e.Digital Corporation (fka EDIG)

[Cassandra]

niz: The share price is exactly where it was in early October 2002 right after Falk and Collier issued a shareholder letter that hyped a lot of supposed developments but dropped in one sentence saying that the majority of the projected $2.6 million in revenue for the September quarter would be realized in the following quarter. It's been a rough 12.5 months:

http://moneycentral.msn.com/investor/charts/chartdl.asp?Symbol=US%3AEDIG&ShowChtBt=Refresh+Chart...

The share price kept dropping in mid October and was down 40% within 3 weeks (closed at 0.28 on 10/21/02). There was a very small (light volume) build-up for the expectations of the annual SHM and the stock closed at 0.35 on 11/5/02, the day of the SHM which was held after the bell.

No one denies that the SHM was a disaster. The President, Jim Collier, was an unexplained no-show and FF's presentation came across very poorly. They did not release the financial at the SHM but did indicate that revenue was not even close what they had previously indicated.

The following day, 11/6/02, the share price gapped down 26% to open at 0.26, dropping as low as 0.18 to close at 0.20 on phenomenal volume of 4.9 million shares (nearly as many as traded on the day of the NASDAQ application announcement).

There was more selling when the 10Q was released showing that the projected revenue of $2.6 million was off by a factor of 10 and that actual gross revenue was a mere $290K. The stock closed at a low of 0.18.

The PPS doubled back to as high at 0.37 in late November when the product placement of the Ody 1000 on the cover of Parade was announced, but it started to retreat immediately again since the product was not available. The stock was back at 0.19 by December 6, when it appeared that the Ody was not available for the "holiday selling season" as the company had promised.

The company tried to satisfy unhappy shareholders with a letter on 12/20/02 saying that Ody 1000's were shipping to the US from Korea that day. The pump could only get the share price to 0.25 by 12/24/02.

Next came the expectation of the usual CES pump in January 2003. Unfortunately, it didn't work this year, despite the usual company PRs and the announcement that the Ody 1000 would finally be shipped in early Feb. 2003.

The Softeq PR on 2/19/03 only took the PPS from 0.19 to 0.21

In late March 2003, the company held a webcast to spin the disclosure that Ernst & Young had resigned as its auditors. The company attempted to imply that it had made the move to cut costs, but the SEC disclosure was clear that E&Y had chosen to resign for reasons that EDIG would not disclose.

The PPS continued to decline until it hit a bottom of 0.12 on April 22, 2003. After that, there was very low volume accumulation and sales that drove the back and forth in the 0.12 to the 0.20 range for weeks (until mid-May).

In late May (May 29 to be specific), the volume rose significantly without any news and the PPS range seemed firmly trenched in the 0.20's. By June, the PPS has risen to the high 0.20's on low volume.

After the FYE webcast on July 1, 2003, the share price shot up to 0.43 on moderately high volume. The company guided that QE 9/30/03 would have the highest gross revenue in the 14-year history of the company and that major news would come in September at the WAEA Conference and in October thru Disney. The stock had an anticipatory pop prior to the WAEA, but when none of the PRs relased by Alaska or APS mentioned EDIG and the PRs made it clearer the the digEplayer was APS's device (not EDIG's), the price retreated.

The "major news event" by Disney also did not mention EDIG involvement as some were expecting. Therefore the price is back to the 0.38-0.40 range, where it was before the disastrous implications of missed guidance and a bizarre SHM absent the President.

The results of the "best quarter in the history of the company" are imminent. If they meet or exceed guidance, the share price should go up. If they missed again and again did not warn, will shareholders be forgiving?