of an automobile. These products are typically used to replace original body components damaged in collisions or through general wear and tear. These products include body panels, lighting components, cooling parts and mirrors. Replacement parts serve both everyday vehicle owners and professional repair customers and represent a foundational category within the Company’s assortment.

Hard Parts. The hard parts category includes engine, chassis, drivetrain, suspension, braking, electrical and other mechanical components necessary for vehicle operation. This category supports routine maintenance, system replacement and mechanical repair across a broad range of domestic and import vehicles.

Other Parts and Accessories. The other parts category includes products designed to enhance vehicle performance, functionality, comfort or appearance. This includes performance upgrades, specialty components and accessories that allow customers to customize or improve their vehicles beyond standard replacement needs, including suspension kits, towing equipment, lift kits and more. The Company has expanded our assortment in this category to serve enthusiast and specialty vehicle segments, including trucks, off-road and muscle car segments.

The Company is a Delaware C corporation and is headquartered in Long Beach, California. The Company has employees located in the United States.

Basis of Presentation

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to U.S. Securities and Exchange Commission (“SEC”) Form 10-Q and Article 10 of SEC Regulation S-X. In the opinion of management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the consolidated balance sheets of the Company as of October 3, 2026 and January 3, 2026, the consolidated results of operations for the thirteen and thirty-nine weeks ended October 3, 2026 and September 27, 2025, and the consolidated statements of cash flows for the thirty-nine weeks ended October

3, 2026 and September 27, 2025. The Company’s results for the interim periods are not necessarily indicative of the results that may be expected for any other interim period, or for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended January 3, 2026, which was filed with the SEC on March 5, 2026 and all our other periodic filings, including Current Reports on Form 8-K, filed with the SEC after the end of our 2025 fiscal year, and throughout the date of this report.

Based on our current operating plan, we believe that our existing cash and 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.

Reverse Stock Split

On May 26, 2026, the Company effected a 1-for-10 reverse stock split of the issued and outstanding common stock (the “Reverse Stock Split”). All share and per share information in the consolidated financial statements and the notes to the consolidated financial statements are presented after giving effect to the Reverse Stock Split retrospectively for all periods presented. For additional information about the Reverse Stock Split, see Note 3,Stockholders’ Equity and Share-based Compensation.

Sale of Subsidiary

On January 27, 2026, the Company sold 100% of the issued and outstanding shares of its Philippines subsidiary to a third party. The third party integrated the subsidiary into their organization, and the Company still utilizes the teams across customer service, back office, finance and accounting, marketing and technology. As of January 3, 2026, accumulated other comprehensive income (“AOCI”) of $1,223 included cumulative foreign currency translation adjustments related to the Philippines subsidiary. As a result of the sale, on January 27, 2026, the Philippines subsidiary was deconsolidated from our consolidated financial statements, including the AOCI balance which was reclassified as a component of the $2,292 gain on sale of subsidiary that was recorded inoperating expense in the consolidated statements of operations in the thirty-nine weeks ended October 3, 2026.

Assets and Liabilities Held for Sale

In December 2025, the Company committed to a plan to sell its Philippines subsidiary, which met the criteria for held for sale under ASC 360, and thus the disposal group was measured at the lower of the carrying amount or fair value less costs to sell as of January 3, 2026. The disposal group did not qualify as a discontinued operation under ASC 205, as it did not represent a strategic shift that would have a major effect on our operations or financial results. As of January 3, 2026, the Philippines subsidiary’s total assets and total liabilities classified as held for sale, as measured at their carrying values, were $3,434 and $3,884, respectively.

Recent Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU requires disclosure, in the notes to the consolidated financial statements, of specified information that disaggregates certain costs and expenses into specified categories. In January 2025, the FASB issued ASU 2025-01, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date.” This update applies to all public business entities and will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this update on its consolidated financial statements and the notes to the consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, “Intangibles-Goodwill and Other-Internal-Use Software,” which revises the guidance for capitalizing costs related to internal-use software to better reflect modern, iterative and agile development practices. This ASU plans to remove project stage references and instead will focus on a new capitalization criteria: (i) management has authorized and committed to the software project and (ii) project

completion probability. This ASU requires companies to evaluate whether significant development uncertainty exists before capitalizing costs and also incorporates website development guidance intoSubtopic 350-40. This ASU is effective for annual and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and the notes to the consolidated financial statements.

Note 2 – Borrowings

Convertible Notes Payable

The Company maintains 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 September 8, 2025, the Company entered into a purchase agreement (“Purchase Agreement”) with certain investors, pursuant to which the Company issued convertible notes (the “Convertible Notes”) with an aggregate principal amount of $25,000 and issued and sold $10,733 in gross proceeds of common stock (see*“Note 3 - Stockholders’ Equity and Share-Based Compensation”*). The Convertible Notes accrue interest quarterly at a rate oftwo 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 common stock of the Company at the maturity date, at a conversion price of $12.00 per share (“Conversion Price”). As of October 3, 2026 and January 3, 2026, the Convertible Notes payable balance was $25,545 and $25,161, respectively.

