Debt

9 Months Ended

Sep. 30, 2023

Debt

Debt

11. Debt

Credit Facilities

On November 22, 2022, the Subsidiaries entered into the IPSA with Alterna.  On November 28, 2022, the Subsidiaries and Alterna entered into a rider to the IPSA, to modify the IPSA to, among other things, provide a credit facility for up to 75% of net orderly liquidation value of inventory, not to exceed 100% of the eligible accounts receivable balance.   The IPSA, which provides for a one-year Line of Credit with a maximum capacity of up to $15 million, is scheduled to be renewed in November 2023, unless canceled by either party, as provided in the agreement. The Line of Credit bears an interest rate of Prime plus 1.85%. The effective borrowing rate under the IPSA was 10.35% as of September 30, 2023.   Interest and related servicing fees for the three months and nine months ended September 30, 2023, were approximately $153 and $476, respectively. Under the arrangement, the Company may transfer eligible short-term trade receivables to the conduit, with full recourse, on a daily basis in exchange for cash.  Generally, at the transfer date, the Company may receive cash equal to approximately 85% of the value of the transferred receivables.  The Company accounts for the transfers of receivables as a secured borrowing due to the Company’s continuing involvement with the accounts receivable.

The Company used approximately $4.5 million of IPSA funding to repay the outstanding balance of the credit facility with JP Morgan Chase Bank, N.A. (“JPMC”), which subsequently expired on January 31, 2023.

 During the three and nine months ended September 30, 2023, the Company transferred receivables having an aggregate face value of $17.5 and $52.5 million, respectively, to the conduit and received proceeds of $18.2 and $58.9 million, respectively, which also include draws on available inventory funding. There were no losses incurred on these transfers during the three and nine months ended September 30, 2023.

 As of September 30, 2023, the outstanding borrowings under the IPSA were approximately $6.5 million and the outstanding principal amount of receivables transferred under the IPSA amounted to $7.0 million.

Notes Payable

On April 6, 2021, BK Technologies, Inc., a wholly owned subsidiary of the Company, and JPMC, as a lender, entered into a Master Loan Agreement in the amount of $743 to finance various items of manufacturing equipment (the “JPMC Credit Agreement”). The Company used funds obtained from the Line of Credit to replace the JPMC Credit Agreement. This note payable was paid in full on June 27, 2023.

On September 25, 2019, BK Technologies, Inc., a wholly owned subsidiary of the Company, and U.S. Bank Equipment Finance, a division of U.S. Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $425 to finance various items of manufacturing equipment. The loan is collateralized by the equipment purchased using the proceeds. The Master Loan Agreement is payable in 60 equal monthly principal and interest payments of approximately $8 beginning on October 25, 2019, matures on September 25, 2024, and bears a fixed interest rate of 5.11%.

The following table summarizes the notes payable principal repayments subsequent to September 30, 2023:

	September 30, 2023
Remaining three months of 2023	$	23
2024		71
Thereafter		—
Total payments	$	94