SOURCE: e.Digital Corporation

February 12, 2014 10:00 ET

e.Digital Reports Third Quarter Results

SAN DIEGO, CA--(Marketwired - Feb 12, 2014) - e.Digital Corporation (OTCQB: EDIG), a long standing source of innovation and future-defining patented technologies, today announced results for its third quarter of fiscal 2014, ended December 31, 2013.

Recent Highlights:

  • Continued Flash-R licensing success: During the third fiscal quarter, the Company entered into eight revenue-generating license and settlement agreements. There are five remaining defendants from the original groups of lawsuits filed by the Company's law firm, Handal & Associates. The Company expects additional settlements before the end of the fiscal year.
  • Additional Lawsuits Filed: In early December 2013, the Company filed numerous additional lawsuits against manufacturers and suppliers of Flash memory storage devices. These devices include various types of Flash cards, SSD drives and USB thumb drives. The Company believes the defendants are infringing claim one of the Company's U.S. Patent No. 5,839,108 ("the '108 patent"). Claim one of the '108 patent was not affected by last year's collateral estoppel ruling, which the Company is currently challenging through an appeal it filed with the Federal Circuit Court of Appeals. There are currently 40 active cases in this latest round of litigation.

Management Commentary:
"Recent Flash-R licensing and settlement agreements resulted in a profitable third quarter and increased our cash position," commented Fred Falk, president and CEO of e.Digital. "We have settled with all but five of the initial defendants and are currently in settlement discussions with defendants from new patent enforcement actions initiated in early December 2013. In addition to managing our litigation activities, our law firm, Handal & Associates, is pursuing the collateral estoppel appeal we filed last October. We believe a successful appeal would enhance our claim infringement position with respect to litigation against remaining and future defendants.

"We continue to explore and market applications of our Nunchi® and microSignet™ technologies with the assistance of Handal & Associates. The Company's microSignet technology offers a unique hardware security solution, which in addition to other levels of security offers a solution to online data security breaches. A prototype of this security technology is being developed to demonstrate this exciting technology to potential licensees. On a separate track, we are developing applications and technologies to demonstrate the power and functionality of our Nunchi technology," concluded Falk.

Third Quarter Fiscal 2014 Financial Summary:
The Company reported a net income of $698,794 or $0.00 per share, for the third quarter of fiscal 2014 compared to a net loss of $334,494 or $(0.00) per share for the prior year's third quarter. For the third quarter of fiscal 2014 revenues totaled $1,286,367 compared to $79,072 for the third quarter of the prior year. The most recent quarter included $1,227,500 of patent license revenues with no comparable revenues for the third quarter of the prior year. Operating expenses increased to $572,573 from $472,766 for the prior year's comparable quarter primarily due to increased patent-related legal costs associated with increased revenues.

For the nine months ended December 31, 2013 the Company reported a net income of $217,244 or $0.00 per share on revenues of $1,837,554. For the comparable nine months of the prior year the Company reported a net loss of $1,043,482 or $(0.00) per share on revenues of $336,567. The Company's results are impacted by the timing and amount of license fees.

About e.Digital Corporation: For more than 20 years, e.Digital's ideas and inventions have impacted the evolution of consumer products. Today, e.Digital innovations, including its Flash-R™ portfolio of flash memory-related patents, are essential to many portable consumer electronic products. The Company pioneered dedicated portable in-flight entertainment systems and more than 30 airlines have made e.Digital powered products their in-flight entertainment choice. For more information about e.Digital, please visit: www.edigital.com.

Safe Harbor statement under the Private Securities Litigation Reform of 1995: This press release includes forward-looking information and statements. Except for historical information contained in this release, statements in this release may constitute forward-looking statements regarding assumptions, projections, expectations, targets, intentions or beliefs about future events that are based on management's belief, as well as assumptions made by, and information currently available to, management. While the Company believes that expectations are based upon reasonable assumptions, there can be no assurances that goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by the Company or on its behalf. Some of these factors include the substantial uncertainties inherent in pursuing patent enforcement activities including, but not limited to the risks and costs of litigation and support activities, the timing and amount of settlements/licenses if any, the acceptance of existing and future products and technologies, the difficulty of commercializing and protecting new technology such as the Company's Nunchi, microSignet and other technologies, the impact of competitive products, technologies and pricing, general business and economic conditions, and other factors detailed in the Company's Annual Report on Form 10-K and other periodic reports filed with the SEC. Except as required by law, the Company specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.

 
e.Digital Corporation and subsidiary
Condensed Consolidated Balance Sheet
(000's omitted except per share amount)
(unaudited)
 
    December 31,   March 31,
    2013   2013
    $   $
ASSETS        
  Current        
    Cash   2,045   1,741
    Accounts receivable   62   176
    Inventory   15   21
    Deposits and prepaid expenses   36   60
  Total current assets   2,158   1,998
    Property and equipment, net   11   13
    Inventory, long-term   40   104
  Total assets   2,209   2,115
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
  Current        
    Accounts payable   83   67
    Accrued and other   130   273
  Total current liabilities   213   340
  Stockholders' equity   1,996   1,775
  Total liabilities and stockholders' equity   2,209   2,115
         
   
   
e.Digital Corporation and subsidiary  
Condensed Consolidated Statement of Operations  
(000's omitted except per share amount)  
(unaudited)  
   
    For the three months     For the nine months  
    ended December 31,     ended December 31,  
    2013     2012     2013     2012  
    $     $     $     $  
Revenues   1,286     79     1,838     337  
Cost of revenues                        
Operating expenses:                        
  Products and services   84     73     255     266  
  Patent licensing and litigation costs   113     90     338     165  
  Contingent legal fees and expenses   119     -     149     3  
Selling and administrative   180     179     626     559  
Research and related expenditures   77     131     238     446  
Total operating expenses   573     473     1,606     1,439  
Income (loss)   713     (394 )   232     (1,102 )
(Provision for) benefit from income taxes   (15 )   59     (15 )   59  
Income (loss) attributed to common stockholders   698     (335 )   217     (1,043 )
Income (loss) per common share - basic and diluted   0.00     (0.00 )   0.00     (0.00 )
                         
Weighted average common shares outstanding                        
  Basic and diluted   293,187     293,008     293,187     293,005