Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 05, 2021 | Jun. 30, 2020 | |
Document Information Line Items | |||
Entity Registrant Name | PARTS iD, INC. | ||
Trading Symbol | ID | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 32,873,457 | ||
Entity Public Float | $ 42,046,790 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001698113 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Ex Transition Period | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-38296 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 81-3674868 | ||
Entity Address, Address Line One | 1 Corporate Drive | ||
Entity Address, Address Line Two | Suite C | ||
Entity Address, City or Town | Cranbury | ||
Entity Address, State or Province | NJ | ||
Entity Address, Postal Zip Code | 08512 | ||
City Area Code | 609 | ||
Local Phone Number | 642-4700 | ||
Title of 12(b) Security | Class A Common Stock, par value $0.0001 per share | ||
Security Exchange Name | NYSE | ||
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash | $ 22,202,706 | $ 13,618,835 |
Accounts receivable | 2,236,127 | 1,168,260 |
Inventory | 4,856,265 | 3,399,376 |
Prepaid expenses and other current assets | 5,811,332 | 2,703,882 |
Total current assets | 35,106,430 | 20,890,353 |
Property and equipment, net | 11,470,360 | 11,020,781 |
Intangible assets | 237,752 | 222,483 |
Deferred tax assets | 1,099,800 | 263,300 |
Other assets | 267,707 | 267,707 |
Total assets | 48,182,049 | 32,664,624 |
Current liabilities | ||
Accounts payable | 35,631,913 | 25,213,657 |
Customer deposits | 16,185,648 | 8,599,914 |
Accrued expenses | 5,468,570 | 4,950,406 |
Other current liabilities | 3,592,782 | 2,867,219 |
Notes payable, current portion | 19,706 | 24,627 |
Total current liabilities | 60,898,619 | 41,655,823 |
Notes payable, net of current portion | 15,971 | |
Total liabilities | 60,898,619 | 41,671,794 |
COMMITMENTS AND CONTINGENCIES (Note 6) | ||
SHAREHOLDERS’ DEFICIT | ||
Preferred stock, $0.0001 par value per share; 1,000,000 shares authorized and 0 issued and outstanding | ||
Additional paid in capital | 4,998,505 | |
Accumulated deficit | (12,719,857) | (14,008,170) |
Total shareholders’ deficit | (12,716,570) | (9,007,170) |
Total Liabilities and Shareholder’s deficit | 48,182,049 | 32,664,624 |
Class F Common Stock | ||
SHAREHOLDERS’ DEFICIT | ||
Common stock value | ||
Total shareholders’ deficit | ||
Class A Common Stock | ||
SHAREHOLDERS’ DEFICIT | ||
Common stock value | 3,287 | 2,495 |
Total shareholders’ deficit | $ 3,287 | $ 2,495 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Preferred stock par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Class F Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Class A Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 32,873,457 | 24,950,958 |
Common stock, shares outstanding | 32,873,457 | 24,950,958 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Financial Position [Abstract] | ||
Net revenue | $ 400,832,371 | $ 287,820,277 |
Cost of goods sold | 315,027,012 | 226,603,934 |
Gross profit | 85,805,359 | 61,216,343 |
Operating expenses: | ||
Advertising | 33,359,299 | 20,986,879 |
Selling, general and administrative | 44,266,151 | 35,147,259 |
Depreciation | 6,859,237 | 5,847,413 |
Total operating expenses | 84,484,687 | 61,981,551 |
Income (loss) from operations | 1,320,672 | (765,208) |
Interest expense | 8,395 | 34,534 |
Income (loss) before income taxes | 1,312,277 | (799,742) |
Income taxes (benefits) | (801,552) | (143,902) |
Net income (loss) | 2,113,829 | (655,840) |
Net income (loss) | 2,113,829 | (655,840) |
Less: Preferred stocks dividends (including $15 million deemed dividends on redemption in 2020) | 15,442,697 | 500,000 |
Loss available to common shareholders | $ (13,328,868) | $ (1,155,840) |
Loss per common share | ||
Basic and diluted loss per share (in Dollars per share) | $ (0.52) | $ (0.05) |
Weighted average number of shares (basic and diluted) (in Shares) | 25,860,097 | 24,950,958 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parentheticals) | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Statement of Financial Position [Abstract] | |
Deemed dividends on redemption | $ 15,000,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Deficit - USD ($) | Class A Common Stock | Class F Common Stock | Preferred Stock | Additional Paid In Capital | Accumulated Deficit Amount | Total |
Balance at Dec. 31, 2018 | $ 2,495 | $ 4,998,505 | $ (12,852,330) | $ (7,851,330) | ||
Balance (in Shares) at Dec. 31, 2018 | 24,950,958 | |||||
Preferred stock dividend | (500,000) | (500,000) | ||||
Net income | (655,840) | (655,840) | ||||
Balance at Dec. 31, 2019 | $ 2,495 | 4,998,505 | (14,008,170) | (9,007,170) | ||
Balance (in Shares) at Dec. 31, 2019 | 24,950,958 | |||||
Preferred stock dividend | (442,697) | (442,697) | ||||
Acquisition of Legacy Acquisition Corp. | $ 536 | 238,951 | 239,487 | |||
Acquisition of Legacy Acquisition Corp. (in Shares) | 5,362,152 | |||||
Redemption of warrant in connection with acquisition of Legacy Acquisition Corp. | $ 256 | (5,237,456) | (382,819) | (5,620,019) | ||
Redemption of warrant in connection with acquisition of Legacy Acquisition Corp. (in Shares) | 2,560,347 | |||||
Net income | 2,113,829 | 2,113,829 | ||||
Balance at Dec. 31, 2020 | $ 3,287 | $ (12,719,857) | $ (12,716,570) | |||
Balance (in Shares) at Dec. 31, 2020 | 32,873,457 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash Flows from Operating Activities: | ||
Net income (loss) | $ 2,113,829 | $ (655,840) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation | 6,859,237 | 5,847,413 |
Deferred income tax | (836,500) | (143,044) |
Gain sale of fixed assets | (3,228) | (500) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,067,867) | (56,549) |
Inventory | (1,456,889) | (631,233) |
Prepaid expenses and other current assets | (2,777,595) | (115,471) |
Accounts payable | 10,418,256 | 79,901 |
Customer deposits | 7,585,734 | (756,598) |
Accrued expenses | 458,002 | 451,924 |
Other current liabilities | 695,613 | 248,994 |
Net cash provided by operating activities | 21,988,592 | 4,268,997 |
Cash Flows on Investing Activities: | ||
Proceeds from sale of fixed assets | 36,000 | 500 |
Purchase of property and equipment | (58,544) | (85,345) |
Purchase of intangible assets | (15,269) | (5,570) |
Website and software development costs | (7,283,044) | (7,108,461) |
Net cash used in investing activities | (7,320,857) | (7,198,876) |
Cash Flows from Financing Activities: | ||
Principal paid on notes payable | (20,892) | (20,386) |
Payments of preferred stock dividends | (442,697) | (500,000) |
Cash payments for cancellation of Legacy warrants | (5,620,275) | |
Net cash used in financing activities | (6,083,864) | (520,386) |
Net change in Cash | 8,583,871 | (3,450,265) |
Cash, beginning of year | 13,618,835 | 17,069,100 |
Cash, end of year | 22,202,706 | 13,618,835 |
Supplemental disclosure of cash flows information: | ||
Cash paid for interest | 7,684 | 6,130 |
Cash paid for income taxes | $ 3,200 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Note 1 – Organization and Description of Business Description of Business PARTS iD, Inc., a Delaware corporation (the “Company,” “PARTS iD,” “we” or “us”), is a technology-driven, digital commerce company focused on creating custom infrastructure and unique user experiences within niche markets. PARTS iD has a product portfolio comprising more than 17 million SKUs, an end-to-end digital commerce platform for both digital commerce and fulfillment, and a virtual shipping network comprising over 2,500 locations, nearly 5,000 active brands, and machine-learning algorithms for complex fitment industries such as vehicle parts and accessories. Management believes that the Company is a market leader and proven brand-builder, fueled by its commitment to delivering an engaging shopping experience; comprehensive, accurate and varied product offerings; and continued digital commerce innovation. Merger between Legacy Acquisition Corp. and Onyx Enterprises Int’l, Corp. On November 20, 2020, Legacy Acquisition Corp., a special purpose acquisition company and publicly traded “shell company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) (“Legacy”), and Onyx Enterprises Int’l, Corp., a New Jersey corporation (“Onyx”), consummated a business combination (the “Business Combination”) pursuant to that Business Combination Agreement, dated as of September 18, 2020 (the “Business Combination Agreement”), by and among