Once a company starts generating income, I like to examine its...

Once a company starts generating income, I like to examine its ability to generate free cash flow as a determinant of valuation.

From their Annual Report

OPERATING CASH FLOW
Year ended 31/12/15: - $4.32m
Year ended 31/12/16: - $2.96m

INVESTING CASH FLOW
Year ended 31/12/15: - $263k
Year ended 31/12/16: - $13.728m

In other words, TFL have had a cumulative capital deficit over this two-year period of minus -$21.27m. Still, they managed to generate cash flow of $33.09m during this period, but only by issuing equity.

They started FY15 with $55.331m in cash but ended it with $2.799m - after dropping $33.816m on a share buy back. They ended FY16 with $11.354m, but only because of issuing $31.252m in equity during the year. So, while it may look like they have a healthy balance sheet with $11.354m in cash (end of FY16), they are simply unable to generate FCF without issuing equity (*at this stage).

In their most recent quarterly, they estimated cash outflows for the March 17 Q at $8.483m. They will need receipts from customers to be > this amount, otherwise they will be forced to draw down on their cash balance. The jury is still out here. The March quarterly report (due around the end of April) should reveal more. Personally, I would like to see several quarters of free cash flow generation before deciding to invest.

@slammer81