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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2003

Commission File Number 0-20734

e.Digital Corporation
(Exact name of registrant as specified in its charter)

Delaware 33-0865123
-------- ----------
(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)

13114 Evening Creek Drive South, San Diego, California 92128
- ------------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)

(858) 679-1504
--------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES |X| NO |_|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

Common Stock, par value $0.001 155,241,328
- ------------------------------ -----------
(Class) (Outstanding at November 7, 2003)

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e.DIGITAL CORPORATION

INDEX

Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited):

Consolidated Balance Sheets as of September 30, 2003 and
and March 31, 2003 3

Consolidated Statements of Operations for the three
and six months ended September 30, 2003 and 2002 4

Consolidated Statements of Cash Flows for the six months
ended September 30, 2003 and 2002 5

Notes to Interim Consolidated Financial Statements 6

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10

Item 3. Quantitative and Qualitative Disclosure about Market Risk 16

Item 4. Controls and Procedures 16

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17

SIGNATURES 18


2


e.DIGITAL CORPORATION

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)



September 30, 2003 March 31, 2003
$ $
------------------ --------------

Current
Cash and cash equivalents 380,483 83,906
Accounts receivable, trade, less allowance of $114,824 and $138,236
for doubtful accounts, respectively 136,069 181,536
Inventory net of allowance for obsolete inventory of $nil and $6,435 respectively 25,099 138,795
Deposits and prepaid expenses 73,911 92,574
Deferred contract charges 178,227 218,192
----------------------------------
Total current assets 793,789 715,003
----------------------------------
Property and equipment, net of accumulated depreciation of
$508,613 and $445,205, respectively 166,428 141,397
Intangible assets, net of accumulated amortization of
$38,393 and $93,610, respectively 1,016 38,949
Restricted cash 190,000 --
----------------------------------
Total assets 1,151,233 895,349
==================================

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current
Accounts payable, trade 739,377 736,682
Other accounts payable and accrued liabilities 93,946 128,083
Accrued lease liability 515,000 515,002
Accrued employee benefits 149,433 203,027
Dividends 184,500 61,500
Deferred revenue 696,543 311,703
Unsecured promissory notes, short term 342,415 186,984
----------------------------------
Total current liabilities 2,721,214 2,142,981
----------------------------------
Unsecured promissory notes 407,585 626,595
----------------------------------
Total liabilities 3,128,799 2,769,576
----------------------------------

Commitments and Contingencies

Stockholders' deficit
Preferred stock, $0.001 par value; 5,000,000 shares authorized
Series D Preferred stock 250,000 shares designated: 205,000 and 205,000
issued and outstanding, respectively. Liquidation preference
of $2,050,000 each period 2,050,000 2,050,000
Common stock, $0.001 par value, authorized 200,000,000,
155,125,855 and 147,604,343 shares outstanding, respectively 155,126 147,605
Additional paid-in capital 60,777,409 59,430,144
Contributed surplus 1,592,316 1,592,316
Dividends (184,500) (61,500)
Accumulated deficit (66,367,917) (65,032,792)
----------------------------------
Total stockholders' deficit (1,977,566) (1,874,227)
----------------------------------

Total liabilities and stockholders' deficit 1,151,233 895,349
==================================


See notes to interim consolidated financial statements


3


E.DIGITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)



For the three months ended For the six months ended
September 30, September 30,
2003 2002 2003 2002
$ $ $ $
------------------------------- ------------------------------

Revenues:
Products 1,036,071 180,969 2,047,042 665,471
Services 61,844 109,321 204,864 176,326
------------------------------- ------------------------------
1,097,915 290,290 2,251,906 841,797
------------------------------- ------------------------------

Cost of revenues:
Products 893,729 1,155,197 1,863,701 2,075,723
Services 68,684 33,031 181,845 98,447
------------------------------- ------------------------------
962,413 1,188,228 2,045,546 2,174,170
------------------------------- ------------------------------
Gross profit (loss) 135,502 (897,938) 206,360 (1,332,373)
------------------------------- ------------------------------

Operating expenses:
Selling and administrative 385,101 1,056,998 764,527 2,044,261
Research and related expenditures 476,140 419,340 676,805 803,495
------------------------------- ------------------------------
Total operating expenses 861,241 1,476,338 1,441,332 2,847,756
------------------------------- ------------------------------

Operating loss (725,739) (2,374,276) (1,234,973) (4,180,129)
------------------------------- ------------------------------

Other income (expense):
Interest income -- 565 -- 1,601
Interest expense (28,273) (299,867) (63,438) (504,346)
Loss on disposal of asset -- -- (36,714) --
Other income -- -- -- 67,014
------------------------------- ------------------------------
Other income (expense) (28,273) (299,302) (100,152) (435,731)
------------------------------- ------------------------------

