Bob's Discount Furniture, Inc.

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands, except share and per share amounts)

Condensed Consolidated Statements of Operations and Comprehensive Income

(Unaudited, amounts in thousands, except per share amounts)

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited, amounts in thousands, except share amounts)

Bob's Discount Furniture, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (cont.)

(Unaudited, amounts in thousands, except share amounts)

Condensed Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

1. Nature of Business

Bob’s Discount Furniture, Inc. is a Delaware corporation and omni-channel retailer of quality home furnishings offering a wide variety of merchandise assortments across several categories including upholstery, case goods, bedding and other. This assortment of merchandise can be purchased through both retail and eCommerce sales channels. As used in these Condensed Consolidated Financial Statements, “the Company” refers to Bob's Discount Furniture, Inc. and its subsidiaries. At September 27, 2026, the Company operated 229 stores in 28 states across the United States.

On February 5, 2026, the Company completed an initial public offering (the “IPO”), pursuant to which an aggregate of 19,450,000 shares of common stock were sold at a price of $17.00 per share. The Company received aggregate net proceeds of $304.2 million after deducting underwriting discounts and commissions and other offering expenses. The Company used the net proceeds from the IPO, cash on hand and borrowings under its Asset Based Revolving Credit Facility (“Revolving Credit Facility”) to repay the amounts outstanding under its $350.0 million Term Loan. Refer to “Note 3, Long-Term Debt” for further information on the Term Loan and Revolving Credit Facility.

2. Summary of Significant Accounting Policies

Basis of Presentation

These unaudited condensed consolidated financial statements include the accounts and those of the Company's wholly-owned subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements.

In the opinion of management, these condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company's financial position, results of operations and cash flows for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed in this report. The results reported in these condensed consolidated financial statements should not necessarily be taken as indicative of the results that may be expected for the entire fiscal year. These condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements as of and for the fiscal year ended December 28, 2025.

The Company's fiscal quarters follow a 13-week convention (“three-month fiscal period”), with each quarter ending on a Sunday. The third quarters for 2026 and 2025 ended on September 27, 2026 and September 28, 2025, respectively.

Estimates and Assumptions

The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Areas in which significant estimates have been made include, but are not limited to, leased assets and the Company's evaluation of retail stores for impairment. Actual results could differ from the estimates made and such differences could be material to the condensed consolidated financial statements.

Tariff Refunds

In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized, and subsequent legal proceedings have directed U.S. Customs and Border Protection (“CBP”) to process refunds of such tariffs. The Company evaluates potential tariff refunds as gain contingencies. Accordingly, no amounts are recognized in the condensed consolidated financial statements until the refund becomes realized or realizable, which the Company defines as the earlier of CBP approval of the refund claim or receipt of cash. When recognized, tariff refunds will be recorded as a reduction of cost of sales for inventory previously sold or as a reduction to inventory for products remaining on hand. The portion of refunds received that represent interest will be recorded as interest income. During the nine-month fiscal period ended September 27, 2026, the Company received approval from the CBP for $46.4 million in IEEPA tariff refund claims. Of this amount, the Company recognized $4.9 million and $42.8 million of tariff refunds for claims as a reduction of costs of sales, related to inventory previously sold, in the three and nine-month fiscal periods ended September 27, 2026, respectively, and $1.5 million in interest income in the nine-month fiscal period ended September 27, 2026 on the Company's condensed consolidated statement of operations and comprehensive income. Interest income related to the IEEPA tariff refund claims wasnot material for the three-month fiscal period ended September 27, 2026.

Recently Issued Accounting Standards

Recent Accounting Standards Not Yet Adopted

In December 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270) - Narrow Scope Improvements. The standard update clarifies interim disclosure requirements and the applicability of Topic 270. This ASU adds a comprehensive list of required interim disclosures, clarifies the form and content of interim financial statements, and requires disclosure of events since the end of the previous annual reporting period that materially affect the entity. This update will be effective for interim periods within fiscal years beginning after December 15, 2027, and can be applied either prospectively or retrospectively. Early adoption is permitted. The Company does not expect this update to have a material impact on its condensed consolidated financial statements.

In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities. The standard update establishes the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. This update will be effective for fiscal years beginning after December 15, 2028, including interim periods within those fiscal years, and can be applied modified retrospectively or retrospectively. Early adoption is permitted. The impact that this standard update will have on the Company is dependent on future government grants.

