Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Apr. 17, 2023 | Jun. 30, 2022 | |
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 | 34,814,306 | ||
Entity Public Float | $ 52,797,055 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001698113 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | 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 | ||
Security Exchange Name | NYSE | ||
Entity Interactive Data Current | Yes | ||
Auditor Name | WithumSmith+Brown PC | ||
Auditor Location | Princeton NJ | ||
Auditor Firm ID | 100 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash | $ 3,796,267 | $ 23,203,230 |
Accounts receivable | 1,330,521 | 2,157,108 |
Inventory | 2,505,259 | 5,754,748 |
Prepaid expenses and other current assets | 3,775,055 | 4,874,704 |
Total current assets | 11,407,102 | 35,989,790 |
Property and equipment, net | 12,915,773 | 13,700,876 |
Intangible assets | 262,966 | 262,966 |
Deferred tax assets | 2,314,907 | |
Right-of-use assets | 1,075,157 | |
Security deposits | 247,708 | 267,707 |
Total assets | 25,908,706 | 52,536,246 |
Current liabilities | ||
Accounts payable | 36,404,249 | 40,591,938 |
Customer deposits | 3,098,119 | 15,497,857 |
Accrued expenses | 5,793,044 | 6,221,330 |
Other current liabilities | 2,279,138 | 3,930,841 |
Operating lease liabilities | 688,188 | |
Notes payable, net of unamortized discount of $1,296,718 | 4,203,282 | |
Warrants liability | 551,000 | |
Total current liabilities | 53,017,020 | 66,241,966 |
Other non-current liabilities | ||
Operating lease, net of current portion | 386,866 | |
Total liabilities | 53,403,886 | 66,241,966 |
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 as of December 31, 2022 and 2021 | ||
Common stock, $0.0001 par value per share; 10,000,000 Class F shares authorized and 0 issued and outstanding as of December 31, 2022 and 2021 | ||
100,000,000 Class A shares authorized 34,825,971 and 33,965,804 issued and outstanding as of December 31, 2022 and 2021, respectively | 3,411 | 3,396 |
Additional paid in capital | 11,107,946 | 6,973,541 |
Accumulated deficit | (38,606,537) | (20,682,657) |
Total shareholders’ deficit | (27,495,180) | (13,705,720) |
Total liabilities and shareholders’ deficit | $ 25,908,706 | $ 52,536,246 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Notes payable, net discount (in Dollars) | $ 1,296,718 | |
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 per share (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 per share (in Dollars per share) | $ 0.0001 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 34,825,971 | 33,965,804 |
Common stock, shares outstanding | 34,825,971 | 33,965,804 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net revenue | $ 340,596,365 | $ 448,668,928 |
Cost of goods sold | 276,920,256 | 358,439,239 |
Gross profit | 63,676,109 | 90,229,689 |
Operating expenses: | ||
Advertising | 31,509,076 | 42,346,886 |
Selling, general and administrative | 39,492,132 | 49,554,126 |
Depreciation | 8,283,982 | 7,465,095 |
Total operating expenses | 79,285,190 | 99,366,107 |
Loss from operations | (15,609,081) | (9,136,418) |
Change in value of warrants | (248,000) | |
Interest expense | 240,282 | 7,172 |
Loss before income tax expense (benefit) | (15,601,363) | (9,143,590) |
Income tax expense (benefit) | 2,322,517 | (1,180,790) |
Net loss | (17,923,880) | (7,962,800) |
Net loss | (17,923,880) | (7,962,800) |
Loss available to common shareholders | $ (17,923,880) | $ (7,962,800) |
Loss per share (basic and diluted) (in Dollars per share) | $ (0.53) | $ (0.24) |
Weighted average number of shares (basic and diluted) (in Shares) | 34,113,108 | 33,179,973 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parentheticals) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Loss per share (basic and diluted) | $ (0.53) | $ (0.24) |
Weighted average number of shares (basic and diluted) | 34,113,108 | 33,179,973 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders’ Deficit - USD ($) | Class A Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2020 | $ 3,287 | $ (12,719,857) | $ (12,716,570) | |
Balance (in Shares) at Dec. 31, 2020 | 32,873,457 | |||
Shares issued on release of working capital reserve | $ 30 | (30) | ||
Shares issued on release of working capital reserve (in Shares) | 299,999 | |||
Share-based compensation | $ 79 | 6,973,571 | 6,973,650 | |
Share-based compensation (in Shares) | 792,348 | |||
Net loss | (7,962,800) | (7,962,800) | ||
Balance at Dec. 31, 2021 | $ 3,396 | 6,973,541 | (20,682,657) | (13,705,720) |
Balance (in Shares) at Dec. 31, 2021 | 33,965,804 | |||
Share-based compensation | $ 15 | 4,171,905 | 4,171,920 | |
Share-based compensation (in Shares) | 148,645 | |||
Shares issued on RSU’s vesting | ||||
Shares issued on RSU’s vesting (in Shares) | 711,522 | |||
Capitalized equity raising costs | (37,500) | (37,500) | ||
Net loss | (17,923,880) | (17,923,880) | ||
Balance at Dec. 31, 2022 | $ 3,411 | $ 11,107,946 | $ (38,606,537) | $ (27,495,180) |
Balance (in Shares) at Dec. 31, 2022 | 34,825,971 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (17,923,880) | $ (7,962,800) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation | 8,283,981 | 7,465,095 |
Deferred tax expense (benefit) | 2,314,907 | (1,215,107) |
Share-based compensation expense | 2,444,246 | 4,852,985 |
Amortization of right-of-use asset | 861,362 | |
Gain on sale of fixed assets | (63,254) | |
Amortization of debt issuance costs | 167,282 | |
Decrease in value of warrants issued | (248,000) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 826,587 | 79,019 |
Inventory | 3,316,964 | (898,483) |
Prepaid expenses and other current assets | 1,052,551 | 936,628 |
Operating lease liabilities | (861,362) | |
Other assets | 20,000 | |
Accounts payable | (3,752,858) | 4,960,025 |
Customer deposits | (12,399,738) | (687,791) |
Accrued expenses | (853,519) | 752,760 |
Other current liabilities | (1,680,172) | 338,059 |
Net cash (used in) provided by operating activities | (18,494,903) | 8,620,390 |
Cash Flows from Investing Activities: | ||
Proceeds from sale of fixed assets | 90,250 | |
Purchase of property and equipment | (94,195) | (324,025) |
Purchase of intangible assets | (25,214) | |
Website and software development costs | (5,704,021) | (7,250,921) |
Net cash used in investing activities | (5,707,966) | (7,600,160) |
Cash Flows from Financing Activities: | ||
Principal paid on notes payable | (19,706) | |
Payment of debt issue costs | (166,594) | |
Proceeds from JGB loan - net | 5,000,000 | |
Payments of stock raising costs | (37,500) | |
Net cash provided by (used in) financing activities | 4,795,906 | (19,706) |
Net change in cash | (19,406,963) | 1,000,524 |
Cash, beginning of the year | 23,203,230 | 22,202,706 |
Cash, end of the year | 3,796,267 | 23,203,230 |
Supplemental non-cash disclosure | ||
Right-of-use assets obtained in exchange for operating leases | 1,936,457 | |
Issuance of warrants related to JGB loan | 799,000 | |
Supplemental disclosure of cash flows information | ||
Cash paid for interest | 88,000 | 7,172 |
Cash paid for income taxes | $ 5,000 | $ 7,209 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [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” “our” or “us”), is a technology-driven, digital commerce company focused on creating custom infrastructure and unique user experience within niche markets. PARTS iD has a product portfolio comprising approximately 18 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, over 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 U.S. Securities and Exchange Commission (“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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated 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 consolidated financial statements include assessment of the Company’s ability to continue as a going concern, revenue recognition, return allowances, allowance for doubtful accounts, valuation of deferred income tax assets, stock-based compensation, and the capitalization and recoverability of software development costs. Stock Compensation Compensation expense related to stock option awards and restricted stock units granted to certain employees, directors and consultants is based on the fair value of the awards on the grant date. If the service inception date precedes the grant date, accrual of compensation cost for periods before the grant date is based on the fair value of the award at the reporting date. In the period in which the grant date occurs, cumulative compensation cost is adjusted to reflect the cumulative effect of measuring compensation cost based on fair value at the grant date rather than the fair value previously used at the service inception date or any subsequent reporting date. Forfeitures are recorded as they occur. The Company recognizes compensation cost related to time-vested options and restricted stock units with graded vesting features on a straight-line basis over the requisite service period. Compensation cost related to a performance-vesting options and performance-based units, where a performance condition or a market condition that affects vesting exists, is recognized over the shortest of the explicit, implicit, or defined service periods. Compensation cost is adjusted depending on whether the performance condition is achieved. If the achievement of the performance condition is probable or becomes probable, the full fair value of the award is recognized. If the achievement of the performance condition is not probable or ceases to be probable, then no compensation cost is recognized or amounts previously recognized are reversed. 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 has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. 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. Going Concern These consolidated financial statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assts and satisfaction of liabilities in the normal course of business. We have operated with a negative working capital model since our inception. The Company has a working capital deficiency of approximately $41.6 million. We continue to face macro-economic headwinds and the resulting declining revenue and profitability, which substantially decreased the negative working capital, and resulted in the use of approximately $18.5 million in cash from operating activities, of which $14.3 million was attributable to changes in working capital during the year ended December 31, 2022. With this, substantial doubt exists about the Company’s ability to continue as a going concern within one year from the date of the issuance of these consolidated financial statements. To address liquidity concerns, the Company is pursuing additional financing and continues to restructure and optimize its operations including moderating capital investments, improving gross margin, reducing expenses, and renegotiating vendor payment terms. The Company also believes that the newly negotiated shipping contract will lead to a substantial reduction in shipping costs which it began to realize in November 2022. This will enable the Company to increase revenue and improve profitability. In addition, the Company obtained $5 million from the Loan Agreement with JGB (as discussed below) of net funding to address its liquidity needs. PARTS iD has retained Canaccord Genuity Group, Inc. (“Canaccord”) as its financial advisor and DLA Piper LLP (US) as its legal counsel to assist in evaluating potential strategic alternatives. There can be no assurance that the evaluation of strategic alternatives will result in any potential transaction, or any assurance as to its outcome or timing. PARTS iD has not set a timetable for completion of the process and does not intend to disclose developments related to the process unless and until PARTS iD executes a definitive agreement with respect thereto, or the Board otherwise determines that further disclosure is appropriate or required. On February 24, 2022, the Russian Federation launched a full-scale invasion against Ukraine, and sustained conflict and disruption in the region is ongoing. The Company’s ability to maintain adequate liquidity for its operations is dependent upon a number of factors, including its revenue and earnings, the impacts of COVID-19 on macroeconomic conditions, and its ability to take further cost savings and cash conservation measures if necessary. The conflict could have a material adverse effect upon the Company. Refer to Note 14 — Subsequent Events for additional information. 