Trend: Where is the revenue going to come from?
You As a result, the FYE 2004 will be a minimum of $4,653,991. Which is your opinion.
There were 3 design/development manufacturing contracts this year - Softeq, APS and Eclipse, (which is a holdover from early 2002). Each in the $1 million range for total revenue, but each with the vast majority of the revenue going to pay the manufacturer.
Softeq is fulfilled and all of the revenue should have been booked by QE 9/30/03 (about 1/2 was in QE 6/30/03).
Sounds like shipping on the APS order may have fallen into early this Q instead of last Q. How much revenue will be recognized in last Q vs. this Q? I would not be surprised to hear EDIG say that revs for last Q ended up being less than projected because the APS shipment was delayed into November.
Eclipse has been delayed for 5 quarters and who knows when it will ship. Fulfillment of this contract is key in e.Digital's revenue projections. Since they say they expect to ship it this Q, they seem to have included the revenue in their very sketchy projections. However, I am growing ever more convinced that the Eclipse unit will ship this Q.
If Eclipse doesn't ship this Q, the recognition of the APS revenue is key to last Q and the current Q. Without revenue from Eclipse, it's doubtful IMO that both QE 9/30/03 and 12/31/03 would be over $1 million.
If Eclipse does ship this Q, then where would the revenue come from for QE 3/31/04? There are no announced new contracts for design/development and manufacturing (which is what brings in the larger top-line dollars). It seems revenue would fall of greatly.
Lastly, the biggest issue of all is not top-line revenue, but gross margin, which is razor thin on these contracts. The end result is that the revenue does not even come close to covering operating expenses, let alone interest payments and dividends to the holders of the preferred convertible shares. Therefore, the $65 million hole just keeps getting bigger.
AI
