e.Digital Corporation (fka EDIG)

[Sentinel]

Rollingrock...I would say that the webcast certainly told me quite a bit I hadn't known before, even after the SHM. That content appears in bold below. I envy you if you knew all this beforehand. You must have quite the DD network.

Business Presentation - Fred Falk

Good afternoon ladies and gentlemen, we appreciate this opportunity to update you on our progress at e.digital as well as discuss new business developments that have occurred since the annual meeting earlier this month. Before I discuss these new business developments, I would like to address the pending S-3 registration statement scheduled to be filed this month with the SEC. As many of you are aware, last December, we converted over 2 million dollars of short term debt into series "D" preferred stock, and agreed to a June 30 2003 deadline for filing a registration statement. Investors in the series "D" worked with us and agreed to wait until this month to file. Last month we announced the completion of a 1.2 million dollar financing in connection with the sale of series "E" preferred stock, and our agreements to a registration filing form S-3 no later than 30 days from the closing of the transaction.

Some of you have inquired as to how we arrived at the terms for the series "E". Please know that many of the terms and conditions of the series "E" were influenced by the series "D". Only the series "D", series "E", and warrants from our September 2001 note financing are being included in the registration statement. Also please understand that the number of shares being registered is based on both the series "D" and series "E" preferred stock being held for the maximum amount of time, and being converted at the lowest possible price, as well as having all of the warrants exercised.

Based on our current and future business prospects for the next two years, we expect the shares ultimately converted will be far less than the maximum number that is required to be filed in the registration statement.

Now I would like to update you on current business, and discuss new business developments. As we mentioned at the annual meeting, through one of our Asian manufacturing partners, production on the Eclipse by Fujitsu-10 product has begun. Since our meeting, ExF-10 successfully showcased their branded product, based on our MicroOS-powered automotive-infotainment platform to their distribution organization. Because of the enthusiastic response, ExF-10 is seeking to presell the entire opening order as well as place follow-on orders. We expect announcements providing further details regarding delivery, product launch, and follow-on orders in 2004 - early 2004.

The next business developments have occurred since our meeting and are all agreements in principle, pending final approval.

At this time, we are confident that all of these agreements will be executed, and we would like to share with you today some early details of these important business-building developments.

The first of our new business developments involves a major consumer brand combining our MOS-powered personal audio and personal video platforms utilizing a derivative of our Odyssey 1000 form-factor. The expected consumer release date is late spring 2004 at which time the OEM and specifications of the device are scheduled to be revealed.

Another agreement calls for an OEM-branded consumer version of our personal video platform featuring a 7" LCD screen. This new video product is expected to reach consumers in early Fall 2004, through a major OEM's retail and e-tail site. The branding OEM and device specifications are scheduled to be revealed upon the consumer launch of the product.

We are pleased to announce today that we have reached a licensing agreement in principle with the world’s largest OEM supplier of flashed based MP3 players.

This Asian OEM supplies products to many of the worlds leading consumer brands. Under the agreement, this Asian OEM will manufacture consumer-branded products based on our MicroOS-enabled personal audio platform for their customers. This agreement is similar in scope to the licensing agreement we announced on September 16, 2003, with another major Asian-based OEM although it is more encompassing by calling for the incorporation of e.digital’s MicroOS-based technology with 1.8" hard disk drive and Cornice storage elements.

The Cornice storage element is a patent-pending high capacity, low cost durable storage solution sizeable enough to hold a significant amount of audio/visual content while remaining small enough to fit inside a pocket-sized device. The Cornice SE delivers the speed and capacity of small disk drives, the low battery usage of solid state storage media such as flash, and extreme durability all at the lowest cost in the industry.

We have also reached a separate agreement in principle with an existing OEM partner on a Cornice-based version of our personal audio platform. Their e.digital powered branded product is scheduled to be unveiled at the upcoming CES.

We expect further announcements regarding both of these pending agreements, relationships and products in early January.

We have been working with Cornice for several months on these and further pending business opportunities. As I stated at the annual meeting the lion’s share of the development work for our MicroOS-based technology platform is complete and each new project undertaken now requires fewer development hours, thereby reducing costs and speeding OEM-branded products to market resulting in expected increasing revenues and further business.

Revenue and royalty potential on devices produced under each current agreement as well as under each of the pending agreements we have discussed today is expected to range from several hundred thousand to several million dollars annually based on the degrees of consumer acceptance of these e.digital powered OEM- branded products.

As we stated in our meeting earlier this month, in most cases it will be 3-6 months after OEM-branded devices are launched to consumers until we can begin releasing the cumulative dollar amounts of the revenues and/or royalties being realized, as well as forecast expected cumulative revenues based on the ongoing performance of the products.

The 2004 International Consumer Electronics Show will be held January 8th through January 11th in Las Vegas. Because we have a full schedule of meetings with current and potential OEM customers and partners we will not be hosting our own booth. We are pleased to report that branded, derivative products from some of our proprietary technology platforms are scheduled to be displayed in the Texas Instruments booth as well as in other booths at the show.

We are working with OEM customers and partners on joint press releases scheduled to be released in early January to coincide with CES. We are also scheduling press and media opportunities for some of these new business developments highlighting our MicroOS-powered technology platforms.

We are also pleased to report that since the SHM we have made more progress on a proposed licensing agreement involving our core MicroOS technology, as well as with 2 major OEMs seeking to converge elements of 2 or more of our technology platforms into differentiated branded products.

We also expect further IFE related agreements to be finalized during the next 2 months. Beyond these, we are working on other business opportunities each in varying stages of development. We look forward to providing further details in upcoming corporate announcements regarding all of our current and pending business.

During the annual meeting I emphasized that we are only pursuing new business with "home run" potential as well as a path for future product generations and further devices based on our technology platforms. All of the developments we have discussed today meet these criteria. We expect most, if not all of the revenue from the delivery of the ExF-10 product as well as the first royalties expected from the Asian OEM under the September 16, 2003 licensing agreement will be accounted for next quarter. Accordingly we anticipate our revenue for this quarter ending December 31, 2003 will be approximately $700,000. We expect revenue next quarter in the 1.5 – 2 million-dollar range based upon the delivery of the ExF-10 units, first royalties from the Asian OEM on their customers' branded jukebox and further income from our personal video and personal audio platform.

We will continue to provide further business and revenue guidance in accordance with the information we receive from our OEM customers and partners. We’ve made good progress in our business and technology in 2003 and we are committed to making 2004 the best year ever for e.digital and for you our shareholders. We wish you and your loved ones all the best this holiday season and we wish all of us a prosperous 2004.