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, 2022 and 2021, the Company determined that an allowance for doubtful accounts was not necessary. Inventor Inventory consists 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. Merchandise-in-transit directly from suppliers to customers is recorded in inventory until the product is delivered to the customer. As of December 31, 2022 and 2021, merchandise-in-transit amounted to $957,735 and $4,053,610, respectively. Risk of loss is transferred from the supplier to the Company at the shipping point. Since the purchased goods are immediately shipped directly from suppliers to customers the Company deemed that an inventory reserve for obsolete or slow moving goods was unnecessary. Other Current Assets Other current assets include advances to vendors amounting to $1,796,680 and $3,185,681 as of December 31, 2022 and 2021, respectively, which is included in prepaid expenses and other current assets on the consolidated balance sheets. Website and Software Development The Company capitalizes certain costs associated with website and software developed for internal use in accordance with ASC 350-50, Intangibles – Goodwill and Other – Website Development Costs, Intangibles – Goodwill and Other – Internal Use Software, Property and E pment 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 Intan ible 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, 2022 and 2021, and no impairment charges were necessary. Accounts Payable Accounts payable as of December 31, 2022 consisted of amounts payable to vendors of $33.1 million and credit card payable of $3.3 million payable to a credit card company. The Company has not reached a definitive agreement with the credit card company on paying off the balance owed. The Company stopped making any payments and is responsible for late fees and any interest on the outstanding balance. As of December 31,2022, accounts payable consisted of amounts payable to vendors was $33.9 million and $6.7 million credit card payable to the same credit card company mentioned above. Revenue Reco nition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) 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. Allowances for sales returns at December 31, 2022 and 2021, were $549,250 and $738,465, 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 $230,157 and $353,985 for the years ended December 31, 2022 and 2021, 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 $3,098,119 and $15,497,857 at December 31, 2022 and 2021, 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 $3,414,019 and $2,855,998 at December 31, 2022 and 2021, 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. Advertising Costs Advertising costs are expensed as incurred. The Company incurred $31.5 million in advertising costs during the year ended December 31, 2022 and $42.4 million during the year ended December 31, 2021. 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 consolidated financial statements. The Company files U.S. federal and State of New Jersey tax returns and had no unrecognized tax benefits at December 31, 2022 and 2021. 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, 2022 and 2021. 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 For the years ended December 31, 2022 and 2021, basic net loss per common share was determined by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of calculating diluted net loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include performance-based stock units and unvested restricted stock units using the treasury stock method. For all periods presented, there is no difference in the number of shares used to compute basic and diluted net loss per common share due to the Company’s net loss. The following average number of potentially dilutive securities were excluded from the computation of diluted weighted-average shares outstanding for the years ended December 31, 2022 and 2021, as they were antidilutive: Years ended December 31, 2022 2021 Performance-based units 527,000 619,000 Unvested restricted stock units 1,053,445 1,551,033 Warrant - JGB 1,000,000 - Total 2,580,445 2,170,033 New Accountin Standards In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Leases, (ASC 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), |
Property and equipment
Property and equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Note 3 – Property and Equipment Property and equipment consisted of the following as of: December 31, 2022 2021 Website and software development $ 50,697,486 $ 43,265,793 Furniture and fixtures 851,926 851,926 Computers and electronics 1,015,853 994,925 Vehicles 325,504 430,162 Leasehold improvements 300,673 237,190 Video and equipment 176,903 176,903 Total - gross 53,368,345 45,956,899 Less: accumulated depreciation (40,452,572 ) (32,256,023 ) Total - net $ 12,915,773 $ 13,700,876 Website and software development included capitalized stock-based compensation of $1,727,674 and $2,120,655 for the years ended December 31, 2022 and 2021, respectively. Depreciation of property and equipment for the years ended December 31, 2022 and 2021 amounted to $8,283,981 and $7,465,095, respectively. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt [Abstract] | |
Debt | Note 4 – Debt On October 21, 2022 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with JGB Collateral, LLC, a Delaware limited liability company (“JGB”), in its capacity as collateral agent (the “Agent”) and the several financial institutions or entities that from time to time become parties to the Loan Agreement as lenders (collectively, the “Lender”). The Loan Agreement provided for term loans in an aggregate principal amount of up to $11.0 million under two tranches. The tranches consist of (i) a first tranche consisting of term loans in the aggregate principal amount of $5.5 million, of which the entire amount was funded to the Company on the Closing Date (the “Initial Term Loan Advance”); and (ii) a second tranche consisting of term loans in the aggregate principal amount of an additional $5.5 million, which may funded to the Company by the Lender in its sole and absolute discretion (subject to the terms and conditions of the Loan Agreement) until the date that is six months after the Closing Date (the “Second Term Loan Advance” and together with the Initial Term Loan Advance, the “Term Loan Advances”). Each of the Term Loan Advances will be issued with an original issue discount of $500,000. In connection with the entry into the Loan Agreement, with respect to the Initial Term Loan Advance, the Company issued to the Lender a warrant (the “Warrant”) to purchase 1,000,000 shares (the “Warrant Shares”) of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”). The Warrant will be exercisable for a period of five years from the date of issuance at a per-share exercise price equal to $2.00, subject to certain adjustments as specified in the Warrant. If the Company seeks and obtains the Second Loan Term Advance in accordance with the terms of the Loan Agreement, the Company will issue another Warrant to the Lender to purchase 1,000,000 shares of the Company’s Common Stock at a per-share exercise price equal to $2.00 and otherwise on the same terms and conditions as the Warrant issued with respect to the Initial Term Loan Advance. The Warrant also provides for customary shelf and piggyback registration rights with respect to the Warrant Shares. The effective interest rate on the First Tranche of $5.5 million note was 17.9%. The Company incurred debt issue costs of approximately $165,000 in connection with this loan and recorded a discount of $500,000. As of December 31, 2022, the Company had $4.2 million outstanding net of amortization of debt issue costs of $18,903 and $56,735 amortization of discount on the note. The Company incurred $166,527 of interest expense on the note during the quarter and year ended December 31, 2022. A portion of the note was attributed to the warrant for 1,000,000 shares of the Company’s stock which at the time of issuance had been valued at $799,000 using the Black-Scholes model. As of December 31, 2022, the fair value of the warrant was determined to be approximately $551,000, and accordingly, the decrease in its value was recorded as an offset other income and expense on the consolidated statement of operations. The loan requires the Company to make payments of 30 monthly payments of $183,333 beginning on April 30, 2023 with the last payment due September 30, 2025. On January 6, 2023, the Company notified its Agent and Lender that it was not in compliance with the Consolidated Quarterly Net Revenue Covenant (as defined in the Loan Agreement) for the calendar quarter ended December 31, 2022. On February 22, 2023, the Company and JGB executed an amendment to the Loan Agreement and on February 27, 2023, the Company repaid $2.0 million of the loan to JGB. See “Note 14 – Subsequent Events” for more information. |
Shareholders_ Deficit
Shareholders’ Deficit | 12 Months Ended |
Dec. 31, 2022 | |
Shareholders’ Deficit [Abstract] | |
