All: I emailed GIFT some questions Fri and received this response on Sat.
1. Management and the Board are and have been looking for favorable business investments, especially those which we feel utilize the patents claims. However, up to this point, electronic distribution has not yet yielded profits for operating companies. As to the litigation, we believe that the validity of the patent is not at issue. What is at issue is the interpretation of the claims. Therefore, we find it difficult to believe that the litigation results could be completely unfavorable. It is possible, however, that certain of the claim interpretations might be modified as the result of Court rulings.
2. Publicity for the sake of publicity would lead nowhere. For the past several months, the litigation pace has increased substantially. However, there have been no rulings on any issues. At this time, the defendants have the burden of filing their interpretations of the patent's claims, as E-data had done over 6 months ago. They requested additional time for discovery and were granted it. Their papers are now due in June. We expect the Markman trial to commence as soon as the Judges are able to identify the specific issues for trial which can not be done until the defendants' interpretations are filed. There is still more discovery to come. Additionally, we have no desire to try the case in the press.
We are also involved in ongoing negotiations and will announce new licenses as they are signed. In the meantime, licensees continue to pay their fees on a timely basis, and so far, those with annual licenses pursuant to our posted licensing schedules have renewed. As expected, the reported net revenue from licensees (the licensing base) has increased from year to year, but not yet on the accelerated basis that the spread of e-commerce and higher bandwidth will bring.
The price decrease is on relatively small volume that might even have been caused by 1 selling shareholder.
3. Present sources of revenue are from patent licensing. 1996 revenue from licensing was approximately $200,000 which is expected to increase this year. To what number? We can not tell until we receive reports on annual renewals as they come due and as new licenses are signed.
4. Present "customers" are essentially licensees that, for the most part have been announced. Future are those that utilize the patents claims, as adjudicated and interpreted by the Courts. We believe that with the spread of electronic distribution of information, software, music and video in the not to distant future, our patent will bring substantial revenues to E-data and its shareholders.
I apologize for the lack of PR and information, but only information as to results, whether favorable or unfavorable in nature are substantive issues for reporting. As the case winds it way through discovery and the subsequent trial, it would be difficult and unproductive to tell everyone about each little nuance.
We have been, are doing, and will continue to do everything possible to win the case and build a company that our shareholders will be proud to own.
Thanks for your continuing support.
Arnold Freilich, President |
