Here is a transcript of Mr. Falk's interview on AOL today, reposted from Raging Bull ... biff
By: fremont_seattle
Reply To: 153500 by ckslaTuesday, 18 Jan 2000 at 5:08 PM EST
Post # of 153774
Re: Edig and Video. Here's transcript of AOL interview...see if it answers your question. Go to E.digPage for other interviews....
Full Interview Transcript
AOL Interview with e.Digital CEO Fred Falk
Company Note: e.Digital Corporation, based in San Diego, California, licenses its line of patented hardware and software technologies for use in a variety of handheld devices, and offers custom product design and
manufacturing services to its OEM customers.
Company Note: The Company trades on the over-the-counter Bulletin Board: EDIG 52-week low: 0.07 52-week high: $10.00 Previous Close on 1/11/2000: $6.437
Question: Can you give us a basic description of your key technologies and products?
Answer: We're basically an engineering company that develops digital recording and playback technology. We've utilized that technology to develop a number of products including the world's first digital voice recorder that interfaced with the computer and the Internet. We've also utilized that technology to setup a digital dictation system for a company called Lanier Worldwide for the medical industry. Most recently, we utilized that technology in developing the world's first digital music player design featuring EPACK, which is an audio compression technology from Lucent. In addition to EPACK, this player supports multiple audio compression technologies, including AAC from Dolby, WMA
from Microsoft, as well as MP3. We announced our first licensee of this design last week at the consumer electronic show and are currently working with numerous other potential OEMs for licensing of this design for various applications. The core to our technology is an operating system that we developed five years that was specifically designed for
portable, digital products that interfaced with the computer and therefore the Internet. We call that operating system the Micro OS
Question: What are your plans for going on NASDQ?
Answer: Our plan is we are doing everything in our power to move the company from the OTC to a NASDAQ listing. General NASDAQ requirements call for listing applications only after we reach $4 threshold for small cap, $5 share price for a national market listing. We expect to have our application in. If we hold these levels or better in the next 30 days.
At that point, it's up to NASDAQ as far as the timing of review of application and acceptance there of.
Comment: Company Note: e.Digital [EDIG]'s specialty is developing computer-compatible OEM (original equipment manufacturer) products using its patented MicroOS flash memory file management system.
Question: Fred, does e-Digital have any serious direct competition for its Micro OS?
Answer: There are other operating systems out there for these devices, however, they are not as robust as the operating system that we have and also not as efficient as our operating system. They're also encumbered with proprietary hardware. Our is a pure flash management file system. We were also told by a very large technology company that they have reviewed numerous other operating systems for these devices and found that ours was the best.
Question: Who are your key customers?
Answer: They are basically the consumer electronic companies, as well as PC manufacturers. Those are the key customers.
Question: Currently, you are dependent I believe 3 customers?
Answer: Currently, our customers are Lanier, Intel and Maycom. We also have business relationships with IBM and Lucent Technologies. We also announced business relationships last week with Rio Port and we
announced earlier a relationship with Liquid Audio.
Question: SageCalc: With the Diamond Rio MP3 and Creative Lab's Nomad players out on the market, how do you intend to compete?
Answer: Basically, the difference between our player design and the Diamond Rio player design as well as, and I'm not totally up to date on the Nomad, the big difference is that we support multiple Codecs, which is audio compression technology. We also support multiple digital rights
management systems. We are also working very closely with the record labels to make sure that our player design will support their top 20 music content, once they make it available for Internet downloading.
Question: Are Microsoft a friend or foe?
Answer: I can't comment on that. We seem them as friendly. That's all I can comment on.
Question: SageCalc: How does Lucent Technologies [LU] "Enhanced Perceptual Audio Codec (ePAC)" differ from MP3, and what is your role in the usage of this compression/decompression standard?
Answer: The big difference between ePAC and MP3 is that ePAC provides a very high quality of audio playback. In the same Utilizing the same compression ratio as MP3. It also includes security technology which is not found in mP3. Our part was porting the ePAC codec to the Texas Instruments digital signal processor (DSP) and then also building a
reference design around that for Lucent Technologies.