Legacy, Excel Merger Sub I, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Legacy and directly owned subsidiary of Merger Sub 2 as defined below (“Merger Sub 1”), Excel Merger Sub II, LLC, a Delaware limited liability company and direct wholly owned subsidiary of Legacy (“Merger Sub 2”), Onyx, and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the stockholder representative, pursuant to which: (a) Merger Sub 1 merged with and into Onyx, with Onyx surviving as a direct wholly-owned subsidiary of Merger Sub 2, (b) Onyx merged with and into Merger Sub 2, with Merger Sub 2 surviving as direct wholly-owned subsidiary of Legacy, and (c) Legacy changed its name from Legacy Acquisition Corp. to PARTS iD, Inc. and Merger Sub 2 changed its name to PARTS iD, LLC. At the effective time of the Business Combination, Legacy issued 24,950,958 shares of Class A common stock to Onyx shareholders and all outstanding shares of Legacy Class F common stock and warrants for Legacy Class A common stock were settled through a combination of cash, redemptions, cancellation and conversions into Class A common stock of the Company. In addition, all outstanding Onyx preferred shares were redeemed and settled through a combination of cash and issuance of Class A common stock of the Company. The Business Combination was treated as a recapitalization and reverse acquisition for financial reporting purposes. Onyx is considered the acquirer for accounting purposes, and Legacy’s historical financial statements before the Business Combination have been replaced with the historical financial statements of Onyx in this and future filings with the SEC. Accordingly, the operations of the Company are primarily comprised of the historical operations of Onyx and the financial position and result of operations of Legacy have been incorporated into the Company’s consolidated financial statements beginning on November 20, 2020, the effective date of the Business Combination. Similarly, the outstanding number of common shares of Onyx, its par value and additional paid in capital (APIC) as of December 31, 2019 were adjusted to reflect the exchange of shares and its par value of the legal acquirer, Legacy. COVID-19 Global Pandemic The global spread of COVID-19 and related measures to contain its spread (such as government-mandated business closures and shelter in-place guidelines) have created significant volatility, uncertainty and economic disruption. Although the COVID-19 pandemic and related measures to contain its spread have not adversely affected the Company’s results of operations to date, they have adversely affected certain components of the Company’s business, including by increasing cancellations and shipping times. The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations, financial condition and liquidity in the future will depend on numerous evolving factors that it cannot predict, including the duration and scope of the pandemic; any resurgence of the pandemic; governmental, business and individuals’ actions that have been and continue to be taken in response to the pandemic; the impact of the pandemic on national and global economic activity, unemployment levels and financial markets; the potential for shipping difficulties, including slowed deliveries to customers; and the ability of consumers to pay for products. The COVID-19 pandemic has generally resulted in a decrease in consumer spending, which could have an adverse impact on the Company through reduced consumer demand for its products and availability of inventory. Additionally, the COVID-19 pandemic has resulted in the Company’s employees working remotely for an indefinite period of time, which could negatively impact the Company’s business and harm productivity and collaboration. If there is a prolonged impact of COVID-19, it could adversely affect the Company’s business, results of operations, financial condition and liquidity, perhaps materially. The future impact of COVID-19 and related containment measures cannot be predicted with certainty and may increase the Company’s borrowing costs and other costs of capital and otherwise adversely affect its business, results of operations, financial condition and liquidity, and the Company cannot assure that it will have access to external financing at times and on terms it considers acceptable, or at all, or that it will not experience other liquidity issues going forward. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The consolidated financial statements are presented in U.S. dollars and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of PARTS iD, Inc. and its wholly-owned subsidiary PARTS iD LLC. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements include revenue recognition, return allowances, allowance for doubtful accounts, depreciation, inventory valuation, valuation of deferred income tax assets and the capitalization and recoverability of software development costs. Cash The Company considers all immediately available cash and any investments with original maturities of three months or less, when acquired, to be cash equivalents. Concentration of Credit Risk Financial instruments that expose the Company to a concentration of credit risk principally include cash and accounts receivable balances. The Company maintains all of its cash in high credit quality financial institutions located in the United States. Amounts on deposit may at times exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not experienced any losses in such accounts. Accordingly, management believes that its credit risk relating to cash is minimal. The Company manages accounts receivable credit risk through its policy of limiting extensions of credit to customers. Substantially all customer orders are paid by credit card at the point of sale. Accounts Receivable Accounts receivable balances include amounts due from customers. The Company periodically reviews its accounts receivable balances to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts, historical occurrences of credit losses, existing economic conditions, and other circumstances that may indicate that the realization of an account is in doubt. As of December 31, 2020 and December 31, 2019, the Company determined that an allowance for doubtful accounts was not necessary. Inventory Inventories consist of purchased goods that are immediately available-for-sale and are stated at the lower of cost or net realizable value, determined using the first-in first-out method. Risk of loss and the transfer of title from the supplier to the Company occurs at the shipping point. Merchandise-in-transit directly from suppliers to customers is recorded in inventory until the product is delivered to the customer. As of December 31, 2020 and 2019, merchandise-in-transit amounted to $4,208,514 and $2,662,933, respectively. Other Current Assets Other current assets include advances to vendors and claims receivables from the vendors amounting to $3,708,759 and $1,620,043, as of December 31, 2020 and 2019, respectively. Website and Software Development The Company capitalizes certain costs associated with website and software developed for internal use in accordance with Accounting Standards Codification (“ASC”) 350-50, Intangibles – Goodwill and Other – Website Development Costs Intangibles – Goodwill and Other – Internal Use Software Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Asset Class Estimated useful lives Video and studio equipment 5 years Website and internally developed software 3 years Computer and electronics 5 years Vehicles 5 years Furniture and fixtures 5 years Leasehold improvements Lesser of useful life or lease term Intangible Assets Intangible assets consist of indefinite-lived domain names and are stated at cost less impairment losses, if any. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. The Company has determined that there were no triggering events in the years ended December 31, 2020 and 2019, and no impairment charges were necessary. Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Effective January 1, 2019 the Company elected to adopt ASU 2014-09 using the modified retrospective method which applied to all new contracts initiated on or after January 1, 2019 and all open contracts which had remaining obligations as of that date. Prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historical accounting practices under Topic 605. The adoption of ASU 2014-09 did not have a material impact on the Company’s balance sheets and financial results for the year ended December 31, 2019 and there was no cumulative effect to accumulated deficit on the date of adoption. