Microcap & Penny Stocksedig (e.Digital )

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To: JimC1997 who wrote (812)4/26/2002 5:32:37 PM
From: JimC1997
   of 1644
Week 17/Year 2002: EDIG vs. NASDAQ

With its close this week at 1663.89 the NASDAQ Composite index is down 14.7% from its 12/31/2001 level of 1950.40, down 32.7% from its 12/31/00 level of 2470.52 and down 59.1% from its 12/31/99 level of 4069.31.

EDIG closed the week at $0.70, down 47.0% from its $1.32 price on 12/31/01, down 58.5% from its $1.6875 price on 12/31/00, and down 75.9% from its $2.9062 price on 12/31/99.

EDIG has now underperformed the NASDAQ for the past 16 weeks of the new year.

Here is the scorecard since 12/31/00: In 38 of the 69 weeks EDIG has outperformed the NASDAQ Composite index on a year-to-date basis.

For the period since 12/31/99, EDIG has outperformed the NASDAQ index in 85 of the 121 weekly comparisons.

Although EDIG remains behind the NASDAQ, in the past such occurrences have been the signal that a large price gain might occur within a short period of time. In fact, 20 of the last 21 EDIG price jumps of 10%+ (measured from the previous day's close to that day's high) have occurred within eleven trading days of a Friday in which EDIG had underperformed the NASDAQ index.

EDIG must rise to $1.13 to match the NASDAQ index for 2002.

Some bashers like to point to the decline in price that e.Digital has endured from its 1/24/00 peak and claim that EDIG has performed worse than most tech stocks.

But consider this: Even after their recent recovery, 70 (46%!) of the 150 largest technology stocks (by market capitalization at their peaks) closed this week at prices which represent more than a 90% decline from their peak value (as did EDIG, of course.) The average decline in value for all of these 150 stocks from their peak price to their 12/31/01 close was 83%. In fact, ten of these large technology stocks (ICGE, GX, EXDS, MFNX, XOXO, ATHM, MCLD, NXTV, VERT and CMTN) which had a collective peak valuation of $306 billion have filed Chapter 11 bankruptcy actions or are about to lose their NASDAQ listings and all sell for less than $1.00/share today - a loss of over $300 billion in combined value. (By comparison, Enron was worth $68 billion at its peak.)

What is the point I am trying to drive home with this weekly comparison?

Not that EDIG has been a better investment than holding a diversified group of NASDAQ stocks (although that has certainly been true at most measurement dates!), but rather that EDIG is closely following the fluctuations of the NASDAQ prior to the expected release of good news from the company.

EDIG shareholders know that they have a better upside potential than the vast majority of stocks in the NASDAQ Composite and are thus unwilling to sell their shares at these prices.

Yes, the NASDAQ will recover over time and will someday surpass its previous highs.

But when e.Digital is associated in news stories with the latest and by far the best digital jukebox and other exciting new technologies, marketed by well-known consumer electronics brands, what will happen to the price of EDIG? Could it rise above $2.16?

Of course it could, and likely will. But the NASDAQ would have to rise above its old 5132.52 all-time high to keep pace with EDIG shares purchased at this past week's closing price level if that happened.

Which do you think is more likely to occur first? A rise in the overall market above its old all-time high, or the release of revenue-related news about e.Digital products that could send the stock skyward?

For me the answer is clear and that is why I have been purchasing substantial blocks of EDIG at these levels.

Stay the course and ignore the rantings of all of the foolish, manic bashers who fester on Raging Bull in lieu of a real life. Their goal is to disrupt the e.Digital investor community which has developed.

The "long-bashers" (who hold the stock but whine every day on this board that news hasn't been released to meet their impatient expectations) will be the saddest of all when exciting developments are unveiled, because they failed to heed suggestions to take advantage of a golden opportunity to average down their cost basis at these prices.

In November the company launched the MXP-100, a new IBM MicroDrive-based digital audio player with voice navigation and a new e-commerce site which will sell that product and other e.Digital players as they are released. The MXP-100 has received outstanding reviews both from consumers and from impartial media experts. We then saw a coordinated publicity campaign for that player and the new site launched, including the first national television commercial in the company's history. Sales of just 100 units per day will cover all of the company's operating expenses. Fred Falk has also advised all of us in his most recent letters that the list of OEM customers continues to grow and includes some of the best known brands in the consumer electronics world. In December Circuit City began sales of another e.Digital-powered jukebox under its house label and has announced reorders of that product. In rapid succession two other digital audio players using e.Digital technology were launched - the Treo 10 which has received favorable comparisons to the Apple iPOD and the MP2000.

