Note 3 - Accounts Receivable Agreements

6 Months Ended

Mar. 31, 2020

Notes to Financial Statements

Financing Receivables [Text Block]

Note

3

– Accounts Receivable Agreements

The Company’s Wireless segment has entered into various agreements,

one

agreement with recourse, to sell certain receivables to unrelated

third

-party financial institutions.  For the agreement with recourse, the Company is responsible for collecting payments on the sold receivables from its customers.  Under this agreement, the

third

-party financial institution advances the Company

90%

of the sold receivables and establishes a reserve of

10%

of the sold receivables until the Company collects the sold receivables.  As the Company collects the sold receivables, the

third

-party financial institution will remit the remaining

10%

to the Company.  At

March 31, 2020,

the

third

-party financial institution has a reserve against the sold receivables of

$0.1

million, which is reflected as restricted cash.  For the receivables sold under the agreement with recourse, the agreement addresses events and conditions which

may

obligate the Company to immediately repay the institution the outstanding purchase price of the receivables sold.  The total amount of receivables uncollected by the institution was

$0.8

million at

March 31, 2020

for which there is a limit of

$4.0

million.  Although the sale of receivables is with recourse, the Company did

not

record a recourse obligation at

March 31, 2020

as the Company concluded that the sold receivables are collectible.  The other agreements without recourse are under programs offered by certain customers in the Wireless segment.

For the

six

months ended

March 31, 2020

and

2019,

the Company received proceeds from the sold receivables under all of the various agreements of

$11.4

million and

$2.9

million, respectively, and included the proceeds in net cash provided by operating activities in the Consolidated Condensed Statements of Cash Flows.  The fees associated with selling these receivables ranged from

1.0%

to

1.8%

of the gross receivables sold for the

six

months ended

March 31, 2020

and

1.7%

to

1.9%

of the gross receivables sold for the

six

months ended

March 31, 2019. 

The Company recorded costs of

$0.1

million and

$0.2

million for the

three

and

six

months ended

March 31, 2020,

respectively, and

$0.1

million for both the

three

and

six

months ended

March 31, 2019,

in other expense in the Consolidated Condensed Statements of Operations.

The Company accounts for these transactions in accordance with ASC

860,

“Transfers and Servicing” (“ASC

860”

). ASC

860

allows for the ownership transfer of accounts receivable to qualify for sale treatment when the appropriate criteria is met, which permits the Company to present the balances sold under the program to be excluded from accounts receivable, net on the consolidated condensed balance sheets. Receivables are considered sold when they are transferred beyond the reach of the Company and its creditors, the purchaser has the right to pledge or exchange the receivables and the Company has surrendered control over the transferred receivables.