SOURCE: e.Digital Corporation

August 14, 2008 16:00 ET

e.Digital Reports Fiscal Q1 2009 Financial Results

IP Monetization Efforts Progressing

SAN DIEGO, CA--(Marketwire - August 14, 2008) - e.Digital Corporation (OTCBB: EDIG), a leading technology innovator of dedicated portable entertainment systems and patented flash memory-related technology, today reported revenues for its fiscal Q1 2009 ended June 30, 2008 totaled $378,000, compared to revenues of $1.3 million for the same period a year ago which included a $760,000 European in-flight entertainment (IFE) order. Fiscal Q1 sales activity slowed substantially due to airline industry economics associated with the significant increase in jet fuel costs.

"After a tough first quarter, we're seeing the IFE market improve as airlines adjust to higher fuel prices and begin to move ahead with their dedicated portable IFE plans," remarked Will Blakeley, e.Digital's president and chief technical officer. "In conjunction with the September World Airline Entertainment Association (WAEA) Conference and Exhibition, we look forward to announcing new customers for our Best in Class eVU™ entertainment system."

Gross profit for Q1 2009 was $114,000 or 30% of revenues, compared to $246,000 or 19% of revenues. The improved gross margin percentage resulted from a higher percentage of content services and improved unit costing compared to the same period in the prior year. Net loss for the three months ended June 30, 2008 was $669,000 or $(0.00), compared to a net loss of $594,000 or $(0.00) for the same period last year. The increased loss was primarily the result of reduced revenues offset by improved product margins and reduced operating costs.

e.Digital's senior vice president, Robert Putnam, commented on the Company's intellectual property (IP) monetization activities, "Through our legal representatives, licensing discussions and legal efforts are ongoing with the companies named in our complaints filed in the U.S. District Court for the Eastern District of Texas."

"We believe the five patents that comprise our Flash-R™ patent portfolio are fundamental to the use of flash memory in many of today's popular consumer electronic products that total in the billions of dollars in annual sales," Putnam continued.

"In anticipation of our September 17, 2008 shareholders meeting, we encourage all shareholders to read the proxy material currently being disseminated through our proxy service and to return their votes as soon as possible," concluded Putnam. "We look forward to releasing further business information and meeting with shareholders this quarter."

About e.Digital Corporation: e.Digital is a leading innovator of dedicated portable inflight entertainment systems. More than 30 airlines have made dedicated portable systems powered by e.Digital technology their inflight entertainment choice. e.Digital also owns and is pursuing the monetization of its Flash-R™ portfolio of flash memory-related patents. e.Digital was the first company to employ and patent important aspects of the use of removable flash memory in portable recording devices. For more information about e.Digital and eVU, please visit:

Safe Harbor statement under the Private Securities Litigation Reform of 1995: All statements made in this document, other than statements of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development, expected future developments and other factors that we believe are appropriate under the circumstances. These forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the businesses of the Company and the industries and markets in which the Company operates. Actual outcomes and results may differ materially from what is expressed or implied by the forward-looking statements. More information about potential factors that could affect the Company can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed with the Securities and Exchange Commission ("SEC"). e.Digital Corporation disclaims any intent or obligation to update these or any forward-looking statements, except as otherwise specifically stated by it.

                   e.Digital Corporation and subsidiary
                          Condensed Balance Sheet
                  (000's omitted except per share amount)

                                                    June 30,    March 31,
                                                      2008         2008
                                                       $            $
      Cash                                                818          122
      Accounts receivable                                 104          175
      Inventory                                           546          489
      Deposits and prepaid expenses                        36           35
                                                  -----------  -----------
   Total current assets                                 1,504          821
      Property and equipment, net                          36           40
                                                  -----------  -----------
   Total assets                                         1,540          861
                                                  ===========  ===========

      Accounts payable                                  1,070          836
      Accrued and other                                   419          464
      Term and promissory notes                           871          813
      Warrant derivative liability                        186            -
                                                  -----------  -----------
   Total current liabilities                            2,546        2,113
   Long term liabilities                                  304          453
   Series AA Convertible Preferred stock                  482            -
   Stockholders' deficit                               (1,792)      (1,705)
                                                  -----------  -----------
   Total liabilities and stockholders' deficit          1,540          861
                                                  ===========  ===========

                   e.Digital Corporation and subsidiary
                    Condensed Statement of Operations
                 (000's omitted except per share amount)

                                                     For the three months
                                                        ended June 30,
                                                      2008         2007
                                                        $            $

Total revenue                                             378        1,305
Cost of revenue                                           264        1,059
                                                  -----------  -----------
   Gross profit                                           114          246
Operating expenses:
   Selling and administrative                             539          471
   Research and development                               146          280
                                                  -----------  -----------
Total operating expenses                                  685          751
                                                  -----------  -----------
Operating loss                                           (571)        (505)
Other income (expenses):
   Interest income                                          5            -
   Interest expense                                       (49)         (69)
   Other                                                  (54)         (20)
                                                  -----------  -----------
Total other expenses                                      (98)         (89)
                                                  -----------  -----------
Loss and comprehensive loss                              (669)        (594)
   Dividends on convertible preferred stock                (1)         (27)
                                                  -----------  -----------
Loss attributed to common stockholders                   (670)        (621)
                                                  ===========  ===========
Loss per common share - basic and diluted               (0.00)       (0.00)
                                                  ===========  ===========
Weighted average common shares outstanding            274,498      244,411

Contact Information

    e.Digital Corporation:
    Robert Putnam
    (858) 304-3016 ext. 205
    Email Contact