In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software. The standard update eliminates accounting consideration of software project development stages that exists under current U.S. GAAP. Capitalization of software development costs would begin when (1) management has authorized and committed to funding a software development project and (2) it is probable that the software development project will be completed and the software will be used to perform its intended function. This update will be effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, and can be applied prospectively, using a modified transition based on status of the project and whether software costs were capitalized before the date of adoption, or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact that this standard update will have on the Company’s consolidated financial statements when adopted.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses. The standard update requires disclosure of additional information about specific expense categories to provide investors with a better understanding of an entity’s cost structure and forecasting cash flows. The new requirements will be effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, and can be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact on its disclosures from adopting this new accounting standard.

3. Long-Term Debt

Long-term debt obligations are summarized as follows:

Term Loan

On October 31, 2025, the Company entered into a $350.0 million Term Loan (the “Term Loan”) having a maturity date of October 31, 2032 and bearing interest of 4.0% plus the Secured Overnight Financing Rate (“SOFR”), with a SOFR floor of 0%. Contracted payments were 1% of the Term Loan annually, with 0.25% paid quarterly beginning in June 2026. The Company was required to prepay the Term Loan with any proceeds received from an IPO of the Company’s common shares. In the nine-month fiscal period ended September 27, 2026, the Company repaid the Term Loan using net proceeds from the IPO completed in February 2026, cash on hand and borrowings under the Revolving Credit Facility. Refer to “Note 1, Nature of Business” for further information on the IPO.

Debt Issuance Costs

In connection with the Term Loan, the Company incurred $11.0 million of financing costs, which were deferred as a reduction to the carrying value of the long-term debt obligation. The amounts deferred were amortized over the life of the Term Loan using the effective interest method and recognized as interest expense in the Company’s condensed consolidated statements of operations and comprehensive income. In connection with the repayment of the Term Loan, the Company recognized an acceleration of amortization of debt issuance costs of $10.7 million in the nine-month fiscal period ended September 27, 2026.

Asset Based Revolving Credit Facility

On April 29, 2026, the Company amended its Revolving Credit Facility, increasing the maximum availability from $125.0 million to $200.0 million and extending the maturity date to April 2031. The availability of credit at any given time is constrained by the terms and conditions of the facility, including the amount of collateral available and a borrowing base formula based on several factors including the value of eligible qualified cash, accounts receivable and inventory. In connection with the Revolving Credit Facility, the Company has entered into a letter of credit of $0.6 million issued on the Company's behalf by a financial institution related to the guarantee of future payment on certain lease agreements. Borrowing capacity under the Revolving Credit Facility was $178.0 million and $124.4 million at September 27, 2026 and December 28, 2025, respectively. In connection with the amendment, the Company incurred $0.6 million in financing costs that will be amortized over the term of the Revolving Credit Facility using the effective interest method. Amortization of debt issuance costs associated with the Revolving Credit Facility was not material for the three and nine-month fiscal periods ended September 27, 2026 and September 28, 2025.

4. Fair Value Measurements

The following table summarizes, by level within the fair value hierarchy, the financial assets and liabilities that are accounted for at fair value on a recurring basis at September 27, 2026, and December 28, 2025.

There were no Level 3-classified assets or liabilities at September 27, 2026 or December 28, 2025.

The Company did not record any impairment charges or expected credit losses on assets required to be measured at fair value on a non-recurring basis during the three and nine-month fiscal periods ended September 27, 2026 and September 28, 2025.

5. Related Party Transactions

Leases

The Company had no related party lease activity in the nine-month fiscal period ended September 27, 2026. In the three and nine-month fiscal periods ended September 28, 2025, the Company leased four retail stores from limited liability companies of which Mr. Bob Kaufman, the Company's founder and a member of the Board of Directors from 2014 until his resignation in December 2025, maintained ownership. Total rent expense associated with these related parties was $0.6 million and $1.9 million for the three and nine-month fiscal periods ended September 28, 2025, respectively.

Management Fees

Upon consummation of the Company’s IPO, the Company's advisory agreement with Bain Capital terminated. In connection with the termination, the Company recognized a fee of $2.0 million in the nine-month fiscal period ended September 27, 2026. In the three and nine-month fiscal periods ended September 28, 2025, the Company recognized management fees and expense reimbursement to entities affiliated with Bain Capital in connection with the advisory agreement totaling $0.5 million and $1.5 million, respectively. The termination and management fees are classified as selling, general and administrative ("SG&A") expenses in the Company's condensed consolidated statements of operations and comprehensive income.

