Cautionary Statement You should read the following discussion and analysis in conjunction with our consolidated financial statements and the related notes thereto contained in Part I, Item 1 of this report. Certain statements in this report, including statements regarding our business strategies, operations, financial condition, and prospects are forward-looking statements. Use of the words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” “will likely continue,” “will likely result” and similar expressions that contemplate future events may identify forward-looking statements. The information contained in this section is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the U.S. Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at http://www.sec.gov. The section entitled “Risk Factors” set forth in Part II, Item 1A of this report, and similar discussions in our other SEC filings, describe some of the important factors, risks and uncertainties that may affect our business, results of operations and financial condition and could cause actual results to differ materially from those expressed or implied by these or any other forward-looking statements made by us or on our behalf. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management’s opinions only as of the date thereof. We do not assume any obligation to revise or update forward-looking statements, unless required by law. Finally, our historic results should not be viewed as indicative of future performance. Overview We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and performance parts and accessories. We principally sell our products to individual consumers through our flagship website at www.carparts.com, our mobile app, and online marketplaces. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. Our corporate website is located at www.carparts.com/investor. The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites. With over 30 years of operating history, CarParts.com serves as a one-stop destination for vehicle repair, upgrade, and maintenance needs, delivering a seamless digital shopping experience guided by our mission of “Empowering Drivers Along Their Journey.” We continue to invest in modern technology, data, and design to power our digital platforms and improve ease of use across channels. In the fall of 2025, we launched Spark, our AI-powered shopping assistant, designed to help customers more easily discover products, navigate fitment, and complete purchases with greater confidence. We believe that we have a significant opportunity to become a preferred destination for automotive repair and maintenance by executing on our evolving strategy, which includes investing in technology, expanding product offerings and customer segments, and enhancing supply chain and logistics capabilities. ​ To support this strategy, we continue to enhance our fulfillment center footprint and productivity. In June 2024, we opened a new state-of-the-art fulfillment center in Las Vegas, Nevada. This semi-automated facility is designed to improve service levels, support faster delivery to the West Coast, reduce last-mile transportation costs, and expand product availability. With this expansion, we operate four distribution centers across the U.S., totaling over 1 million square feet of fulfillment space. ​ In tandem, we have refined our eCommerce experience and segmentation strategy to prioritize direct customer relationships and long-term engagement. In 2025, we launched the JC Whitney Performance Hub, featuring branded performance and upgrade products. We are also expanding our assortment in the European vehicle segment, having launched the CarParts Euro hub. ​ 16 Table of Contents In September 2025, we entered into a long-term commercial partnership with A-Premium, a global supplier of automotive mechanical parts, giving our customers access to approximately 150,000 additional SKUs. The partnership operates primarily on a dropship basis, expanding our product assortment without a corresponding increase in owned inventory or working capital. ​ These strategic initiatives are intended to strengthen brand loyalty and increase customer lifetime value, while positioning CarParts.com as a trusted destination for automotive parts and maintenance support. ​ Industry-wide trends that support our strategy and future growth include: 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. 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. 3.Growth of online sales. The U.S. Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach over $27 billion by 2028. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales. We believe that we are well positioned for the shift to online sales due to our history of being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces. Factors Affecting our Performance 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 in Part II, Item IA, of this report, and in Part I, Item IA, in our Annual Report on Form 10-K for the fiscal year ended January 3, 2026. ​ Executive Summary 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. Net sales decreased by 10.7% to $135,640 in the second quarter of 2026 compared to the second quarter of 2025. The decrease in net sales was primarily attributable to initiatives to improve profitability, including the rationalization of marketing spend through reduced investment in lower-margin customers and customers with lower lifetime values (“LTVs”). Gross profit decreased by 9.5% to $45,056 and gross margin increased 40 basis points to 33.2% compared to 32.8% in the second quarter of 2025. The increase in gross margin was primarily driven by product mix and favorable freight costs. 17 Table of Contents 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. Non-GAAP measures 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. We believe that these non-GAAP financial measures provide important supplemental information to management and investors. We also believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business and results of operations. Management uses Adjusted EBITDA as one measure of our operating performance because it assists in comparing our operating performance on a consistent basis by removing the impact of share-based compensation expense as well as other items that we do not believe are representative of our ongoing operating performance. Internally, this non-GAAP measure is also used by management for planning purposes, including the preparation of internal budgets; for allocating resources to enhance financial performance; and for evaluating the effectiveness of operational strategies. We also believe that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the ongoing operations of companies in our industry. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review our consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. In addition, we expect to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ July 4, 2026 ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ June 28, 2025 Net loss ​ $ (3,222) ​ $ (12,711) ​ $ (5,162) ​ $ (27,994) Depreciation & amortization ​ 4,267 ​ 4,978 ​ 8,532 ​ 10,460 Amortization of intangible assets ​ 8 ​ 14 ​ 16 ​ 27 Interest expense, net ​ 116 ​ 204 ​ 395 ​ 201 Income tax provision (benefit) ​ 7 ​ 90 ​ (1,384) ​ 230 EBITDA ​ $ 1,176 ​ $ (7,425) ​ $ 2,397 ​ $ (17,076) Stock compensation expense ​ $ 587 ​ $ 2,273 ​ $ 2,243 ​ $ 5,145 Workforce transition costs(1) ​ ​ — ​ ​ 1,657 ​ ​ — ​ ​ 1,657 Gain on sale of subsidiary(2) ​ ​ — ​ ​ — ​ ​ (2,292) ​ ​ — Strategic alternatives exploration costs(3) ​ ​ — ​ ​ 379 ​ ​ — ​ ​ 929 Adjusted EBITDA ​ $ 1,763 ​ $ (3,116) ​ $ 2,348 ​ $ (9,345) (1) We incurred workforce transition costs, primarily related to severance, mainly as part of our workforce reductions during 2025. (2) On January 27, 2026, the Philippines subsidiary was deconsolidated from our consolidated financial statements and a gain on sale of subsidiary was recorded in operating expense in the consolidated statements of operations. (3) We incurred certain costs, primarily legal and advisor costs, attributable to our exploration of strategic alternatives during 2025. 18 Table of Contents ​ Results of Operations The following table sets forth selected statements of operations data for the periods indicated, expressed as a percentage of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ Net sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales 66.8 67.2 67.1 67.6 Gross profit 33.2 32.8 32.9 32.4 Operating expense 35.6 40.9 35.2 41.7 Loss from operations (2.4) (8.1) (2.3) (9.3) Other income (expense): ​ ​ ​ ​ Other income, net ​ 0.3 ​ 0.1 ​ 0.2 ​ 0.1 ​ Interest expense (0.3) (0.3) (0.3) (0.2) Total other income (expense), net 0.0 (0.2) (0.1) (0.1) Loss before income taxes (2.4) (8.3) (2.4) (9.3) Income tax provision (benefit) 0.0 0.1 (0.5) 0.1 Net loss (2.4) % (8.4) % (1.9) % (9.4) % ​ Thirteen and Twenty-Six Weeks Ended July 4, 2026 Compared to the Thirteen and Twenty-Six Weeks Ended June 28, 2025 Net Sales and Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ ​ (in thousands) ​ (in thousands) ​ Net sales ​ $ 135,640 ​ $ 151,949 ​ $ 267,601 ​ $ 299,327 ​ Cost of sales ​ 90,584 ​ 102,170 ​ 179,603 ​ 202,201 ​ Gross profit ​ $ 45,056 ​ $ 49,779 ​ $ 87,998 ​ $ 97,126 ​ Gross margin ​ 33.2 % 32.8 % 32.9 % 32.4 % ​ 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. 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. Operating Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ ​ ​ ​ July 4, 2026 ​ ​ ​ ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ ​ (in thousands) ​ (in thousands) Operating expense ​ $ 48,278 ​ ​ $ 62,196 ​ $ 94,273 ​ $ 124,689 ​ Percent of net sales ​ 35.6 % ​ 40.9 % 35.2 % 41.7 % ​ 19 Table of Contents 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. Total Other Income (Expense), Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ ​ (in thousands) ​ (in thousands) ​ Total other income (expense), net ​ $ 7 ​ $ (204) ​ $ (271) ​ $ (201) ​ Percent of net sales ​ 0.0 % (0.1) % (0.1) % (0.1) % ​ 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. Income Tax (Benefit) Provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ Twenty-Six Weeks Ended ​ ​ ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 ​ ​ ​ ​ (in thousands) ​ (in thousands) ​ Income tax (benefit) provision ​ $ 7 ​ $ 90 ​ $ (1,384) ​ $ 230 ​ Percent of net sales ​ 0.0 % 0.1 % (0.5) % 0.1 % ​ 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. 