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e. Digital Corporation Reports Q3 Fiscal 2006 Results; Company Amends Q2 Fiscal 2006 Filing, Begins eVU(TM) Trial Deliveries, In

Companies mentioned in this article: e.Digital Corporation - e. Digital

e.Digital Corporation (OTC:EDIG), a leading innovator of proprietary flash memory management and secure digital video technology, today reported revenues for the third quarter of its fiscal year 2006 ended December 31, 2005 totaled $115,000 compared to revenues of $1.42 million for third quarter of fiscal 2005. The decrease was due primarily to one customer pushing out their delivery schedule. The company also has approximately $1.2 million in orders, for which it has already received over $700,000 in production payments to date. The orders are expected to ship this quarter (Q4 fiscal 2006) and next quarter (Q1 fiscal 2007). Revenues for the first nine months of fiscal 2006 ended December 31, 2005 totaled $3.10 million compared to revenues of $3.54 million for the first nine months of fiscal 2005.

The company reported an operating loss of $515,000 for its third fiscal quarter 2006, compared to an operating loss of $349,000 for the same period last year. The company reported an operating loss of $1.32 million for the first nine months of fiscal 2006 compared to an operating loss of $1.45 million for the same period last year.

Net loss available to common stockholders for the third fiscal quarter of 2006 was $(0.00) per basic diluted share, compared to $(0.01) per basic diluted share for the same period last year. Net loss available to common stockholders for the first nine months of fiscal 2006 was $(0.01) per basic diluted share, compared to $(0.01) per basic diluted share for the same period last year.

The company also filed today an amended Form 10-Q/A for the second fiscal quarter ended September 30, 2005. A total of $128,057 of product costs paid in the third fiscal quarter should have been accrued in the second fiscal quarter. Management has taken steps to remediate this matter. The amendment does not change the company's nine-month revenues, costs or operating results.

e. Digital also announced today that it has commenced pilot deliveries of its new, proprietary eVU(TM) mobile entertainment product to companies in the healthcare and travel and leisure industries (please view the following link of the Med-eVU(TM) version of the product: www.edigital.com/evu.htm). Based on e.Digital's proprietary digital video technology, eVU features razor-sharp images on its 7" high resolution LCD screen, superb audio fidelity, dual stereo headphone jacks, embedded credit card reader/processor, touch screen capabilities, bright full featured graphical user interface, e.Digital's patent-pending hardware security technology, 10+ hours of high resolution video playback on a single battery charge, and other important features.

"We are very pleased with initial feedback from companies evaluating our eVU mobile entertainment devices and turnkey entertainment services business," said Will Blakeley, e.Digital's president and chief technical officer. "We have developed logistic and secure content solutions to enable customers to rapidly deploy, operate and maintain eVUs for their customers/passengers/patients.

"Based on this response, and the U.S. and international companies we are working with, we believe we can grow our revenues and improve margins in future periods," commented Blakeley. "As our new turnkey entertainment services solution is fully implemented, we expect to capture more margin on each product sale and collect monthly revenues from content and other services. More importantly, we believe we can become profitable with annual sales of eVU units totaling approximately half of the 8,000+ e.Digital-powered IFE units currently in the field.

"The markets addressed by the companies we are working with, will complement our IFE business, but with improved margins and fewer logistic, financial and competitive challenges," added Blakeley. "We expect to announce first eVU orders this quarter and more throughout this calendar year."

e. Digital further announced today that it has initiated efforts to partner with an intellectual property management company to jointly pursue monetizing the company's patent portfolio.

"With the proliferation of flash memory based products and the increasing recording capacity of flash, we believe our patent holdings in this area are fundamental and valuable, particularly in the areas of content file management, optimal flash memory management, and in removable flash applications," concluded Blakeley. "With the assistance of an intellectual property management partner, our strategy is to aggressively pursue licensing agreements with companies we believe have products utilizing our intellectual property."

About e.Digital Corporation:. e.Digital Corporation specializes in the delivery, management, and protection of secure digital content through its proprietary technology platforms. Through customer and partnering relationships, e.Digital is a provider of secure portable Video on Demand products. e.Digital's services include the licensing of the Company's MicroOS(TM), Content Mark-Up Language (CML) application, patent-pending hardware security technology, Digital Rights Management (DRM) solutions, and video display software applications. In addition, e.Digital partners with leading, innovative companies, designing and providing manufacturing services for products employing the Company's proprietary digital technology platforms. For more information about e.Digital and its technology platforms, please visit the company website at www.edigital.com.