Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

v3.23.3
Subsequent Events
9 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
Subsequent Events

Note 10 – Subsequent Events

  

On October 6, 2023, the Company entered into a definitive Restructuring Support Agreement (the “RSA”) to restructure the Company’s indebtedness with certain of its trade vendors (the “Consenting Vendors”). Pursuant to the terms and conditions of the RSA, the Company agreed to pay to each holder of a (i) Vendor Claim (as defined in the RSA), an amount equal to 55% of such total Vendor Claim consisting of (A) 12.5% of such Vendor Claim (the “Initial Payment”) on the earlier to occur of (X) two business days following the Company’s receipt of the Restructuring Funds (as defined in the RSA) and (Y) December 15, 2023, and (B) the remaining 42.5% of such Vendor Claim paid monthly over 36 months; and (ii) a Convenience Claim (as defined in the RSA), an amount equal to 65% of such Convenience Claim (A) with respect to a Consenting Vendor, no later than two business days after the Company makes the Initial Payment and (B) with respect to an Additional Consenting Vendor (as defined in the RSA), on the later of (X) two business days after the Company makes the Initial Payment and (Y) five business days after such Additional Consenting Vendor’s execution of an Accession Letter (as defined in the RSA). The RSA will terminate automatically upon the earliest occur of (i) payment of the full amount of the Agreed Vendor Claim (as defined in the RSA) to each Consenting Vendor and (ii) the mutual written consent of the Company and the Consenting Vendors holding at least 80% of the Total Vendor Claim Amount (as defined in the RSA).

 

On October 9, 2023, Lind Global Partners II, L.P. converted $230,000 of debt into 1,703,704 shares of the Company’s stock at $0.135 per share. The conversion price was based on the three lowest VWAPS during the twenty Trading Days prior to the conversion.

 

On October 20, 2023, the Company entered into a Note Purchase Agreement whereby the Company agreed to issue and sell to Sanjiv Gomes, the Company’s Chief Information Officer, in a private placement, an unsecured promissory note in the aggregate principal amount of $1,000,000 (the “Unsecured Note”). The Unsecured Note bears interest at the rate of 7.75% per annum, compounded semi-annually, and matures on October 20, 2024. The Unsecured Note is unsecured and is strictly subordinated in right of payment to the prior payment in full of all of the (i) indebtedness owed by the Company to Lind pursuant to the Lind Purchase Agreement and (ii) litigation funding provided by the Funder pursuant to the Funding Agreement. The Unsecured Note also provides that the Company and Mr. Gomes intend for the Unsecured Note to be an emergency loan advance to bridge the Company to a possible debtor-in-possession financing facility and for such advance to be included as part of that facility (if and when applicable).

 

The Company failed to meet its obligations under the terms of the Lind Agreement and Lind Note after the balance sheet date. In October, the Company did not have sufficient authorized shares to fulfill its obligations to issue shares upon request from the Lind Note and Lind Warrant, which is deemed to be an event of default. Upon occurrence of the event of default, the Company is liable to, among other remedies available to the investor, pay 110% of the outstanding principal amount of the Lind Note resulting in a payoff of $5.3 million or convert, at the request of the investor, all or a portion of the outstanding principal amount into shares of Common Stock at the lower of (i) the then-current Conversion Price (as defined in the Lind Note) and (ii) 80% of the average of the three (3) lowest daily VWAPs during the 20 trading days prior to the delivery by Lind of the applicable notice of conversion. The Company does not currently have sufficient amount of authorized shares of Common Stock to have the outstanding principal balance of the Lind Note convert into, and the Lind Warrant exercised into, shares of the Company’s Common Stock.

 

On October 25, 2023, Lind Global Partners II, L.P. converted $201,500 of debt into 1,707,627 shares of the Company’s stock at $0.118 per share. The conversion price was based on the three lowest VWAPS during the twenty Trading Days prior to the conversion.

 

On October 27, 2023 the Company received written notice from the NYSE American LLC indicating that the Company is not in compliance with the continued listing standard set forth in Section 1003(f)(v) of the NYSE American Company Guide (“Section 1003(f)(v)”) because the shares of the Company’s Class A common stock, par value $0.0001 per share (the “Common Stock”) have been selling for a substantial period of time at a low price per share. The Notice has no immediate effect on the listing or trading of the Company’s Common Stock and the Common Stock will continue to trade on the NYSE American under the symbol “ID” with the designation of “.BC” to indicate that the Company is not in compliance with the NYSE American’s continued listing standards. Additionally, the Notice does not result in the immediate delisting of the Company’s Common Stock from the NYSE American.

