Ok last post for lunch time. First - the distinction between an...

Ok last post for lunch time.

First - the distinction between an Income Statement and a Cash Flow Statement.

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Where the income statement measures a business’s profitability, the cash flow statement measures its liquidity or its ability to pay off its short-term debt obligations.
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Second - the difference between revenue and receipts.

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A company's revenues are amounts it has earned as the result of business activities such as selling merchandise or performing services. Under the accrual method of accounting, revenues are reported on the income statement in the period in which they are earned even when a dependable customer is allowed to pay 60 days later. In this example, when the revenues are earned the company will credit a revenues account and will debit the asset account Accounts Receivable.

A company's receipts usually refers to the cash that it receives. The following are examples of receipts which are not revenues:

• borrowing $1,000 in cash from the bank
• collecting an account receivable from a customer who had purchased goods on credit 30 days earlier
• disposing of a company vehicle and receiving cash that is equal to the vehicle's book value
• receiving $1,000 from an employee who had borrowed $1,000 from the company several weeks earlier
• receiving cash from an investor for new shares of the company's common stock

When a company makes a $200 cash sale (or performs services for $200 of cash) the company will have both $200 of revenues and $200 of cash receipts.
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I haven't had time to look through my model and run any numbers against today's announcement but I'm sure some of you will. When you do so please remember - the cash flow statement is a measure of liquidity. The income statement is a measure of profitability.

In terms of investment, as long as the company doesn't have liquidity concerns you're mostly worried about profitability. This announcement doesn't tell you anything about that except where it says the company "received" $544k (I'm going to assume this means "earned" not the accounting definition of "received" because that wouldn't make sense). Of this, $325k was from purchase orders - this is the closest number you can get to an indication of revenue/profitability.

Per my estimates above, this $325k consists of old contracts and the contracts announced in January, February, and March. Of those 3 contracts, this $325k would represent ONE QUARTER of revenue. If you assumed straightline payment, that means yearly revenue from those 3 contracts would be $1.3m (the February contract is very small so mostly just January and March).

There's a bunch of other contracts where revenue should kick in soon. Plus with all the upscaling going on, revenue wouldn't be straightline, it would be more.

Don't get liquidity confused with profitability.