The Company assessed all terms and features of the Convertible Notes in order to identify any potential embedded features that would require bifurcation. The Company determined that the conversion options of the Convertible Notes, including the conversion feature of the $12.00 Conversion Price, was clearly and closely related to the debt host and did not require separate accounting. Additionally, this feature did not meet the definition of a derivative under ASC 815,Derivatives and Hedging, and as a result, did not require separate accounting as a derivative.

Credit Facility** **

On June 15, 2026, the Company and First Business Specialty Finance, LLC (“FBSF”) entered into a Loan and Security Agreement (the “Credit Agreement”) providing for an asset-based revolving credit facility in an aggregate maximum principal amount of up to $25,000 (the “Credit Facility”), secured by substantially all of the assets of the Company. The Credit Facility matures on March 31, 2028.

As of October 3, 2026 and January 3, 2026, the 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. On September 2, 2026, the Company entered into the First Amendment to the FBSF Loan and Security Agreement. This First Amendment provided for a separate revolving line of credit for capital expenditures (“Capex Revolver”) for an aggregated maximum principal amount of up to $1,500, and bears 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. As of October 3, 2026, the outstanding Capex Revolver balance was $0.

Loans drawn under the Credit Facility bear interest at a per annum rate equal to the One-Month SOFR plus an applicable margin of 3.25% per annum. In addition, if the sum of the Company’s cash balance and availability under the Credit Facility is less than$15,000, or if the Company’s availability under the Credit Facility is less than$7,500, then the Company must maintain a Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of not less than 1.1 to 1.0, tested quarterly on a trailing four-quarter basis.

In connection with entering into the Credit Facility with FBSF, the Company and JPMorgan Chase Bank (“JPMC”) terminated the Company’s revolving credit facility with JPMC. At the time it was terminated, there wasno balance outstanding on the JPMC revolving loan and there wasno termination fee.

Note 3 – Stockholders’ Equity and Share-Based Compensation

Reverse Stock Split

On May 11, 2026, at the 2026 Annual Meeting of Stockholders, the Company’s stockholders approved the implementation of a Reverse Stock Split to be effected at such time and date, as determined by the Company’s Board of Directors in its sole discretion and a form of certificate of amendment to the Company’s Second Amended and Restated Certificate of Incorporation (the “Certificate of Amendment”) to effect the Reverse Stock Split. On May 11, 2026, the Company’s Board of Directors then approved a 1-for-10 reverse stock split of the Company’s issued and outstanding common stock. On May 21, 2026, the Company filed the Certificate of Amendment with the Secretary of State of the State of Delaware to effectuate the Reverse Stock Split on May 26, 2026. As a result of the Reverse Stock Split, everyten shares of common stock outstanding immediately prior to effectiveness were combined and converted into one share of common stock. All share and per share information are presented after giving effect to the Reverse Stock Split retrospectively.

The reverse stock split did not change the authorized number of shares of the Company’s common stock.

Common Stock Issuance

On March 21, 2026, the Company entered into a Purchase Agreement with certain investors. The Company issued and sold an aggregate of 1,000 shares of common stock, par value $0.001 per share, at a purchase price of $8.00 per share, resulting in gross proceeds of $8,000.

Options and Restricted Stock Units

The Company had the following common stock option activity during the thirty-nine weeks ended October 3, 2026:

The following table summarizes the Company’s restricted stock unit ("RSU") and restricted stock award (“RSA”) activity for the thirty-nine weeks ended October 3, 2026, and details regarding the awards outstanding and exercisable as of October 3, 2026 (in thousands):

During the thirty-nine weeks ended October 3, 2026,86 RSUs and RSAs that vested were time-based.

For the thirteen and thirty-nine weeks ended October 3, 2026, we recorded compensation costs related to stock options, RSUs and RSAs of $1,120 and $3,559, respectively. For the thirteen and thirty-nine weeks ended September 27, 2025, we recorded compensation costs related to stock options, RSUs and RSAs of $2,472 and $8,119, respectively. As

of October 3, 2026, there was unrecognized compensation expense related to stock options, RSUs and RSAs of $3,775 that will be expensed through September 2030.

Note 4 – Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):

Periods were retroactively adjusted for the effect of the Reverse Stock Split (see“Note 3 - Stockholders’ Equity and Share-Based Compensation”* for further information).

For the thirteen and thirty-nine weeks ended October 3, 2026 and September 27, 2025, all outstanding potentially dilutive securities, including the Convertible Notes, have been excluded from the calculation of diluted net loss per share as the effect of including such securities and Convertible Notes would have been anti-dilutive.