Shareholders’ Deficit | Note 5 – Shareholders’ Deficit Preferred Stock As of December 31, 2022 and 2021, 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, 2022 and 2021, no Common Stock As of December 31, 2022 and 2021, the Company had 34,825,971 and 33,965,804 shares of Class A common stock outstanding, respectively. As of December 31, 2022 and 2021, the Company had reserved 6,005,660 and 6,905,830, respectively, shares of Class A common stock for issuance as follows: Nature of Reserve As of As of a. Indemnification reserve: Upon the expiration of the indemnification period of two 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 750,000 750,000 b. EIP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Equity Incentive Plan 3,212,078 4,112,248 c. ESPP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Employee Stock Purchase Plan 2,043,582 2,043,582 Total shares reserved for future issuance 6,005,660 6,905,830 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 Corporation 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 does 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. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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 that expire over the next three years. As mentioned in Note 2, the Company adopted ASC 842 effective January 1, 2022. Accordingly, the consolidated balance sheet as of December 31, 2022 includes a right-of-use asset. Rental expense for operating leases was $856,319 and $1,207,969 for the years ended December 31, 2022 and 2021, respectively. The first operating lease is for a 13,600 square foot facility located in Cranbury, New Jersey. The monthly payments as follows: October 1, 2022 to September 30, 2023 $ 11,265 October 1, 2023 to September 30, 2024 $ 11,605 October 1, 2024 to September 30, 2025 $ 11,957 The Company also has executed an agreement for 6,800 square feet of expansion space with the following monthly payments: October 1, 2022 to September 30, 2023 $ 7,367 October 1, 2023 to September 30, 2024 $ 7,588 October 1, 2024 to September 30, 2025 $ 7,814 The Company recorded the present value of the lease payments using a 7.0% discount rate and a weighted average term of 2 years. The present value of the payments is recorded as a right-of use asset which is amortized over the lease term. The above leases also provide for a 2- year renewal at the Company’s option. The Company has 30 days prior to termination of the above leases to exercise the renewal option. Future minimum lease payments under non-cancelable operating leases as of December 31, 2022 are as follows: Year ending December 31, 2023 $ 753,871 2024 276,358 2025 177,939 Total future minimum lease payments $ 1,208,168 Less portion representing interest (133,114 ) Present value of lease obligations 1,075,054 Less current portion of lease obligations (688,188 ) Long term portion of lease obligations $ 386,866 |
Legal Matters
Legal Matters | 12 Months Ended |
Dec. 31, 2022 | |
Legal Matters [Abstract] | |
Legal Matters | Note 7 - Legal Matters Business Combination Liti ation On October 3, 2020, counsel to Stanislav Royzenshteyn and Roman Gerashenko (together, the “Founder Stockholders”) and Onyx Enterprises Canada Inc. and its principals (collectively, 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 Shareholder 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 order was entered. Since then, the Founding Stockholders advised the court that they will no longer seek to unwind the Business Combination. Rather, they are seeking damages from the defendants in the Shareholder Litigation (as defined below). 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 in 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. On or about September 30, 2022 the EPA proposed a fine to the Company and the parties have negotiated a final disposition of this matter that the Company will pay $491,474 with two payments of $49,147 in October and December 2022 and the remainder to be paid in 12 monthly installments of $32,765 plus interest at 5.0% with the last payment due on December 29, 2023. 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 e-commerce platform found at www.idparts.com. The Company first used “iD” to sell automotive products in March of 2009 on its e-commerce 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 Volkswagen has obtained a stay of this matter pending the outcome in the ID Parts matter. The Company is seeking monetary damages for use of its trademark as well as an order precluding Volkswagen from continuing to use ID as part of its branding. As discovery has not commenced, the case value and exposure are undetermined at this time. The parties have engaged in settlement discussions but remain far apart in their evaluation of the merits of the case. Shareholder Liti ation Royzenshteyn, et. al. v. Pathak, et al. v. Onyx Enterprises Int’l Corp, Superior Court of New Jersey, Monmouth County, Chancery Division, Docket No. MON-C-45. This is a pending litigation matter that involves a shareholder dispute that arises from a stock purchase and warrant purchase agreement between Onyx Enterprises Int’l Corp. (“Onyx”) and Onyx Enterprises Canada, Inc. (“OEC”) (the “Transaction”). The litigation was instituted by the plaintiffs Stanislav Royzenshteyn and Roman Gerashenko, who were the founding stockholders of Onyx, in the Superior Court of New Jersey, Chancery Division, Monmouth County in February 2018 (the “Shareholder Litigation”). Onyx was named by the Plaintiffs as a nominal defendant based upon the plaintiffs’ shareholder derivative claims. The Defendants Carey Curtin and Prashant Pathak asserted third party claims against Onyx seeking indemnification from the Onyx to the extent that the claims were asserted by the Plaintiffs against the Defendants in their capacity as Directors of Onyx. On August 31, 2021, the Judge issued a decision on the Defendants’ Motion for Summary Judgement, in which he granted the motion in part and denied it in part. The fraud related claims asserted by the Plaintiffs against OEC, and the other defendants were not dismissed as well as certain other claims, including claims under the New Jersey Oppressed Minority Shareholder statute. The shareholder derivative claims were dismissed leaving the Third-Party Complaint for indemnification as the only remaining claim that involves the Company. The Company has not received a specific demand for any monetary damages from the Defendants regarding their indemnification claims, nor does the Company have any concrete information regarding the scope of any such potential damages. Given the amount of time that the Defendants attorneys have devoted to defending the claims against their clients in the Shareholder Litigation, the potential damages arising from the indemnification claims could be significant. If the Defendants prevail on their indemnification claims, the Company will assert that that any damages sought should be allocated based on the time and effort spent in defending against the breach of fiduciary claims, as opposed to defending against the Plaintiffs’ fraud claims, which are the predominant claims in the litigation. Given that the breach of fiduciary claims against the Defendants have been dismissed, any claim for indemnification will only include fees and costs incurred prior to the decision on the Summary Judgment Motion. No trial date has been scheduled. Onyx was named by the Plaintiffs as a nominal defendant based upon the plaintiffs’ shareholder derivative claims. The Defendants, Carey Curtin and Prashant Pathak, asserted third party claims against Onyx seeking indemnification from the Onyx to the extent that the claims were asserted by the Plaintiffs against the Defendants in their capacity as Directors of Onyx. On August 31, 2021, the Judge issued a decision on the Defendants’ Motion for Summary Judgement, in which he granted the motion in part and denied it in part. The fraud related claims asserted by the Plaintiffs against OEC, and the other defendants were not dismissed as well as certain other claims, including claims under the New Jersey Oppressed Minority Shareholder statute. The shareholder derivative claims were dismissed leaving the Third-Party Complaint for indemnification as the only remaining claim that involves the Company. The Company has not received a specific demand for any monetary damages from the Defendants regarding their indemnification claims, nor does the Company have any concrete information regarding the scope of any such potential damages. Given the amount of time that the Defendants attorneys have devoted to defending the claims against their clients in the Shareholder Litigation, the potential damages arising from the indemnification claims could be significant. If the Defendants prevail on their indemnification claims, the Company will assert that that any damages sought should be allocated based on the time and effort spent in defending against the breach of fiduciary claims, as opposed to defending against the Plaintiffs’ fraud claims, which are the predominant claims in the litigation. Given that the breach of fiduciary claims against the Defendants have been dismissed, any claim for indemnification will only include fees and costs incurred prior to the decision on the Summary Judgment Motion. 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. Management believes that Mr. Royzenshteyn’s claims are without merit, but at this early stage without any litigation actually having been commenced 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 made against the Company. Any amount awarded as a result will be recorded in the period it occurs. Potential Indemnification Claims by Former Directors of Onyx Former Onyx Directors Royzenshteyn and Gerashenko (the “Plaintiff Directors”) tendered a demand for indemnification from the Company pursuant to their Director Indemnification agreements with Onyx. The Company’s Board denied the request for indemnification. The Plaintiff Directors then filed a motion in the Stockholder litigation to reserve their indemnification claims for future litigation. That motion was heard by the Special Discovery Master, who denied motion on the grounds that the Plaintiffs had not filed a proposed amended pleading asserting these alleged claims with their motion. Subsequently, the Plaintiffs attempted to file an amended pleading with respect to the indemnification claims, which pleading was rejected by the court because it was not accompanied by an order. Thereafter, the Plaintiff Directors submitted the proposed pleading to the Special Master, which pleading was opposed by the Company and the Defendants on the grounds that it was time barred based on the statute of limitations contained in the indemnification agreements. The Special Master has issued a report and recommendation in which he held that the Plaintiffs indemnification claims are not time- barred and are preserved for a future litigation. The Company filed a motion objecting to that Report and Recommendation, which motion was denied by the Court. To date, the Plaintiffs have not filed any action seeking indemnification from the Company. 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 KSI Auto Parts v. Parts iD, Inc This is a pending litigation matter that was filed on November 28, 2022. The Plaintiff is an auto body parts supplier. Plaintiff alleges in its complaint that it supplied auto body parts to Parts iD and Onyx for which it has not been paid. Plaintiff alleges that the outstanding balance due from Parts iD is $257,090.75, exclusive of interest and costs. Default was entered against Parts iD for failing to timely answer the Plaintiff’s complaint. Parts iD has filed a motion to vacate the entry of default, which motion is still pending as of the date of this letter. Competition Specialties, Inc. v. Onyx Enterprises Int’l Corp., et. Al This is a pending litigation matter that was filed on February 9, 2023. Plaintiff sells automotive parts and products. Plaintiff alleges in its complaint that it sold automotive parts and products to Onyx and Parts iD for which it has not been paid. Plaintiff alleges that the total balance due from Parts iD is $275,051.30, exclusive of interest and costs. Parts iD has not yet filed a responsive pleading to the Plaintiff’s complaint. Hasson v Parts iD, Inc On September 9, 2022, Kenneth Hasson filed a Complaint in the United States District Court for the Western District of Pennsylvania at No. 22-cv-1291. Hasson purports to bring claims on behalf of a putative class. Hasson alleges that the website, www.carid.com, allegedly operated by Parts ID, Inc., violated the Pennsylvania Wiretapping and Electronic Surveillance Control Act, 18 Pa. Cons. Stat. § 5701, et seq Potential Indemnification Claim by Canaccord On January 13, 2023, the Company received a notice from Cannacord for potential indemnification claims in connection with a Compliant that was filed in the United States District Court for the District of New Jersey by Former Onyx Directors Messrs. Royzenshteyn and Gerashenko, under the caption Royzenshteyn et al. v. Onyx Enterprises Canada Inc., et al. and related to the Business Combination. Canaccord was named as a Defendant in this pending litigation matter and the Company was not directly named as a party to this proceeding. The Company has accepted the indemnification notice from Canaccord and has agreed to indemnify Canaccord for legal and other expenses incurred in connection with this litigation, as applicable. 