SAN DIEGO, CA -- 08/04/10 -- e.Digital Corporation (OTCBB: EDIG), a leading innovator of dedicated portable entertainment systems and patented flash memory-related technology, today reported revenues of $512,000 for its fiscal first quarter ended June 30, 2010 (fiscal Q1 2011), a 130% increase over $223,000 recorded a year ago in fiscal Q1 2010. Revenues for fiscal Q1 2011 were primarily derived from eVU™ portable in flight entertainment (IFE) sales and services.

The Company also announced that a Markman hearing has been scheduled for January 28, 2011 in connection with the second round of Flash-R™ intellectual property (IP) cases. e.Digital filed enforcement actions against 19 companies in November 2009 after receiving $11.4 million in licensing revenues from seven companies from its first round of flash memory-related cases. To date, three of the 19 companies in the second round have settled and entered into licensing agreements.

"We are pleased with the progress in our second round of Flash-R enforcement," remarked Fred Falk, president and CEO of e.Digital. "We recently received our first periodic royalty payment from one of the two companies that have entered into on-going royalty agreements."

Gross profit for fiscal Q1 2011 was $175,000 or 34% of revenues, compared to $102,000 or 46% of revenues for the same period a year ago. While service margins declined from 65% to 54% due to repair and content mix, product gross margin was positive in the first quarter due to higher product sales.

Operating expenses for fiscal Q1 2011 declined by 20% to $525,000, compared to $656,000 for the same period a year ago. The decrease was due to $258,000 of reduced professional fees primarily due to reduced business litigation costs as a result of the favorable outcome of the digEcor litigation reported last year, offset by increases of $64,000 in non-cash stock-based compensation expense, $40,000 in R & D staffing expense, and $20,000 increase in outside engineering and consulting costs for new projects.

Loss attributable to common stockholders for fiscal Q1 2011 was $382,000 or $(0.00) per diluted share, compared to loss attributable to common stockholders of $612,000 or $(0.00) per diluted share for the same period last year.

"While we added Sri Lanka Airlines as our newest eVU customer last quarter, portable IFE business conditions for new hardware are still not showing improvement," commented Falk. "We are suspending further development of our next generation eVU hardware and instead we are updating eVU's housing with a dramatically enhanced new look as well as making other hardware improvements. eVU is a proven leader in portable IFE because of its extended battery life, ease of operation and its rugged reliability. Should IFE business conditions improve or we partner outside of portable IFE, we can rapidly complete the next generation upgrade. We are receiving increasing interest in our IFE services and we are working to grow this side of the eVU business to profitability."

"In connection with our plans to expand our IP business beyond the Flash-R patent portfolio, we are collaborating with Dr. Pat Nunally on developing new technologies," Falk added. "Also, we have received and responded to the first USPTO office action on our digital storage media encryption patent application."

"We are very encouraged with all our IP developments and look forward to providing further information about them in future Company communications," concluded Falk. "We also look forward to the January Markman hearing and enforcement activity that will precede it."

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.