A couple of points:
1) First of all, an apology - based upon the language in the lastest 10Q, it sounds like your take on factoring (i.e., PXYN receives 20% immediately, and possibly more later depending on the factor's success in collecting on the A/R) was correct. It boggles my mind that PXYN failed to mention this fact in earlier 10Qs.
2) Obviously, the fact that PXYN COULD receive additional monies doesn't mean that it WILL. If it DOES, however - and particularly if they ultimately get anywhere close to 35% of gross billings - the whole factoring thing becomes more of a temporary nuisance that will eventually work itself out than a serious threat to the company's existence. They were profitable last qtr while factoring all their receivables, and they reduced debt by a substantial amount. All else being equal, one would expect the current level of gross billings to yield a profit of at least $3M in Q4 given the end of stock grants to TPS and reduced interest costs. So it would seem PXYN could limp along profitably even in the absence of any change in the factoring situation. But things WOULD eventually change - DRAMATICALLY - if they eventually get what I'll call (for lack of a better term) "kickbacks" from the factor. Each quarter in which they factor $40M of gross billings would add as much as $6M ($40M * 15%) in deferred revenue that they might receive down the road. AND each quarter that passes puts them 3 months closer to the beginning of these "kickbacks" - which, once they start, would presumably flow in on an ongoing basis. They're probably about halfway through the 18-month "holding" period for receivables factored in Q1.
3) I don't think conventional financing is going to happen. Investors look at a company's future prospects, but banks look at its current financial state. And given PXYN's current financial state, no bank is going to offer it conventional financing on anything other than usurious terms. So I don't think criticism of Kurtz for failing to "fix" the factoring situation yet is valid.
I see three possible resolutions to the factoring situation:
1) Best case: TPS proves itself to be a true partner and basically says "start collecting all A/R in house and pay me when you can".
2) Next-best case: In approximately 9 months, PXYN starts receiving "kickbacks" from the factor to the tune of several million dollars per quarter.
3) Worst case: TPS offers no relief and significant "kickbacks" from the factor never materialize. I don't think PXYN will be able to obtain conventional financing, so it slowly addresses the factoring situation as best it can - i.e., it starts keeping the "best" A/R in house immediately and gradually increases the percentage that is collected in house as it's cash situation slowly improves.
