Replies to post #45766 on e.Digital Corporation (fka EDIG)

[richardosborne]

Now that I agree with, the reason I asked that I would like to see clarification on the structure of the agreement, and future marketing of the system.

[Cassandra]

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.

[newelong]

Tinroad ... Well, since ...

I started all of this, I`m hoping I too can bring it to an understandable conclusion ...

This is the context of my e-mail to Robert ...

In the 9-9-03 press release from Alaska Airlines it was mentioned that they "will offer digEplayer™ units beginning in October". Some time ago it was mentioned that our initial development contract with APS was valued at close to $1,000,000, which I believe included manufacturing and industrial/mechanical design costs [Digitalway] and our NRE/design fees, licensing fees and royalties. Are we still expected to book most of this revenue yet this quarter ? Also, During the last webcast it was mentioned that royalties range "up to several hundred dollars on the audio-video platform", and in this connection I was wondering if there would be much in the way of recurring costs on follow-up orders from Alaska Airlines for the digEplayer other than supplying e.Digital`s proprietary chips with embedded MicroOS technology, and assuming the manufacturing costs are separate from our royalties and again paid by APS to Digitalway directly ?

... In a phone conversation with Robert just a short time ago, he acknowledged that our contract with APS is indeed close to $1,000,000, and whether of not most of that revenue is booked this quarter would depend on when APS wants the units delivered. With regard to follow-up orders, not only did I get the impression that there will be minimal expenses offsetting our royalties, but that any modifications would be paid for by either APS or the airline. Furthermore, manufacturing costs are definitely distinct and separate from our royalties ... for those who are wont to imply otherwise.

I also asked him about the statement he made during the last webcast ...

"And with the airlines alone you ... you look at orders in the thousands of pieces, and times that by royalties in the hundreds of dollars you can see how, just in that industry alone, that revenue can quickly add up for the Company, as well as all the other markets that we`re pursuing with APS."

... he did not deny making it, and when asked more specifically about the other markets being pursued with APS, he indicated that the travel and leisure industry markets would involve both parties, but other markets may, or may not, include APS.

Consequently, I will stand be my "guesstimate" of royalties on follow-up orders of $300, and perhaps even more ... and as Robert stated in the 7-1-03 webcast ...

"We believe all three of these projects as well as the Odyssey 1000 being the fourth line of revenue, as well as some new OEM developments that we`re working on, all of them continue to not only be great revenue generators for the Company, but have significant follow-on orders depending on how they`re accepted in the marketplace, and all of them look like, from our vantage point, to have tremendous upside potential."

NEWe.LONG

[Gilgamash]

Tinroad...So why I am not surprised?...Lol...

Regards...Gilgamash...