Business Wire | Mar 9, 2021 04:05PM EST

PARTS iD, Inc. Reports Record Fourth Quarter and 2020 Results

Mar. 09, 2021

CRANBURY, N.J.--(BUSINESS WIRE)--Mar. 09, 2021--PARTS iD, Inc. (NYSE American: ID) ("PARTS iD" or "Company"), the owner and operator of, among other verticals, "CARiD.com," a leading digital commerce platform for the automotive aftermarket, today announced results for the fourth quarter and year ended December 31, 2020.

Full Year 2020 Financial Summary (Comparisons versus Full Year 2019)

* Net revenue increased 39.3% to $400.8 million as compared to $287.8 million. * Gross margin was 21.4% as compared to 21.3%. * Operating expenses as a percent of net revenue, including $5.5 million of business combination transaction expenses, improved to 21.1% as compared to 21.5%. Excluding transaction expenses, 2020 operating expenses as a percent of net revenue were 19.7%. * Operating income increased $2.1 million to $1.3 million as compared to an operating loss of $(0.8) million. Excluding transaction expenses, 2020 operating income was $6.9 million. * Net income was $2.1 million as compared to a net loss of $(0.7) million. * Adjusted EBITDA was $15.4 million compared to $6.6 million.

Fourth Quarter 2020 Financial Summary (Comparisons versus Fourth Quarter 2019)

* Net revenue increased 32.8% to $93.1 million as compared to $70.1 million. * Gross margin was 20.4% as compared to 21.0%. * Operating expenses as a percent of net revenue, including $5.3 million of business combination transaction expenses, were 27.5% as compared to 23.3%. Excluding transaction expenses, 2020 operating expenses as a percent of net revenue improved to 21.8%. * Operating loss was $(6.6) million as compared to $(1.6) million. Excluding transaction expenses, fourth quarter 2020 operating loss was $(1.3) million. * Net loss was $(4.1) million as compared to $(1.3) million. * Adjusted EBITDA was $1.1 million compared to $0.7 million.

Management Commentary

"Our record-breaking performance in 2020 was filled with numerous highlights and accomplishments," said Nino Ciappina, Chief Executive Officer of PARTS iD. "Financially, we delivered 39% top-line growth and revenue of over $400 million while driving strong gains in profitability and cash generation. Strategically, we made important progress expanding our penetration in newer categories such as OE & Repair parts and in new verticals such as Motorcycles, Boating & RV/Campers, while at the same time capitalizing on the accelerated shift to online spending during the pandemic to accelerate growth of our core business. Operationally, during the year, we on-boarded 155 new vendors, 267 distribution locations and integrated 1,100 tire installation service centers with our platform, further advancing CARiD.com's position as a leading one-stop-shop in the auto aftermarket industry, including the Do-It-For-Me space. On top of all this, we completed a successful business combination to bring PARTS iD to the public markets.

"Looking ahead, we believe our technology-led, data-driven approach to digital commerce provides us with a strong foundation to build on for profitable growth within our existing lines of business as well as expansion into other complex, multidimensional parts and accessories markets. Our strength in combining deep industry knowledge and experience in automotive parts with the strong digital and technical skills of our engineering and development teams is what makes our platform a unique digital commerce business."

Full Year 2020 Results

Net revenue for 2020 increased 39.3% to $400.8 million, compared to $287.8 million in 2019. This increase was primarily attributable to a 24.3% increase in website traffic and a 19.0% increase in the conversion rate compared to 2019. The increase in website traffic and the conversion rate was primarily attributable to product growth in new verticals, search engine bidding automation and optimization, and increased e-commerce adoption due to COVID-19.

Gross profit for 2020 increased 40.2% to $85.8 million compared to $61.2 million in 2019, with gross margin up 10 basis points to 21.4% compared to 21.3%. The increase in gross profit was primarily attributable to the year-over-year increase in revenue.

Operating expenses in 2020 were $84.5 million compared to $62.0 million in 2019. The increase in operating expenses was primarily attributable to higher advertising expenses aimed at driving website traffic and increasing brand awareness, combined with $5.5 million in business combination transaction expenses. Operating expenses as a percent of net revenue improved 40 basis points to 21.1% from 21.5% in 2019, which reflected greater leverage on higher revenues during 2020. Excluding transaction expenses, operating expenses as a percent of net revenue were 19.7%, an improvement of 180 basis points.

