e.Digital Reports Third Quarter Results

SAN DIEGO, CA, Feb 12, 2014 (Marketwired via COMTEX) -- 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(TM)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(R) and microSignet(TM) 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(TM) 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
                                     ==========  ==========  ==========  ==========