e.Digital Corporation (fka EDIG)

[Cassandra]

Trend: Given that e.Digital has said it has a licensing/royalty agreement with the multi-billion dollar OEM, they should be able to recognize royalty income immediately upon shipping (according to their revenue recognition policy) regardless of when the cash comes in (which is usually later).

Revenue is usually booked to Accounts Receivable first, but it still counts as revenue. Therefore, if this Gateway player is the device EDIG referenced in its PR, revenue for all units shipped this quarter should be included in the 10Q for QE 12/31/03.

The only thing that would change that is if there is an unusual provision that would not allow revenue recognition based upon shipping. I am reminded of the Musical agreement wherein no royalties were due on units sold before April 2002. I doubt that would be the situation here.