Note 5 – Income Taxes

The Company is subject to U.S. federal income tax as well as income tax of foreign and state tax jurisdictions. The tax years 2021-2025 remain open to examination by the major taxing jurisdictions to which the Company is subject, except the Internal Revenue Service for which the tax years 2022-2025 remain open.

For the thirteen and thirty-nine weeks ended October 3, 2026, the effective tax rate for the Company 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 on the current period pre-tax loss.

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.

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 October 3, 2026, there was no material change from the fiscal year ended January 3, 2026 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.

Note 6 – Commitments and Contingencies

Leases

On February 12, 2026, the Torrance office lease expired. The Company entered into a sublease agreement for a new corporate office headquarters in Long Beach, California. This sublease commenced on March 1, 2026 with asixty-month lease term set to expire in February of 2031. The Company is obligated to pay approximately$46 in monthly base rent, which shall increase by 3% each year beginning on the second-year anniversary of the lease term. In accordance with ASC 842 –Leases (“ASC 842”), the Company recorded$2,391 in Right-of-use assets – operating, non-current, and$2,020 in Right-of-use obligation – operating, non-current, with$371 recorded in Right-of-use obligation – operating, current, on the consolidated balance sheet at the commencement of the lease.

Legal Matters

Asbestos**.** A wholly-owned subsidiary of the Company, Automotive Specialty Accessories and Parts, Inc. and its wholly-owned subsidiary Whitney Automotive Group, Inc. ("WAG"), are named defendants in several lawsuits involving claims for damages caused by installation of brakes during the late 1960’s and early 1970’s that contained asbestos. WAG marketed certain brakes, but did not manufacture any brakes. WAG maintains liability insurance coverage to protect its and the Company’s assets from losses arising from the litigation and coverage is provided on an occurrence rather than a claims made basis, and the Company is not expected to incur significant out-of-pocket costs in connection with this matter that would be material to its consolidated financial statements.

Ordinary course litigation. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business, including, for example, claims relating to product liability, workplace injuries, intellectual property rights, and employment matters. For example, a worker, who was directly employed by the Company’s third party labor contracting firm at the Company’s Grand Prairie, TX warehouse has filed a negligence claim in the Superior Court of the State of California, Los Angeles County, Central District relating to aworkplace injury from March 2021. In July 2024, the Court granted the Company’s motion for summary judgment. The plaintiff has filed an appeal and the Company intends to continue to defend itself vigorously, although there can be no assurance that there will not be some liability. As of the date hereof, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flow of the Company. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations.

IEEPA Tariffs. On February 20, 2026, the U.S. Supreme Court issued a ruling relating to tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). In April 2026, the U.S. Customs and Border Protection (“CBP”) released the Consolidated Administration and Processing Entries (“CAPE”) functionality to facilitate a phased approach to process IEEPA tariff refunds. As a result, the Company has been recovering the IEEPA tariffs and has received tariff refunds of approximately $4,900 as of October 3, 2026. For the thirty-nine weeks ended October 3, 2026, the Company recorded a $2,400 benefit for the tariffs associated with inventory already sold in cost of sales and recorded $90 in other income on the consolidated statements of operations, and the remaining refund received reduced the carrying value of inventory by approximately $2,400 on the consolidated balance sheet as of October 3, 2026. These refunds represent the recovery of duties the Company previously paid and recognized in cost of goods sold in prior periods. As tariff costs have been recovered, the Company has adjusted product pricing to reflect its lower landed costs and to remain competitive in the market, and may continue adjusting pricing in future periods as additional refunds are realized. Any remaining estimated tariff refunds to be realized will be recognized when the requirements under ASC 450,Contingencies, have been met.

Note 7 – Product Information

As described in Note 1 above, the Company’s products consist of replacement parts serving the wear and tear and body repair market, hard parts to serve the maintenance and repair market, and other parts and accessories. The following table summarizes the approximate distribution of the Company’s revenue by product type.

Note 8 – Segment Information

The Company operates as asingle reportable segment (referred to as “segment” herein), engaged in the distribution and selling of aftermarket auto part products (SKUs) to customers through the flagship website,www.carparts.com*,* mobile app, online marketplaces and its wholesale platform. No individual operating segments were identified by the Company.

The Company’s CODM is the Chief Executive Officer. The CODM assesses performance for the entire Company and decides how to allocate resources based on consolidated net loss that is reported on the consolidated statements of operations. The determination that the Company operates as a single segment is consistent with the nature of the operations and the consolidated financial information regularly reviewed by the CODM, for the purposes of evaluating key operating decisions, allocating resources, and planning and forecasting the consolidated operating budget. The measure of segment assets is reported on the consolidated balance sheets as total assets. The Company sells its products primarily to customers in the United States. The accounting policies of the segment are the same as those described in*“Note 1 – Basis of Presentation and Description of Company.”*

The CODM is regularly provided with significant segment expenses. The following table summarizes the Company’s segment net sales, significant segment expenses, and segment loss: