gernb1:
...and likely at least a half million to e.digital
Not necessarily.
The initial agreement with APS was to design and engineer the digEplayer (for which e.Digital was paid substantial NRE fees), as well as for manufacture of 1,000 units. Therefore, e.Digital received NRE fees plus gross revenue for what they charged APS for maufacturing. Gross profit on APS product sales was the APS product revenue minus what they paid to Digitalway. Most of that revenue was booked in QE 12/31/03, but if they didn't ship all 1,000 units by the end of the Q, some revenue may have been booked in QE 3/31/04.
However, the PR about Jetsgo ordering 1,000 units from APS was written in EDIGspeak/Putnamese (weasel terminology). See the bold and especially the underlined part of the PR quote:
“Jetsgo’s order of APS’ digEplayer is a great win for this version of our MicroOS-powered personal video technology platform (PVTP),” said Fred Falk, e.Digital’s president and CEO. “We look forward to continuing our support of APS in the IFE and travel and leisure industry by providing under license our growing portfolio of audio and video technology.”
"Our support" - "Under license." These terms could very well mean that the only revenue e.Digital will receive from APS on the Jetsgo order is a small licensing fee per unit.
The Alaska Airline PR is a bit more ambiguous. However, note that they do not say that APS has ordered more units from e.Digital as a result of the additional order by Alaska Air. They merely state the Alaska Air has ordered more units from APS and that this is an endorsement of e.Digital's personal video technology platform. Additionally, they merely state that they are happy to be "working with" APS, not "receiving orders from" APS.
"Alaska Airlines’ follow-on order of APS’ digEplayer demonstrates the growing market acceptance of our personal video technology platform (PVP),” added Fred Falk, e.Digital’s president and CEO. “The team at APS has done a tremendous job getting the digEplayer off the ground. We are excited to be working with them in building this version of our PVP into an industry-leading standard.”
The only argument that anyone could make that APS will always have to order digEplayers from e.Digital is the following statement by e.Digital:
e.Digital expects to realize several million dollars in revenue from APS’ digEPlayer through product sales to airlines and other companies serving the travel and leisure industry, refurbishment fees and other services provided to APS.
As EDIG investors, know, the vast majority of things e.Digital has "expected" have not come to fruition.
Perhaps the APS agreement for Alaska Air orders are different than orders from other airlines to APS or perhaps all future APS orders are for licensing only. IMO, those who are in close contact with Putnam should pin him down on whether these are licensing fee arrangements (low gross revenue) or a manufacuring agreement (higher gross revenue).
If he refuses to clarify, the APS agreement from now on could be merely a licensing agreement.
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