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps (i) identifies contracts with customers; (ii) identifies performance obligation(s); (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligation(s); and (v) recognizes revenue when (or as) the Company satisfies each performance obligation. The Company recognizes revenue on product sales through its website as the principal in the transaction as the Company has concluded it controls the product before it is transferred to the customer. The Company controls products when it is the entity responsible for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory risk from shipment through the delivery date, has discretion in establishing prices, and selects the suppliers of products sold. Sales discounts earned by customers at the time of purchase and taxes collected from customers, which are remitted to governmental authorities, are deducted from gross revenue in determining net revenue. Allowances for sales returns are estimated and recorded based on historical experience and reduce product revenue, inclusive of shipping fees, by expected product returns. Net allowances for sales returns at December 31, 2020 and 2019, were $1,062,077 and $495,697, respectively. The Company also earns advertising revenues through sales of media space on its e-commerce site. Advertising revenue is recognized during the period in which the advertisements are displayed on the Company’s e-commerce site. Advertising revenue amounted to $392,262 and $305,863 for the years ended December 31, 2020 and 2019, respectively. The Company has two types of contractual liabilities: (i) amount received from customers prior to the delivery of products are recorded as customer deposits in the accompanying balance sheets and are recognized as revenue when the products are delivered, amounting to $16,185,648 and $8,599,914 at December 31, 2020 and 2019, respectively and (ii) site credits (which are initially recorded in accrued expenses and are recognized as revenue in the period they are redeemed) amounting to $2,422,051 and $1,933,895 at December 31, 2020 and 2019, respectively. Cost of Goods Sold Cost of goods sold consists of the cost of product sold to customers, plus shipping and handling costs and shipping supplies, net of vendor rebates. Income Taxes The Company is a C-corporation for U.S. federal income tax purposes. Accordingly, the Company accounts for income taxes in accordance with the provisions of ASC 740 Income Taxes ASC 740 also provides guidance on the accounting for uncertain tax positions recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, management concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company files U.S. federal and State of New Jersey tax returns and had no unrecognized tax benefits at December 31, 2020 and 2019. The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the years ended December 31, 2020 and 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its filing positions. Earnings (Loss) Per share The Company used the two-class method to compute earnings per common share because the Company had issued preferred securities that entitled the holder to participate in dividends and earnings of the Company. Under this method, net income (loss) is reduced by any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated to Class A common stock and each series of preferred stock to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the preferred stock have no obligation to fund losses. Diluted net income per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus the potential dilutive effects of outstanding securities. There were no outstanding securities such as stock options, warrants, and convertible debt during the years ended December 31, 2020 and 2019. In addition, the Company analyzes the potential dilutive effect of the preferred stock under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding preferred stock converts into common stock at the beginning of the period or when issued if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as their diluted net income (loss) per share during the period. The following table sets forth the computation of basic and diluted income (loss) per share for the periods indicated below: For the year ended 2020 2019 Net income (loss) $ 2,113,829 $ (655,840 ) Less: Preferred stocks dividends 442,697 500,000 Less: Deemed Preferred dividends 15,000,000 - Loss available to common shareholders (13,328,868 ) (1,155,840 ) Weighted average number of shares (basic and diluted) 25,860,097 24,950,958 Basic and diluted earnings per share $ (0.52 ) $ (0.05 ) New Accounting Standards In February 2016, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 – Property and Equipment Property and equipment consisted of the following as of: December 31, 2020 2019 Website and software development $ 33,894,207 $ 26,611,163 Furniture and fixtures 843,575 843,576 Computers and electronics 696,684 677,943 Vehicles 430,162 467,463 Leasehold improvements 219,757 219,757 Video and equipment 176,903 176,903 Total - Gross 36,261,288 28,996,805 Less: accumulated depreciation (24,790,928 ) (17,976,024 ) Total - Net $ 11,470,360 $ 11,020,781 Property and equipment included the following amounts for assets recorded under capital leases. December 31, 2020 2019 Gross value at cost $ 303,230 $ 343,433 Less: accumulated depreciation (269,382 ) (278,087 ) Net $ 33,848 $ 65,346 Depreciation of property and equipment for the years ended December 31, 2020 and 2019 amounted to $6,859,237 and $5,847,413, respectively. |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure of Borrowings [Abstract] | |
Borrowings | Note 4 – Borrowings Automobile and Equipment Leases As of December 31, 2020 and 2019, the Company’s borrowings consisted of automobile and equipment leases. Interest rates ranged from 4% to 12%. The principal and interest payments extend through November 30, 2021. Future minimum lease payments under non-cancelable capital leases as of December 31, 2020 were as follows: Year ending December 31, 2021 $ 20,943 Less: Interest expenses 1,237 Total $ 19,706 |
Shareholders_ Deficit
Shareholders’ Deficit | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Shareholders’ Deficit | Note 5 – Shareholders’ Deficit Preferred Stock In connection with the merger (Note 1), Legacy purchased all outstanding 1,000,000 shares of preferred stock of Onyx for payments of $9.0 million in cash and $11.0 million of the Company’s common stock, assumed by Legacy Acquisition Sponsor I LLC, a Delaware limited liability company (the “Sponsor”), through the transfer of 1,100,000 of the Sponsor’s shares of Legacy Class A common stock at $10.00 per share. This redemption of preferred stock was accounted for as an extinguishment and the Company recognized a deemed dividend of $15.0 million. Deemed dividend is calculated as the excess fair value of the $9.0 million cash and $11.0 million of the Company’s common stock over the $5.0 million carrying value of the preferred stock at the time of redemption. The deemed dividend is recognized as a component of net loss attributable to Class A common stockholders for purposes of computing basic and diluted earnings per share. Because the Company has an accumulated deficit, the deemed dividend and the redemption of preferred stock is recorded within additional paid in capital. As of December 31, 2020, the Company had authorized for issuance a total of 1,000,000 shares of preferred stock, par value of $0.0001 per share (“Preferred Stock”). As of December 31, 2020, no shares of Preferred Stock were issued or outstanding. The Certificate of Incorporation of the Company authorizes the Board to fix the voting rights, if any, designations, powers, preferences and relative, participating, optional, special, and other rights at the time of issuance of any Preferred Stock. As of December 31, 2019, there were 1,000,000 shares of Series A preferred stock outstanding. The preferred stock was non-voting and entitled to a 10% cumulative dividend and held certain liquidation preferences that were senior to the common stockholders. As of December 31, 2019, the Company recorded a liability for unpaid accrued dividends of $41,667. Common Stock As of December 31, 2020, the Company had 32,873,457 shares of Class A common stock outstanding and had reserved 7,998,178 shares of Class A common stock for issuance as