As I said, NRE costs could be handled in any way from Wencor pay cost plus premium, to EDIG doing it gratis recognizing potential future sales.

But in the aerospace/defense industry (where my experience in these things lies), NRE is covered in one of four ways: Cover with internal IR&D budget, set up a cost sharing arrangement with the customer, customer pays on a time and materials basis (no profit), or customer pays on a cost reimbursement type basis including fee (CPIF/CPAF). Rarely, if a contract is in play for an ``experimental``/R&D effort, is the contract on a Firm Fixed Price basis (too many unknowns to effectively bid, ergo, excessive risk to both parties, and no definite result from the effort).

All that being said, once the effort is contemplated, management must/should go through a risk/reward mitigation thought process (which is sometimes quite formal).

If it is felt that the effort will pay off big through future sales, and not just to the one soliciting customer but multiple customers, the company will probably opt to fund the effort themselves using IR&D/research budget. This way they own the (patentable) technology developed outright with no possible dispute. Taken down another layer; if it is suspected that (patentable) derivative discoveries may be made (not necessarily specific to the contemplated product) through performing the effort (which could be useable in other products down stream), the company may elect to fund the effort themselves.

But if the effort is for only one customer due to its uniqueness or due to any exclusive agreements, and if no beneficial derivative inventions are expected to result, the company has no incentive to fund the effort themselves. A patent is pretty worthless if it is for something you`ll only ever sell to one customer with whom you already have a strong working relationship. In such a case, sharing any resultant patent rights or forfeiting patent rights IS thinkable.

I`ll stop there, having pretty much made the point and having described the complexities of the issue.

But the foregoing is all predicated on the company actually having an IR&D budget/funding available to support the effort internally. If not (which is most likely the case with EDIG - they aren`t exactly swimming in money), risk must be considered for seeking internal funding (dilution), or pursuing one of the three other options where the customer participates (with possible contract clauses to protect possible patent rights).

Now, our exclusivity with APS/Wencor is an unknown (for me anyway), or the extent/scope of any exclusivity clause that may exist. We`ve heard about exclusivity being in place in different ways (unilateral/bilateral; aircraft only/commercial use only; None; variations of these; etc.).

We also know that EDIG isn`t swimming in money.

So this is a tough call for the company, and for us trying to figure the course most desireable to the company.

Thus, it`s a bit of a kraps shoot. But if NRE fees were forthcoming, they could have put us (slightly) over the top.

Thanks for giving this prospect some consideration....

SGE