Please read my post again - EVERYTHING is laid out for you, including a quote from the 8K. Here is the same information presented slightly differently:
1) The company factored $4.9M of 2012 and 2013 billings.
2) The company received net proceeds of approximately $1.4M (which is 28.57% of the $4.9M in billings). THIS IS THE REVENUE REALIZED FROM $4.9M IN BILLINGS AFTER FACTORING.
3) "In connection with these sales of receivables, the Company recorded financing costs of approximately $873,000...". This is their ESTIMATE of the DIFFERENCE between REVENUE THAT WOULD HAVE BEEN REALIZED IF THEY DIDN'T FACTOR and REVENUE THEY ACTUALLY DID REALIZE BY FACTORING. If you want to, you can this of this as the factoring "fee".
If they DIDN'T factor, they ESTIMATE they would have realized revenue of ($1.4M + $873,000), or $2.273M.
The "fee" for factoring is thus (in this specific case):
1) ($873,000 / $2,273,000 * 100) = 38.4% of "net revenue in the absence of factoring"; or
2) ($873,000 / $4,900,000 * 100) = 17.82% of gross sales.
Unfortunately, the two times they've factored in 2014, they did so at substantially WORSE terms - they received only 20% of gross billings in both cases:
On January 3, 2014, the Company factored prescriptions generated in 2013 of $7.1M to a third party at 20% of the gross amount for $1.4 million to finance a portion of its operations.
At various times between January 2014 and June 2014, the Company factored an additional $47.5 million of its 2014 billings at 20% of the gross amount to the same third party for aggregate net proceeds of approximately $9.8 million to finance a portion of its operations.
It is impossible to calcuate the factoring "fee" for this $47.5M + $7.1M) = $54.6M of A/R without knowing the company's estimate of the percentage of gross sales they would realize as revenue in the absence of factoring.
I can think of three possible explanations for their net take to drop from 28.57% of billings to 20%:
1) They're desperate for cash and willing to accept less favorable terms;
2) Their estimate of the "recoverable portion" of billings has dropped because the sales are of "lower quality";
3) Their estimate of the recoverable portion of billings has dropped because of the increase in the percentage being taken off the top by Garbino
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