Customer Service Fees

The Company recognized fees for the outsourcing of customer service assistance to an entity affiliated with Bain Capital totaling $2.1 million and $2.0 million for the three-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively, and $5.9 million for both the nine-month fiscal periods ended September 27, 2026 and September 28, 2025. These fees are classified as SG&A in the Company's condensed consolidated statements of operations and comprehensive income. The Company had amounts owed associated with these fees of $0.6 million as of both September 27, 2026 and December 28, 2025, which were included in accounts payable on the Company's condensed consolidated balance sheet.

6. Product Warranties

Product Warranties

The following table summarizes the Company's activity for product warranty obligations:

7. Leases

The Company recognizes leases in its condensed consolidated balance sheets as a right-of-use ("ROU") asset and a lease liability. The Company has operating leases for its retail stores, distribution centers, corporate headquarters, and certain equipment under operating and finance leases that expire at various dates through 2041. Some of the leases include options to extend the lease term for up to 20 years. The Company's leases do not have any residual value guarantees or any restrictions or covenants imposed by the leases.

At September 27, 2026, the Company had 10 non-cancellable leases for retail stores andone non-cancellable lease for a regional distribution center of which none had commenced. The initial terms of these leases range fromten tofifteen years with options to extend for up to an additional twenty years. Upon lease commencement, the ROU asset and lease liability will be determined and recognized in the Company's condensed consolidated balance sheets. Lease liabilities at September 27, 2026 exclude undiscounted future lease payments of approximately $213.2 million associated with these leases.

The following table summarizes finance and operating lease assets and liabilities recognized in the Company's condensed consolidated balance sheets at September 27, 2026, and December 28, 2025:

The following table summarizes lease expense recognized in the Company's condensed consolidated statements of operations and comprehensive income for thethree and nine-month fiscal periods ended September 27, 2026 and September 28, 2025:

Supplemental cash flow information related to leases is as follows:

The weighted average remaining lease term and weighted average discount rate for finance and operating leases at September 27, 2026, and September 28, 2025, were:

The following table summarizes the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancellable leases with terms of more than one year that are recognized in the Company's condensed consolidated balance sheet at September 27, 2026:

8. Commitments and Contingencies

Contingencies

The Company is a defendant in lawsuits arising in the ordinary course of business. Such matters are subject to many uncertainties and the outcomes of individual litigated matters are not predictable with assurance. While the Company is unable to predict the outcome, based on information currently available, the Company does not believe that resolution of any of these matters, individually or in the aggregate, will have a material adverse effect on the Company's condensed consolidated financial position, results of operations or cash flows.

Government Grants

In 2016, the State of Connecticut Department of Economic and Community Development (“DECD”) agreed to provide the Company with up to $20.7 million in subsidies comprised primarily of a $1.7 million grant, up to $11.0 million of tax credits and a $7.0 million forgivable loan in consideration of certain minimum investments that the Company agreed to make in Connecticut. The grant, which has no continuing conditions, was received in prior years, and no material benefit has been or is expected to be realized from the tax credits. The terms of the forgivable loan are described below.

DECD Loan Forgiveness Program

Under an agreement dated December 14, 2016, as most recently amended on December 3, 2025, the DECD provided a direct forgivable loan of $7.0 million which bears interest at an annual rate of 2%. The funds were specifically designated for use in the purchase of leasehold improvements, machinery and equipment, and furniture and fixtures in conjunction with the construction of the Company's corporate headquarters. Monthly interest-only payments commenced at the time the loan was granted with principal payments deferred until January 1, 2028. The final payment of principal and interest is due on September 1, 2029, if not sooner paid or forgiven. The Company will be entitled to prorated loan forgiveness so long as the Company has achieved at least 50% of its full-time Connecticut jobs creation requirement fortwenty-four consecutive months, of which it can choose thetwenty-four consecutive months with the highest average full-time employment in Connecticut during the period from December 14, 2016, through October 31, 2027, does not relocate its Manchester, Connecticut corporate headquarters through December 14, 2038 and does not relocate its Connecticut distribution center operations outside of the State of Connecticut through December 3, 2035. The Company believes it will meet all the requirements for loan forgiveness and accordingly has not recognized the forgivable loan in the Company’s condensed consolidated balance sheets. As the Company believes it will meet all requirements for loan forgiveness, the proceeds from the loan offset the carrying cost of the $7.9 million of assets generated in Connecticut associated with this program included in prepaids and other current assets on the Company's condensed consolidated balance sheets.

The Company assesses the likelihood of the conditions attached to the loan each reporting period. If the Company determines that it is no longer probable it will meet the conditions outlined in the DECD agreement, the change will be accounted for as a change in estimate.