Question: SageCalc: What exactly is the IBM VoiceTIMES alliance, and how often do its members interact?
Answer: The IBM VoiceTIMES alliance is an alliance that was established to develop a specification and standards for portable, digital voice recorders that are used in conjunction with speech to text technology. There is set schedule with regard to meetings. We meet as is needed. The
first specification was published earlier, late last year in October 1999.
Comment: Company Note: Flash memory can store the equivalent of 50 to 100 floppy disks of data on a card one-fourth the size of a single disk. Flash memory requires no power after data is initially stored and is faster in operation than hard drives.
Question: Many investors have voiced concerns over the large number of shares in float on EDIG, can you put their concerns to rest? I see a lot more support for this stock if the float issue becomes mute. Best regards from one of your biggest fans!!
Answer: We believe that is exactly right. Because once we are on NASDAQ our liquidity will allow large funds and institutions to buy our stock. This will be seen as a benefit at that point, not as a detriment.
Question: SageCalc: Why did your revenues decline by 26% in the first nine months of 1999, and when do you plan on becoming profitable?
Answer: Basically, we were finalizing a lot of our Internet music player technology and we're waiting for the Lanier shipments to begin. We see calender 2000 to be dramatically improved financially. We'll forecast as we contracts from other OEMs
Comment: Company Note: MicroOS is an operating system for flash memory that is believed important for hand-held devices. Allows storing large files in smaller segments wherever they may fit within a flash memory.
Question: Do you see yourselves dominating the digital industry like Qualcom did with the CDMA patents?
Answer: The homerun for e.Digital will be to have Micro OS become an industry standard in portable digital devices. It is to that end that we are working.
Question: Your business model is after liscensing revenue?
Answer: Yes, we license and then collect royalties on the units that are sold either through the manufacturing process if we oversee that and are in charge of the contract manufacturing through a third party our royalty is imbedded there. If they license our revenue will be provided
by margin on product sales or licensing fees and royalties on straight licensing type arrangements.
Question: Is e.Digital involved in a venture with Blockbuster to deliver full motion video over the internet?
Answer: I cannot comment on that, however, we are working on
incorporating video technology into portable digital devices.
Question: Will MP3 become an obsolete format?
Answer: No, we believe that MP3 will always have its place in the industry. However, it is our understanding that it will not be supported by the major record labels for security and quality reasons.
Question: please comment on automobile radios and your technology
Answer: We met with two major providers of high end car stereos at CES and are continuing to work with them to incorporate this technology into the automobile.
Question: This morning CNBC reported that there will be a big demand for flash memory. Will that demand create a demand for EDIG's MicroOS flash memory software?
Answer: Yes, we believe that will create more of a demand for our software certainly as the industry continues to use flash memory. The answer is yes, we believe it will create more of a demand for our software.
Question: Considering the high risk involved in an OTC Bulletin Board equity which lacks analytical coverage, why should the individual investor consider your stock?
Look at where the emerging industries are growing. It's just not e.Digital that sees the huge potential for hand held digital devices almost every large corporation on the planet sees the same future. According to Forrester Research, the global growth of flash memory devices will grow from 4 million dollars worth of devices in 1999 to 8.5 billion in 2001. Also, with the convergence of voice, data, music, still pictures and full motion video, numerous companies are interested in putting to market single devices that incorporate these technologies.
The days of people carrying a single cell phone, pager, organizer, music player are going away. Our vision of the future of these devices is that we will communicate with them via voice rather than hand based systems or miniature keyboards. These devices will need to have larger displays, fewer buttons, and be user friendly. We seek to incorporate
all major emerging technologies for an OEM to come to us, build their device quickly and get it to market. In short, we're in a tremendous growth industry.
Comment: Thank you for joining us today Mr. Falk! We have been speaking with Fred Falk, president & CEO of e.Digital Corporation. Visit www.edig.com.
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