Replies to post #73673 on Quantum Materials Corp. (fka QTMM)

[solartech]

Yea, that newfie is always wrong. Jamis is right, when a payment is not completed any partial payment can only be counted as receivable while the full licensing fee is counted as deferred revenue under liabilities. There will be reactor sale in Star Park with a sales revenue of some $3 million reported in the coming 10K due on September 27, but PR announcing receiving that amount, share price will soar long before the 10K is out. That PR can happen any day now as Amtronics has sent a letter to related party demanding payment for the remaining $500K and for the reactors.

[Kurt_Banoffee]

No. You're mostly wrong.

Yes, $500,000 has been received. The second $500,000 has been billed but not received. Nothing has been recorded as revenue as of the date of the Q. It's all deferred. DR is a liability because you have received something of value but have not yet done whatever performance is required to record it as revenue. In effect, you're liable if you don't uphold your part of the deal.

On the operating section of the cash flow statement, an increase in a current liability increases cash this is why the $1,000,000 deferred revenue shows up as a positive number. On the other hand, an increase in a current asset decreases cash. In this case, it's an increase in AR representing the unpaid $500,000. That's why it shows up as a negative.

Once the second $500,000 is received, AR will go down, and cash will go up by that amount. Deferred revenue won't change unless they start recognizing it as revenue. When that happens, DR goes down and revenue, and thus Net Income, goes up which passes through to the balance sheet as an increase in equity offsetting the decrease in DR.