RE:RE:RE:RE:Some newsI'm not an accountant but possibly can answer some of your questions.
1. LOI's do not appear on financial statements.
Here is the standard used to determine if revenue is listed on the income statement.
"Revenue is recognized when there is evidence or arrangement, the amount is fixed or determinable,
products are shipped to the customer, and collection is reasonably assured and is recorded net of
discounts or sales incentives. Amounts received prior to the shipment of products are recognized as
deferred revenue in the year received and recorded as revenue when the products are shipped and
the above criteria is met."
Obviously if an LOI hasn't been converted to a firm contract with fixed prices and terms, you can't list it on the P&L. There is a chance that the 6/3/13 LOI was converted prior to the qtr end and they started work on the project before 6/30 but unlikely they could have performed 70% of the work by the end of the period 6/30. BUT if they did so but hadn't billed the customer yet, that work would be listed as unbilled rev.
I think it's just a coincidence that the unbilled revs is close to 70% of the Saudi contract.
2. "where is the 30% accounted for in the second qtr financials?"
Unless the work has been done, they will not show up in the financials. The LOI's and any firm contracts show up in the P&L as the work is done, the customer is billed and eventually pays NTG.
You are on to something however. The unbilled revenue is a predictor of the next qtr's total revs.
For instance, in the Q1 report, there was unbilled revs of 1,071,058. This lead to Q2 total revs of 2.1million. The 1,071,058 was work that had been done by 3/31 but not billed. The more jobs NTG has going at one time and as long as the backlog keeps growing, you will see more and more work that slips into the unbilled revs category. So as of 6/30/13, there was 2.7million in unbilled revs. That means Q3 will be at least 2.7 million total revs and probably a LOT higher because any work they did from 7/1 thru 9/30 will be added to the 2.7 million for Q3 gross revs as long as they get it billed. As the work progresses from LOI's to contracts to finished work, NTG revs and eps should soar. There is room for some caution. It's easy for NTG to bill for high margin licenses up front because it doesn't require much work. The actual work of installing software, testing and ensuring compliance with contract specs takes actual manpower and time. So the actual installation won't be as profitable so Q2 margins may be difficult to maintain over time. I am still hoping for .07-.09eps for 2013. I was pleasantly surprised by Q2 and so maybe there will be more surprises but my expectations are .07 to .09. We'll find out in a couple of months. I would guess Q3 revs should be in the $4million range. Huge numbers compared to last year.