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 a) third-party intellectual property rights, including but not limited to copyrights, designs, marks, patents and trade names, b) governmental regulation, including emission control regulations or c) 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 $614,983 and $620,000 as of December 31, 2022 and 2021, respectively, in aggregate for the above potential loss contingencies. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Plan | Note 8 – 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, 2022 and 2021. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation [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”). The 2020 EIP became effective immediately upon the closing of the Business Combination. As of December 31, 2022, of the 4,904,596 shares of Class A common stock reserved for issuance under the 2020 EIP in the aggregate, 3,212,078 shares remain available for issuance. The 2020 EIP provides for the grant of stock options, restricted stock, restricted stock units, performance shares, performance units, stock appreciation rights, other stock-based awards and cash awards (collectively “awards”). The awards may be granted to employees, directors and consultants of the Company. During the year ended December 31, 2022, selling, general and administrative expenses included $2,444,246 of stock-based compensation expense. Beginning in January 2021, the Company has granted both restricted stock units (“RSUs”) and restricted performance-based stock units (“PSUs”) as described below. Restricted Stock Units The following table summarizes the activity related to RSUs during the year ended December 31, 2022: Weighted Restricted Average Grant Stock Date Units Fair Value Unvested balance at beginning of the period 1,551,033 $ 6.52 Granted 414,582 $ 1.13 Vested (860,169 ) $ 6.12 Forfeited (52,001 ) $ 7.62 Unvested balance at December 31, 2022 1,053,445 $ 4.67 The Company has granted RSUs that vest over a specified period, generally up to three years from the date of grant. RSUs granted in 2022 included (a) 376,582 RSUs granted to directors, of which 50,000 vested on September 28, 2022 and the balance of 326,582 will vest on June 14, 2023 or the date of the 2023 annual meeting of stockholders, and (b) 75,000 RSUs granted to various employees, contractors and consultants, in 2022 of which (i) will vest at various intervals over a three year period, (ii) 52,001 were forfeited, and (iii) 726,863 will vest, subject to the participants’ continued service to the Company, as provided in the applicable award agreements. During 2022, 106,812 director and 753,357 non-director shares were vested. The Company recognized $2,444,246 of stock-based compensation expense associated with RSUs for the year ended December 31, 2022. As of December 31, 2022, approximately $4.2 million of unamortized stock-based compensation expense was associated with outstanding RSUs, which is expected to be recognized over a remaining weighted average period of 0.78 years. Performance-Based Restricted Stock Units The following table summarizes the activity related to PSUs during the year ended December 31, 2022: PSU Type Balance at December 31, Granted Forfeited Balance at Net revenue based 421,600 29,600 103,200 495,200 Weighted average grant date fair value $ 7.61 $ 2.20 $ 7.92 $ 8.00 Cash flow based 105,400 7,400 25,800 123,800 Weighted average grant date fair value $ 1.55 1.55 $ 1.55 $ 2.44 Total 527,000 37,000 129,000 619,000 During the year ended December 31, 2022, the Company granted 37,000 PSUs to several employees, contractors and consultants that contain both service and performance-based vesting conditions, of which 129,000 PSUs were forfeited and the remaining were outstanding as of December 31, 2022. The PSUs will vest in March 2024 based upon the level of achievement of several Company-specific cumulative operational performance milestones for the three years ended December 31, 2023, as determined by the Compensation Committee of the Company. Of the PSUs granted in 2021, 80% are based on net revenue performance-based vesting conditions that were established at the grant date and 20% are subject to cash flow performance-based vesting conditions, of which certain thresholds had not been established as of December 31, 2022. As a result, the service inception date of the cash-flow based PSUs precedes the grant date associated with these PSUs and the recognition of compensation expense is based upon the fair value of these PSUs as of December 31, 2022. See “Stock Compensation” in Note 2 for more information. As of December 31, 2022, the performance criteria included in the PSUs plan are unlikely to be achieved and accordingly the Company has no accrual of stock-based compensation expenses associated with the outstanding PSUs. The weighted average period of 1.07 years was remaining before the expiration of outstanding PSUs. 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, but it has not yet been implemented. As of December 31, 2022 and 2021, no shares had been issued under the 2020 ESPP. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10 – Income Taxes Income tax expense (benefit) consisted of the following: December 31, 2022 2021 Current Federal $ - $ - State 27,446 34,317 Subtotal 27,446 34,317 Deferred Federal 2,305,034 (1,208,287 ) State 10,037 (6,820 ) Subtotal 2,315,071 (1,215,107 ) Total income tax expense (benefit) $ 2,342,517 $ (1,180,790 ) For the years ended December 31, 2022 and 2021, the effective income tax rate of (20.4)% and 12.91% respectively, differs from the federal statutory rate of 21% primarily due to change in the valuation allowance and 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, 2022 2021 Federal statutory rate 21.00 % 21.00 % Permanent items (4.94 )% (5.27 )% State and local taxes, net of federal taxes 0.00 % (0.16 )% Deferred rate changes (0.02 )% 0.00 % Change in valuation allowance (33.88 )% - Other (2.56 )% (2.66 )% (20.4 )% 12.91 % The components of the Company’s net deferred tax (liabilities) assets consist of the following: December 31, 2022 2021 Allowance for doubtful accounts $ 108,000 $ 108,000 Accrued expenses 259,000 181,500 Stock compensation 42,400 225,600 Net operating loss carryforward 3,757,700 1,717,400 Accumulated depreciation (1,320,700 ) (2,362,800 ) Deferred revenue 573,500 867,900 Lease liability 229,300 - Other miscellaneous items 35,900 1,400 Right-of-use asset (229,300 ) - Start-up costs 1,462,700 1,575,907 Total deferred tax assets 4,918,500 2,314,907 Valuation allowance (4,918,500 ) - Deferred tax assets, net $ - $ 2,314,907 As of December 31, 2022, the Company had $17,034,462 federal net operating losses (“NOL”), all remaining from 2019 and onwards and accordingly available to offset future taxable income indefinitely, however they 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 States. 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 on the future 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 filed a short period final return for the year ended November 20, 2020 and the Company filed a full calendar year return for the year ended 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 in 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 2018 and later remain subject to examination by the IRS and respective states. |
Impact of Covid-19
Impact of Covid-19 | 12 Months Ended |
Dec. 31, 2022 | |
Impact of Covid-19 [Abstract] | |
Impact of COVID-19 | Note 11 – Impact of COVID-19 The Company continues to actively monitor the COVID-19 pandemic, including the current spread of certain variants of the virus and plan for potential impacts on our business. While conditions related to the pandemic generally have improved in 2022 compared to 2021, conditions vary geographically. Although the COVID-19 pandemic has caused economic disruptions on a global scale, and created significant uncertainty, we believe it increased the adoption of online shopping by consumers and, for periods during which stimulus payments were disbursed by the government, particularly between April 2020 and April 2021, increased demand for the products of the Company with a positive effect on our revenue and profitability. However, there was a decline in site traffic in 2022 due to an increase in the average cost-per-click in the Company’s search advertising programs, changes in channel mix, and lower consumer discretionary spending. The impact of COVID-19, including changes in consumer behavior, pandemic fears and market downturns, and restrictions on business and individual activities, has created significant volatility in the global economy. Recent outbreaks in certain regions continue to cause intermittent COVID-19-related disruptions in our supply chain. During 2022, continued spikes in the price of materials, workforce shortages and shipping and seaport delays led to increases in the cost of goods sold, which negatively impacted gross margins of the Company. Supply chain challenges have increased order cancellations and shipping costs. After two years of port congestions and container shortages, supply chain disruptions are showing signs of easing. We continue to pass a portion of the increased costs through to our customers, while balancing the need to maintain price competitiveness. Notwithstanding the economic challenges described above, the Company achieved a gross margin of 18.7% during the year ended December 31, 2022 compared to 20.1% for the prior year. |
Russian-Ukrainian Conflict
Russian-Ukrainian Conflict | 12 Months Ended |
Dec. 31, 2022 | |
Russian Ukrainian Conflict [Abstract] | |
Russian-Ukrainian Conflict | Note 12 – Russian-Ukrainian Conflict The Russian invasion of Ukraine and resulting a response from other nations have impacted, and are expected to continue to impact, our business in near term. Russia’s invasion of Ukraine has elevated geopolitical tensions and security concerns as well as having recently created some inflationary pressures. Our engineering and product data development team as well as back office and part of its customer service center are in Ukraine. Therefore, the conflict in Ukraine could have a material adverse effect on our business, financial condition, and results of operations. The conflict could have a material adverse effect upon the Company in the future. Since the onset of the active conflict on February 24, 2022, most of our contractors have been able to continue their work, although at a reduced capacity and/or schedule. Our websites and call centers have continued to function but could be more negatively impacted in the future. Some of our contractors have moved outside of Ukraine to neighboring countries where they continue to work remotely. Some of our contractors who have remained in Ukraine have moved to other areas in Ukraine, but their ability to continue work is subject to significant uncertainty and potential disruptions. The situation in Ukraine is highly complex and continues to evolve. We cannot provide any assurance that our outsourced teams in Ukraine will be able to provide efficient and uninterrupted services, which could have an adverse effect on our operations and business. In addition, our ability to maintain adequate liquidity for our operations is dependent on a number of factors, including our revenue and earnings, which could be significantly impacted by the conflict in Ukraine. Further, any major breakdown or closure of utility services, any major threat to civilians or any international banking disruption could materially impact the operations and liquidity of the Company. The Company will continue monitoring the military, social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate. |
