e.Digital posts 3Q loss

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Portable in-flight entertainment (IFE) system supplier e.Digital reported losses of $315,000 for the third quarter of fiscal 2010 compared a $1.5 million profit for the same period in the prior fiscal year.

The company, which sells eVU entertainment systems to airlines, saw its revenues drop to $284,000 from $3.9 million year-over-year.

e.Digital attributes the decline primarily due to the timing of licensing fees from the company's flash memory-related patents as e.Digital recorded $3.65 million in licensing fees from such patents during the third quarter of fiscal 2009.

Operating expenses in the third quarter of fiscal 2010 were equal to the company's expenses during the period in fiscal 2009, $689,000, but e.Digital's expenditures varied year-over-year.

For example, during the third quarter of fiscal 2010, the firm reduced its staffing costs by $28,000 due to fewer personnel and also trimmed its litigation-related legal expenses by $163,000 due to the favourable outcome of digEcor litigation.

e.Digital claims it was the first to develop, employ and patent technology that initiated the use of flash memory in portable products, and the company had been embroiled in contractual disputes for years with its former partner digEcor. However, a Utah district judge dismissed all of digEcor's remaining claims against e.Digital in September 2009.

With expenses outpacing sales, the San Diego firm also reported an operating loss of $585,000 in the third quarter of fiscal 2010 versus an operating income of $1.6 million for the period in the previous fiscal year.

The company ended the third quarter of fiscal 2010 with $2.8 million in cash.

Looking to the fourth quarter, e.Digital's president and chief executive Fred Falk says in a statement that he expects the firm's eVU entertainment systems and services business will secure more customers after having adding three new airline customers in the third quarter.

"To date, we have made good progress on the next generation of our proprietary eVU platform as we remain committed to introducing new eVU systems later this year directly and through partnering efforts," he says.

Falk also anticipates increased licensing revenues and additional flash memory patent portfolio business developments in the fourth quarter.