Loss and comprehensive loss for the period (754,013) (2,673,578) (1,335,125) (4,615,860)
Accrued dividends on the Series D Preferred stock (61,500) -- (123,000) --
------------------------------- ------------------------------
Loss attributable to common stockholders (815,513) (2,673,578) (1,458,125) (4,615,860)
=============================== ==============================
Loss per common share - basic and diluted (0.01) (0.02) (0.01) (0.03)
=============================== ==============================

Weighted average common shares outstanding 154,882,753 138,025,421 151,993,493 136,515,851
=============================== ==============================


See notes to interim consolidated financial statements


4


E.DIGITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)



For the six months ended
September 30
2003 2002
OPERATING ACTIVITIES $ $
---------------------------

Loss for the period (1,335,125) (4,615,860)
Adjustments to reconcile loss to net cash used in operating activities:
Depreciation and amortization 51,341 89,558
Accrued interest and accretion relating to secured promissory notes 28,126 470,606
Stock issued to vendor 49,263 66,000
Stock issued to consultant -- 185,085
Loss on disposal of asset 36,713 --
Changes in assets and liabilities:
Accounts receivable, trade 45,467 481,888
Inventory 113,696 183,595
Prepaid expenses and other 18,663 (43,046)
Deferred contract charges 39,965 (21,759)
Accounts payable, trade 2,695 55,883
Other accounts payable and accrued liabilities (90,389) (217,829)
Accrued employee benefits (53,594) (33,259)
Deferred revenue 384,840 46,630
---------------------------
Cash (used in) operating activities (708,339) (3,352,507)
---------------------------
INVESTING ACTIVITIES
Purchase of property and equipment (75,152) (62,810)
Increase in restricted cash (190,000) (634)
Interest earned on certificate of deposit -- (668)
---------------------------
Cash (used in) investing activities (265,152) (64,112)
---------------------------
FINANCING ACTIVITIES
Proceeds from issuance of Shares 933,500 2,667,838
Proceeds from 24% Unsecured Note 69,300 --
Proceeds from 24% Unsecured Promissory Notes 200,000 --
Proceeds from issuance of Unsecured Notes -- 1,800,000
Payment on 24% Unsecured Note (104,757) --
Payment on Secured Promissory Note -- (1,400,000)
Deferred financing charge -- 21,000
Proceeds from exercise of stock options 122,025 --
Proceeds from exercise of warrants 50,000 --
---------------------------
Cash provided by financing activities 1,270,068 3,088,838
---------------------------
Net increase (decrease) in cash and cash equivalents 296,577 (327,781)
---------------------------
Cash and cash equivalents, beginning of period 83,906 445,219
---------------------------
Cash and cash equivalents, end of period 380,483 117,438
===========================

Supplemental schedule of noncash investing and financing activities:
Deemed dividends on Series D preferred stock 123,000 --


See notes to interim consolidated financial statements


5


E.DIGITAL CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2003

1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

e.Digital Corporation, (the "Company") is incorporated under the laws of
Delaware. The Company offers engineering partnerships to electronics companies
to create portable digital devices that can link to personal computers and the
Internet. The Company markets to Original Equipment Manufacturers ("OEMs")
complete reference designs and technology platforms with a focus on digital
music and voice/video player/recorders.

The accompanying unaudited interim consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary of the same name, based
in San Diego, California. The unaudited interim consolidated financial
statements have been prepared, by management, in accordance with accounting
principles generally accepted in the United States for interim financial
information and in the opinion of management reflect all adjustments, which
consist of normal and recurring adjustments, necessary to present fairly the
financial position and results of operations and cash flows of the Company.

The Company has incurred significant losses and negative cash flow from
operations in each of the last three years and has an accumulated deficit of
$66,367,917 at September 30, 2003. At September 30, 2003 the Company had a
working capital deficiency of $1,927,425. Substantial portions of the losses are
attributable to marketing costs of the Company's new technologies and products
and substantial expenditures on research and development of technologies. The
Company's operating plans may require additional funds that may take the form of
debt or equity financings. There can be no assurance that any additional funds
will be available. The Company's ability to continue as a going concern is in
substantial doubt and is dependent upon achieving a profitable level of
operations and obtaining additional financing.