Equity Offering Sales Agreement
Equity Offering Sales Agreement | 12 Months Ended |
Dec. 31, 2022 | |
Equity Offering Sales Agreement [Abstract] | |
Equity Offering Sales Agreement | Note 13 – Equity Offering Sales Agreement On November 18, 2022 the Company entered into an Equity Offering Sales Agreement with D.A. Davidson & Co. (the “Sales Agreement”) with respect to an “at the market” offering program, under which the Company may, from time to time in its sole discretion, issue and sell through D.A. Davidson, acting as sales agent, shares of the Company’s Class A common stock, par value $0.0001 per share, having an aggregate gross sales price of up to $15,970,800 (the “Placement Shares”). The issuance and sale, if any, of the Placement Shares by the Company under the Sales Agreement will be made pursuant to a prospectus supplement, as filed with the Securities and Exchange Commission (the “SEC”) on the date hereof, to the Company’s registration statement on Form S-3, originally filed with the SEC on September 16, 2022 and as amended on October 11, 2022, which became effective on October 14, 2022. Pursuant to the Sales Agreement, D.A. Davidson may sell the Placement Shares at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), including by means of ordinary brokers’ transactions, to or through the New York Stock Exchange LLC or any other market venue where the Placement Shares may be traded, or in privately negotiated transactions, or through a combination of any such methods of sale, or any other method permitted by law. Actual sales will depend on a variety of factors to be determined by the Company from time to time. D.A. Davidson will use commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell the Placement Shares from time to time, based upon instructions from the Company (including any price or size limits or other customary parameters or conditions the Company may impose). The Company will pay D.A. Davidson a commission of 3.0% of the gross sales proceeds of any Placement Shares sold through D.A. Davidson, acting as sales agent, under the Sales Agreement. Because there is no minimum offering amount required pursuant to the Sales Agreement, the actual total public offering amount, commissions and proceeds to the Company, if any, are not determinable at this time. The Company expects to use any net proceeds for general corporate purposes, which may include working capital, capital expenditures, the repayment or refinancing of existing indebtedness, mergers and acquisitions and other investments. The Company is not obligated to make any sales of Placement Shares under the Sales Agreement. As of December 31, 2022, no sales of Placement Shares have occurred under the Sales Agreement. The offering of Placement Shares pursuant to the Sales Agreement will terminate upon the earlier of (i) the issuance and sale, through D.A. Davidson, of all Placement Shares subject to the Sales Agreement and (ii) termination of the Sales Agreement in accordance with its terms. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 – Subsequent Events On January 6, 2023, the Company notified its Agent and Lender that it was not in compliance with the Consolidated Quarterly Net Revenue Covenant (as defined in the Loan Agreement) for the calendar quarter ended December 31, 2022. As a result of the default, an Event of Default (as defined in the Loan Agreement) was triggered under the Loan Agreement and the Company had $5,507,333 immediately due and payable under the Loan Agreement, unless a forbearance agreement was reached with the Agent and the Lender. On January 17, 2023, the Company entered into a Forbearance Agreement and Reservation of Rights with the Agent and the Lender with respect to the default. The Forbearance Agreement provided that both the Agent and the Lender will not exercise or pursue any rights or remedies under the Loan Agreement or any other Loan Document (as defined in the Loan Agreement) until the earlier of (i) April 30, 2023 or (ii) that certain date when the Lender or Agent become aware that any Event of Default (other than the Subject Default) has occurred and is continuing, in exchange for certain forbearance payments in the aggregate amount of $50,000 paid by the Company to the Lender pursuant the Forbearance Agreement. The Lender agreed to extend the period in which the Company must register for resale the shares of common stock underlying the warrant issued to the Lender in connection with the Loan Agreement from 90 days following the Issue Date to February 3, 2023. On February 6, 2023, Richard White notified the Company of his resignation from the Board of Directors effective immediately. Mr. White’s decision to resign from the Board was solely for personal reasons and is not the result of any disagreement with the Company with respect to any matter relating to the Company’s operations, policies or practices, or any disagreements in respect of accounting principles, financial statement disclosure, or any issue impacting the Audit Committee of the Board (the committee on which he served). Rahul Petkar, a current independent director, was appointed as a member of the Company’s Audit Committee in replacement of Mr. White. Also on February 6, 2023, the Company began implementing a restructuring plan approved by the Board to streamline its operations considering its current liquidity needs and financial condition. In connection therewith, the Company is reducing its employment base by two-thirds in the United States and similarly significantly reducing its independent contractors in Ukraine, Costa Rica, and the Philippines. The employees and independent contractors affected by this reduction were informed of the Company’s decision beginning on February 7, 2023. Each affected employee in the United States will be paid such employee’s respective salary through such employee’s termination date and the Company is unable to offer severance to any of the affected employees. In addition, the Company has reduced the salaries of the remaining employees by ten percent to decrease operating expenses moving forward. On February 16, 2023, the Company received correspondence from the Agent constituting its assertion of a notice of events of default and reservation of rights (the “Notice of Default”) under the Loan Agreement, by and among the Company, its subsidiaries, the Agent and certain lenders party thereto (collectively, the “Lender”). The Notice of Default purported that certain events of default under the Loan Agreement have occurred and are continuing, due to the Company’s current liquidity situation. On February 22, 2023, the Company and the Agent executed an amendment to the Loan Agreement (the “Amendment”) which, among other things, (i) the Company agreed to repay the principal amount of the term loan to the Agent in the following installments: (A) $2 million on February 23, 2023, (B) $1 million on August 22, 2023 and (C) the entire remaining principal balance and all accrued but unpaid interest (including the Original Issue Discount, as defined in the Amendment) on August 22, 2024; (ii) the Agent agreed to withdraw the Notice of Default and not exercise its purported rights and remedies thereunder; (iii) the Lender may elect, at any time and from time to time, to convert any outstanding portion of the outstanding term loan into shares of the Company’s common stock at a conversion price of $0.50 per share; (iv) removed the “Cash Minimum” covenant of which the Company had to maintain unrestricted, unencumbered Cash (as defined in the Loan Agreement) of at least $2,000,000; (v) removed the EBITDA (as defined in the Loan Agreement) covenant of which the Company had to maintain at least the applicable EBITDA Target (as defined in the Loan Agreement) for each calendar quarter; (vi) removed the revenue covenant in which the Company had to maintain consolidated quarterly net revenue of at least $75 million each calendar quarter and (vii) provide a lien to JGB in the Company’s claims for trademark infringement against Volkswagen Group of America, Inc. pursuant to the lawsuit currently pending in the (X) United States District Court for the District of New Jersey and captioned as Onyx Enterprises Int’l, Corp v. Volkswagen Group of America, Inc., and all proceeds and products thereof and (Y) United States District Court for the District of Massachusetts and captioned as Onyx Enterprises International Corp. v. ID Parts LLC, and all proceeds and products thereof (collectively, the “Volkswagen Trademark Claims”), provided that the Company can secure the Permitted Litigation Indebtedness (as defined in the Amendment) on the terms described in the Amendment. In connection with the Amendment, the Company and the Agent entered into an Amended and Restated Intellectual Property and Security Agreement (the “A&R Security Agreement”) which amended and restated that certain Intellectual Property and Security Agreement, dated as of October 21, 2022. The A&R Security Agreement removed the exclusion of the Volkswagen Trademark Claims from the Agent’s security interest in the Company’s intellectual property. On February 17, 2023, Antonino Ciappina, the Chief Executive Officer (“CEO”) resigned as the CEO and principal executive officer of the Company for personal reasons. The Board immediately appointed John Pendleton, the Company’s current Executive Vice President, Legal & Corporate Affairs as the Company’s interim CEO and principal executive officer. Mr. Pendleton continues to serve in his capacity as the Company’s Executive Vice President, Legal & Corporate Affairs. In February 2023, the Company laid off approximately 60% of its employees to conserve resources as it is in the process of obtaining additional financing. On March 6, 2023 (the “Initial Closing Date”), PARTS iD, Inc., a Delaware corporation (the “Company”), entered into a Note and Warrant Purchase Agreement (the “Purchase Agreement”) whereby the Company agreed to issue and sell to certain investors (collectively, the “Investors”), in a private placement, (i) an aggregate principal amount of up to $10 million in junior secured convertible promissory notes (the “Convertible Notes”) and (ii) an aggregate of up to two million warrants to purchase the Company’s common stock at an exercise price of $0.50 per share (the “Warrants”), in one or more closings pursuant to the terms of the Purchase Agreement. All of the disinterested directors of the Company’s Board of Directors, as well as the disinterested directors of the Audit Committee, reviewed and approved the terms of the Purchase Agreement, Convertible Notes and Warrants. As of the Initial Closing Date, the Company issued and sold (i) an aggregate principal amount of $2,900,000 of Convertible Notes and (ii) an aggregate of 580,000 Warrants, of which $2,650,000 of