Excluding the 45 day holiday shopping window, in all honesty what do you think EDIG does per month in online sales? Considering their marketing budget is essentially zilch, how does one expect the company to pull in potential customers outside of traditional shopping seasons? I don't see online sales as a material source of revenues- at this juncture it may provide the bulk of sales but I doubt it covers even 0.001% of charges to cash, and in fact product sales are likely to still generate negative gross margins in the quarter ending 12/31/02.
NRE fees have traditionally generated extremely thin gross margins after expensing for cost of sales. There was a slight increase in gross margins on service revenue in fiscal year 2002 but the majority that surplus was on account of their contract with Dataplay. After they pay the salaries of the engineers, the service-side of the business is a net-drain on cash.