e.Digital Corporation (fka EDIG)

[cksla]

e.Digital Corp. Files Sept. 30, 2002 Form 10-Q Quarterly Financial Report


Business Editors

SAN DIEGO--(BUSINESS WIRE)--Nov. 14, 2002--e.Digital Corp.
(OTC:EDIG) today filed its Form 10-Q for the quarter ended Sept. 30,
2002 with the Securities and Exchange Commission.
For the quarter, the company reported a comprehensive loss of
$2,673,578 ($0.02 per share) on total revenues of $290,290. The loss
includes costs associated with inventory write-downs, price reductions
on the company's branded products, logistics and distribution
expenses, and write offs of accounts receivable.
Ran Furman, CFO, said, "As stated at our Annual Shareholder
Meeting last week, revenues for the September quarter were much lower
than expected, particularly for our consumer electronics business
unit. We have also applied extremely conservative accounting measures
and the Company took write offs in all applicable areas in the
September quarter. Product revenues and accounts receivable reflect
our revised accounting procedures under which we now defer revenue
from products sold to most of our retailers. Revenues for most retail
consumer electronics sales are only realized when products are sold
through to consumers, regardless of when they were shipped.
"We have taken action and continue taking action to streamline our
operations, control overhead, increase margins, and improve our
financial performance. Since June we have effectively reduced our
monthly burn rate by over forty percent, from $500,000 to under
$300,000, and we continue to trim costs where necessary. In addition
we are confident that we will be able to restructure all of the
Secured and Unsecured Notes prior to December 31, 2002," concluded
Furman.
Fred Falk, president and CEO, stated, "Regardless of the internal
and external reasons, we are very dissatisfied with the quarter's
financial results. The Company has been through a difficult quarter
and we are making changes and improvements. We are proactively moving
the company forward in business areas where the company can be
successful.
"We are placing strong emphasis on increasing revenues in the four
areas we outlined at our Annual Shareholder Meeting: 1) Selling
through European, Asian, and U.S. regional consumer electronics
retailers; 2) OEM development, non-recurring engineering fees, and
other services; 3) Licensing and royalties from OEM-branded
e.Digital-powered products; 4) Selling e.Digital-branded products
through our online store at www.edigital-store.com and other e-tail
channels.
"We are experiencing an increase in online sales of our consumer
electronics products, and, based on the success of digital music
player products during last year's holiday selling season, we expect
revenues to improve during the current quarter. Because the bulk of
holiday sales take place between Thanksgiving and Christmas, we will
be able to better gauge the extent of our revenue improvement in
December. We look forward to releasing further product and OEM
business development information this month and in December,"
concluded Falk.

About e.Digital

e.Digital Corp. designs, licenses, brands, manufactures and sells
digital audio products and technologies. The company's trademarked
digital audio players include the MXP(TM) 100, Treo(TM) portable
digital jukebox line, Silhouette(TM) ultra-slim MP3-CD player, and
Odyssey(TM) line of flash- and hard disk drive-based players.
e.Digital launched WeDigMusic.com to complement its digital audio
players by providing consumers with a one-stop-shop for streaming and
downloading music from thousands of artists on the Web. The company
also offers an engineering partnership for the world's leading
electronics companies to link portable digital devices to PCs and the
Internet. e.Digital develops and markets to consumer electronics
manufacturers complete end-to-end solutions for delivery and
management of open and secure digital media with a focus on music,
voice and video players/recorders, and automotive infotainment and
telematics systems. Other applications for e.Digital's technology
include portable digital music players and voice recorders; desktop,
laptop and handheld computers; PC peripherals; cellular phone
peripherals; e-books; video games; digital cameras; and digital video
recorders. Engineering services range from the licensing of
e.Digital's patented MicroOS(TM) file management system to custom
software and hardware development, industrial design, and
manufacturing services. For more information on the company, please
visit www.edig.com. To shop at the e.Digital online store, please
visit www.edigital-store.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.
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. Those statements are not guarantees of future performance
and involve risks, uncertainties and assumptions that will be
difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or implied by those
forward-looking statements. Factors that may affect the Company's
businesses, financial condition and operating results include future
products and results, technological shifts, potential technical
difficulties that could delay new products and services, competition,
pricing pressures, the uncertainty of market acceptance of new
products and services by OEM's and end-user customers, effects of
changes in the economy, consumer spending, the ability of the Company
to maintain relationships with strategic partners and suppliers, the
ability of the Company to timely and successfully develop, maintain
and protect its technology and product and service offerings and
execute operationally, the ability of the company to attract corporate
financing and the ability of the Company to attract and retain
qualified personnel. These factors may also include, but are not
limited to, general market conditions, the Company's ability to
develop new products to meet market demand, the Company's ability to
maintain cost controls, the mix of products and services the Company's
customers require and the effects of natural disasters, international
conflicts and other events beyond the Company's control. 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 by e.Digital with the Securities and Exchange
Commission ("SEC"). e.Digital disclaims any intent or obligation to
update those forward-looking statements, except as otherwise
specifically stated by it.

Editors Note: e.Digital is a trademark of e.Digital Corporation.
All other company, product, and service names are the property of
their respective owners.

--30--dw/sd* js/sd

CONTACT: e.Digital Corp., San Diego
Investor Relations:
Robert Putnam, 858/679-1504
[e-mail]

KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS ENTERTAINMENT INTERNET
MUSIC SOFTWARE EARNINGS
SOURCE: e.Digital Corp.

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