Convertible Notes and 530,000 Warrants were purchased by entities affiliated with certain directors, officers and beneficial owners of the Company. The Convertible Notes accrue interest at 7.75% per annum, compounded semi-annually and such interest may be paid at the option of the Company either in cash or common stock. Upon the Company’s sale and issuance of equity or equity-linked securities pursuant to which the Company receives aggregate gross proceeds of at least $3 million (a “Qualified Equity Financing”), the Convertible Notes are mandatorily convertible into shares of such equity securities sold in the Qualified Equity Financing. The Company may, at its option, redeem the Convertible Notes (including the outstanding principal and any accrued but unpaid interest thereon) for cash, in full or in part, if the Convertible Notes have otherwise not been converted within 180 days of the date of issuance. In addition, upon a Change of Control (as defined in the Convertible Notes) of the Company, the Convertible Notes shall be repaid in full at or before the closing of such transaction in cash. The Convertible Notes are strictly subordinated to the (i) senior secured indebtedness incurred or owed by the Company pursuant to that certain Loan and Security Agreement, dated as of October 21, 2022, by and among the Company, its subsidiary PARTS iD, LLC, a Delaware limited liability company and JGB Collateral, LLC, a Delaware limited liability company, in its capacity as collateral agent and the several financial institutions or entities that from time to time become parties thereto, as amended by that certain Amendment to Loan and Security Agreement, dated as of February 22, 2023 (the “Loan Agreement”); and (ii) the Permitted Litigation Indebtedness (as defined in the Loan Agreement). Subject to the subordination provisions described above and more fully described in the Convertible Notes, the Convertible Notes are secured by a junior security interest in all of the Company’s right, title, and interest in and to all of the Company’s assets. The Convertible Notes mature on March 6, 2025. The Warrants will expire after 5 years from the date of issuance and may not be exercised on a cashless basis. The Warrants provide that a holder of Warrants will not have the right to exercise any portion of its Warrants, if such holder, together with its affiliates, and any other party whose holdings would be aggregated with those of the holder for purposes of Section 13(d) or Section 16 of the Exchange Act would beneficially own in excess of 4.99%, of the number of shares of the Company’s Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that each holder may increase or decrease the Beneficial Ownership Limitation by giving notice to the Company, with any such increase not taking effect until the sixty-first day after such notice is delivered to the Company but not to any percentage in excess of 9.99%; provided that any holder of the Warrants that beneficially owns in excess of 19.99% of the number of shares of the Common Stock outstanding on the issuance date of the Warrants shall not be subject to the Beneficial Ownership Limitation. The Company intends to use the proceeds from the issuance of the Convertible Notes and the Warrants for working capital purposes and the repayment of current indebtedness. The Convertible Notes and the Warrants were issued by the Company in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and have not been registered under the Securities Act. The Company’s management evaluated subsequent events through the date of issuance of these consolidated financial statements. There have been no subsequent events other than those described above that occurred that would require adjustment to or disclosure in the consolidated financial statements as of and for the year ended December 31, 2022. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
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 consolidated 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 consolidated financial statements include assessment of the Company’s ability to continue as a going concern, revenue recognition, return allowances, allowance for doubtful accounts, valuation of deferred income tax assets, stock-based compensation, and the capitalization and recoverability of software development costs. |
Stock Compensation | Stock Compensation Compensation expense related to stock option awards and restricted stock units granted to certain employees, directors and consultants is based on the fair value of the awards on the grant date. If the service inception date precedes the grant date, accrual of compensation cost for periods before the grant date is based on the fair value of the award at the reporting date. In the period in which the grant date occurs, cumulative compensation cost is adjusted to reflect the cumulative effect of measuring compensation cost based on fair value at the grant date rather than the fair value previously used at the service inception date or any subsequent reporting date. Forfeitures are recorded as they occur. The Company recognizes compensation cost related to time-vested options and restricted stock units with graded vesting features on a straight-line basis over the requisite service period. Compensation cost related to a performance-vesting options and performance-based units, where a performance condition or a market condition that affects vesting exists, is recognized over the shortest of the explicit, implicit, or defined service periods. Compensation cost is adjusted depending on whether the performance condition is achieved. If the achievement of the performance condition is probable or becomes probable, the full fair value of the award is recognized. If the achievement of the performance condition is not probable or ceases to be probable, then no compensation cost is recognized or amounts previously recognized are reversed. |
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 has significant cash balances at financial institutions which throughout the year regularly exceed the federally insured limit of $250,000. Any loss incurred or lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. 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. |
Going Concern | Going Concern These consolidated financial statements have been prepared in accordance with GAAP assuming the Company will continue as a going concern. The going concern assumption contemplates the realization of assts and satisfaction of liabilities in the normal course of business. We have operated with a negative working capital model since our inception. The Company has a working capital deficiency of approximately $41.6 million. We continue to face macro-economic headwinds and the resulting declining revenue and profitability, which substantially decreased the negative working capital, and resulted in the use of approximately $18.5 million in cash from operating activities, of which $14.3 million was attributable to changes in working capital during the year ended December 31, 2022. With this, substantial doubt exists about the Company’s ability to continue as a going concern within one year from the date of the issuance of these consolidated financial statements. To address liquidity concerns, the Company is pursuing additional financing and continues to restructure and optimize its operations including moderating capital investments, improving gross margin, reducing expenses, and renegotiating vendor payment terms. The Company also believes that the newly negotiated shipping contract will lead to a substantial reduction in shipping costs which it began to realize in November 2022. This will enable the Company to increase revenue and improve profitability. In addition, the Company obtained $5 million from the Loan Agreement with JGB (as discussed below) of net funding to address its liquidity needs. PARTS iD has retained Canaccord Genuity Group, Inc. (“Canaccord”) as its financial advisor and DLA Piper LLP (US) as its legal counsel to assist in evaluating potential strategic alternatives. There can be no assurance that the evaluation of strategic alternatives will result in any potential transaction, or any assurance as to its outcome or timing. PARTS iD has not set a timetable for completion of the process and does not intend to disclose developments related to the process unless and until PARTS iD executes a definitive agreement with respect thereto, or the Board otherwise determines that further disclosure is appropriate or required. On February 24, 2022, the Russian Federation launched a full-scale invasion against Ukraine, and sustained conflict and disruption in the region is ongoing. The Company’s ability to maintain adequate liquidity for its operations is dependent upon a number of factors, including its revenue and earnings, the impacts of COVID-19 on macroeconomic conditions, and its ability to take further cost savings and cash conservation measures if necessary. The conflict could have a material adverse effect upon the Company. Refer to Note 14 — Subsequent Events for additional information. |
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, 2022 and 2021, the Company determined that an allowance for doubtful accounts was not necessary. |
Inventory | Inventor Inventory consists 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. Merchandise-in-transit directly from suppliers to customers is recorded in inventory until the product is delivered to the customer. As of December 31, 2022 and 2021, merchandise-in-transit amounted to $957,735 and $4,053,610, respectively. Risk of loss is transferred from the supplier to the Company at the shipping point. Since the purchased goods are immediately shipped directly from suppliers to customers the Company deemed that an inventory reserve for obsolete or slow moving goods was unnecessary. |
Other Current Assets [PolicyText Block] | Other Current Assets Other current assets include advances to vendors amounting to $1,796,680 and $3,185,681 as of December 31, 2022 and 2021, respectively, which is included in prepaid expenses and other current assets on the consolidated balance sheets. |
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 ASC 350-50, Intangibles – Goodwill and Other – Website Development Costs, Intangibles – Goodwill and Other – Internal Use Software, |
Property and Equipment | Property and E pment 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 | Intan ible 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, 2022 and 2021, and no impairment charges were necessary. |
Accounts Payable | Accounts Payable Accounts payable as of December 31, 2022 consisted of amounts payable to vendors of $33.1 million and credit card payable of $3.3 million payable to a credit card company. The Company has not reached a definitive agreement with the credit card company on paying off the balance owed. The Company stopped making any payments and is responsible for late fees and any interest on the outstanding balance. As of December 31,2022, accounts payable consisted of amounts payable to vendors was $33.9 million and $6.7 million credit card payable to the same credit card company mentioned above. |