Letters of Credit

The Company has entered into a letter of credit issued on the Company's behalf by a financial institution related to the guarantee of collateral for our workers' compensation and automobile liability insurance contracts. There was $10.2 million and $9.4 million of outstanding letters of credit at September 27, 2026 and December 28, 2025, respectively, related to these insurance programs, which were included in restricted cash on the Company's condensed consolidated balance sheets.

9. Net Income Per Share

Basic and diluted net income per share were as follows:

In the three-month fiscal periods ended September 27, 2026 and September 28, 2025,449,481 and 1,634,661 stock-based awards, respectively, were excluded from the diluted net income per share calculation because their inclusion would have been anti-dilutive. In the nine-month fiscal periods ended September 27, 2026 and September 28, 2025,414,651 and 1,667,745 stock-based awards, respectively, were excluded from the diluted net income per share calculation because their inclusion would have been anti-dilutive.

10. Revenue and Segment Information

The following table details revenue by source and significant segment expenses for the Company'sone reportable segment:

(1)Cost of sales excludes depreciation and amortization of $4.6 million and $3.9 million for the three-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively, and $12.6 million and $11.2 million for the nine-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively.

(2) Pre-opening expenses exclude advertising expenses of $2.7 million and $2.3 million for the three-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively, and $6.2 million and $5.9 million for the nine-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively.

(3)Other segment items include net loss (gain) on disposal of fixed assets, restructuring charges, insurance recoveries, stock-based compensation expense, and other items.

(4)Interest expense in the nine-month fiscal period ended September 27, 2026 includes an acceleration of amortization of debt issuance costs of $10.7 million in connection with the repayment of the $350.0 million Term Loan.

Contract Liabilities

The Company defers revenue when cash payments are received in advance of performance for unsatisfied gift cards and customer deposit obligations. Gift card liabilities included in accrued expenses in the Company's condensed consolidated balance sheets were $7.2 million and $7.5 million at September 27, 2026 and December 28, 2025, respectively. Customer deposit liabilities were $83.3 million and $70.7 million at September 27, 2026 and December 28, 2025, respectively. The Company believes the majority of the contract liabilities outstanding at September 27, 2026 will be recognized as revenue within fiscal year 2026 as the performance obligations are satisfied.

The Company recognizes gift card and customer deposit breakage proportional to historical gift card and customer deposit redemption rates. Gift card and customer deposit breakage recognized as revenue were $0.5 million in both the three-month fiscal periods ended September 27, 2026 and September 28, 2025 and $1.4 million and $1.3 million in the nine-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively.

11. Stock-based Compensation

Stock Compensation Expense

The Company recognized stock-based compensation expense of $0.8 million and $1.0 million in the three-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively, and $2.4 million and $2.8 million in the nine-month fiscal periods ended September 27, 2026 and September 28, 2025, respectively. On September 27, 2026, the total unrecognized compensation cost related to non-vested service-based stock awards granted under the Company’s 2026 Equity Incentive Plan was $8.0 million which will be recognized over a weighted average period of 3.2 years.

Stock Options Outstanding

The following table summarizes the stock option activity under the Company’s 2026 Equity Incentive Plan for the nine-month fiscal period ended September 27, 2026:

The aggregate intrinsic value of stock options vested during the nine-month fiscal periods ended September 27, 2026 and September 28, 2025 was $6.4 million, and $1.8 million, respectively. The aggregate intrinsic value of the options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. The tax benefit for stock option exercises recognized during three-month fiscal periods ended September 27, 2026 and September 28, 2025 was $0.1 million for both periods and during the nine-month fiscal periods ended September 27, 2026 and September 28, 2025 was $1.7 million and $1.1 million, respectively.

Fair Value

The following table summarizes the weighted-average grant date fair value of stock options granted during the period and the assumptions that were used in determining the grant date fair value of each award granted:

12. Income Taxes

The following table summarizes the effective income tax rate for the three and nine-month fiscal periods ended September 27, 2026 and September 28, 2025:

The effective income tax rate represents the combined federal and state tax effects attributable to pre-tax earnings for the period. The effective income tax rate for the three-month fiscal period ended September 27, 2026 decreased when compared to the corresponding rate in the prior year period, primarily driven by an increase in research and development tax credits, partially offset by an increase in non-deductible executive compensation expense resulting from the Company's transition to a publicly traded company in 2026 and the application of the executive compensation deduction limitations under applicable U.S. tax law.

The effective income tax rate for the nine-month fiscal period ended September 27, 2026 remained flat when compared to the corresponding rate in the prior year period, primarily driven by an increase in research and development tax credits and a larger excess tax benefit from stock-based compensation, offset by an increase in non-deductible executive compensation as discussed above.