Woz told the cop that it was a SDMI synthesizer. The cop either knew what it was, or really believed Woz because he told the two that,"Somebody has already beaten you to the idea."
The two of them actually go pretty for back into phone phreaking. They were friends with the famous cap'n crunch.
They used to sell long distance phone calls with their boxes.I think that they also recieve down payments on their first computer order from the homebrew computer club. So i would imagine that some of this money found its way to Apple, but the purpose of selling the phone calls was never actually directed torward gathering capital for a company.