Revenue Recognition | Revenue Reco nition In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) 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. Allowances for sales returns at December 31, 2022 and 2021, were $549,250 and $738,465, 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 $230,157 and $353,985 for the years ended December 31, 2022 and 2021, 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 $3,098,119 and $15,497,857 at December 31, 2022 and 2021, 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 $3,414,019 and $2,855,998 at December 31, 2022 and 2021, 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. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. The Company incurred $31.5 million in advertising costs during the year ended December 31, 2022 and $42.4 million during the year ended December 31, 2021. |
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 consolidated financial statements. The Company files U.S. federal and State of New Jersey tax returns and had no unrecognized tax benefits at December 31, 2022 and 2021. 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, 2022 and 2021. 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 For the years ended December 31, 2022 and 2021, basic net loss per common share was determined by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of calculating diluted net loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include performance-based stock units and unvested restricted stock units using the treasury stock method. For all periods presented, there is no difference in the number of shares used to compute basic and diluted net loss per common share due to the Company’s net loss. The following average number of potentially dilutive securities were excluded from the computation of diluted weighted-average shares outstanding for the years ended December 31, 2022 and 2021, as they were antidilutive: Years ended December 31, 2022 2021 Performance-based units 527,000 619,000 Unvested restricted stock units 1,053,445 1,551,033 Warrant - JGB 1,000,000 - Total 2,580,445 2,170,033 |
New Accounting Standards | New Accountin Standards In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Leases, (ASC 842) In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment are stated at cost less accumulated depreciation | 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 diluted weighted-average shares outstanding | Years ended December 31, 2022 2021 Performance-based units 527,000 619,000 Unvested restricted stock units 1,053,445 1,551,033 Warrant - JGB 1,000,000 - Total 2,580,445 2,170,033 |
Property and equipment (Tables)
Property and equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | December 31, 2022 2021 Website and software development $ 50,697,486 $ 43,265,793 Furniture and fixtures 851,926 851,926 Computers and electronics 1,015,853 994,925 Vehicles 325,504 430,162 Leasehold improvements 300,673 237,190 Video and equipment 176,903 176,903 Total - gross 53,368,345 45,956,899 Less: accumulated depreciation (40,452,572 ) (32,256,023 ) Total - net $ 12,915,773 $ 13,700,876 |
Shareholders_ Deficit (Tables)
Shareholders’ Deficit (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Shareholders’ Deficit [Abstract] | |
Schedule of shares of Class A common stock for issuance | Nature of Reserve As of As of a. Indemnification reserve: Upon the expiration of the indemnification period of two 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 750,000 750,000 b. EIP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Equity Incentive Plan 3,212,078 4,112,248 c. ESPP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Employee Stock Purchase Plan 2,043,582 2,043,582 Total shares reserved for future issuance 6,005,660 6,905,830 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of first operating lease | October 1, 2022 to September 30, 2023 $ 11,265 October 1, 2023 to September 30, 2024 $ 11,605 October 1, 2024 to September 30, 2025 $ 11,957 October 1, 2022 to September 30, 2023 $ 7,367 October 1, 2023 to September 30, 2024 $ 7,588 October 1, 2024 to September 30, 2025 $ 7,814 |
Schedule of future minimum lease payments under non-cancelable operating leases | Year ending December 31, 2023 $ 753,871 2024 276,358 2025 177,939 Total future minimum lease payments $ 1,208,168 Less portion representing interest (133,114 ) Present value of lease obligations 1,075,054 Less current portion of lease obligations (688,188 ) Long term portion of lease obligations $ 386,866 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation [Abstract] | |
Schedule of summarizes the activity related to RSU | Weighted Restricted Average Grant Stock Date Units Fair Value Unvested balance at beginning of the period 1,551,033 $ 6.52 Granted 414,582 $ 1.13 Vested (860,169 ) $ 6.12 Forfeited (52,001 ) $ 7.62 Unvested balance at December 31, 2022 1,053,445 $ 4.67 |
Schedule of summarizes the activity related to PSU | PSU Type Balance at December 31, Granted Forfeited Balance at Net revenue based 421,600 29,600 103,200 495,200 Weighted average grant date fair value $ 7.61 $ 2.20 $ 7.92 $ 8.00 Cash flow based 105,400 7,400 25,800 123,800 Weighted average grant date fair value $ 1.55 1.55 $ 1.55 $ 2.44 Total 527,000 37,000 129,000 619,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | December 31, 2022 2021 Current Federal $ - $ - State 27,446 34,317 Subtotal 27,446 34,317 Deferred Federal 2,305,034 (1,208,287 ) State 10,037 (6,820 ) Subtotal 2,315,071 (1,215,107 ) Total income tax expense (benefit) $ 2,342,517 $ (1,180,790 ) |
Schedule of effective income tax rate reconciliation | December 31, 2022 2021 Federal statutory rate 21.00 % 21.00 % Permanent items (4.94 )% (5.27 )% State and local taxes, net of federal taxes 0.00 % (0.16 )% Deferred rate changes (0.02 )% 0.00 % Change in valuation allowance (33.88 )% - Other (2.56 )% (2.66 )% (20.4 )% 12.91 % |
Schedule of net deferred tax (liabilities)/assets | December 31, 2022 2021 Allowance for doubtful accounts $ 108,000 $ 108,000 Accrued expenses 259,000 181,500 Stock compensation 42,400 225,600 Net operating loss carryforward 3,757,700 1,717,400 Accumulated depreciation (1,320,700 ) (2,362,800 ) Deferred revenue 573,500 867,900 Lease liability 229,300 - Other miscellaneous items 35,900 1,400 Right-of-use asset (229,300 ) - Start-up costs 1,462,700 1,575,907 Total deferred tax assets 4,918,500 2,314,907 Valuation allowance (4,918,500 ) - Deferred tax assets, net $ - $ 2,314,907 |
Organization and Description _2
Organization and Description of Business (Details) | 12 Months Ended |
Dec. 31, 2022 shares | |
Organization and Description of Business (Details) [Line Items] | |
Description of business | PARTS iD has a product portfolio comprising approximately 18 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, over 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, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Cash balances | $ 250,000 | |
Working capital | 41,600,000 | |
Decreased in working capital | 18,500,000 | |
Cash from operating activities | 14,300,000 | |
Liquidity needs | 5,000,000 | |
Merchandise-in-transit amounted | 957,735 | $ 4,053,610 |
Other Assets, Miscellaneous, Current | 1,796,680 | 3,185,681 |
Vendors accounts payable | 33,900,000 | |
Credit card payable | 6,700,000 | |
Allowances for sales returns | 549,250 | 738,465 |
Advertising revenue | 230,157 | 353,985 |
Customer deposits | 3,098,119 | 15,497,857 |
Accrued expenses | 3,414,019 | 2,855,998 |
Advertising costs expense | 31,500,000 | $ 42,400,000 |
Accounts Payable [Member] | ||
Summary of Significant Accounting Policies (Details) [Line Items] | ||
Vendors accounts payable | 33,100,000 | |
Credit card payable | $ 3,300,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of property and equipment are stated at cost less accumulated depreciation | 12 Months Ended |
Dec. 31, 2022 | |
Video and studio equipment [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Website and internally developed software [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Computer and electronics [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Vehicles [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Furniture and Fixtures [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Leasehold Improvements [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Leasehold improvements | Lesser of useful life or lease term |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of computation of diluted weighted-average shares outstanding - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Computation Of Diluted Weighted Average Shares Outstanding Abstract | ||
Performance-based units | 527,000 | 619,000 |
Unvested restricted stock units | 1,053,445 | 1,551,033 |
Warrant - JGB | 1,000,000 | |
Total | 2,580,445 | 2,170,033 |
Property and equipment (Details
Property and equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Stock-based compensation | $ 1,727,674 | $ 2,120,655 |
Depreciation | $ 8,283,981 | $ 7,465,095 |
Property and equipment (Detai_2
Property and equipment (Details) - Schedule of property and equipment - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 53,368,345 | $ 45,956,899 |
Less: accumulated depreciation | (40,452,572) | (32,256,023) |
Total - Net | 12,915,773 | 13,700,876 |
Website and software development [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 50,697,486 | 43,265,793 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 851,926 | 851,926 |
Computers and electronics [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 1,015,853 | 994,925 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 325,504 | 430,162 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | 300,673 | 237,190 |
Video and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and Equipment, Gross | $ 176,903 | $ 176,903 |
Debt (Details)
Debt (Details) - USD ($) | 12 Months Ended | ||
Feb. 27, 2023 | Dec. 31, 2022 | Apr. 30, 2023 | |
Debt (Details) [Line Items] | |||
Aggregate principal amount | $ 11,000,000 | ||
Original issue discount | $ 500,000 | ||
Warrants exercisable | 5 years | ||
Per-share exercise price (in Dollars per share) | $ 2 | ||
Effective interest rate amount | $ 5,500,000 | ||
Effective interest rate | 17.90% | ||
Debt issuance costs | $ 165,000 | ||
Loan discount | 500,000 | ||
Outstanding net | 4,200,000 | ||
Amortization of debt issue costs | 18,903 | ||
Amortization of discount | 56,735 | ||
Interest expense | 166,527 | ||
Issuance cost | 799,000 | ||
Fair value of warrants | $ 551,000 | ||
Loan monthly payments | 30 months | ||
Due date | Sep. 30, 2025 | ||
Warrant [Member] | |||
Debt (Details) [Line Items] | |||
Purchase to warrants (in Shares) | 1,000,000 | ||
Common Stock [Member] | |||
Debt (Details) [Line Items] | |||
Purchase to warrants (in Shares) | 1,000,000 | ||
Per-share exercise price (in Dollars per share) | $ 2 | ||
First tranches [Member] | |||
Debt (Details) [Line Items] | |||
Aggregate principal amount | $ 5,500,000 | ||
Second tranche [Member] | |||
Debt (Details) [Line Items] | |||
Aggregate principal amount | $ 5,500,000 | ||
Class A Common Stock [Member] | |||
Debt (Details) [Line Items] | |||
Class A common stock, par value (in Dollars per share) | $ 0.0001 | ||
Subsequent Event [Member] | |||
Debt (Details) [Line Items] | |||
Monthly payments of amount | $ 183,333 | ||
JGB [Member] | Subsequent Event [Member] | |||
Debt (Details) [Line Items] | |||
Loan repaid | $ 2,000,000 | ||
Black-Scholes model [Member] | |||
Debt (Details) [Line Items] | |||
Purchase to warrants (in Shares) | 1,000,000 |
Shareholders_ Deficit (Details)
Shareholders’ Deficit (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Shareholders’ Deficit (Details) [Line Items] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Class A Common Stock [Member] | ||
Shareholders’ Deficit (Details) [Line Items] | ||
