On4 Communications Inc (ONCI)

[TJG]

People need to understand how QVC works and what their requirements are to understand why Steve needs to pass on low margin deals.

QVC requires a minimum amount of inventory to be on hand in their shipping department. They as well require you have ample back up order to keep that inventory at a sustained level.

Here is the problem, we are limited on production capabilities at the moment. This is simply to see based on the contracts we sign. We signed one in Oct and the delivery date is Jan. Thats due to our current production constraints. Once the new manufacturing facilities come on line we will be able to handle QVC. But for us to go with them and ensure we have inventory, would mean we need to cut back on FULL MARGIN orders in order to fill their low margin orders.

So they will have to either be put on hold or they will need to make the deal better for us.