Operating income in 2020 increased $2.1 million to $1.3 million as compared to an operating loss of $(0.8) million in 2019. Excluding transaction expenses, 2020 operating income was $6.9 million.

Net income for 2020 was $2.1 million compared to a net loss of $(0.7) million in 2019.

Adjusted EBITDA increased 135.2% to $15.4 million compared to $6.6 million in 2019.

Fourth Quarter 2020 Financial Results

Fourth quarter 2020 net revenue increased 32.8% to $93.1 million, compared to $70.1 million in the fourth quarter of 2019. This increase was primarily attributable to a 11.5% increase in website traffic and a 27.6% increase in the conversion rate compared to the fourth quarter of 2019. The increase in website traffic and the conversion rate was primarily attributable to product growth in new verticals, search engine bidding automation and optimization, and increased e-commerce adoption due to COVID-19.

Gross profit for the fourth quarter 2020 increased 29.1% to $19.0 million compared to $14.7 million in the same prior year period, with gross margin of 20.4% compared to 21.0%. The increase in gross profit was attributable to the year-over-year increase in revenue, partially offset by a 60 basis point decrease in gross margin primarily due to higher product promotion expenses.

Operating expenses were $25.6 million for the fourth quarter of 2020 compared to $16.3 million in the fourth quarter of 2019. The increase in operating expenses was primarily attributable to higher advertising expenses aimed at driving website traffic and increasing brand awareness, combined with $5.3 million in business combination transaction expenses. Operating expenses as a percent of net revenue were 27.5%, an increase of 420 basis points. Excluding transaction expenses, operating expenses as a percent of net revenue were 21.8%, an improvement of 150 basis points reflecting greater leverage on higher revenues during the fourth quarter 2020.

Operating loss for the fourth quarter of 2020 was $(6.6) million compared to $(1.6) million for the fourth quarter of 2019. Excluding transaction expenses, the fourth quarter 2020 operating loss was $(1.3) million.

Net loss for the fourth quarter of 2020 increased 213% to $(4.1) million compared to a net loss of $(1.3) million in the same prior year period.

Adjusted EBITDA increased 56.8% to $1.1 million in the fourth quarter of 2020 compared to $0.7 million in the same prior year period.

Balance Sheet

As of December 31, 2020, the company had cash of $22.2 million compared to $13.6 million at December 31, 2019. The increase in cash was primarily driven by net cash provided by operating activities of $22.0 million, partly offset by cash used in investing activities of $7.3 million, primarily relating to website and software development expenditures, and cash used in financing activities of $6.1 million, which included $5.6 million in cash payments for the cancellation of Legacy warrants.

Conference Call

PARTS iD Chief Executive Officer, Nino Ciappina, and Chief Financial Officer, Kailas Agrawal, will host a live conference call to discuss financial results today, March 9, 2021 at 4:30 p.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-9129 (domestic) or (201) 493-6753 (international). The conference call will also be available to interested parties through a live webcast at https://www.partsidinc.com/. A telephone replay of the call will be available until March 23, 2021, by dialing (877) 660-6853 (domestic) or (201) 612-7415 (international) and entering the conference identification number: 13717017.

About PARTS iD, Inc.

PARTS iD is a technology-driven, digital commerce company focused on creating custom infrastructure and unique user experiences within niche markets. Founded in 2008 with a vision of creating a one-stop eCommerce destination for the automotive parts and accessories market, PARTS iD has since become a market leader and proven brand-builder, fueled by its commitment to delivering a revolutionary shopping experience; comprehensive, accurate and varied product offerings; and continued digital commerce innovation.

Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP. Management uses non-GAAP financial measures internally to evaluate the performance of the business. Additionally, management believes certain non-GAAP measures provide meaningful incremental information to investors to consider when evaluating the performance of the Company.

