3Q05 R&D Expense was $339K. In the six months ended 30 Sept. 04 (the prior two qtrs), R&D expense was ~$790K. So it looks like they`re averaging around $350K in internally funded R&D expense per qtr, or ~$115k/month. That`s probably enough to pay wages/OH for their entire engineering staff, so it looks to me like you`re right; EDIG is funding all R&D and retaining undisputeable patent rights to anything they develop. In my mind, this also adds credence to the thought that EDIG hasn`t exclusively licensed its tech to APS/Wencor, and can independently go to whomever else in any venue to sell digEs/derivatives. Or they can choose to supply their buddies at Wencor. And why not? They`re are better equipped to find/service customers via their reputation, existing customer portfolio, logistics infrastructure, etc. It is nice to believe EDIG CAN act independently, however.

This independence and internal R&D also places EDIG in a better position to charge a premium for finished product. Often when one of the three arrangements with a customer to enable R&D (i.e., cost sharing, time and materials sans fee, or CPIF/CPAF) is used, the contract includes some language allowing a predetermined or discount price for the end product as consideration for the customer`s participation in terms of funding and risk. If EDIG isn`t following that path, we are poised for greater rewards in the future.

Also found this in my reading of the 15 Nov 04 (2Q05) report: ``.....an increase of $81,112 in legal fees in connection with the pending Eclipse arbitration.`` So they did spend (at least) $100K on counsel!

JMHO and I KNOW nuttin`!

Does that count as two mysteries solved?

SGE