I believe there is enough information available in the SEC filings to conclude that e.Digital will indeed be responsible to pay for the manufacturing.
In October 2002, we announced a development agreement with Aircraft Protective
Systems, Inc. ("APS") to develop and market a portable, hard disk drive-based
In-Flight Entertainment, or IFE, system under contract for a leading U.S.
airline. The agreement specifies that we will manufacture and sell the
customizable digital video player through APS. The agreement includes
provisions for NRE fees to be paid by APS to us for design services plus
licensing fees and royalties. To date, we have received $100,000 in payments
under this agreement with respect to NRE fees only, of which $100,000 has been
deferred at June 30, 2003. In addition, we received a deposit of $190,000 for
product to be delivered which was deferred at June 30, 2003.
What e.Digital is saying here is that the APS agreement calls for e.Digital to manufacture the devices. Just because the terminology that the company uses as to how it will be paid is "royalties" doesn't mean that it will not have to pay for the manufacturing for which it is clearly responsible. It is also clear that they have already received a deposit on the products.
Therefore, given the above as well as the other reasons I have stated (such as simply doing the math), I believe there is enough information to conclude that e.Digital will indeed be paying Digitalway for manufacturing and that funds to pay DW will come out of the so-called "royalties" that APS pays to e.Digital.
