Austonia: e.Digital looses money on each player sold because they cost more than they sell for. If you check the last 5 quarters you will see negative gross profit on product sales in every quarter.
This negative gross profit situation causes the company to have losses that are greater than the cost of operations. The company is better off not offering any products for sale.
One of the reasons for the negative gross profit is the small production runs, but product returns and defects are also likely to add to the cost. At least e.Digital terminated the ridiculous contract they signed with their "strategic partner," APL, to handle the call center and shipping at a minimum cost of over $42,000/mo.
The money to support operations is from a combination of shelf-stock sales and NRE fees that are paid before they are earned (listed as "deferred" in the 10Qs and 10Ks).
Also the negative GP margin on products makes the quality issues somewhat irrelevant, since the company does not make money selling them anyway.