 

Pursuant to Section 1003(f)(v), the NYSE American staff (the “Staff”) determined that the Company’s continued listing is predicated on effecting a reverse stock split of its Common Stock or demonstrating sustained price improvement within a reasonable period of time, which the Staff determined to be no later than April 27, 2024. The Notice further stated that as a result of the foregoing, the Company has become subject to the procedures and requirements of Section 1009 of the NYSE American Company Guide, which could, among other things, result in the initiation of delisting proceedings, unless the Company cures the deficiency in a timely manner. The NYSE American may also accelerate delisting action in the event that the Company’s Common Stock trades at levels viewed by the Staff to be abnormally low. 

 

The Company intends to monitor the price of its Common Stock and consider available options if its Common Stock does not trade at a consistent level likely to result in the Company regaining compliance by April 27, 2024. The Company’s receipt of the Notice does not affect the Company’s business, operations or reporting requirements with the Securities and Exchange Commission. 

 

On October 30, 2023, the Company entered into an interim officer engagement agreement (the “Engagement Agreement”) with SRV Partners, LLC, a Delaware limited liability company (“SRVP”). Pursuant to the Engagement Agreement, Arkady A. Goldinstein was appointed as the interim Chief Financial Officer of the Company, effective November 1, 2023. Mr. Goldinstein also assumed on an interim basis the duties of Principal Financial Officer and Principal Accounting Officer of the Company.

 

On November 2, 2023, the Company entered into a Note Purchase Agreement whereby the Company agreed to issue and sell to 2642186 Ontario Inc. (“Ontario”), in a private placement, a junior secured promissory note in the aggregate principal amount of $1,000,000. The note bears interest at the rate of 7.75% per annum, compounded semi-annually, and matures on November 2, 2024. The note is (A) secured by a junior security interest in any potential proceeds from the Company’s currently pending litigation matters (i) in the District of Massachusetts and captioned as Parts iD, Inc. v. ID Parts, LLC (Case No. 1:20-cv-1253-RWZ) and (ii) in the District of New Jersey and captioned as Onyx Enterprises, Int’l Corp. v. Volkswagen Group of America, Inc. (Case No. 20-9976) (collectively, the “Litigation”) and (B) strictly subordinated in right of payment to the prior payment in full of all of the Litigation funding provided by the Funder pursuant to the Funding Agreement. The note also provides that the Company and Ontario intend for the note to be an emergency loan advance to bridge the Company to a possible debtor-in-possession financing facility and for such advance to be included as part of that facility (if and when applicable).

 

On November 3, 2023, Lind Global Partners II, L.P. converted $161,500 of debt into 1,682,291 shares of the Company’s stock at $0.0965 per share. The conversion price was based on the three lowest VWAPS during the twenty Trading Days prior to the conversion.

 

On November 30, 2023, PARTS iD, Inc., a Delaware corporation (the “Company”) entered into a Purchase and Sale of Future Receivables Agreement (the “Riverside Agreement”) with Riverside Capital NY (“RCNY”). Pursuant to the terms of the Riverside Agreement, the Company agreed to sell, and RCNY agreed to purchase, the Company’s right, title and interest in and to $1,469,700 of the Company’s future receivables, for a purchase price of $1,065,000. Pursuant to the terms of the Riverside Agreement, the Company agreed to pay RCNY $15,400 each day until such time as RCNY has been repaid.

 

Also on November 30, 2023, the Company also entered into a Standard Merchant Cash Advance Agreement (the “Wave Agreement”) with WAVE ADVANCE INC (“WAVE”). Pursuant to the terms of the Wave Agreement, the Company agreed to sell, and WAVE agreed to purchase, the Company’s right, title and interest in and to $1,518,000 of the Company’s future receivables, for a purchase price of $1,100,000. Pursuant to the terms of the Wave Agreement, the Company agreed to pay RCNY $15,400 each day until such time as WAVE has been repaid.

 

The Riverside Agreement and the Wave Agreement each provides for the grant of a junior security interest in the future receivables and other related collateral under the Uniform Commercial Code in accounts and proceeds, subordinated to the indebtedness incurred under that certain Securities Purchase Agreement, dated as of July 14, 2023, by and between the Company and Lind Global Fund II LP, as amended.