Management of the Company has undertaken steps as part of a plan to improve
operations with the goal of sustaining Company operations for the next twelve
months and beyond. These steps include (a) branding and selling the Company's
Odyssey(TM) 1000 digital audio product (b) delivering digital products produced
under contract for OEMs; (c) expanding sales and marketing to additional OEM
customers and markets; (d) controlling overhead and expenses; and (e) raising
additional capital and/or financing. There can be no assurance the Company can
successfully accomplish these steps and it is uncertain the Company will achieve
a profitable level of operations in the future or without additional financing.

There can be no assurance that any additional financings, if required, will be
available to the Company on satisfactory terms and conditions, if at all. In the
event the Company fails to achieve profitable operations and is unable to
continue as a going concern, it may elect or be required to seek protection from
its creditors by filing a voluntary petition in bankruptcy or may be subject to
an involuntary petition in bankruptcy. To date, management has not considered
this alternative, nor does management view it as a likely occurrence.

These consolidated financial statements do not give effect to any adjustments
which would be necessary should the Company be unable to continue as a going
concern and therefore be required to realize its assets and discharge its
liabilities in other than the normal course of business and at amounts different
from those reflected in the accompanying consolidated financial statements.

2. LOSS PER SHARE

The Company's losses for the periods presented cause the inclusion of potential
common stock ("Common Stock") instruments outstanding to be antidilutive and,
therefore, the Company is not required to present a diluted loss per common
share. Stock options, warrants and convertible preferred stock exercisable into
15,467,647 shares of Common Stock were outstanding as at September 30, 2003.
These securities were not included in the computation of diluted loss per share
because they are antidilutive, but they could potentially dilute earnings per
share in future periods.

The loss available to common stockholders was increased during the six months
ended September 30, 2003 and 2002 by accrued dividends of $123,000 and $nil,
respectively. The loss available to common stockholders is computed as follows:


6


E.DIGITAL CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2003



For the three months ended For the six months ended
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----

Loss and comprehensive loss $(754,013) $(2,673,578) $(1,335,125) $(4,615,860)
Dividends on Series D preferred stock (61,500) -- (123,000) --
--------- ----------- ----------- -----------
Loss available to common stockholders $(815,513) $(2,673,578) $(1,458,125) $(4,615,860)
========= =========== =========== ===========


3. UNSECURED PROMISSORY NOTES

September 30, 2003 March 31, 2003
------------------ --------------
15% Unsecured Promissory Note $ 750,000 $ 750,000
24% Unsecured Promissory Note -- 35,454
Accrued interest on notes 84,375 28,125
Less current portion (342,415) (186,984)
--------- ---------
Long term $ 491,960 $ 626,595
========= =========

15% Unsecured Notes

On December 11, 2002, the Company issued a 15% Unsecured Promissory Note ("15%
Unsecured Note") for gross cash proceeds of $750,000. The 15% Unsecured Note,
under the original term, was scheduled to mature on February 11, 2004 and
payable $50,000 each month, with a final payment of $35,801 on February 11,
2004. The Company entered into a forbearance agreement with the lender through
and including December 31, 2002. On December 30, 2002, the Company issued
133,223 shares of Common Stock in consideration for all unpaid interest. On
December 23, 2002, the holder of the 15% Unsecured Note agreed to (i) extend the
maturity date of the 15% Unsecured Note from February 11, 2004 to May 31, 2005;
(ii) reduce the monthly payments from $50,000 to $7,500 through December 31,
2003, representing the monthly interest on the 15% Unsecured Note and (iii)
$50,000 payments each month, beginning January 31, 2004. As of September 30,
2003, accrued interest totaled $84,375 [March 31, 2003 - $28,125]. The Company
has entered into an additional forbearance agreement with the lender deferring
any payments through and including December 31, 2003. 24% Unsecured Note In
March 2003, the Company issued to a director to finance inventory purchases a
24% Unsecured Promissory Note ("24% Unsecured Note") for gross cash proceeds of
$42,000 and in April 2003 increased the note by $37,800. For the six months
ended September 30, 2003, the Company recorded $2,782 in interest expense. On
July 3, 2003, the note principal and interest in the amount of $74,532 was paid.

4. STOCKHOLDERS' EQUITY

The following table summarizes stockholders' equity transactions during the six
month period ended September 30, 2003:



Additional Dividends Contributed Accumulated
Shares Amount paid-in capital surplus deficit
# $ $ $ $ $
- ---------------------------------------------------------------------------------------------------------------------------------

