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"Loading" is displayed when the Reader is checking for new/changed/deleted files on the card or main flash and updates the file cache. "Formatting..." is shown when a book doesn't have pagination info in the cache and Reader has to paginate it. Happens once on opening the book and once when you change the font size. If you use eBook Library software to copy books to the Reader, it will pre-paginate them and they won't have to be formatted when opened on the device.
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