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. 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. ​ Foreign Currency The impact of foreign currency is mainly related to sales of our products in Canada and was not material to our operations. On January 27, 2026, we sold 100% of the issued and outstanding shares of our Philippines subsidiary to a third party. As a result, the Philippines subsidiary was deconsolidated from our consolidated financial statements. 20 Table of Contents Liquidity and Capital Resources Sources of Liquidity 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). Working Capital 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. Cash Flows 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): ​ ​ ​ ​ ​ ​ ​ ​ Twenty-Six Weeks Ended ​ ​ ​ ​ July 4, 2026 ​ ​ ​ June 28, 2025 Net cash provided by (used in) operating activities ​ $ 10,643 ​ $ (20,060) Net cash used in investing activities ​ (4,105) ​ (4,408) Net cash provided by financing activities ​ 6,406 ​ 7,845 Effect of exchange rate changes on cash ​ (594) ​ — Net change in cash and cash equivalents ​ $ 12,350 ​ $ (16,623) ​ Operating Activities 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. Investing Activities 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. Financing Activities 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. 21 Table of Contents Debt and Available Borrowing Resources 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. Convertible Notes Payable 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. Credit Facility 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. ​ 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. ​ The Credit Agreement contains customary negative covenants restricting our ability to create, incur, assume or become liable for indebtedness; make certain investments; dispose of assets; pay dividends or repurchase our stock; create, incur or assume liens; consummate mergers or acquisitions; enter into affiliate transactions; or amend our organizational documents. The Credit Agreement also contains customary representations and warranties, affirmative financial covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-acceleration to other debt, and material adverse changes in our business. If an event of default occurs, FBSF will be entitled to take various actions, including the acceleration of all amounts due under the Credit Facility and all actions permitted to be taken by a secured creditor. In addition, if the sum of our cash balance and availability under the Credit Facility is less than $15,000, or if our availability under the Credit Facility is less than $7,500, then we 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. 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. In connection with entering into the Credit Facility with FBSF, we and JPMC terminated our revolving credit facility with JPMC. At the time it was terminated, there was no balance outstanding on the JPMC revolving loan and there was no termination fee. Funding Requirements 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 22 Table of Contents 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. Seasonality We believe our business is somewhat seasonal in nature. It includes many categories, geographies, and channels which may experience seasonality from time to time based on various external factors. Additionally, seasonality may affect our product mix. These historical seasonality trends could continue, and such trends may have a material impact on our financial condition and results of operations in subsequent periods. Critical Accounting Policies and Estimates Our unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses, as well as the disclosure of contingent assets and liabilities and other related disclosures. On an ongoing basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition, uncollectible receivables, inventory, valuation of deferred tax assets and liabilities, intangible and other long-lived assets and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of our assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and we include any revisions to our estimates in our results for the period in which the actual amounts become known. There were no significant changes to our critical accounting policies during the thirteen weeks ended July 4, 2026. We believe our critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our historical consolidated financial condition and results of operations (for further detail, refer to our Annual Report on Form 10-K for the fiscal year ended January 3, 2026 that we filed with the SEC on March 5, 2026): ● Valuation of Inventory – Inventory Reserve ● Impairment of Long-Lived Assets ​