Balance, March 31, 2003 147,604,343 $147,605 $59,430,144 (61,500) $1,592,316 $(65,032,792)
Shares issued for cash 4,913,160 4,913 928,587 -- -- --
Shares issued upon exercise
of stock options 859,837 860 121,165 -- -- --
Shares issued upon exercise
of warrant 500,000 500 49,500 -- -- --
Shares issued to vendors 195,913 196 49,067 -- -- --
Shares issued for debt
reduction 1,052,632 1,052 198,947 -- -- --
Dividends on Series D Preferred
stock -- -- -- (123,000) -- --
Loss for the period -- -- -- -- -- (1,335,125)
- --------------------------------------------------------------------------------------------------------------------------------
Balance, September 30, 2003 155,125,885 $155,126 $60,777,409 (184,500) $1,592,316 $(66,367,917)
================================================================================================================================



7


E.DIGITAL CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2003

On June 10, 2003, the Company issued 1,052,632 shares of Common Stock in
consideration for all principal balance and paid interest on $200,000 of 24%
Unsecured Promissory Note ("24% Unsecured Promissory Note") issued in May 2003.

5. WARRANTS AND OPTIONS

At September 30, 2003 warrants were outstanding and exercisable into the
following shares of Common Stock:

Number of Exercise Price
Description Common Shares $ Expiration Date
- --------------------------------------------------------------------------------
Warrants 161,662 $0.19 October 5, 2005
Warrants 850,000 $0.19 September 30, 2006
- --------------------------------------------------------------------------------
Total 1,011,662
================================================================================

Subsequent to September 30, 2003, 115,473 warrants were exercised for cash
proceeds of $21,940.

The following table summarizes stock option activity for the period:

Number of Weighted Average
Options Exercise Price
- --------------------------------------------------------------------------------
Outstanding at March 31, 2003 3,943,250 $1.0846
Granted 3,307,000 $0.1560
Exercised (859,837) $0.1419
Forfeited (1,606,247) $0.5893
---------- -------
Outstanding at September 30, 2003 4,784,166 $0.7784
---------- -------
Exercisable at September 30, 2003 3,342,827 $1.0304
---------- -------

Options outstanding are exercisable at prices ranging from $0.155 to $5.46 and
expire over the period from 2003 to 2008 with an average life of 3.88 years.

6. SERIES D PREFERRED STOCK

On December 30, 2002, the Company issued 205,000 shares of 12% Series D
non-redeemable convertible preferred stock (the "Series D stock") with a stated
value of $10 per share. The Series D stock was issued pursuant to a conversion
agreement with all of the noteholders of the Company's $1,000,000 12% Secured
Promissory Notes and $1,050,000 of 24% Unsecured Notes. Dividends of 12% per
annum are payable, with certain exceptions, either in cash or in shares of
Common Stock at the Company's election. The conversion price for each share of
Series D stock was $0.20 subject to certain adjustments. The conversion price
was reduced to $0.19 pursuant to anti-dilution protection triggered by the sale
of Common Stock in January 2003. At September 30, 2003 accrued dividends totaled
$184,500 [March 31, 2003 - $61,500]. At September 30, 2003 the Series D stock
would have been convertible into 11,113,158 common shares.

7. INVENTORY

Inventory is recorded at the lower of cost and net realizable value. Cost is
determined on a first-in, first out basis.

September 30, 2003 March 31, 2003
$ $
- ------------------------------------------------------------------------------
Finished goods 21,543 134,146
Raw materials 3,556 4,649
- ------------------------------------------------------------------------------
25,099 138,795
==============================================================================

At March 31, 2003, the provision for inventory obsolescence was $6,435. During
the quarter ended September 30, 2003, the Company applied the $6,435 provision
to obsolete inventory.

8. COMMITMENTS AND CONTINGENCIES

The Company entered into a three-year fulfillment, storage and freight
management agreement with APL Direct Logistics ending on September 30, 2004. As
part of this agreement, the Company provided APL Direct Logistics with a letter
of credit amounting to $144,724 and prepaid $90,000 to APL Direct Logistics for
inbound and outbound freight


8


E.DIGITAL CORPORATION AND SUBSIDIARY
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 2003

management services to be drawn down upon submission of invoices from APL. In
September 2002, the Company terminated the agreement. In the quarter ending
December 31, 2002, APL drew down on $129,925 of the letter of credit, sold
$51,992 of inventory and held $21,668 of prepaid freight to apply to reduce
outstanding obligations. The Company believes the total amount due to APL at
September 30, 2003 was $75,452 which is included as a current liability.
Settlement of this liability may be either more or less than the amount recorded
in the consolidated financial statements and accordingly may be subject to
measurement uncertainty in the near term.