To this end, we provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net income (loss) plus (a) interest expense; (b) income tax provision (or less benefit); and (c) depreciation expense. Adjusted EBITDA consists of EBITDA plus costs, fees, expenses, write offs and other items that do not impact the fundamentals of our operations, as described further below following the reconciliation of these metrics. Management believes these non-GAAP measures provide useful information to investors in their assessment of the performance of our business. The exclusion of certain expenses in calculating EBITDA and Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis as these costs may vary independent of business performance. Accordingly, we believe that EBITDA and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

EBITDA and Adjusted EBITDA have limitations as an analytical tool, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

* Although depreciation is a non-cash charge, the assets being depreciated may have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; * EBITDA and Adjusted EBITDA do not reflect changes in our working capital; * EBITDA and Adjusted EBITDA do not reflect income tax payments that may represent a reduction in cash available to us; * EBITDA and Adjusted EBITDA do not reflect depreciation and interest expenses associated with the lease financing obligations; and * Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider EBITDA and Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income (loss) and our other GAAP results.

This press release also presents the non-GAAP measures of operating expenses excluding business combination transaction expenses and operating income (loss) excluding business combination transaction expenses. Business combination transaction expenses represent the expenses incurred solely related to the business combination transaction that closed in November 2020. It primarily includes investment banker fees, legal fees, professional fees for accountants and SEC and Hart-Scott-Rodino filing fees.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release.

Cautionary Note Regarding Forward-Looking Statements

All statements made in this press release relating to future financial or business performance, conditions, plans, prospects, trends, or strategies and other such matters, including without limitation, expected future performance, the anticipated ability to capitalize on eCommerce demand or the potential for long term profitable growth, are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. In addition, when or if used in this press release, the words "may," "could," "should," "anticipate," "believe," "estimate," "expect," "intend," "plan," "predict," "potential," "look forward" and similar expressions and their variants, as they relate to PARTS iD may identify forward-looking statements. PARTS iD cautions that these forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time, often quickly and in unanticipated ways.

Important factors that may cause actual results to differ materially from the results discussed in the forward-looking statements include risks and uncertainties, including without limitation, ability to obtain adequate financing to advance product development and company growth, the marketplace for online purchases of aftermarket auto parts, ability to maintain and enforce intellectual property rights, supply chain disruptions, unanticipated demands on cash resources, competition risks including the entry of new competitors and products, adverse federal, state and local government regulation, technological obsolescence of the PARTS iD's products, price increases for supplies, the effects of current and future U.S. and foreign trade policy and tariff actions, and any disruption to its business caused by the current COVID-19 pandemic. Further information on the factors and risks that could cause actual results to differ from any forward-looking statements are contained in PARTS iD's filings with the United States Securities and Exchange Commission (SEC), which are available at https://www.sec.gov (or at https://www.partsidinc.com). The forward-looking statements represent the estimates of PARTS iD as of the date hereof only, and PARTS iD specifically disclaims any duty or obligation to update forward-looking statements.



PARTS iD, Inc.

Consolidated Statements of Operations



For the three months ended For the year ended December 31, (unaudited) December 31, (audited)

2020 2019 2020 2019



Net revenue $ 93,080,908 $ 70,071,128 $ 400,832,371 $ 287,820,277

Cost of goods 74,098,159 55,368,066 315,027,012 226,603,934 sold

Gross profit 18,982,749 14,703,062 85,805,359 61,216,343



Operating expenses:

Advertising 8,344,505 5,402,620 33,359,299 20,986,879

Selling,general and 15,383,017 9,337,131 44,266,151 35,147,259 administrative

Depreciation 1,824,564 1,604,719 6,859,237 5,847,413

Totaloperating 25,552,086 16,344,470 84,484,687 61,981,551 expenses

Income (loss)from (6,569,337 ) (1,641,408 ) 1,320,672 (765,208 )operations



Interest 711 29,720 8,395 34,534 expense

Income (loss)before income (6,570,048 ) (1,671,128 ) 1,312,277 (799,742 )taxes

Income taxes (2,460,779 ) (359,047 ) (801,552 ) (143,902 )(benefits)

Net income $ (4,109,269 ) $ (1,312,081 ) $ 2,113,829 $ (655,840 )(loss)



Net income $ (4,109,269 ) $ (1,312,081 ) $ 2,113,829 $ (655,840 )(loss)

Less:Preferredstocksdividends(including $15 15,067,697 125,000 15,442,697 500,000 million deemeddividends onredemption in2020)

Loss availableto common $ (19,176,966 ) $ (1,437,081 ) $ (13,328,868 ) $ (1,155,840 )shareholders

Loss per common share

Basic anddiluted loss $ (0.67 ) $ (0.06 ) $ (0.52 ) $ (0.05 )per share

Weightedaverage numberof shares 28,567,751 24,950,958 25,860,097 24,950,958 (basic anddiluted)

PARTS iD, Inc.

