E.DIGITAL CORPORATION
978,947 SHARES OF COMMON STOCK
You should read this prospectus supplement and the accompanying prospectus
carefully before you invest. Both documents contain information you should
consider when making your investment decision.
PLAN OF DISTRIBUTION
Pursuant to this prospectus supplement, our company is offering an
aggregate of 978,947 shares of our common stock to the following two entities in
the amounts and for the consideration as hereinafter described. In connection
herewith, we are offering 678,947 shares of our common stock to Davric
Corporation, an institutional investor. The common stock will be purchased at a
negotiated aggregate purchase price of $129,000, with the purchase price per
share equal to $0.19.
We are also offering 300,000 shares of our common stock to Eltech
Electronics, Inc. ("Eltech") in consideration for certain manufacturing services
previously provided to the company (the "Manufacturing Services"). For purposes
of this Prospectus Supplement, we have assumed that the Manufacturing Services
have a value of $54,000.
USE OF PROCEEDS
The net proceeds to us from the sale of 678,947 shares to Davric will be
approximately $129,000. We plan to use the net proceeds for general
corporate purposes, including:
- Working capital
- Capital expenditures
- Research and development
- Payment of trade payables and other debt
- General and administrative expenses