The Company relies on Maycom Co., Ltd. for the manufacture of its wireless
product developed for Softeq, and DigitalWay Co., Ltd. for the manufacture of
its Odyssey and in flight entertainment ("IFE") products and Orient Power for
the manufacture and assembly of the Eclipse-branded audio products. The Company
depends on its contract manufacturers to (i) allocate sufficient capacity to its
manufacturing needs, (ii) produce acceptable quality products at agreed pricing
and (iii) deliver on a timely basis. If a manufacturer is unable to satisfy
these requirements, the Company's business, financial condition and operating
results may be materially and adversely affected. Any failure in performance by
any of these manufacturers for any reason could have a material adverse affect
on the Company's business. Production and pricing by each such manufacturer is
subject to the risk of price fluctuations and periodic shortages of components.
The Company does not have supply agreements with component suppliers and,
accordingly, it is dependent on the future ability of its manufacturers to
purchase components. Failure or delay by suppliers in supplying necessary
components could adversely affect the Company's ability to deliver products on a
timely and competitive basis in the future.

Approximately $515,000 of the accrued lease liability arose in the normal course
of business for goods and services delivered to the Company and were recorded at
amounts reflected on the invoices and other documentation received from the
third party vendor. This amount is approximately five years old. The Company has
had no contact with the vendor and the amount may not require payment.
Accordingly, the accrued lease liability reflects management's best estimate of
the amount that may be due. Settlement of this liability may be either more or
less than the amount recorded in the consolidated financial statements and
accordingly may be subject to measurement uncertainty in the near term.

In September 2000, the Company entered into a three-year sublease agreement
which subsequently expired on July 31, 2003. The Company is currently occupying
7,750 square feet on a month to month basis with an aggregate monthly payment of
$9,291 inclusive of utilities and costs.

9. RESTRICTED CASH

Restricted cash represents an irrevocable letter of credit issued to Digitalway
in the amount of $190,000 for future production.

10. CREDIT RISK

Amounts owing from three major customer comprise 36%, 20% and 16% of accounts
receivable at September 30, 2003. Amounts owing from two major customers
comprise approximately 50% and 26%, respectively of accounts receivable at March
31, 2003.

11. MAJOR CUSTOMERS AND SUPPLIERS

The Company operates in one major line of business, the development, manufacture
and marketing of electronic products. Sales to three major customers comprise
75% of revenue for the quarter ended September 30, 2003. Sales to two major
customers comprise 63% of revenue for quarter ended September 30, 2002.

12. COMPARATIVE FIGURES

Certain of the comparative figures have been restated to conform with the
current period's presentation.


9


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE
COMPANY'S FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A
VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW AND UNDER THE SUB-HEADING,
"BUSINESS RISKS." SEE ALSO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED MARCH 31, 2003.

General

We offer engineering services to leading electronics companies to create
portable digital devices that can link to PCs, the Internet and other electronic
devices. We market our services and technologies to Original Equipment
Manufacturers ("OEMs") with a focus on developing digital music, voice, and
video players/recorders using the latest in digital storage media (a device used
to store data) and technology. OEMs are business customers that license or
purchase our products or our technology to embed in their own products. We offer
complete reference designs (working, full-featured designs sometimes implemented
as prototypes that can be customized to a customers' preferred look and feel or
branded and sold as they are, according to the customer's wishes) and technology
platforms (basic working technology that can be developed into a finished
consumer product, or incorporated into an existing consumer product design) for
private labeling by OEMs. We may sometimes integrate our OEMs' unique or
proprietary features and/or technology into new products for their product
lines. We focus our marketing efforts on OEMs in various digital processing
markets including digital music, dictation equipment, consumer electronics,
digital image and video and other electronic product markets.

We have relationships with manufacturers with facilities in the United States,
China and Korea. We have expertise in developing, performing and overseeing
manufacturing processes. We apply our technology and expertise in providing
manufacturing supervision, documentation, and quality control services to
products for our OEM customers and for our e.Digital branded products. We also
use our technology to design and build "e.Digital-branded" portable digital
audio players and market them to consumers through various channels. Our primary
focus, however, is serving the development and manufacturing needs of our OEM
customers and licensees.

Services offered include custom hardware, firmware (an instruction set
programmed into a chip which determines the product's functionality and user
interface), software development, technology platform development, product
design, manufacturing services, fulfillment services, warranty services, and
licensing of our patented file management systems. Our revenues may result from
the sale of products, product royalties, fees from engineering services,
industrial order fulfillment, technical support services, warranty services
and/or design services. In some cases, we rely on outside subcontractors to
perform services including manufacturing, testing and certification, industrial
design, and assembly.

