SOURCE: e.Digital Corporation

August 14, 2007 16:15 ET

e.Digital Reports Higher Revenues and Reduced Net Loss for First Fiscal Quarter

Revenues for Q1 2008 Increase 172% Over Immediately Preceding Quarter -- Total 72% of Prior Fiscal Year Revenues as eVU™ Is Accepted by Major Airline Customers

SAN DIEGO, CA--(Marketwire - August 14, 2007) - e.Digital Corporation (OTCBB: EDIG), a leading innovator of portable in-flight entertainment (IFE) systems and patented flash memory-related technology, reported substantially improved revenues and a reduced net loss for its fiscal 2008 first quarter ended June 30, 2007. For the first quarter, e.Digital reported revenues of $1.30 million, a significant increase from revenues of $21,000 for the first quarter of the year prior and a 172% increase over revenues of the immediately preceding quarter ended March 31, 2007. Revenue for the first quarter included quantity shipments of the Company's eVU™ mobile entertainment system to multiple in-flight entertainment (IFE) customers including major European airlines.

e.Digital reported a gross profit of $246,000 for the three months ended June 30, 2007 compared to a gross profit of $4,500 for the same period a year ago. The gross profit increase was due primarily to eVU sales in the current period whereas eVU was being developed and tested in the comparable period last year. Operating costs increased from $688,000 for fiscal Q1 2007 to $751,000 in fiscal Q1 2008 primarily due to an increase in professional services related to litigation, patent enforcement, audits, and sales commissions related to increased revenues. Net loss for the first quarter decreased by 47% to $593,000 from $1.12 million for the first quarter of the year prior. Net loss available to common stockholders for the first fiscal quarter of 2008 was $(0.00) per basic and diluted share, compared to $(0.01) per basic and diluted share for the same period last year.

e.Digital also reported that its backlog at June 30, 2007 was approximately $2.7 million with further orders and shipments expected this fiscal year. In recent years, one customer accounted for substantially all of the Company's revenues. e.Digital is diversifying its sales with three customers accounting for 98% of first quarter fiscal 2008 revenues and further diversification is expected in future periods. To date, ten airlines have purchased the Company's proprietary eVU as their portable entertainment system of choice making e.Digital one of the leading suppliers of dedicated portable IFE systems and services.

"In the first seven months of eVU commercial quantity deliveries, we shipped over $3 million in products and services and invested in personnel and systems to support a growing customer base," said Will Blakeley, e.Digital's president and chief technical officer. "This quarter, we expect patent enforcement actions to commence on our flash memory-related patent portfolio and also expect to ship over $2 million in eVU products and services with improved margins as we expand our international portable IFE business."

About e.Digital Corporation: e.Digital is a provider of secure portable Video on Demand products including its proprietary eVU™ portable entertainment system. e.Digital also owns and is pursuing the monetization of its portfolio of flash memory-related patents. 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,
                                                        2007       2007
                                                          $          $
   Cash                                                     744        695
   Accounts receivable                                      839         37
   Inventory                                                174        309
   Deposits and prepaid expenses                             49         51
                                                      ---------  ---------
 Total current assets                                     1,806      1,092
   Property and equipment, net                               32         36
   Prepaid transaction costs                                309        629
                                                      ---------  ---------
 Total assets                                             2,147      1,757
                                                      =========  =========
   Accounts payable                                         940        687
   Other payable and accruals                               160        131
   Accured employee beneifts                                198        150
   Dividends                                                491        464
   Customer deposits                                        703        119
   Current maturity of convertible note, net                204        139
   Secured promissoty note, net                             743        750
                                                      =========  =========
 Total current liabilities                                3,438      2,439
                                                      =========  =========
 Long term                                                  686        754
   Stockholders' deficit                                 (1,977)    (1,437)
                                                      =========  =========
 Total liabilities and stockholders' deficit              2,147      1,757
                                                      =========  =========

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

                                                      For the three months
                                                          ended June 30
                                                        2007       2006
                                                          $          $
Total revenue                                             1,305         21
Cost of revenue                                          (1,059)       (17)
                                                      ---------  ---------
   Gross profit                                             246          5
                                                      =========  =========
Operating expenses:
   Selling and administrative                               471        336
   Research and development                                 280        353
                                                      ---------  ---------
Total operating expenses                                    751        688
                                                      ---------  ---------
Operating profit (loss)                                    (505)      (684)
Other income (expenses):
   Interest income                                            -          8
   Interest expense                                         (69)      (447)
   Other                                                    (20)         -
                                                      ---------  ---------
Total other income (expenses)                               (88)      (440)
                                                      ---------  ---------
Loss and comprehensive loss                                (593)    (1,123)
   Dividends on convertible preferred stock                 (27)       (34)
                                                      =========  =========
Loss attributed to common stockholders                     (621)    (1,157)
                                                      =========  =========
Loss per common share - basic and diluted                 (0.00)     (0.01)
Weighted average common shares outstanding              244,411    200,431

Contact Information

    e.Digital Corporation
    Robert Putnam
    (858) 304-3016 ext. 205 (office)
    (858) 395-4517 (mobile)
    Email Contact