Shares of common stock outstanding | 34,825,971 | 33,965,804 |
Shares of common stock issued | 6,005,660 | 6,905,830 |
Shareholders_ Deficit (Detail_2
Shareholders’ Deficit (Details) - Schedule of shares of Class A common stock for issuance - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule Of Shares Of Class ACommon Stock For Issuance Abstract | ||
Indemnification reserve: Upon the expiration of the indemnification period of two 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 | 750,000 | 750,000 |
EIP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Equity Incentive Plan | 3,212,078 | 4,112,248 |
ESPP reserve: Shares reserved for future issuance under the stockholder approved Parts iD, Inc. 2020 Employee Stock | ||
Purchase Plan | 2,043,582 | 2,043,582 |
Total shares reserved for future issuance | 6,005,660 | 6,905,830 |
Shareholders_ Deficit (Detail_3
Shareholders’ Deficit (Details) - Schedule of shares of Class A common stock for issuance (Parentheticals) | Dec. 31, 2022 shares |
Schedule Of Shares Of Class ACommon Stock For Issuance Abstract | |
Common shares to former Onyx shareholders | 750,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) m² | Dec. 31, 2021 USD ($) | |
Commitments and Contingencies (Details) [Line Items] | ||
Operating leases expire term | 3 years | |
Rental expense (in Dollars) | $ | $ 856,319 | $ 1,207,969 |
Operating lease square feet (in Square Meters) | 6,800 | |
Lease payments discount rate | 7% | |
Weighted average term | 2 years | |
Leases renewal | 2 years | |
New Jersey [Member] | ||
Commitments and Contingencies (Details) [Line Items] | ||
Operating lease square feet (in Square Meters) | 13,600 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of first operating lease | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
October 1, 2022 to September 30, 2023 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | $ 7,367 |
October 1, 2023 to September 30, 2024 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | 7,588 |
October 1, 2024 to September 30, 2025 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | 7,814 |
New Jersey [Member] | October 1, 2022 to September 30, 2023 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | 11,265 |
New Jersey [Member] | October 1, 2023 to September 30, 2024 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | 11,605 |
New Jersey [Member] | October 1, 2024 to September 30, 2025 [Member] | |
Debt Instrument [Line Items] | |
Monthly payments | $ 11,957 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of future minimum lease payments under non-cancelable operating leases | Dec. 31, 2022 USD ($) |
Schedule Of Future Minimum Lease Payments Under Non Cancelable Operating Leases Abstract | |
2023 | $ 753,871 |
2024 | 276,358 |
2025 | 177,939 |
Total future minimum lease payments | 1,208,168 |
Less portion representing interest | (133,114) |
Present value of lease obligations | 1,075,054 |
Less current portion of lease obligations | (688,188) |
Long term portion of lease obligations | $ 386,866 |
Legal Matters (Details)
Legal Matters (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Feb. 09, 2023 | Nov. 28, 2022 | Oct. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Legal Matters (Details) [Line Items] | ||||||
Total payments | $ 491,474 | |||||
Payments | $ 49,147 | $ 49,147 | ||||
Monthly installments | $ 32,765 | |||||
Interest percentage | 5% | |||||
Payment due date | Dec. 29, 2023 | |||||
Balance due from parts | $ 257,090.75 | |||||
Accrued amount | $ 614,983 | $ 620,000 | ||||
Subsequent Event [Member] | ||||||
Legal Matters (Details) [Line Items] | ||||||
Balance due from parts | $ 275,051.3 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 28, 2022 | Oct. 31, 2020 | Dec. 31, 2022 | Jun. 14, 2023 | |
Stock-Based Compensation (Details) [Line Items] | ||||
Common stock reserved for issuance | 750,000 | |||
Selling, general and administrative expenses (in Dollars) | $ 2,444,246 | |||
RSUs granted shares | 376,582 | 75,000 | ||
Vested shares | 50,000 | 726,863 | 326,582 | |
Vested period | 3 years | |||
Forfeited shares | 52,001 | |||
Stock-based compensation expense (in Dollars) | $ 2,444,246 | |||
Weighted average period | 1 year 25 days | |||
Granted PSUs to several employees | 37,000 | |||
Forfeited and the remaining outstanding | 129,000 | |||
Net revenue performance-based vesting conditions percentage | 80% | |||
Cash flow performance-based vesting conditions percentage | 20% | |||
Class A Common Stock [Member] | ||||
Stock-Based Compensation (Details) [Line Items] | ||||
Common stock reserved for issuance | 4,904,596 | |||
Remain available for issuance shares | 3,212,078 | |||
Issuance of common stock shares | 2,043,582 | |||
Restricted Stock Units (RSUs) [Member] | ||||
Stock-Based Compensation (Details) [Line Items] | ||||
Unamortized stock based compensation expense (in Dollars) | $ 4,200,000 | |||
Weighted average period | 9 months 10 days | |||
Director [Member] | ||||
Stock-Based Compensation (Details) [Line Items] | ||||
Vested shares | 106,812 | |||
Non Directors [Member] | ||||
Stock-Based Compensation (Details) [Line Items] | ||||
Vested shares | 753,357 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to RSUs | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Schedule of Summarizes the Activity Related to Rsus [Abstract] | |
Restricted Stock Units, Unvested balance at beginning of the period | shares | 1,551,033 |
Weighted Average Grant Date Fair Value, Unvested balance at beginning of the period | $ / shares | $ 6.52 |
Restricted Stock Units, Granted | shares | 414,582 |
Weighted Average Grant Date Fair Value, Granted | $ / shares | $ 1.13 |
Restricted Stock Units, Vested | shares | (860,169) |
Weighted Average Grant Date Fair Value, Vested | $ / shares | $ 6.12 |
Restricted Stock Units, Forfeited | shares | (52,001) |
Weighted Average Grant Date Fair Value, Forfeited | $ / shares | $ 7.62 |
Restricted Stock Units, Unvested balance at ending of the period | shares | 1,053,445 |
Weighted Average Grant Date Fair Value, Unvested balance at ending of the period | $ / shares | $ 4.67 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs [Line Items] | |
Balance Beginning | 527,000 |
Granted | 37,000 |
Forfeited | 129,000 |
Balance Ending | 619,000 |
Net revenue based [Member] | |
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs [Line Items] | |
Balance Beginning | 421,600 |
Granted | 29,600 |
Forfeited | 103,200 |
Balance Ending | 495,200 |
Weighted average grant date fair value [Member] | |
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs [Line Items] | |
Balance Beginning (in Dollars per share) | $ / shares | $ 7.61 |
Granted (in Dollars per share) | $ / shares | 2.2 |
Forfeited (in Dollars per share) | $ / shares | 7.92 |
Balance Ending (in Dollars per share) | $ / shares | $ 8 |
Cash flow based [Member] | |
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs [Line Items] | |
Balance Beginning | 105,400 |
Granted | 7,400 |
Forfeited | 25,800 |
Balance Ending | 123,800 |
Weighted average grant date fair value [Member] | |
Stock-Based Compensation (Details) - Schedule of summarizes the activity related to PSUs [Line Items] | |
Balance Beginning (in Dollars per share) | $ / shares | $ 1.55 |
Granted (in Dollars per share) | $ / shares | 1.55 |
Forfeited (in Dollars per share) | $ / shares | 1.55 |
Balance Ending (in Dollars per share) | $ / shares | $ 2.44 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | (20.40%) | 12.91% |
Federal statutory rate | 21% | |
Federal net operating losses (in Dollars) | $ 17,034,462 | |
Percentage of taxable income | 80% | |
Tax attributes, percentage | 50% |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of income tax expense - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current | ||
Federal | ||
State | 27,446 | 34,317 |
Subtotal | 27,446 | 34,317 |
Deferred | ||
Federal | 2,305,034 | (1,208,287) |
State | 10,037 | (6,820) |
Subtotal | 2,315,071 | (1,215,107) |
Total income tax expense (benefit) | $ 2,342,517 | $ (1,180,790) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of effective income tax rate reconciliation | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Effective Income Tax Rate Reconciliation [Abstract] | ||
Federal statutory rate | 21% | 21% |
Permanent items | (4.94%) | (5.27%) |
State and local taxes, net of federal taxes | 0% | (0.16%) |
Deferred rate changes | (0.02%) | 0% |
Change in valuation allowance | (33.88%) | |
Other | (2.56%) | (2.66%) |
Income tax rate | (20.40%) | 12.91% |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of net deferred tax (liabilities)/assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Net Deferred Tax Liabilities Assets [Abstract] | ||
Allowance for doubtful accounts | $ 108,000 | $ 108,000 |
Accrued expenses | 259,000 | 181,500 |
Stock compensation | 42,400 | 225,600 |
Net operating loss carryforward | 3,757,700 | 1,717,400 |
Accumulated depreciation | (1,320,700) | (2,362,800) |
Deferred revenue | 573,500 | 867,900 |
Lease liability | 229,300 | |
Other miscellaneous items | 35,900 | 1,400 |
Right-of-use asset | (229,300) | |
Start-up costs | 1,462,700 | 1,575,907 |
Total deferred tax assets | 4,918,500 | 2,314,907 |
Valuation allowance | (4,918,500) | |
Deferred tax assets, net | $ 2,314,907 |
Impact of Covid-19 (Details)
Impact of Covid-19 (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Gross margin percentage | 18.70% |
Compared to prior year percentage | 20.10% |
Equity Offering Sales Agreeme_2
Equity Offering Sales Agreement (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Nov. 18, 2022 | Dec. 31, 2022 | |
Equity Offering Sales Agreement (Details) [Line Items] | ||
Aggregate gross sales price | $ 15,970,800 | |
Gross sales proceeds percentage | 3% | |
Class A Common Stock [Member] | ||
Equity Offering Sales Agreement (Details) [Line Items] | ||
Common stock, par value | $ 0.0001 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Mar. 06, 2023 | Feb. 06, 2023 | Jan. 17, 2023 | Feb. 28, 2023 | Feb. 23, 2023 | Feb. 22, 2023 | Dec. 31, 2022 | Aug. 22, 2023 | Jan. 06, 2023 | |
Subsequent Events (Details) [Line Items] | |||||||||
Accrue interest rate | 7.75% | ||||||||
Gross proceeds | $ 3,000,000 | ||||||||
Warrants expire term | 5 years | ||||||||
Common stock outstanding percentage | 4.99% | ||||||||
Excess percentage | 9.99% | ||||||||
Ownership percentage | 19.99% | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent Events (Details) [Line Items] | |||||||||
Loan payable | $ 5,507,333 | ||||||||
Aggregate amount | $ 50,000 | ||||||||
Operating expenses percentage | 10% | ||||||||
Installment amount | $ 2,000,000 | $ 1,000,000 | |||||||
Conversion price, per share (in Dollars per share) | $ 0.5 | ||||||||
Unencumbered cash | $ 2,000,000 | ||||||||
Revenue | $ 75,000,000 | ||||||||
Employees percentage | 60% | ||||||||
Aggregate principal amount | $ 2,900,000 | ||||||||
Warrants | 530,000 | ||||||||
Subsequent Event [Member] | Warrant [Member] | |||||||||
Subsequent Events (Details) [Line Items] | |||||||||
Warrants | $ 580,000 | ||||||||
Exercise price, per share (in Dollars per share) | $ 0.5 | ||||||||
Convertible Notes Payable [Member] | Subsequent Event [Member] | |||||||||
Subsequent Events (Details) [Line Items] | |||||||||
Aggregate principal amount | $ 10,000,000 | ||||||||
Warrants | 2,650,000 | ||||||||
Convertible Notes Payable [Member] | Subsequent Event [Member] | Warrant [Member] | |||||||||
Subsequent Events (Details) [Line Items] | |||||||||
Warrants | $ 2 |