e.Digital Reports Profitable Q2 2010 Financial Results

SAN DIEGO, CA--(Marketwire - November 16, 2009) - e.Digital Corporation (OTCBB: EDIG), a leading technology innovator of dedicated portable entertainment systems and patented flash memory-related technology, today reported revenues for fiscal Q2 2010 ended September 30, 2009 totaled $1.5 million, compared to revenues of $1.8 million for fiscal Q2 2009. Q2 2010 revenues included $1.25 million in licensing fees from the Company's Flash-R™ patent portfolio.

"In concert with our legal representatives, we achieved many of our early intellectual property (IP) monetization goals, successfully licensing all seven active companies in the first round of filings and using the $11.4 million in proceeds to strengthen our financial positions and facilitate a second round of filings against 19 more companies," said Fred Falk, e.Digital's president and CEO. "With many more prospective licensees of our fundamental IP beyond this second round, we are leveraging the knowledge and experience gained in our initial enforcement actions to raise the bar on our licensing terms and to streamline, accelerate and maximize our IP licensing activities. Also, as a result of our early licensing success, we are being approached regarding licensing terms apart from current litigation efforts."

"Regarding our eVU business, we are pleased to report that our efforts, including meetings at last month's WAEA Conference, have resulted in receiving new eVU™ orders for three airlines to date this quarter. These orders include our first from a U.S.-based air carrier," commented Falk. "We look forward to providing additional details as the orders ship later this quarter. With airline economics gradually improving, we are experiencing increasing business activity including eVU trials with U.S.-based and international airlines. We believe these trials and other marketing efforts could result in significant eVU orders."

Gross profit for Q2 2010 was $936,000 or 62% of revenues, compared to $1.2 million or 65% of revenues for the same period a year ago.

Operating expenses for Q2 2010 were $377,000, compared to $757,000 in Q2 2009. The $380,000 decrease included reduced staffing costs due to fewer personnel, a reduction in shareholder related costs due to the timing of this year's annual meeting, and reduced professional fees primarily due to reduced business litigation costs including a reversal of a litigation accrual resulting from a favorable litigation outcome.

Income before provision for income taxes for Q2 2010 was $554,000 compared to net income before income taxes of $235,000 for the comparable period for the prior year. The $319,000 improvement was the result of reduced operating and other expenses that offset a slight decline in revenues and related gross profit.

Net income attributable to common stockholders for Q2 2010 was $292,000 or $0.00 per share, compared to a net loss attributable to common stockholders of $72,000 or $(0.00) per share for the same period last year.

Revenues for the first six months of fiscal 2010 were $1.7 million, compared to $2.2 million for the same six months in fiscal 2009. The 19% reduction in revenues included reduced product revenues and patent license revenues and increased service revenues.

Gross profit for the first six months of fiscal 2010 was $1.0 million or 60% of revenues, compared to $1.3 million or 59% of revenues for the same period a year ago.

Operating expenses for the first six months of fiscal 2010 were $1.0 million, compared to $1.4 million for the first six months of fiscal 2009. The $400,000 decrease included reduced staffing costs due to fewer personnel, a reduction in shareholder related costs due to the timing of this year's annual meeting, and reduced professional fees primarily due to reduced business litigation costs including reversal of a litigation accrual resulting from a favorable litigation outcome.

Net loss attributable to common stockholders for the first six months of fiscal 2010 was $320,000 or $(0.00) per share, an improvement compared to the net loss attributable to common stockholders of $743,000 or $(0.00) per share for the same period last year.

"With in flight entertainment (IFE) business conditions improving and our partnering efforts on other market opportunities progressing, we are focused on completing the next generation of our proprietary eVU platform and introducing new eVU systems next year," Falk continued. "Our new eVU systems will feature a wireless interface and support web browsing, text messaging, on-board product sales, and streamed video and content updates. The new systems will have greater processing power to support High Definition video and offer more design options and enhanced graphical user interface choices while maintaining industry leading battery life."

"Our new eVU technology platform can also support High Definition output to TV sets, advanced LCDs, wireless voice and data communications, streamed television, and Bluetooth headsets," remarked Falk. "We believe our improving financial position and this next generation of our eVU platform will keep us at the forefront of the portable IFE industry and solidify business opportunities in non-IFE markets."

"With our improving business outlook and the validation of our IP monetization strategy, we are overhauling our website and evaluating programs and options to attain greater visibility to the investment community," Falk concluded. "We expect additional IP licensing and eVU systems and services 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)

                                                September 30,   March 31,
                                                    2009          2009
                                                      $             $
ASSETS
  Current
    Cash                                                2,617         3,814
    Accounts receivable                                 1,437            94
    Inventory                                             508           517
    Deposits and prepaid expenses                          24            26
                                                ------------- -------------
  Total current assets                                  4,586         4,451
    Property and equipment, net                            17            27
                                                ------------- -------------
  Total assets                                          4,603         4,478
                                                ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current
    Accounts payable                                      188           203
    Accrued and other                                     941           590
    Convertible term debt                                  97           381
                                                ------------- -------------
  Total current liabilities                             1,226         1,174
  Long term liabilities                                     -            24
  Stockholders' equity                                  3,377         3,280
                                                ------------- -------------
  Total liabilities and stockholders' equity            4,603         4,478
                                                ============= =============







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

                                For the three months   For the six months
                                 ended September 30,   ended September 30,
                                  2009       2008       2009       2008
                                    $          $          $          $

Revenues                            1,512      1,774      1,735      2,152

Cost of revenues                      576        617        697        881
                                ---------  ---------  ---------  ---------

  Gross profit                        936      1,157      1,038      1,271
Operating expenses:

  Selling and administrative          251        628        828      1,166

  Research and development            126        129        206        276
                                ---------  ---------  ---------  ---------

Total operating expenses              377        757      1,034      1,442
                                ---------  ---------  ---------  ---------

Operating income (loss)               559        400          4       (171)

Other income (expenses)                (5)      (165)       (19)      (263)
                                ---------  ---------  ---------  ---------

Income (loss) before income
 taxes                                554        235        (15)      (434)

Provision for income taxes           (206)      (264)      (206)      (264)
                                ---------  ---------  ---------  ---------

Income (loss)                         348        (29)      (221)      (698)

Dividends on convertible
 preferred stock                      (56)       (43)       (99)       (45)
                                ---------  ---------  ---------  ---------

Income (loss) attributed to
 common stockholders                  292        (72)      (320)      (743)
                                =========  =========  =========  =========

Income (loss) per common share
 - basic and diluted                 0.00      (0.00)     (0.00)     (0.00)
                                =========  =========  =========  =========

Weighted average common shares
 outstanding                      284,408    277,082    283,463    275,797
                                =========  =========  =========  =========