follows: a) Adjustment reserve: Upon finalizing the Merger consideration, subject to the adjustments, if any, the Company will issue up to 300,000 Common shares to former Onyx shareholders. b) Indemnification reserve: Upon the expiration of the indemnification period of three years as described in the Business Combination Agreement, subject the payments of indemnity claims, if any, the Company will issue up to 750,000 Common shares to former Onyx shareholders. c) Equity Plans reserve: 4,904,596 shares reserved for future issuance under the Company’s 2020 Equity Incentive Plan and 2,043,582 shares reserved for future issuance under the Company’s 2020 Employee Stock Purchase Plan. Further, pursuant to the Business Combination Agreement, the Sponsor has a right to 1,502,129 shares of Class A common stock should its price exceed $15.00 per share for any thirty-day trading period during the 730 calendar days after the effective date of the Business Combination. Voting, Dividends, and Other Distributions Subject to the rights of Preferred stock, if any, the holders of Class A and Class F Common stock are entitled to a) one vote for each share on all matters that require stockholder approval, b) receive dividends and distributions as and when declared by the Board out of any assets or funds legally available therefor, equally on a per share basis, and c) share the distribution of all remaining or surplus assets, if any, in the event of liquidation, dissolution or winding up of the Company, ratably in proportion to the number of shares of Common stock held by them. Rights and Options The Company has the authority to create and issue rights, warrants and options entitling the holders thereof to acquire from the Company any shares of its capital stock of any class or classes, with such rights, warrants and options to be evidenced by or in instrument(s) approved by the Board. The Board is empowered to set the exercise price, duration, times for exercise and other terms and conditions of such rights, warrants or options; provided, however, that the consideration to be received for any shares of capital stock issuable upon exercise thereof may not be less than the par value thereof. The common stockholders do not carry any preemptive rights enabling them to subscribe for, or receive shares of, common stock or any other securities convertible into shares of common stock. As of December 31, 2019, the Company had issued 24,950,958 shares of common stock having equal voting rights (one share, one vote) and were entitled to dividends if and when declared by the Board of Directors, subject to the rights and provisions of Series A Preferred Stock outstanding at that time. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 6 – Commitments and Contingencies Operating Leases The Company has several non-cancelable operating leases for facilities and vehicles that expire over the next four years. Rental expense for operating leases was $1,220,408 and $1,261,399 for the years ended December 31, 2020 and 2019, respectively. Future minimum lease payments under non-cancelable operating leases as of December 31, 2020 are as follows: Year Ending December 31, 2021 $ 1,118,331 2022 932,774 2023 550,013 2024 46,181 $ 2,647,299 Legal Matters Closed matter: California Air Resources Board (CARB) v. Onyx Enterprises Int’l Corp. On September 18, 2018, the California Air Resources Board (“CARB”), first notified the Company of its allegations that between September 2015 and 2018, the Company offered for sale and/or sold products developed by third parties that were not exempted by CARB pursuant to 13 C.C.R. §§ 22220. On August 3, 2020, the Company entered into a Settlement Agreement and Release with CARB pursuant to which it did not admit fault, but agreed to pay a fine in the aggregate amount of $281,000, of which $140,500 is payable to fund a Supplemental Environmental Project entitled Installation of School Air Filtration Systems – El Centro (Imperial County). During the year ended December 31, 2020, the entire amount of $281,000 was paid to the respective authorities. The Company has also implemented a series of supplemental CARB compliance procedures with the goal of avoiding a recurrence of the situation that led to the alleged violation. Open Matters: Environmental Protection Agency (“EPA”) v. Onyx Enterprises Int’l, Corp. d/b/a CARiD On October 22, 2018, the U.S. Environmental Protection Agency (the “EPA”), submitted a formal information request asserting that the Company sold improper and illegal defeat devices in violation of the Clean Air Act (the “CAA”). The Company responded on December 2018. On July 16, 2020, the EPA presented the Company with a proposed notice of violation directed to a subset of sales performance parts that the EPA alleges were sold by the Company in violation of the CAA. The EPA did not propose an aggregate fine but identified 267 transactions as being in violation of the CAA. The products in question were sold by the Company in 2018 and have since been removed from its platform. On November 22, 2020, the Company provided a response to the EPA with analysis directed at the reasons the 267 transactions did not violate the CAA. Management believes that the EPA will propose a fine to the Company and the parties will negotiate a final disposition of this matter that will not have a material adverse effect on the Company’s balance sheets or results of operations. Seoul Semiconductor Co, LTD et. al. v. Onyx Enterprises Int’l Corp On May 15, 2020, the Company was sued for patent infringement by Seoul Semiconductor Company (“Seoul Semiconductors”), a designer of LED component packages and the manufacturing processes necessary to produce LED packages. The Civil Action is captioned as Seoul Semiconductor Co., LTD. and Seoul Viosys Co., LTD v. Onyx Enterprises Int’l Corp, Civil Action Number 2:20-cv-05955 Onyx Enterprises Int’l, Corp. v. IDParts, LLC On June 30, 2020, the Company initiated a trademark infringement action against IDParts, LLC (“IDParts”) for the unlawful use of “ID” to sell automotive products through its eCommerce platform found at “http://www.idparts.com. The Company first used “iD” to sell automotive products in March of 2009 on its ecommerce platform found at www.carid.com. The Civil Action is captioned as Onyx Enterprises Int’l, Corp. v. IDParts, LLC, Civil Action Number 1:20-cv-11253-RMZ Onyx Enterprises Int’l Corp v. Volkswagen Group of America, Inc. On August 4, 2020, Onyx initiated a trademark infringement action against Volkswagen Group of America, Inc. (“Volkswagen”) for the unlawful use of “ID” to brand its new line of electric vehicles due to be imported into the United States in 2021 and manufactured in Tennessee in 2022. The United States Patent and Trademark Office rejected Volkswagen’s application to register “ID” multiple times due to the Company’s priority over the mark in the automotive space. In 2019, Volkswagen approached the Company for a license to use ID for a royalty. When Volkswagen announced in July of 2020 that it would proceed with the launch using this branding, the Company filed suit. The Civil Action is captioned as Onyx Enterprises Int’l, Corp v. Volkswagen Group of America, Inc., Civil Action Number 3:20-cv-09976-BRM-ZNQ Lexidine LLC v. Onyx Enterprises Int’l Corp On January 20, 2021, Lexidine, LLC filed a patent infringement suit against the Company in the United States District Court for the District of New Jersey. The case is based upon United States Patent No. 7,609,961 and is directed toward certain OEM Fit 3rd Brake Light Cameras offered for sale by third party brands on the Company’s eCommerce platform. The matter has not been served. It is captioned as Lexidine LLC v. Onyx Enterprises Int’l Corp, d/b/a www.carid.com, Case No. 3:21-cv-00946. Lexidine is seeking monetary relief for the sale of allegedly infringing products as well as injunctive relief. Stockholder Litigation The Company (i) has been named as a defendant in Stanislav Royzenshteyn and Roman Gerashenko v. Prashant Pathak, Carey Kurtin, Ekagrata, Inc., Onyx Enterprises Canada Inc., Onyx Enterprises Int’l Corp., In Colour Capital, Inc., J. William Kurtin Onyx Enterprises Canada Inc. v. Stanislav Royzenshteyn and Roman Gerashenko and Onyx Enterprises Int’l, Corp. Prashant Pathak and Carey Kurtin v. Onyx Enterprises Int’l Corp. While the core dispute rests between the Founder Stockholders and the Investor Stockholder and Principals, the Investor Stockholder and Principals have made claims directly