E.Digital Corporation
e. Digital Corporation () is a public company based in San Diego, California and trades over-the-counter on the OTCBB under the ticker symbol "EDIG." Founded in 1988 as Norris Communicatons, it is one of the publicly traded companies started by inventor Elwood "Woody" Norris.
Corporate history
The company was incorporated in the Province of British Columbia, Canada in February, 1988 as Norris Communications Corp. It changed its domicile to the Yukon Territory, Canada in November 1994. In August, 1996, jurisdiction was changed to the State of Wyoming. The company was reincorporated in the State of Delaware in September, 1996. In January, 1999 stockholders approved a name change to e.Digital Corporation.
Financial status
Throughout its nearly 20-year history, e.Digital (including its corporate predecessor names) has never posted a profit. The company reported an accumulated deficit of $81 million as of September 30, 2007.
As of September 30, 2007, the company reports it has a negative net worth of -$2,044,263 and a working capital deficiency of -$1,386,273.
e.Digital's accountants, Singer Lewak Greenbaum & Goldstein, LLP of Santa Ana, California, state the following in their opinion letter dated June 11, 2007 attached to the company's 10-K annual report for FY 2007:
- ''"As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, and its total liabilities exceeds its total assets. This raises substantial doubt AbOUT the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Products
The company currently offers only one product - its eVU™ portable audio video player offered to airlines for use as a portable inflight entertainment device.
Intellectual Property
e.Digital owns 5 patents which it refers to as its Flash-R™ patent portfolio. The company has made licensing of its patented "MicroOS" flash file system, also called the "Norris Flash File Systerm" or "NFFS," a priority since 1999. Despite a lack of success, the company claims that its patent holdings relating to flash memory are "fundamental and valuable, particularly in the areas of content file management, optimal flash memory management, and in removable flash applications."
In February 2006, e.Digital announced that it was pursuing "monetization" of its patent portfolio. It engaged Pat Nunally, formerly of Patriot Scientific Corporation, as an Intellectual Property (IP) consultant in June 2006.
On December 21, 2006 the company stated to shareholders that they had "identified 174 companies with 1,372 products that appear to employ our patent portfolio." On December 20, 2007 it further expanded its claim by stating: “To date, we have identified annual U.S. revenues of more than $20 billion from what we believe are infringing products from such companies."
In March 2007 the company engaged the law firm of Duane Morris LLP to pursue patent infringement claims on a contingent fee basis. The agreement grants Duane Morris 40 - 50% of all settlements and awards after full reimbursement for expenses incurred.
e. Digital Corp vs. Vivitar Corporation
The company's first lawsuit for infringement of its patents was filed against Vivitar Corporation on September 7, 2007 in the Marshall Division, Eastern District of Texas.
Legal dispute
In March 2006, e.Digital announced that its contract manufacturer, Maycom, was either unwilling or unable to fulfill a purchase order e.Digital had placed to fulfill an order from its then only customer,digEcor.
In May 2006, digEcor, filed a lawsuit against the company and certain officers regarding the non-delivery of its pre-paid purchase order placed with e.Digital in November, 2005 for 1,250 digEplayers and alleged violation by e.Digital of an April 2002 agreement not to compete with digEcor for a period of 7 years it entered into with Bill Boyer Jr., original owner of digEcor (then named APS) and conceiver of the product and business model.
digEcor sought, among other things, actual damages of $793,750, consequential damages of .not less than $1,000,000 and an injunction to prevent e.Digital from engaging in any competition with digEcor until after 2009. e.Digital eventually delivered the players to digEcor without batteries in October 2006 and the parties entered into a partial settlement agreement reducing the actual damages claim to $98,846. The remaining matters are unresolved as of December 2007.
- General reference for section: eDigital Corporation Annual Report (10-K), 6/29/2007
Notoriety
e. Digital is perhaps best known for a phenomenal rise in the price of its stock from a low of $0.06 USD in January 1999 to a high of $24.50 USD in January 2000 fueled by internet message boards during the dot-com bubble. The price of its stock quickly receded and eventually dropped back to $0.07. It has traded between $0.07 and $0.29 in 2006 and 2007.