In March 2002, we announced that we had entered into a Development and
Manufacturing Agreement with Eclipse by Fujitsu Ten ("Eclipse"), a car stereo
company. Under the agreement, e.Digital receives non-recurring engineering
("NRE") fees for design and development services, as well as revenues for the
manufacture and delivery of Eclipse-branded audio products. Specifically, the
agreement states that e.Digital will provide Eclipse with engineering services
to integrate file management and compressed audio management technology designed
by e.Digital into an advanced automotive audio system. Prior to entering into
the Development and Manufacturing Agreement, we had collaborated with Eclipse
for several months to develop and deliver state-of-the-art automotive OEM and
aftermarket infotainment systems integrating the latest digital audio, voice
recognition, data storage, video, and wireless Internet technologies for sale
under the Eclipse brand name. Eclipse refers to their automotive audio system as
an "infotainment" platform because it includes not only a radio and CD Player,
but also may (i) connect wirelessly to the Internet to download music or other
data, (ii) store, organize, retrieve, and play back data, including digital
audio files, from a hard disk drive, (iii) connect wirelessly to a user's home
personal computer while parked in the driveway for purposes of downloading
and/or uploading music or other information, (iv) record radio signals to a
built-in hard disk drive as they are received and (v) recognize the driver's
voice commands to perform a variety of operations. The first system was unveiled
at the 2002 International Consumer Electronics Show in Las Vegas. To date, we
have received $45,000 under this agreement with respect to NRE fees only, of
which $45,000 has been deferred as of September 30, 2003.


10


In April 2002, we announced a strategic collaboration with DivXNetwork, Inc.
("DivX Networks") of San Diego, California. DivX Networks created and markets a
motion picture compression format (the DivX(TM) codec, a leading standard for
MPEG-4 video distribution) that is used for storing, playing back, and streaming
motion pictures over the Internet. Over 80 million users worldwide have
downloaded the DivX codec and the format is frequently used for distribution of
news, information, and entertainment by corporations and video producers
including major motion picture companies. Under the agreement, we are working
with DivX to jointly develop and market a range of consumer electronics devices
that play back DivX video and provide copyright protection to encoded video
files. To date, we have received no revenues from this collaboration but it is
an important element of our IFE project described below.

In May 2002, we signed a strategic development agreement with Digitalway Co.,
Ltd., ("Digitalway") of Korea. Under the agreement, we co-develop and market
advanced digital audio players for the consumer market. The products are branded
by e.Digital and marketed in the United States and Canada. The products can also
be branded by Digitalway and marketed in Asia and Europe. In January 2003, we
launched the e.Digital Odyssey(TM) 1000, a portable hard disk drive-based
digital audio player jointly designed by e.Digital and Digitalway, and
manufactured by Digitalway. The Odyssey(TM) 1000 is based on our MicroOS(TM)
technology, and has an embedded 2.5 inch, 20 GB capacity hard drive capable of
storing and playing back up to 5,000 tracks. It has a USB (Universal Serial Bus)
2.0 connection capable of downloading and writing up to 8 MegaBytes (MB) per
second. The Odyssey(TM) 1000 incorporates an FM radio and digital voice recorder
and a large, backlit display. It also acts as a portable hard drive and can
store and transport any type of data file including images, spreadsheets, or
other electronic documents. VoiceNav(TM) is included to make it easier to
navigate through a large music collection and play a selected track. In
September, 2003, the Company introduced two new models of the Odyssey 1000 to
supplement our product offerings in the areas of price and capacity. The new
models, 15 GB with a 3,750 track capacity and 40 GB with a capacity to store
over 10,000 tracks, both offer all of the above mentioned functionality of the
20 GB Odyssey 1000(TM).

In September 2003, the Company entered into a royalty bearing licensing
agreement with a multi-billion dollar Asian OEM for the manufacture of the
Company's Odyssey 1000(TM) platform for OEM branding. The Asian OEM will
manufacture a 1.8" version of the Odyssey 1000(TM) for specific OEM branding and
e.Digital is supporting the technology, software, firmware and upgrades to the
Odyssey 1000(TM) platform. Products manufactured under this agreement are
scheduled for consumer release in our third fiscal quarter.

In October 2002, we announced a development agreement with Aircraft Protective
Systems, Inc. ("APS") to develop a portable, hard disk drive-based In-Flight
Entertainment, or IFE, system under contract for a leading U.S. airline. The
agreement specifies that we will manufacture and sell the customizable digital
video player through APS. The agreement includes provisions for NRE fees to be
paid by APS to us for design services plus licensing fees and royalties. To
date, we have received $100,000 in payments under this agreement with respect to
NRE fees only, of which $100,000 has been deferred at September 30, 2003. In
addition, we received a deposit of $190,000 for product to be delivered which
was deferred at September 30, 2003.

