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CORPORATE NEWS & PRESS RELEASES

03/23/06
SHAREHOLDER ALERT              

 

e.digital CORPORATION FILES FORM 8-K REGARDING STATUS OF 1250 UNIT DIGEPLAYER™ ORDER

 

Company Will Release Further Information Regarding Order,

eVU™ Business Developments, and Efforts to Monetize

Flash Memory-Related Patent Portfolio Next Week

 

(SAN DIEGO, CA, March 23, 2006) – e.Digital Corporation (OTC: EDIG), a leading innovator of proprietary flash memory management and secure digital video technology, today filed a Form 8-K with the Securities and Exchange Commission regarding the status of its 1250 unit digEplayer™ order placed by customer, digEcor, in November 2005. Following (in italics), is the body of the Form 8-K filed today: 

On November 11, 2005, in the normal course of our business, we placed a purchase order for 1250 digEplayers with our contract manufacturer, Maycom Co., Ltd. (“Maycom”). Maycom was paid progress payments with final payments made in full for the order by e.Digital and directly by our customer, digEcor (“digEcor”) in March, 2006. 

Maycom has fulfilled orders for digEplayers since 2003, and has fulfilled orders for other products manufactured for e.Digital and its customers since 2000. On March 20, 2006 we became aware of information indicating that Maycom may be unwilling or unable to complete the purchase order for product intended for delivery to digEcor.  We were advised that digEcor made an onsite inspection of order progress in January 2006 prior to final progress payments being made.  

We are investigating this matter as well as discussing alternatives and actions with Maycom and digEcor. We expect Maycom to fulfill their obligation under the purchase order and we intend to take remedial steps including legal action, if necessary. We believe there are alternative suppliers that may be able to complete the order if Maycom is unable to do so. We are also evaluating if any third parties have interfered with our business relationship with Maycom.  

We are unable to determine at this time the impact this matter may have on our financial position or results of operations if Maycom does not timely fulfill its obligation to us and we are unable to deliver product to our customer, digEcor, in a timely manner. We have not recognized any revenue or costs related to products associated with this order, as we only recognize revenues and associated costs when products are delivered to and accepted by our customer. We have approximately $600,000 in deposits to Maycom as a current asset and approximately $790,000 of deposits from digEcor as a current liability related to the digEplayers associated with this order. Our deposits with Maycom may be impaired and we could be obligated to digEcor for their deposits to us if product is not delivered. We intend to seek restitution from Maycom for any damages we may incur from this matter. 

Maycom is not involved in the design, tooling or production of our proprietary eVU™ mobile entertainment product. 

Next week, e.Digital will issue an update regarding this order, and also release information regarding eVU™ business developments, its efforts to monetize its wholly-owned flash memory-related patent portfolio, and other business. 

 

About e.Digital Corporation:. e.Digital Corporation specializes in the delivery, management, and protection of secure digital content through its proprietary technology platforms. Through customer and partnering relationships, e.Digital is a provider of secure portable Video on Demand products. e.Digital’s services include the licensing of the Company’s MicroOS™, Content Mark-Up Language (CML) application, patent-pending hardware security technology, Digital Rights Management (DRM) solutions, and video display software applications. In addition, e.Digital partners with leading, innovative companies, designing and providing manufacturing services for products employing the Company’s proprietary digital technology platforms. For more information about e.Digital and its technology platforms, please visit the company website at www.edigital.com

Safe Harbor statement under the Private Securities Litigation Reform of 1995: All statements made in this document, other than statements of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development, expected future developments and other factors that we believe are appropriate under the circumstances. These forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the businesses of the Company and the industries and markets in which the company operates. These statements are not guarantees of future performance and involve risks, uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements, including but not limited to the Company’s ability to finance its operations, sell its products, implement a turnkey financial, product, and maintenance solution, manufacture and ship orders in a timely manner, secure additional business, and other risks identified and discussed in our filings with the Securities and Exchange Commission (“SEC”). Actual outcomes and results may differ materially from what is expressed or implied by the forward-looking statements. More information about potential factors that could affect the Company can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed with the Securities and Exchange Commission (“SEC”). e.Digital Corporation disclaims any intent or obligation to update these or any forward-looking statements, except as otherwise specifically stated by it. 

Note: eVU and MicroOS are trademarks of e.Digital Corporation. All other company, product, and service names are the property of their respective owners.


CONTACT:

e.Digital Corporation: Robert Putnam, (858) 679-4408,
rputnam@edigital.com

 

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