Consolidated Balance Sheets

As of December 31, 2020 and 2019

(Audited)

2020

2019

ASSETS

Current assets

Cash

$

22,202,706

$

13,618,835

Accounts receivable

2,236,127

1,168,260

Inventory

4,856,265

3,399,376

Prepaid expenses and other current assets

5,811,332

2,703,882

Total current assets

35,106,430

20,890,353

Property and equipment, net

11,470,360

11,020,781

Intangible assets

237,752

222,483

Deferred tax assets

1,099,800

263,300

Other assets

267,707

267,707

Total assets

$

48,182,049

$

32,664,624

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities

Accounts payable

$

35,631,913

$

25,213,657

Customer deposits

16,185,648

8,599,914

Accrued expenses

5,468,570

4,950,406

Other current liabilities

3,592,782

2,867,219

Notes payable, current portion

19,706

24,627

Total current liabilities

60,898,619

41,655,823

Notes payable, net of current portion

-

15,971

Total liabilities

60,898,619

41,671,794

SHAREHOLDERS' DEFICIT

Preferred stock, $0.0001 par value per share;

1,000,000 shares authorized and 0 issued and outstanding

-

-

Common stock, $0.0001 par value per share;

10,000,000 Class F shares authorized and 0 issued and outstanding

-

-

100,000,000 Class A shares authorized and 32,873,457 and 24,950,958 issued and outstanding, as of December 31, 2020 and 2019, respectively

3,287

2,495

Additional paid in capital

-

4,998,505

Accumulated deficit

(12,719,857

)

(14,008,170

)

Total shareholders' deficit

(12,716,570

)

(9,007,170

)

Total Liabilities and Shareholder's deficit

$

48,182,049

$

32,664,624

PARTS iD, Inc.

Consolidated Balance Sheets

As of December 31, 2020 and 2019

(Audited)



2020 2019

ASSETS

Current assets

Cash $ 22,202,706 $ 13,618,835

Accounts receivable 2,236,127 1,168,260

Inventory 4,856,265 3,399,376

Prepaid expenses and other current assets 5,811,332 2,703,882

Total current assets 35,106,430 20,890,353



Property and equipment, net 11,470,360 11,020,781

Intangible assets 237,752 222,483

Deferred tax assets 1,099,800 263,300

Other assets 267,707 267,707

Total assets $ 48,182,049 $ 32,664,624



LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities

Accounts payable $ 35,631,913 $ 25,213,657

Customer deposits 16,185,648 8,599,914

Accrued expenses 5,468,570 4,950,406

Other current liabilities 3,592,782 2,867,219

Notes payable, current portion 19,706 24,627

Total current liabilities 60,898,619 41,655,823



Notes payable, net of current portion - 15,971



Total liabilities 60,898,619 41,671,794





SHAREHOLDERS' DEFICIT

Preferred stock, $0.0001 par value per share;

1,000,000 shares authorized and 0 issued and - - outstanding

Common stock, $0.0001 par value per share;

10,000,000 Class F shares authorized and 0 - - issued and outstanding

100,000,000 Class A shares authorized and32,873,457 and 24,950,958 issued and 3,287 2,495 outstanding, as of December 31, 2020 and2019, respectively

Additional paid in capital - 4,998,505

Accumulated deficit (12,719,857 ) (14,008,170 )

Total shareholders' deficit (12,716,570 ) (9,007,170 )



Total Liabilities and Shareholder's deficit $ 48,182,049 $ 32,664,624



PARTS iD, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

(Audited)

2020

2019

Cash Flows from Operating Activities:

Net income (loss)

$

2,113,829

$

(655,840

)

Adjustments to reconcile net income (loss)

to net cash provided by operating activities:

Depreciation

6,859,237

5,847,413

Deferred income tax

(836,500

)

(143,044

)

Gain sale of fixed assets

(3,228

)

(500

)

Changes in operating assets and liabilities:

Accounts receivable

(1,067,867

)

(56,549

)

Inventory

(1,456,889

)

(631,233

)

Prepaid expenses and other current assets

(2,777,595

)

(115,471

)

Accounts payable

10,418,256

79,901

Customer deposits

7,585,734

(756,598

)

Accrued expenses

458,002

451,924

Other current liabilities

695,613

248,994

Net cash provided by operating activities

21,988,592

4,268,997

Cash Flows on Investing Activities:

Proceeds from sale of fixed assets

36,000

500

Purchase of property and equipment

(58,544

)

(85,345

)

Purchase of intangible assets

(15,269

)

(5,570

)

Website and software development costs

(7,283,044

)

(7,108,461

)

Net cash used in investing activities

(7,320,857

)

(7,198,876

)

Cash Flows from Financing Activities:

Principal paid on notes payable

(20,892

)

(20,386

)

Payments of preferred stock dividends

(442,697

)

(500,000

)

Cash payments for cancellation of Legacy warrants

(5,620,275

)

-

Net cash used in financing activities

(6,083,864

)

(520,386

)

Net change in Cash

8,583,871

(3,450,265

)

Cash, beginning of year

13,618,835

17,069,100

Cash, end of year

$

22,202,706

$

13,618,835

Supplemental disclosure of cash flows information:

Cash paid for interest

$

7,684

$

6,130

Cash paid for income taxes

$

-

$

3,200

The following table reflects the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for each of the periods indicated.

PARTS iD, Inc.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

(Audited)



2020 2019



Cash Flows from Operating Activities:

Net income (loss) $ 2,113,829 $ (655,840 )

Adjustments to reconcile net income (loss)

to net cash provided by operating activities:

Depreciation 6,859,237 5,847,413

Deferred income tax (836,500 ) (143,044 )

Gain sale of fixed assets (3,228 ) (500 )

Changes in operating assets and liabilities:

Accounts receivable (1,067,867 ) (56,549 )

Inventory (1,456,889 ) (631,233 )

Prepaid expenses and other current assets (2,777,595 ) (115,471 )

Accounts payable 10,418,256 79,901

Customer deposits 7,585,734 (756,598 )

Accrued expenses 458,002 451,924

Other current liabilities 695,613 248,994

Net cash provided by operating activities 21,988,592 4,268,997



Cash Flows on Investing Activities:

Proceeds from sale of fixed assets 36,000 500

Purchase of property and equipment (58,544 ) (85,345 )

Purchase of intangible assets (15,269 ) (5,570 )

Website and software development costs (7,283,044 ) (7,108,461 )

Net cash used in investing activities (7,320,857 ) (7,198,876 )



Cash Flows from Financing Activities:

Principal paid on notes payable (20,892 ) (20,386 )

Payments of preferred stock dividends (442,697 ) (500,000 )

Cash payments for cancellation of Legacy (5,620,275 ) - warrants

Net cash used in financing activities (6,083,864 ) (520,386 )



Net change in Cash 8,583,871 (3,450,265 )

Cash, beginning of year 13,618,835 17,069,100

Cash, end of year $ 22,202,706 $ 13,618,835



Supplemental disclosure of cash flows information:

Cash paid for interest $ 7,684 $ 6,130

Cash paid for income taxes $ - $ 3,200



The following table reflects the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for each of the periods indicated.

Adjusted EBITDA

For the three months ended For the year ended December 31, December 31,

2020 2019 2020 2019

Net income $ (4,109,269 ) $ (1,312,081 ) $ 2,113,829 $ (655,840 )(loss)

Adjustments:

Interest 711 29,720 8,395 34,534 expense

Income taxes (2,460,779 ) (359,047 ) (801,552 ) (143,902 )(benefits)

Depreciation 1,824,564 1,604,719 6,859,237 5,847,413

EBITDA (4,744,773 ) (36,689 ) 8,179,909 5,082,205

Additional Adjustments:

Businesscombination 5,261,903 - 5,544,520 - transactionexpenses^(1)

Founder'scompensation^ (110,000 ) 254,978 687,692 965,003 (2)

Legal &settlement 621,418 335,501 725,081 416,776 expenses andgains^(3)

Other items^ 38,022 126,602 291,164 95,237 (4)