So far the year 2002 has seen two new EDIG-engineered products announced - the MTV/DataPlay player and a wide-ranging collaboration with Fujitsu Ten MP3 drive on a new automotive infotainment system. Visitors to the CES saw several other e.Digital-designed products including the e.Digital Renegade, the new Bang & Olufsen digital player and two soon-to-be announced DataPlay players from I-River and Digiset. The DataPlay launch is just a few weeks away.

We can reasonably expect many positive announcements in the near future as more DataPlay audio devices come to market this spring. The recent letter from Fred Falk and newly-appointed EDIG president Jim Collier indicate that OEM announcements and retail availability of the MXP-100 and Treo are expected shortly. Keeping that promise, Good Guys, one of the largest consumer electronics retailers in the country was announced as the first retail customer of e.Digital branded products recently. Then CompUSA became the first nationwide retailer to carry the full line of e.Digital products. Jim Collier has advised that more such retail distribution announcements are to be expected.

A planned sale of equity will bring substantial additional funds to aggressively pursue these opportunities.

Later this year e.Digital will launch new video products designed in conjunction with DivX, incorporating that revolutionary technology.

Each such product and company development should have a favorable impact on the share price in the weeks ahead.

Keep a reasonable perspective on the relative state of your investment here. It is doing just fine, given the condition of the market. I believe that the prospects for EDIG to narrow the gap which has built up between its performance and that of the NASDAQ index are excellent over the next few weeks.


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To: Pamela Murray who started this subject4/28/2002 7:49:54 PM
From: Savant
   of 1644
John just discovered that the firmware-upgraded XP3 (CHD1000) can use the Music Explorer software (which accompanies the MXP100) for drag-and-drop downloads from Windows Explorer (including mass downloading of batches of folders and subfolders). I think this capability is undocumented.
Best wishes,

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To: Savant who wrote (815)4/29/2002 11:00:10 AM
From: bob
   of 1644
This should be an interesting week.


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To: bob who wrote (816)4/29/2002 12:06:56 PM
From: Savant
   of 1644
e.Digital Corp. Shelf Registration Statement Approved By SEC

Business Editors & High-Tech Writers

SAN DIEGO--(BUSINESS WIRE)--April 29, 2002--e.Digital Corp.
(OTCBB:EDIG) announced today that it has received final approval from
the Securities and Exchange Commission on the Form S-3 Shelf
Registration Statement filed on Feb. 6, 2002.
The company also announced that it has further renegotiated
payment terms of the Jan. 18, 2002, 5% SP Note currently scheduled to
mature on May 2, 2002. The renegotiated terms extend the maturity date
six months to Oct. 29, 2002.
Ran Furman, chief financial officer of e.Digital, stated, "The
successful completion and approval of the Shelf Registration
Statement, along with the new payment terms of the Promissory Note,
give us sufficient working capital to aggressively execute our
business plan. This includes expanded marketing and retail
distribution of our consumer electronics products, continuing
development of new products for our OEM licensees and customers, and
possible acquisitions of companies or technologies whose assets
complement and enhance our business."

About e.Digital

e.Digital Corp. offers an engineering partnership for the world's
leading electronics companies to link portable digital devices to PCs
and the Internet. e.Digital develops and markets to consumer
electronics manufacturers complete end-to-end solutions for delivery
and management of open and secure digital media with a focus on music
players/recorders and portable digital voice recorders. Engineering
services range from the licensing of e.Digital's patented MicroOS(TM)
file management system to custom software and hardware development,
industrial design and manufacturing services. For more information on
the company, visit To shop at the e.Digital online
store, visit

Safe Harbor statement under the Private Securities Litigation
Reform of 1995: This document contains forward-looking statements
relating to future performance, technology and product development
that may affect future results and the future viability of the
company. Actual results could be affected or differ materially from
those projected in the forward-looking statements as a result of risks
and uncertainties, including future products and results,
technological shifts, potential technical difficulties that could
delay new products, competition, general economic factors, and
conditions in the markets in which the company operates, pricing
pressures, the uncertainty of market acceptance of new products and
services by OEM's and end-user customers, and other factors identified
and discussed in the company's most recent filings with the Securities
and Exchange Commission. These forward-looking statements are based on
information and management's expectations as of the date hereof.
Future results may differ materially from the company's current

--30--jv/sd* ts/sd

CONTACT: e.Digital Corp.
Robert Putnam, 858/679-1504

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To: bob who wrote (816)4/29/2002 2:47:14 PM
From: BuzzVA
   of 1644
Yeah, nothing like a 11% haircut to start off the week!

