Maycom is a licensee and a marketing partner. As a turnkey manufacturing
service provider, Maycom has access to a number of name-brand consumer
electronics customers to whom they are marketing product designs which include
e.Digital's technology. Their areas of interest are in Internet music players
and digital voice recorders. With Maycom, we are marketing Internet music
player designs worldwide to OEM companies who license and/or brand the designs
for introduction to the retail market under their brand name(s).

We recently developed a reference design for a portable, Internet music player.
In January 2000, we licensed our design and technology to Maycom Company, Ltd.
("Maycom"), a turnkey manufacturer of digital audio and radio communication
products. Maycom has announced its intentions to incorporate our technology into
a portable, Internet music player scheduled to be introduced to the consumer
market in summer 2000. In addition, Maycom has incorporated our technology into
a portable Internet music player design being marketed to third party OEM
customers and/or licensees by both Maycom and our marketing personnel. It is
anticipated that any such OEM products would be manufactured by Maycom.

The competition is expected to be fierce in the field of portable digital music
players. Diamond Multimedia Systems, Inc. introduced the Rio, the first
commercially available MP3 portable player, in November 1998. Other
manufacturers, including Creative Labs, Thompson Multimedia's RCA division, LG
Electronics, Samsung, Sony, Sanyo, Toshiba, and others, have recently released
or announced plans to sell portable digital music players, most using the MP3
format. Other manufacturers are expected to announce products in the future and
companies not normally associated with consumer electronics may enter the market
to use portable music players to seed the market for digital music. Our
technology will compete with other solutions, however we will focus on markets
requiring advanced features and a robust file management system.