In September 2003, Alaska Airlines and APS announced the launch of the IFE
system outlined above under the digEplayer name. Small quantities of players
were available to passengers in October. The release included confirmation that
20th Century Fox is providing content for the units. Each unit features DivX
encoded video content, music provided by DMX Music, airport and route
information and the ability to showcase paid advertising.

In February 2003, we announced a development agreement with independent systems
integrator Softeq Development Corporation ("Softeq"). Under the agreement, we
are collaborating with Softeq to develop a new digital audio product using
e.Digital's patented MicroOS(TM) technology and wireless communication
technology. The agreement calls for us to provide finished, manufactured
products to Softeq, who is to supply them to Hewlett-Packard for a specific
customer of Hewlett-Packard's. To date, we have received $316,750 in payments
under this agreement with respect to NRE fees only, of which $51,000 was
deferred at March 31, 2003 and $93,903 at September 30, 2003.

We incurred operating losses in each of the last three fiscal years and for the
quarter ended September 30, 2003 and these losses have been material. At
September 30, 2003, we had a working capital deficit of approximately $1.8
million. Our current level of monthly cash operating costs is approximately
$200,000. However, we may increase expenditure levels in future periods to
support the launch of "e.Digital" branded products and expand our OEM revenue
opportunities and continue advanced product and technology research and
development. Accordingly, our losses are expected to continue until such time as
we are able to realize supply, licensing, royalty, sales, and development
revenues sufficient to


11


cover costs of operations. We continue to be subject to the risks normally
associated with any new business activity, including unforeseeable expenses,
delays and complications. Accordingly, there is no guarantee that we can or will
report operating profits in the future.

Our unaudited interim consolidated financial statements have been prepared on
the going concern basis, which contemplates the realization of assets and the
discharge of liabilities in the normal course of business for the foreseeable
future.

We have undertaken steps as part of a plan to improve operations with the goal
of sustaining Company operations for the next twelve months and beyond. These
steps include (a) branding and selling our Odyssey(TM) 1000 digital audio
product (b) delivering digital products produced under contract for OEMs; (c)
expanding sales and marketing to additional OEM customers and markets; (d)
controlling overhead and expenses; and (e) raising additional capital and/or
financing, if required. There can be no assurance we can successfully accomplish
these steps and it is uncertain we will achieve a profitable level of operations
in the future or without additional financing.

Critical Accounting Policies

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

We recognize product revenue upon shipment of a product to the customer, FOB
destination or FOB shipping point depending on the specific contract term, if a
signed contract exists, the fee is fixed and determinable, collection of
resulting receivables is probable and there are no resulting obligations. With
most of our consumer electronics retailers, we do not meet the criteria for
revenue recognition upon shipment and therefore only recognize the revenue as
the product is sold through our customer to the ultimate end-user.

NRE contract revenues on short-term projects or service revenue is recognized
once the services or product has been delivered, the fee is fixed and
determinable, collection of the resulting receivable is probable and there are
no resulting obligations. If all of the service or product has been delivered
and there is one element that is perfunctory to the services or product that has
not been delivered, revenue will be recognized evenly over the remaining term of
the undelivered element. Certain NRE costs are capitalized and are expensed in
accordance with the matching principles when the related revenue is recognized.

In prior years, research and development contract revenue on long-term projects
is recognized on the percentage of completion method if reasonable estimate of
the costs and revenues can be determined for each of the milestones; otherwise,
the revenues are recognized when the product or services have been delivered.
Funds received in advance of meeting the criteria for revenue recognition are
deferred and are recorded as revenue as they are earned. If the costs we incur
on a contract are expected to exceed the anticipated revenue we will record the
loss in the period in which the facts that give rise to the revision becomes
known.

We record estimated reductions to revenue for anticipated product returns,
discounts offered to our customers and volume-based incentives. If market
conditions were to decline, we may take actions to increase the discounts
offered for future sales which will result in an incremental reduction of
revenue at the time the discounts are offered.

We maintain allowances for doubtful accounts for estimated losses resulting from
the inability of our customers to make required payments. If the financial
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.

We provide for the estimated cost of product warranties at the time revenue is
recognized. Our warranty obligation is affected by the quality of the work of
our contract manufacturers, product failure rates, material usage and costs
incurred in correcting a product failure. Should actual product failure rates,
or service costs differ from our estimates, revisions to the estimated warranty
liability would be required.

We record inventory at the lower of cost or net realizable value. Cost is
determined on a first-in, first-out basis. We write down our inventory for
estimated obsolescence or unmarketable inventory equal to the difference between
the cost of inventory and the estimated market value based upon assumptions
about future demand and market conditions. If actual market conditions are less
favorable than those projected, additional inventory write-downs may be
required.


