Yes, the time for debate on this is short and it matters little in the grand scheme of things... but what the hay? So here goes.

I would think that when they give guidance and quote a specific number, as is the case with the $2.2 million guidance given on Dec 22, that shareholders expect that number to be reached for the quarter in which the guidance was given.

I would think so too, and it would be nice if we could simply take such statements at face value. Unfortunately, they chose to phrase it in such a way that I don`t think we can assume $2.2 million in revenue for the quarter. Here`s how I think the orders work:

1. They receive an order from Wencor/APS for say, $1,000,000 worth of units.

2. With that order, they receive perhaps half, or $500,000 up front, as a deposit.

3. They place the order with the manufacturer - along with probably a large portion of the deposit just received so that they have little, if any, of their own cash outlay to get the products produced.

4. During manufacture, EDIG has on it`s order books: $1,000,000. But they likely can`t count that or any portion of it at least until products are delivered to Wencor/APS.

5. Once product is delivered, they can probably count the deposit as revenue. But the remainder of the payment is still due from Wencor/APS - possibly on delivery, but probably on terms.

6. Once the remainder of payment is received (after product delivery), then that can also be counted as revenue.

That`s how I see it in simple terms at least. Accounting rules could do strange things to the process, but I don`t see any way that ‘booked orders` must necessarily equate to ‘quarterly revenue` all in the same quarter. In fact, it should almost never equate due to the time lag involved with manufacture, delivery, and payment terms. I suppose they could somehow account for it as unearned revenue and perhaps that`s how it will be reported. But it`s still not the same thing as earned revenue the way most would normally assume.

Advanced payments are still good in that they shield e.Digital`s cash flow and guarantee at least partial payment for products produced.

- Sinkman