Accounts Receivable Agreements

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

Accounts Receivable Agreements

Accounts Receivable Agreements

On March 17, 2022, the Company replaced its $3.0 million credit facility for its Nave and Triton subsidiaries with its primary financial lender with new accounts receivable purchase facilities with capacities of $12.5 million for Nave and $3.0 million for Triton. The lender charges a fee of 1.3% of sold receivables, and both facilities mature on March 17, 2023.

On March 17, 2022, the Company also restructured its accounts receivable purchase facilities secured by the Company’s Fulton subsidiary’s receivables. Under the restructure, the credit capacity excluding a major customer is $1.0 million, with a fee of 1.6% of sold receivables. The credit capacity secured by receivables of a major customer is $2.5 million, with a fee of 1.5% of sold receivables. The facilities mature on December 17, 2022.

For all four facilities, the lender advances the Company 90% of sold receivables and establishes a reserve of 10% of the sold receivables at initial sale, which increases to 100% over time after 120 days, until the Company collects the sold receivables.

The Company has a total capacity under all four facilities of $19.0 million, which has been reallocated between the facilities to accommodate current needs. As of September 30, 2022, the lender has a reserve against the sold receivables of $1.8 million, which is reflected as restricted cash on the consolidated balance sheets.  The facilities agreements address 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 $11.0 million at September 30, 2022 for which there is a limit of $19.0 million. Although the sale of receivables is with recourse, the Company did not record a recourse obligation at September 30, 2022 as the Company concluded that the sold receivables are collectible. 

For the nine months ended September 30, 2022 and 2021, the Company received proceeds from the sold receivables from all of the facilities of $59.8 million and $13.3 million, respectively, and included the proceeds in net cash provided by or used in operating activities in the consolidated statements of cash flows. The Company recorded costs of $0.8 million and $0.1 million for the nine months ended September 30, 2022 and 2021, respectively, in other expense in the consolidated statements of operations.