Adjusted $ 1,066,570 $ 680,392 $ 15,428,365 $ 6,559,221 EBITDA Total

Increase inNet income $ (2,797,188 ) $ 2,769,669 (loss) over2019

Increase inAdjusted $ 386,178 $ 8,869,144 EBITDA over2019

% increase inNet income 213.2 % 422.3 % (loss) over2019

% increase inAdjusted 56.8 % 135.2 % EBITDA over2019



The following tables reflect the reconciliation of (i) operating expenses to operating expenses excluding business combination transaction expenses and (ii) operating income (loss) to operating income (loss) excluding business combination transaction expenses for each of the periods indicated.

Fourth Quarter 2020-Q4 2019-Q4 Change

$ '000 % of $ '000 % of $ '000 % Rev. Rev.

Net Revenue $ 93,081 $ 70,071 $ 23,010



Operating 25,552 27.5 % 16,344 23.3 % 9,208 4.1 %expenses

Less: Businesscombination 5,262 5.7 % - - 5,262 transactionexpenses^(1)

Total excludingBusinesscombination 20,290 21.8 % 16,344 23.3 % 3,946 1.5 %transactionexpenses



Operating income (6,569 ) -7.1 % (1,641 ) (2.3 %) (4,928 ) (4.7 %)(loss)

Add: Businesscombination 5,262 5.7 % - - 5,262 transactionexpenses^(1)

Total excludingBusinesscombination (1,307 ) -1.4 % (1,641 ) (2.3 %) 334 0.9 %transactionexpenses





Full Year 2020 2019 Change

$ '000 % of $ '000 % of $ '000 % Rev. Rev.

Net Revenue $ 400,832 $ 287,820 $ 113,012



Operating 84,485 21.1 % 61,982 21.5 % 22,503 0.5 %expenses

Less: Businesscombination 5,545 1.4 % - - 5,545 transactionexpenses^(1)

Total excludingBusinesscombination 78,940 19.7 % 61,982 21.5 % 16,959 1.8 %transactionexpenses



Operating income 1,321 0.3 % (765 ) (0.3 %) 2,086 0.6 %(loss)

Add: Businesscombination 5,545 1.4 % - - 5,545 transactionexpenses^(1)

Total excludingBusinesscombination 6,865 1.7 % (765 ) (0.3 %) 7,630 2.0 %transactionexpenses



(1) Represents the expenses incurred solely related to the business combination transaction that closed in November 2020. It primarily includes investment banker fees, legal fees, professional fees for accountants and SEC and Hart-Scott-Rodino filing fees.

(2) Represents the excess compensation paid to one of the two founders of Onyx over the amount management believes would have been the compensation of an independent professional CEO for the applicable reporting periods.

(3) Represents legal and settlement expenses and gains related to significant matters that do not impact the fundamentals of our operations, pertaining to: (i) expenses relating to causes of action between certain of the Company's shareholders and which involve claims directly against the Company seeking the fulfillment of alleged indemnification obligations with respect to these matters ($414,599 in Q4 2020; $23,501 in Q4 2019; $596,043 in FY 2020; and $104,776 in FY 2019), (ii) expenses relating to trademark and IP protection cases ($118,868 in Q4 2020; $0 in Q4 2019; $278,086 in FY 2020 and $0 in FY 2019), (iii) expenses relating to the forgone sales of certain private label products pursuant to a settlement of a trademark claim ($87,952 in Q4 2020; $0 in Q4 2019; $87,952 in FY 2020 and $0 in FY 2019), and (iv) expense and gains relating to settlements of CARB and EPA matters ($0 in Q4 2020; expense of $312,000 in Q4 2019; gain of $237,000 in FY 2020; and expense of $312,000 in FY 2019). We are involved in routine IP litigation, commercial litigation and other various litigation matters. We review litigation matters from both a qualitative and quantitative perspective to determine if excluding the losses or gains will provide our investors with useful incremental information. Litigation matters can vary in their characteristics, frequency and significance to our operating results.

(4) Includes write-offs of advances and certain fraud loss claims from earlier years that we determined were uncollectible.

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CONTACT: Investors: Brendon Frey ICR ir@partsidinc.com

CONTACT: Media: Cory Ziskind ICR PARTSiD@icrinc.com