SOURCE: e.Digital Corporation

June 10, 2010 16:30 ET

e.Digital Reports Fiscal Year 2010 Results

SAN DIEGO, CA--(Marketwire - June 10, 2010) - e.Digital Corporation (OTCBB: EDIG), a leading innovator of dedicated portable entertainment systems and patented flash memory-related technology, today announced revenues of $2.6 million for its fiscal year ended March 31, 2010. Revenues for fiscal year 2010 included $1.6 million in licensing fees from the Company's Flash-R™ patent portfolio and $954,000 in eVU™ portable in flight entertainment (IFE) sales and services. Due to the late calendar year 2009 conclusion of the Company's first round of intellectual property (IP) filings and the subsequent initiation of a second round of filings against 19 companies, licensing fees received in fiscal 2010 were substantially less than the $10.1 million recorded for the fiscal year ended March 31, 2009.

"In fiscal 2010, we made solid business progress by successfully concluding our first round of flash memory-related IP cases and filing a second round against nineteen companies in Colorado, with two companies from the second round settling and agreeing to pay ongoing royalties," commented Fred Falk, president and CEO of e.Digital. "We also prevailed in the digEcor litigation and paid off all corporate debt."

Gross profit for fiscal year 2010 was $1.3 million or 51% of revenues, compared to $6.5 million or 59% of revenues for the same period a year ago. The decrease in gross profit resulted primarily from the reduction in higher margin patent license revenue.

Operating expenses for fiscal year 2010 were $2.2 million, compared to $2.8 million in fiscal year 2009. The decrease resulted primarily from a $533,000 reduction in legal fees largely related to the favorable resolution of the digEcor litigation in November 2009.

Loss attributable to common stockholders for fiscal year 2010 was $985,000 or $(0.00) per diluted share, compared to net income attributable to common stockholders of $2.8 million or $0.01 per diluted share for fiscal year 2009.

"While airline economic headwinds continued in fiscal 2010, we grew our eVU services business by 30% over fiscal 2009," added Falk. "We've received new and follow-on eVU orders from airline customers and we're seeing increased portable IFE interest from long haul carriers. We are making progress on the next generation of our proprietary eVU platform and plan to introduce new eVU systems later this year primarily through partnering relationships."

"The accelerated court schedule of our second round of Flash-R cases positions the Company for a dynamic fiscal 2011," Falk concluded. "We look forward to significant legal activity and growing our IP-related licensing revenues this fiscal year."

About e.Digital Corporation: e.Digital is a leading innovator of dedicated portable in flight entertainment systems. More than 30 airlines have made dedicated portable systems powered by e.Digital technology their in flight entertainment choice. e.Digital also owns and is monetizing its Flash-R™ portfolio of flash memory-related patents. e.Digital was the first company to develop, patent, and productize fundamental techniques that opened the door to the widespread use of flash memory in many of today's popular electronic products. For more information about e.Digital , please visit: www.edigital.com.

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 Consolidated Balance Sheet
                  (000's omitted except per share amount)
                                (unaudited)

                                                          March 31,
                                                    2010           2009
                                                     $               $
ASSETS
 Current
  Cash                                                 2,819          3,814
  Accounts receivable                                    109             94
  Inventory                                              347            517
  Deposits and prepaid expenses                           59             26
                                                ------------   ------------
 Total current assets                                  3,334          4,451
  Property and equipment, net                             11             27
                                                ------------   ------------
 Total assets                                          3,345          4,478
                                                ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
 Current
  Accounts payable                                        52            203
  Accrued and other                                      316            590
  Convertible term debt                                    -            381
                                                ------------   ------------
 Total current liabilities                               368          1,174
 Long term liabilities                                     -             24
 Stockholders' equity                                  2,977          3,280
                                                ------------   ------------
 Total liabilities and stockholders' equity            3,345          4,478
                                                ============   ============







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


                                                       For the year
                                                      ended March 31,
                                                    2010           2009
                                                      $              $

Revenues                                              2,554         11,056
Cost of revenues                                      1,242          4,512
                                                -----------    -----------
 Gross profit                                         1,312          6,544
Operating expenses:
 Selling and administrative                           1,708          2,325
 Research and development                               483            519
                                                -----------    -----------
Total operating expenses                              2,191          2,844
                                                -----------    -----------
Operating income (loss)                                (879)         3,700
Other income (expenses)                                  14           (344)
                                                -----------    -----------
Income (loss) before income taxes                      (865)         3,356
Income tax (provision) benefit                           55           (422)
                                                -----------    -----------
Income (loss)                                          (810)         2,934
Dividends on convertible preferred stock               (175)          (130)
                                                -----------    -----------
Income (loss) attributed to common stockholders        (985)         2,804
                                                ===========    ===========
Income (loss) per common share - basic and
 diluted                                              (0.00)          0.01
                                                ===========    ===========

Weighted average common shares outstanding
 Basic                                              285,120        277,997
                                                ===========    ===========
 Diluted                                            285,120        279,144
                                                ===========    ===========