against the Company alleging that the Company has an obligation to indemnify certain individuals affiliated with the Investor Stockholder and Principals pursuant to director indemnification agreements signed by the Company and such individuals. In addition, the Founder Stockholders have tendered a demand for indemnification to the Company arising from certain claims asserted against them by the Investor Stockholder and Principals in the Stockholder Litigation. On March 13, 2019, the Founder Stockholders requested that the court not grant such relief to the Investor Stockholders and Principals. The Company also filed an answer to the complaint together with defenses to the claims for indemnification and have denied any wrongdoing or liability by the Company. Discovery is closed, but there are several pending discovery issues that remain outstanding. The Investor Stockholder and Principals filed a motion for summary judgment seeking dismissal of all of the claims brought by the Founder Stockholders, which motion was heard on February 19, 2021 and for which judgement is awaited. At this point in the Stockholder Litigation, with discovery issues outstanding, no opinion can be offered as to the potential outcome of the Stockholder Litigation or as to any potential exposure of the Company to any monetary judgment. Potential Claim by Former CEO On August 12, 2020, the former CEO of the Company, Mr. Royzenshteyn, a plaintiff in the Stockholder Litigation, filed a motion to amend the complaint in the Stockholder Litigation matter first listed above, to assert claims arising from the Board’s acceptance of his resignation as CEO. Mr. Royzenshteyn has asserted that he did not resign but was terminated by the Board in breach of his employment agreement. His proposed complaint seeks payment of his severance and damages from the Company associated with his alleged termination. Mr. Royzenshteyn’s motion to amend the complaint has been denied by the Special Discovery Master, but his proposed claims are preserved for any potential future action brought by him against the Company. The Special Master’s denial of this motion is awaiting approval of the judge assigned to the case. Management believes that Mr. Royzenshteyn’s claims are without merit, but at this early stage without any litigation actually having been commenced, it is not possible to determine the likelihood of success of any such claims and the potential amount of liability, if any, of any award that may be granted adverse to the Company. Any amount awarded as a result will be recorded in the period it occurs. Business Combination Litigation On October 3, 2020, counsel to the Investor Stockholder and Principals received a letter from counsel to the Founder Stockholders objecting to the Investor Stockholder’s use of the “drag-along right” under Section 4.5 of the Stockholders Agreement, dated July 17, 2015 ((the “Stockholders Agreement”), and the proxy granted pursuant to Section 5.1 of the Stockholders Agreement to execute (i) the stockholder written consent, dated September 18, 2020, approving the Business Combination Agreement and (ii) the Stockholder Support Agreements, in each case on behalf of the Founder Stockholders. The letter also describes the Business Combination as unlawful and threatens further unspecified actions by the Founder Stockholders. On October 15, 2020, the Founder Stockholders filed an order to show cause to preliminarily enjoin the Business Combination pending final adjudication of the Stockholder Litigation. On October 23, 2020, the Superior Court of New Jersey, Chancery Division, Monmouth County refused to grant a preliminary injunction and set the hearing date on the order to show cause for December 4, 2020. On October 26, 2020, the Founder Stockholders filed an application for permission to file emergent motion to request a temporary restraining order preventing the closing of the Business Combination prior to the hearing on December 4, 2020 with the Superior Court of New Jersey, Appellate Division, which such court denied. On October 27, 2020, the Founder Stockholders appealed the Appellate Division’s ruling to the Supreme Court of New Jersey. On October 28, 2020, the Supreme Court of New Jersey denied such appeal. On November 20, 2020, the Founder Stockholders requested another emergent motion before the Superior Court of New Jersey, Chancery Division, Monmouth County for a temporary restraining order preventing the closing of the Business Combination. The Superior Court of New Jersey, Chancery Division, Monmouth County denied that request by order dated November 20, 2020. The Founder Stockholders withdrew their order to show cause after the November 20, 2020 was entered. Misappropriation Action The Company commenced an action on November 24, 2020 against Stanislav Royzenshteyn, the Company’s former CEO, captioned PARTS iD, LLC v. Stanislav Royzenshteyn Other Matters The Company is subject to certain legal proceedings and claims which are common to, and arise in the ordinary course of, its business. Historically, the Company has been involved in legal proceedings or has received a variety of communications alleging that certain products marketed through its e-commerce distribution platform violate i) third-party intellectual property rights, including but not limited to copyrights, designs, marks, patents and trade names, ii) governmental regulation, including emission control regulations or iii) defective products or employee disputes. With regard to intellectual property rights, brand and content owners and others have actively asserted their alleged intellectual property rights against many online companies, including the Company. With regard to governmental regulation, the Company receives inquiries from governmental agencies that regulate the automobile industry to monitor compliance with emissions and other standards. With regard to defective products, the Company is covered by the vendor or manufacturer’s warranty. The Company has not incurred any material losses to date with respect to these types of matters nor does management believe that the final disposition of any such pending matters will have a material adverse effect on the Company’s financial position or results of operations. The Company accrued $375,000 and $75,000 as of December 31, 2020 and December 31, 2019, respectively in aggregate for the above open matters. |
Employee Retirement Plan
Employee Retirement Plan | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Employee Retirement Plan | Note 7 – Employee Retirement Plan The Company maintains a 401(k)-defined contribution plan covering all full-time employees who have completed twelve months of service. The Company may, at its sole discretion, match up to a percentage of each participating employee’s salary. The Company’s contributions vest in annual installments over five years. The Company did not make any discretionary contributions during the years ended December 31, 2020 and 2019. |
Sales Tax
Sales Tax | 12 Months Ended |
Dec. 31, 2020 | |
Retail Land Sales, Description [Abstract] | |
Sales Tax | Note 8 – Sales Tax On September 21, 2018, the U.S. Supreme Court issued a ruling in South Dakota v. Wayfair, Inc. Quill Corp v. North Dakota Wayfair |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 9 — Stock-Based Compensation Equity Incentive Plan In October 2020, in connection with the Business Combination, the Company’s stockholders approved the PARTS iD, Inc. 2020 Equity Incentive Plan (the “2020 EIP”). There are 4,904,596 shares of Class A common stock available for issuance under the 2020 EIP. The 2020 EIP became effective immediately upon the closing of the Business Combination. As of December 31, 2020, no awards had been made under the 2020 EIP. Employee Stock Purchase Plan In October 2020, in connection with the Business Combination, the Company’s stockholders approved the PARTS iD, Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). There are 2,043,582 shares of Class A common stock available for issuance under the 2020 ESPP. The 2020 ESPP became effective immediately upon the closing of the Business Combination. As of December 31, 2020, no shares had been issued under the 2020 ESPP. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10 – Income Taxes The income tax benefits consisted of the following: December 31, 2020 2019 Current Federal $ - $ - State 34,951 (858 ) Sub-total 34,951 (858 ) Deferred Federal (813,189 ) (149,308 ) State (23,314 ) 6,264 Sub-total (836,503 ) (143,044 ) Total income tax $ (801,552 ) $ (143,902 ) For the years ended December 31, 2020 and 2019, the effective income tax rate of (61.1%) and 18.4%, respectively, differs from the federal statutory rate of 21% primarily due to the effect of state income taxes, expenses not deductible for income tax purposes and recognition of benefits accruing due to start-up costs of the Company incurred for the period prior to the Business Combination. The Company’s effective income tax rate reconciliation is as follows. December 31, 2020 2019 Federal statutory rate 21.00 % 21.00 % Permanent items 48.70 % (2.71 )% State and local taxes, net of federal taxes 1.91 % (0.85 )% Deferred rate changes 0.08 % 0.03 % Amortizable start-up costs and other (132.77 )% 0.93 % (61.08 )% 18.40 % The components of the Company’s net deferred tax (liabilities)/assets consisted of the following at: December 31, 2020 2019 Inventory capitalization $ 2,100 $ 2,300 Allowance for doubtful accounts 107,400 107,400 Accrued expenses 110,400 138,100 Charitable contribution - 5,300 Net operating loss carryforward 613,700 1,814,300 Accumulated depreciation (2,428,200 ) (2,330,900 ) Deferred revenue 1,027,200 526,800 Start-up costs 1,667,200 - Deferred tax assets, net $ 1,099,800 $ 263,300 As of December 31, 2020, the Company had $2,922,474 in federal net operating losses (“NOL”), all remaining from 2019 and accordingly available to offset future taxable income indefinitely however, these NOLs are subject to an 80% of taxable income limitation for all periods after January 1, 2021. It is possible that Internal Revenue Code (IRC) Section 382 may apply to these losses and limit their ability to be used in future periods. The analysis thereof has not yet been performed. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in the United Sates. The CARES Act contains several tax provisions, including modifications to the NOL and business interest limitations as well as a technical correction to the recovery period for qualified improvement property. The Company has evaluated these provisions in the CARES Act and does not expect a material impact to its tax provision, except for the 80% of taxable income limitation in the future on the utilization of the Company’s NOLs. The Business Combination consummated on November 20, 2020 was treated as a double-merger for tax reporting purposes. For tax purposes, Onyx will file a short period final return for the year ended November 20th, 2020 and the Company will file a full calendar year return for the year ending December 31, 2020. For purposes of Section 382 of the Internal Revenue Code, the Company expects that all tax attributes will continue to be available as more than 50% of its equity continued to be held by the original shareholders of Onyx. The Company does not currently anticipate any significant increase or decrease of the total amount of unrecognized tax benefits within the next twelve months. None of the Company’s U.S. federal or state income tax returns are currently under examination by the Internal Revenue Service (the “IRS”) or state authorities. However, fiscal years 2017 and later remain subject to examination by the IRS and respective states. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements are presented in U.S. dollars and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of PARTS iD, Inc. and its wholly-owned subsidiary PARTS iD LLC. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the level of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements include revenue recognition, return allowances, allowance for doubtful accounts, depreciation, inventory valuation, valuation of deferred income tax assets and the capitalization and recoverability of software development costs. |
Cash | Cash The Company considers all immediately available cash and any investments with original maturities of three months or less, when acquired, to be cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that expose the Company to a concentration of credit risk principally include cash and accounts receivable balances. The Company maintains all of its cash in high credit quality financial institutions located in the United States. Amounts on deposit may at times exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company has not experienced any losses in such accounts. Accordingly, management believes that its credit risk relating to cash is minimal. The Company manages accounts receivable credit risk through its policy of limiting extensions of credit to customers. Substantially all customer orders are paid by credit card at the point of sale. |
Accounts Receivable | Accounts Receivable Accounts receivable balances include amounts due from customers. The Company periodically reviews its accounts receivable balances to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts, historical occurrences of credit losses, existing economic conditions, and other circumstances that may indicate that the realization of an account is in doubt. As of December 31, 2020 and December 31, 2019, the Company determined that an allowance for doubtful accounts was not necessary. |
Inventory | Inventory Inventories consist of purchased goods that are immediately available-for-sale and are stated at the lower of cost or net realizable value, determined using the first-in first-out method. Risk of loss and the transfer of title from the supplier to the Company occurs at the shipping point. Merchandise-in-transit directly from suppliers to customers is recorded in inventory until the product is delivered to the customer. As of December 31, 2020 and 2019, merchandise-in-transit amounted to $4,208,514 and $2,662,933, respectively. |
Other Current Assets | Other Current Assets Other current assets include advances to vendors and claims receivables from the vendors amounting to $3,708,759 and $1,620,043, as of December 31, 2020 and 2019, respectively. |
Website and Software Development | Website and Software Development The Company capitalizes certain costs associated with website and software developed for internal use in accordance with Accounting Standards Codification (“ASC”) 350-50, Intangibles – Goodwill and Other – Website Development Costs Intangibles – Goodwill and Other – Internal Use Software |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets as follows: Asset Class Estimated useful lives Video and studio equipment 5 years Website and internally developed software 3 years Computer and electronics 5 years Vehicles 5 years Furniture and fixtures 5 years Leasehold improvements Lesser of useful life or lease term |
Intangible Assets | Intangible Assets Intangible assets consist of indefinite-lived domain names and are stated at cost less impairment losses, if any. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset. The Company has determined that there were no triggering events in the years ended December 31, 2020 and 2019, and no impairment charges were necessary. |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) Effective January 1, 2019 the Company elected to adopt ASU 2014-09 using the modified retrospective method which applied to all new contracts initiated on or after January 1, 2019 and all open contracts which had remaining obligations as of that date. Prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historical accounting practices under Topic 605. The adoption of ASU 2014-09 did not have a material impact on the Company’s balance sheets and financial results for the year ended December 31, 2019 and there was no cumulative effect to accumulated deficit on the date of adoption. