Item 8.01 Other Events.
As previously disclosed, PARTS iD, Inc., a Delaware corporation (the "Company")
had a working capital deficiency of approximately $36.7 million as of September
30, 2022, and has continued to experience declining revenues. While we have
operated with a working capital deficiency since our inception, this combined
with declined profitability caused us to consume approximately $14.4 million in
cash from operating activities during the nine months ended September 30, 2022.
Since that time, the Company has recently experienced negative changes in its
credit terms and/or credit limits and credit holds on its accounts imposed by
key product vendors and credit card providers due to the Company's liquidity
issues. These circumstances may adversely impact the Company's ability to
maintain its contractual commitments, available supply of products and other
customer and/or vendor relationships that are essential to the Company's
operations.
In light of the Company's near-term liquidity needs, the Company is currently in
ongoing discussions with its key vendors to work out terms so that the Company
may continue to sell such vendors' products under revised credit terms. The
Company has engaged external advisors to assist the Company in negotiating terms
with its vendors. While the Company continues to explore potential alternative
solutions to its liquidity needs, the Company cannot provide any assurances as
to whether new terms will be definitively negotiated with its vendors, or
whether the final terms of any revised agreements entered into with such vendors
will be favorable to the Company. Therefore, there may be risks that our vendors
cause a reduction in the Company's available product catalogue. The Company also
cannot guarantee that sufficient financing sources in the near future may be
available to the Company on reasonable terms or at all with respect to its
ongoing operations.
In addition, as the Company continues to explore and evaluate strategic
alternatives through its advisor, Canaccord Genuity, Inc., as previously
disclosed, ongoing and recent shareholder litigation has presented challenges
and made it more difficult for the Company to pursue these strategic
alternatives and raise necessary additional capital. Our results of operations
and financial condition may be further harmed to the extent we pay the costs of
settlement and damage awards in connection with the shareholder litigation and
any related indemnification claims.
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