e.Digital Corporation (fka EDIG)

[richardosborne]

Namequoit..One more time

First, my first two paragraphs:

The 20% margin was based on a retail distribution with our revenue at approximately 50% of the retail price, this may be a little high, but lets use it. The cost therefore is 80% of ½ of retail value, or 40% of retail when edig markets and sells the unit.

Since there is a chance that we could sell all U.S. units through our web site, like Dell does, then the gross margin would equal 60%. Using the retail price of $350, the margin calculates to $210 per unit. Of course operating expenses would reduce this amount to determine profitability.

Now the following if you don't understand that

Edig management stated they would generate a minimum of 20% gross margin on retail sales:

1) 20% of Retail Price = Gross Margin
2) Suggested Retail Price $350.00
3) Wholesale price..Revenue to edig at 50% or $175.00
4) Gross Margin at 20% of $175.00 = $35.00
5) Cost therefore = $140.00 ($175.00-%35.00)
6) Cost Ratio on edig reveuue = 140/175 = 80%
7) Cost Ratio on Retail revenue = 140/350 = 40%
8) Margin on retail sale thru web site =210 (350-140)
9) Margin = 60% (210/350)

Hope this helps you understand.

OZ