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps (i) identifies contracts with customers; (ii) identifies performance obligation(s); (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligation(s); and (v) recognizes revenue when (or as) the Company satisfies each performance obligation. The Company recognizes revenue on product sales through its website as the principal in the transaction as the Company has concluded it controls the product before it is transferred to the customer. The Company controls products when it is the entity responsible for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory risk from shipment through the delivery date, has discretion in establishing prices, and selects the suppliers of products sold. Sales discounts earned by customers at the time of purchase and taxes collected from customers, which are remitted to governmental authorities, are deducted from gross revenue in determining net revenue. Allowances for sales returns are estimated and recorded based on historical experience and reduce product revenue, inclusive of shipping fees, by expected product returns. Net allowances for sales returns at December 31, 2020 and 2019, were $1,062,077 and $495,697, respectively. The Company also earns advertising revenues through sales of media space on its e-commerce site. Advertising revenue is recognized during the period in which the advertisements are displayed on the Company’s e-commerce site. Advertising revenue amounted to $392,262 and $305,863 for the years ended December 31, 2020 and 2019, respectively. The Company has two types of contractual liabilities: (i) amount received from customers prior to the delivery of products are recorded as customer deposits in the accompanying balance sheets and are recognized as revenue when the products are delivered, amounting to $16,185,648 and $8,599,914 at December 31, 2020 and 2019, respectively and (ii) site credits (which are initially recorded in accrued expenses and are recognized as revenue in the period they are redeemed) amounting to $2,422,051 and $1,933,895 at December 31, 2020 and 2019, respectively. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold consists of the cost of product sold to customers, plus shipping and handling costs and shipping supplies, net of vendor rebates. |
Income Taxes | Income Taxes The Company is a C-corporation for U.S. federal income tax purposes. Accordingly, the Company accounts for income taxes in accordance with the provisions of ASC 740 Income Taxes ASC 740 also provides guidance on the accounting for uncertain tax positions recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, management concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company files U.S. federal and State of New Jersey tax returns and had no unrecognized tax benefits at December 31, 2020 and 2019. The Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of or during the years ended December 31, 2020 and 2019. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its filing positions. |
Earnings (Loss) Per share | Earnings (Loss) Per share The Company used the two-class method to compute earnings per common share because the Company had issued preferred securities that entitled the holder to participate in dividends and earnings of the Company. Under this method, net income (loss) is reduced by any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated to Class A common stock and each series of preferred stock to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The two-class method is not applicable during periods with a net loss, as the holders of the preferred stock have no obligation to fund losses. Diluted net income per common share is computed under the two-class method by using the weighted-average number of shares of common stock outstanding, plus the potential dilutive effects of outstanding securities. There were no outstanding securities such as stock options, warrants, and convertible debt during the years ended December 31, 2020 and 2019. In addition, the Company analyzes the potential dilutive effect of the preferred stock under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding preferred stock converts into common stock at the beginning of the period or when issued if later. The Company reports the more dilutive of the approaches (two class or “if-converted”) as their diluted net income (loss) per share during the period. The following table sets forth the computation of basic and diluted income (loss) per share for the periods indicated below: |
New Accounting Standards | New Accounting Standards In February 2016, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of straight-line basis over the estimated useful lives of the assets | Asset Class Estimated useful lives Video and studio equipment 5 years Website and internally developed software 3 years Computer and electronics 5 years Vehicles 5 years Furniture and fixtures 5 years Leasehold improvements Lesser of useful life or lease term |
Schedule of computation of basic and diluted income (loss) per share | For the year ended 2020 2019 Net income (loss) $ 2,113,829 $ (655,840 ) Less: Preferred stocks dividends 442,697 500,000 Less: Deemed Preferred dividends 15,000,000 - Loss available to common shareholders (13,328,868 ) (1,155,840 ) Weighted average number of shares (basic and diluted) 25,860,097 24,950,958 Basic and diluted earnings per share $ (0.52 ) $ (0.05 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2020 2019 Website and software development $ 33,894,207 $ 26,611,163 Furniture and fixtures 843,575 843,576 Computers and electronics 696,684 677,943 Vehicles 430,162 467,463 Leasehold improvements 219,757 219,757 Video and equipment 176,903 176,903 Total - Gross 36,261,288 28,996,805 Less: accumulated depreciation (24,790,928 ) (17,976,024 ) Total - Net $ 11,470,360 $ 11,020,781 |
Schedule of property and equipment including amounts for assets recorded under capital leases | December 31, 2020 2019 Gross value at cost $ 303,230 $ 343,433 Less: accumulated depreciation (269,382 ) (278,087 ) Net $ 33,848 $ 65,346 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable capital leases | Year ending December 31, 2021 $ 20,943 Less: Interest expenses 1,237 Total $ 19,706 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating leases | Year Ending December 31, 2021 $ 1,118,331 2022 932,774 2023 550,013 2024 46,181 $ 2,647,299 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax benefits | December 31, 2020 2019 Current Federal $ - $ - State 34,951 (858 ) Sub-total 34,951 (858 ) Deferred Federal (813,189 ) (149,308 ) State (23,314 ) 6,264 Sub-total (836,503 ) (143,044 ) Total income tax $ (801,552 ) $ (143,902 ) |
Schedule of effective income tax rate reconciliation | December 31, 2020 2019 Federal statutory rate 21.00 % 21.00 % Permanent items 48.70 % (2.71 )% State and local taxes, net of federal taxes 1.91 % (0.85 )% Deferred rate changes 0.08 % 0.03 % Amortizable start-up costs and other (132.77 )% 0.93 % (61.08 )% 18.40 % |
Schedule of net deferred tax (liabilities)/assets | December 31, 2020 2019 Inventory capitalization $ 2,100 $ 2,300 Allowance for doubtful accounts 107,400 107,400 Accrued expenses 110,400 138,100 Charitable contribution - 5,300 Net operating loss carryforward 613,700 1,814,300 Accumulated depreciation (2,428,200 ) (2,330,900 ) Deferred revenue 1,027,200 526,800 Start-up costs 1,667,200 - Deferred tax assets, net $ 1,099,800 $ 263,300 |
Organization and Description _2
Organization and Description of Business (Details) | 12 Months Ended |
Dec. 31, 2020shares | |
Organization and Description of Business (Details) [Line Items] | |
Description of business | PARTS iD has a product portfolio comprising more than 17 million SKUs, an end-to-end digital commerce platform for both digital commerce and fulfillment, and a virtual shipping network comprising over 2,500 locations, nearly 5,000 active brands, and machine-learning algorithms for complex fitment industries such as vehicle parts and accessories. |
Class A Common Stock [Member] | |
Organization and Description of Business (Details) [Line Items] | |
Shareholder redemptions | 24,950,958 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Merchandise-in-transit amount | $ 4,208,514 | $ 2,662,933 |
Claims receivables from the vendors | 3,708,759 | 1,620,043 |
Net allowances for sales returns | 1,062,077 | 495,697 |
Advertising Barter Transactions, Advertising Barter Revenue | $ 392,262 | $ 305,863 |
Contractual liabilities, description | For the year ended December 31, 2020 2019 Net income (loss) $2,113,829 $(655,840)Less: Preferred stocks dividends 442,697 500,000 Less: Deemed Preferred dividends 15,000,000 - Loss available to common shareholders (13,328,868) (1,155,840) Weighted average number of shares (basic and diluted) 25,860,097 24,950,958 Basic and diluted earnings per share $(0.52) $(0.05) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets | 12 Months Ended |
Dec. 31, 2020 | |
Video and studio equipment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives | 5 years |
Website and internally developed software [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives | 3 years |
Computer and electronics [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives | 5 years |
Vehicles [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives | 5 years |
Furniture and fixtures [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives | 5 years |