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To: BuzzVA who wrote (818)4/30/2002 8:08:43 AM
From: Brewmeister
   of 1644
Buying opportunity? Seems a "stupid" drop when all new the registration was coming.


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To: Brewmeister who wrote (819)5/1/2002 11:24:46 AM
From: JimC1997
   of 1644
Yes, I believe that today is a good day for all longs to add to their positions in EDIG. I spent the last four days on the West Coast and what I learned made me more confident than ever about both our short-term (next four weeks) and long-term (one to two year) prospects.

Based upon what I learned all e.Digital shareholders will be quite pleased with the direction that the company is headed.

Very exciting new products are in the pipeline.

New and much larger distribution channels are very likely.

And the large consumer electronics companies are finally starting to take e.Digital seriously now that the products have found acceptance with consumers. OEM deals are much more likely today than they were one year ago.

The financial concerns about near-term debt refunding (which drove many to sell their shares at absurdly low prices) have been resolved by the registration statement approval and the loan maturity extension. In the recent environment (widespread fears about a debt crisis and lack of news from the company about new business prospects due to the restraints of the S-3 approval process) it is not surprising that the share price declined so significantly.

However, as shareholders realize that those issues have been resolved and with the announcements which the company is now free to make, the share price should begin to recover.

In that regard, the forthcoming conference call should be very encouraging to all.

At some point those who sold will start to jump back in, driving the price upward quickly.

Today's light volume indicates to me that few have really grasped this new reality yet.

Consequently those who act to buy shares at these levels will be well-positioned as events unfold.

I could not be more confident in the prospects for the company or its value as an investment than I am today.


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To: JimC1997 who wrote (820)5/2/2002 11:34:54 AM
From: JimC1997
   of 1644
EDIG just completed the first of a series of very important and positive transactions which will significantly strengthen this company and benefit its shareholders.

The small equity sale just announced was at a very attractive price, given the recent weakness experienced by the stock. To achieve a direct sale of a large block at a discount of only 10-15% is remarkable.

Remember, there was no underwriter involved so the company saved at least 5-6% by avoiding the cost of a public offering. In addition, selling even that size block into the public market, considering the current climate, would have certainly depressed the share price by more than 15%.

Yesterday I noted that most of the downward price pressure on the stock occurred on just a few days when apparently several shareholders of moderately-large size liquidated their positions. You many blame those foolish decisions, perhaps prompted by fears over the loan refunding issue, as the primary factor behind the current low share price.

E.Digital is proceeding as I expected in my comments last week:

By: jimc1997 $$$$$
26 Apr 2002, 03:37 PM EDT Msg. 961067 of 965835
(This msg. is a reply to 961062 by danielcoats.)
danielcoats, I commented on this the other day:

Once the registration statement is declared effective by the SEC I expect that the company will sell a relatively small block of shares (probably less than 5 million) sufficient to repay the loan and add cash for operations and working capital.

I would guess that the price for this block of shares will probably be at or near (i.e. within 10-15%) the current market price.

I believe that the buyer of the shares will be an institutional investor affiliated with the party who has supported the company with the $1 million bridge loan since January.

I also expect that the company will announce a conference call to address new opportunities available to the company.

Once the market digests this news the share price will likely move up sharply and larger blocks of stock can be sold at more attractive (from the company's perspective) prices as needed to fund working capital expansion.

It is my understanding that the institutional investor who purchased this block of shares was interested in taking a much larger position at current prices. However, EDIG management decided to sell only what was absolutely necessary at this time and compromised with the other party by arranging a partial payment and extension of the loan due date, thereby avoiding a larger sale at these low prices.

As noted by others, this sale occurred without the inducement of warrants or other devices. To my knowledge this is the first time e.Digital or its predecessor, NCII, have ever sold common shares in this manner. This is another step in the maturation process of this company.

Note also how off-base the various prophets of doom have been about the relationship of e.Digital, its lender and this institutional investor. It is a very healthy relationship which will benefit all shareholders of this company.

The new shareholder is in this investment for the long haul and its interests are exactly the same as all other shareholders - a healthy and growing company which will translate into a much higher shareprice over time.

I am very, very pleased by this development. I expect more good news to be released in the very near future.

The upcoming shareholder update will be extremely interesting to all. I have advised Fred to dispense with the call-in portion of that event and to organize it as a series of responses to shareholder e-mails. This should make it much more productive from an information delivery standpoint.


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To: JimC1997 who wrote (821)5/3/2002 2:12:02 PM
From: JimC1997
   of 1644
Sales Opportunities in Retail Channels

Since the immediate sales objective of e.Digital seems to be the expansion of its retail distribution for its own brand, consider the following:

Five retailers are the most likely customers for e.Digital products - Best Buy, Circuit City, CompUSA, Good Guys and RadioShack. There are other regional chains (like Good Guys) such as Tweeter and Sharper Image which might also be considered good prospects.

