eDigital Reports Third Quarter Results

SAN DIEGO, Feb. 14, 2017

Patent monetization update - Nunchi^® –The Company began enforcing its Nunchi^® patents against companies in the connected home security market in fiscal 2015. During the third fiscal quarter of 2017 the Company entered into two new patent license agreements. To date the Company's enforcement actions have resulted in five patent licenses covering six companies. The Company continues to identify companies that it believes infringe the Nunchi technology.

Nunchi technology gathers information based on physical sensors, actions in an environment, as well as historical data, and acts on this information to perform operations or communicate. Applications based on Nunchi technology may include the use of the cloud, communication networks, sensors, algorithms, as well as databases, to understand and respond to the needs of people.

Smart home product development – Utilizing its patented intellectual property, the Company is developing a smart home product to monitor a household's water usage, help prevent water damage and reduce insurance claims by detecting leaks and monitoring water pressure in real-time, assess water quality, and assist homeowners with water conservation efforts. Water conservation is a critical issue impacting the environment as nationwide water supplies become increasingly stressed and water damage claims cost individual homeowners thousands of dollars, and insurance companies billions of dollars every year. The Company recently completed the industrial design phase of the project and continues to focus on firmware and software development.

"In addition to our Nunchi based IoT product development, we are also focusing on cyber security opportunities that leverage the teachings of our Nunchi, SYNAP™ and microSignet™ technologies," commented Fred Falk, president and CEO of eDigital. "The cyber security space is a notoriously difficult space to penetrate without long standing relationships or the financial resources to support product development, but can be very lucrative once a foothold is established. We continue to meet with potential investors and partners that could allow us to bring products to this burgeoning and expansive industry which is expected to grow to $170 billion annually by 2020," concluded Falk.

Third Quarter Fiscal 2017 Financial Summary:
The Company reported a net income of $73,365 or $0.00 per share, for the third quarter of fiscal 2017 compared to a net loss of $363,869 or $(0.00) per share for the prior year's third quarter. There were two patent licenses signed in the third quarter of fiscal 2017 with revenues of $151,000. This compares to no revenue for the third quarter of the prior year. Operating costs and expenses were $77,635 after the benefit of a $265,139 adjustment to reduce accrued contingent legal fees expenses and recaptures posted in the quarter. Operating costs and expenses were $364,669 for the prior year's comparable third quarter.

For the nine months ended December 31, 2016, the Company reported a net loss of $339,670 or $(0.00) per share on revenues of $744,366. For the comparable nine months of the prior year the Company reported a net loss of $838,526 or $(0.00) per share on revenues of $709,531. The Company expects additional Nunchi related license revenue in the last quarter of fiscal 2017 and the Company's results are materially impacted by the timing, size and nature of license fees and related costs.