Leasehold improvements [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of straight-line basis over the estimated useful lives of the assets [Line Items] | |
Property and equipment, estimated useful lives or lease term | Lesser of useful life or lease term |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of computation of basic and diluted income (loss) per share - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of computation of basic and diluted income (loss) per share [Abstract] | ||
Net income (loss) | $ 2,113,829 | $ (655,840) |
Less: Preferred stocks dividends | 442,697 | 500,000 |
Less: Deemed Preferred dividends | 15,000,000 | |
Loss available to common shareholders | $ (13,328,868) | $ (1,155,840) |
Weighted average number of shares (basic and diluted) (in Shares) | 25,860,097 | 24,950,958 |
Basic and diluted earnings per share (in Dollars per share) | $ (0.52) | $ (0.05) |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 6,859,237 | $ 5,847,413 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | $ 36,261,288 | $ 28,996,805 |
Less: accumulated depreciation | (24,790,928) | (17,976,024) |
Total - Net | 11,470,360 | 11,020,781 |
Website and software development [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | 33,894,207 | 26,611,163 |
Furniture and fixtures [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | 843,575 | 843,576 |
Computers and electronics [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | 696,684 | 677,943 |
Vehicles [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | 430,162 | 467,463 |
Leasehold improvements [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | 219,757 | 219,757 |
Video and equipment [Member] | ||
Property and Equipment (Details) - Schedule of property and equipment [Line Items] | ||
Total - Gross | $ 176,903 | $ 176,903 |
Property and Equipment (Detai_3
Property and Equipment (Details) - Schedule of property and equipment including amounts for assets recorded under capital leases - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of property and equipment including amounts for assets recorded under capital leases [Abstract] | ||
Gross value at cost | $ 303,230 | $ 343,433 |
Less: accumulated depreciation | (269,382) | (278,087) |
Net | $ 33,848 | $ 65,346 |
Borrowings (Details)
Borrowings (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum [Member] | |
Borrowings (Details) [Line Items] | |
Lease interest rate | 4.00% |
Maximum [Member] | |
Borrowings (Details) [Line Items] | |
Lease interest rate | 12.00% |
Borrowings (Details) - Schedule
Borrowings (Details) - Schedule of future minimum lease payments under non-cancelable capital leases | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Schedule of future minimum lease payments under non-cancelable capital leases [Abstract] | |
Year ending December 31, 2021 | $ 20,943 |
Less: Interest expenses | 1,237 |
Total | $ 19,706 |
Shareholders_ Deficit (Details)
Shareholders’ Deficit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Shareholders’ Deficit (Details) [Line Items] | ||
Preferred stock shares outstanding | 0 | 0 |
Preferred stock redemption, description | the Company recognized a deemed dividend of $15.0 million. Deemed dividend is calculated as the excess fair value of the $9.0 million cash and $11.0 million of the Company’s common stock over the $5.0 million carrying value of the preferred stock at the time of redemption. | |
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Cumulative dividend, percentage | 10.00% | |
Unpaid accrued dividends (in Dollars) | $ 41,667 | |
Shares of common stock Issued | 24,950,958 | |
Business combination indemnification, description | b)Indemnification reserve: Upon the expiration of the indemnification period of three years as described in the Business Combination Agreement, subject the payments of indemnity claims, if any, the Company will issue up to 750,000 Common shares to former Onyx shareholders. | |
Business combination, description | Further, pursuant to the Business Combination Agreement, the Sponsor has a right to 1,502,129 shares of Class A common stock should its price exceed $15.00 per share for any thirty-day trading period during the 730 calendar days after the effective date of the Business Combination. | |
Onyx Shareholders {Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Preferred stock shares outstanding | 1,000,000 | |
Payments of preferred stock value In cash (in Dollars) | $ 9,000,000 | |
Payment of common stock value (in Dollars) | $ 11,000,000 | |
Shares of common stock Issued | 300,000 | |
2020 Equity Incentive Plan [Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Shares of common stock Issued | 4,904,596 | |
2020 Employee Stock Purchase Plan [Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Shares of common stock Issued | 2,043,582 | |
Class A Common Stock [Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Transfer of sponsor’s shares | 1,100,000 | |
Common stock price per share (in Dollars per share) | $ 10 | |
Shares of common stock outstanding | 32,873,457 | |
Shares of common stock Issued | 7,998,178 | |
Series A Preferred Stock [Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Preferred stock shares outstanding | 1,000,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Aug. 03, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating leases facilities expire | 4 years | ||
Operating Leases, Rent Expense | $ 1,220,408 | $ 1,261,399 | |
Principle amount | 281,000 | $ 281,000 | |
Fund payable | $ 140,500 | ||
Accrued Liabilities | $ 375,000 | $ 75,000 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum lease payments under non-cancelable operating leases | Dec. 31, 2020USD ($) |
Schedule of future minimum lease payments under non-cancelable operating leases [Abstract] | |
2021 | $ 1,118,331 |
2022 | 932,774 |
2023 | 550,013 |
2024 | 46,181 |
Operating leases | $ 2,647,299 |
Employee Retirement Plan (Detai
Employee Retirement Plan (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |
Retirement benefits, Description | The Company maintains a 401(k)-defined contribution plan covering all full-time employees who have completed twelve months of service. |
Contribution, description | The Company’s contributions vest in annual installments over five years. |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Class A Common Stock [Member] | Oct. 31, 2020shares |
2020 Equity Incentive Plan [Member] | |
Stock-Based Compensation (Details) [Line Items] | |
Shares of common stock | 4,904,596 |
2020 Employee Stock Purchase Plan [Member] | |
Stock-Based Compensation (Details) [Line Items] | |
Shares of common stock | 2,043,582 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Nov. 20, 2020 | Mar. 27, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 61.10% | 18.40% | ||
Federal statutory rate | 21.00% | |||
Federal net operating losses (in Dollars) | $ 2,922,474 | |||
Taxable income limitation percentage | 80.00% | 80.00% | ||
Tax attributes, percentage | 50.00% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of income tax benefits - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current | ||
Federal | ||
State | 34,951 | (858) |
Sub-total | 34,951 | (858) |
Deferred | ||
Federal | (813,189) | (149,308) |
State | (23,314) | 6,264 |
Sub-total | (836,503) | (143,044) |
Total income tax | $ (801,552) | $ (143,902) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of effective income tax rate reconciliation | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Schedule of effective income tax rate reconciliation [Abstract] | ||
Federal statutory rate | 21.00% | 21.00% |
Permanent items | 48.70% | (2.71%) |
State and local taxes, net of federal taxes | 1.91% | (0.85%) |
Deferred rate changes | 0.08% | 0.03% |
Amortizable start-up costs and other | (132.77%) | 0.93% |
Income tax rate | (61.08%) | 18.40% |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of net deferred tax (liabilities)/assets - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Schedule of net deferred tax (liabilities)/assets [Abstract] | ||
Inventory capitalization | $ 2,100 | $ 2,300 |
Allowance for doubtful accounts | 107,400 | 107,400 |
Accrued expenses | 110,400 | 138,100 |
Charitable contribution | 5,300 | |
Net operating loss carryforward | 613,700 | 1,814,300 |
Accumulated depreciation | (2,428,200) | (2,330,900) |
Deferred revenue | 1,027,200 | 526,800 |
Start-up costs | 1,667,200 | |
Deferred tax assets, net | $ 1,099,800 | $ 263,300 |