What could e.Digital generate in sales from these retailers?

Best Buy is the largest consumer electronics retailer in the country. Its 420 Best Buy stores and 1,300 Musicland stores will produce $23.300 billion this year.

Circuit City is the second largest consumer electronics retailer with sales of $10.400 billion from its 627 Circuit City and Circuit City Express locations.

CompUSA is owned by a private entity and does not disclose total sales. It operates 221 locations.

Good Guys, located on the West Coast, will generate $800 million from its 79 locations this year.

RadioShack operates 7,199 locations which have an aggregate sales volume of $5.050 billion.

To estimate EDIG sales potential I have assumed that each retailer can sell x units per location per week, based upon its overall size and sales success:

Best Buy: 7 units/week/location (Best Buy locations only)
Circuit City: 3 units/week/location
CompUSA: 4 units/week/location
Good Guys: 3 units/week/location
RadioShack: 1 unit/week/location

At an average wholesale price of $200/unit that would translate into the following annual sales volumes for EDIG:

Best Buy: $30.7 million (153,300 units)
Circuit City: $19.6 million (97,800 units)
CompUSA: $9.2 million (46,000 units)
Good Guys: $2.5 million (12,300 units)
RadioShack: $74.9 million (374,300 units)

Total: $136.9 million (683,700 units)

Added to the above should be some quantity for the on-line sales of e.Digital products at sites such as Tiger Direct and e.Digital's own store.

To put this unit potential in perspective it should be noted that approximately 80 million portable CD and cassette players are sold each year in this country.

To support this sales potential would require at least one month's inventory level. That would amount to $11.4 million. (Additional working capital would be supplied by the Asian manufacturers of the products through normal payment terms.)

The recent equity registration gives e.Digital access to sufficient funds which could support this business opportunity.

Note: This is not a sales projection, but rather an indication of the sales potential which appears to be open to e.Digital in the near future as the company adds retail distribution channels.

Longer-term, much larger mass merchandisers like Wal-Mart and Target could be approached if and when e.Digital establishes its credibility as a high quality consumer electronics brand with proven consumer success.

Other revenue sources will come from DataPlay reference design licensing fees, automotive infotainment and DivX products, all of which are expected to be introduced this year.

Others will likely have different estimates of unit sales potential per location per week or the likelihood of e.Digital's success in adding these retailers, but it is clear to me that sales will quickly ramp up over the next few months.

Jim Collier said that he expects the company to be "revenue neutral" by the Jan-Mar, 2003 period. If the company is producing wholesale gross margins of 15% by that point and the operating expenses are at $500,000 per month that translates into a sales projection of $10 million for that quarter, or an annualized rate of $40 million.

He is also reported to have said that he expects e.Digital products to be in the majority of consumer electronics retail locations by the forthcoming holiday shopping season.

He has delivered on every promise that he has made to e.Digital shareholders and he is obviously expecting sales to attain a very substantial level over the next six to nine months.


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To: JimC1997 who wrote (822)5/3/2002 5:19:13 PM
From: JimC1997
   of 1644
Longer-Term Strategy

While the retail marketplace for e.Digital products may be the best near-term opportunity, longer-term it is clear that Jim Collier is directing his efforts at building a company based upon selling e.Digital-designed products under the brand names of consumer electronics giants.

The approach that he is taking is to first demonstrate the technical viability of a product (prototypes), then the consumer acceptance of that product (e.g. the e.Digital On-Line Store), followed by a successful exposure in significant retail channels (e.g. Good Guys and CompUSA).

At that point the major consumer electronics firms will have evidence that the products are worth branding under their own labels.

Only now is e.Digital finally getting the level of serious interest from such firms that was expected two years ago.

However, at that time the company was pursuing a licensing-only strategy. Today the concept is to provide much more value to consumer electronics firms by offering a wider range of services, thereby greatly increasing the per unit revenue opportunity.

E.Digital intends to offer such firms the option of managing the entire process from design, through manufacturing, distribution and customer service/support.

That is why the agreements Actel (10/16/01 "Silicon Solution for Digital Music and Voice Recorder/Players"), Musical (9/17/01 "Multi-Year Licensing Agreement") and with APL Direct Logistics (9/7/01 "Product Fulfillment and Customer Service Partner") are so significant to the company's future.

Thus far the new strategy has been implemented very well. The recent equity registration gives the company access to the capital needed to take this process much further and to build e.Digital into the successful, growing enterprise that we have all hoped it will become.


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