eDigital Corporation (EDIG) OTC Markets


The handheld tape recorder was once an ubiquitous device before digital technology made it obsolete in the late 1990s. While the device stored sound on a magnetic tape, its successor, the digital recorder, stores sound on a memory card. Both machines incorporated various technologies developed over time by different inventors from the analog-to-digital conversion process to USB flash drive. The names Elwood G. Norris, Norbert P. Daberko and Steven T. Brightbill of eDigital Corp. are forever associated with the invention of the digital recorder for patenting a handheld record and playback device with flash memory in 1994.

Interestingly, the invention or U.S. patent 5491774 A figured in eDigital’s history for generating the company’s first profit in 2010, 22 years after it was founded by Norris. eDigital sued companies that infringed on the patent and later collected licensing fees. Patent monetization became eDigital’s bread and butter and to this day it continues to keep the company afloat. The latest patent infringement settlement was with a provider of Internet of Things solutions for enterprise and consumer markets and involved its sensor technology called Nunchi.


Monetizing Patents


eDigital continued to develop so-called foundational technologies and licensed them to customers. Aside from Nunchi, the company holds multiple patents for MicroSignet, a system and method for managing information stored in semiconductors; Synap, a security system, method, and apparatus for apps; the first system for transferring multimedia files from flash memory cards to PCs; and large-scale network technologies for secure content distribution.

Licensing fee revenues from 15 companies earned eDigital $693,500 for fiscal year 2016. The figure, however, is down from $2.1 million in fiscal year 2015, when eDigital signed 29 new patent license agreements. The company reported a net loss of $1.27 million for fiscal year 2016 from $235,153 in fiscal year 2015.

eDigital is not relying on selling licensing. It commercializes its intellectual property by making consumer products that feature its patents. The first ones were the Flashback, which the company claimed as the first portable digital voice recorder with removable flash memory, digital audio players and eVU portable media player, an in-flight entertainment device for airlines. The product portfolio grew to include combined microphone and speaker earpieces; the world’s first open media, solid-state music player for playing MP3, AAC, WMA and EPAC music files; the world’s first portable digital medical device for dictation and patient data capture; VoiceNav, a voice navigation technology for portable media devices; and wireless MP3 headsets employing its own MicroOS operating system.

Edigital Products

Venturing into smart homes


The cybersecurity market was worth $75 billion in 2015, according to Forbes. eDigital faces tough competition from larger and rich companies that also own proprietary solutions. So, it tries to gain a foothold in the online security market by partnering with smaller companies that have an established presence in the sector, according to eDigital President and CEO Fred Falk.

eDigital sees an opportunity in the rapidly growing market, also known as the Internet of Things (IoT), and wants eDigital to cash in on it through product design. Nunchi is poised to play a key role in the future of mobile communications and the IoT, according to Falk.
Statista estimated the U.S. smart home market’s value at $6 billion annually. In this market, the potential of Nunchi, which allows devices to communicate and monitor remote locations, is on security cameras.

The connected home industry is increasingly becoming more reliant on the collection of data from remote sensors to determine the required response and the Nunchi technology has this capability, Falk said.