12


As our business model now includes selling our own branded portable digital
audio products, the risk of product obsolescence has increased. The realizable
value of our inventory could deteriorate if we are unable to sell products out
of our inventory due to a lack of demand for our products or due to
technological changes in the industry.

Results of Operations

Six months ended September 30, 2003 compared to six months ended September 30,
2002

For the first six months ended September 30, 2003, we reported total revenues of
$2,251,906, a 168% increase from total revenues of $841,797 for the first six
months of fiscal 2002. Product revenues for six months ending September 30, 2003
were $2,047,042, a 208% increase from product revenues of $665,471 for the six
months ending September 30, 2002. Product revenue for the six months ending
September 30, 2003 consisted of OEM products while product revenues for the six
months ending September 30, 2002 consisted almost entirely of sale of portable
digital audio players launched the third quarter of fiscal 2002.

Service revenues for the first six months of fiscal 2003 were $204,864 compared
to $176,326 for the comparable period of the prior year. The timing and amount
of service revenues is dependent upon a limited number of projects. At September
30, 2003 we had $696,543 of deferred revenue from development contracts which
will be recognized based on the terms and conditions of each agreement. We are
increasing our focus on internally developed technology to be offered to OEM
customers in order to speed adoption of our technology and enhance our future
revenues.

For the six months ended September 30, 2003, we reported a gross profit of
$206,360 compared to a gross loss of $1,332,373 for the first six months of
fiscal 2002. Cost of sales for the six months ended September 30, 2003 consisted
of $1,863,701 of product costs and $181,845 of service costs, consisting mostly
of research and development labor being funded in part by OEM development
agreements. Although we do not anticipate any significant future contract
losses, we cannot guarantee that we can maintain positive gross margins in the
future or with future customers. Gross profit as a percentage of revenue
increased from (140.5%) to 10%, due primarily to the fulfillment of the Softeq
contract and positive margins from the sale of Odyssey(TM) 1000 products and
components. At the present time, warranty costs are not significant. We
generally sell our branded products with a six-month manufacturing warranty.

Total operating expenses (consisting of research and related expenditures and
selling and administrative expenses) for the six months ended September 30, 2003
were $1,441,332, as compared to $2,847,756 for the six months ended September
30, 2002. Selling and administrative costs aggregated $764,527 for the first six
months of fiscal 2004 compared to $2,044,261 in the prior period. The $1,279,734
decrease in selling and administrative costs resulted primarily from the
following: decrease in personnel and benefit costs of $670,204, a decrease of
$318,659 in professional fees, a decrease in customer service costs of $81,000,
a $71,094 decrease in shareholder relations expense, a $24,930 decrease in
deprecation and amortization expense and a decrease in advertising and
promotional items of $76,914. We anticipate quarterly selling and administrative
expenses to be constant as we are focused more on OEM opportunities and
de-emphasize selling and marketing our branded products.

Research and related expenditures for the six months ended September 30, 2003
were $676,805, as compared to $803,495, for the six months ended September 30,
2002. The $126,690 decrease in research and development costs resulted primarily
from the decrease in personnel and benefit costs. Research and development costs
are subject to significant quarterly variations depending on the use of outside
services, the assignment of engineers to development projects and the
availability of financial resources.

We reported an operating loss of $1,234,973 for the six months ended September
30, 2003 as compared to an operating loss of $4,180,129 for the six months ended
September 30, 2002. The decrease in operating loss consisted of the gross profit
for the six month period and the decrease of $1,406,424 in operating expenses.
We believe, but we cannot guarantee, that our strategy of investing in OEM
developments with supply or royalty provisions will provide positive margins in
future periods. The timing and amount of product sales and the recognition of
contract service revenues impact our operating losses. Accordingly, there is
uncertainty about future operating results and the results for the three months
are not necessarily indicative of operating results for future periods or the
fiscal year.


13


We reported a loss for the first six months of the current fiscal year of
$1,335,125 as compared to a loss of $4,615,860 for the prior year's first six
months. For the six months ended September 30, 2003, we incurred interest
expense of $63,438 as compared to $504,346 for the comparable period in the
prior year.

The loss available to common stockholders for the six months ended September 30,
2003 and 2002 is $1,458,125 and $4,615,860, respectively. Included in the loss
available to common stockholders for the six months ending September 30, 2003
and 2002 is accrued dividends of $123,000 and $nil, respectively on the Series D
stock.

Three months ended September 30, 2003 compared to three months ended September
30, 2002

For the three months ended September 30, 2003 , we reported total revenues of
$1,097,914 a 278% increase from total revenues of $290,290 for the comparable
three month period of fiscal 2003. Product revenues for the quarter ending
September 30, 2003 were $1,036,071, a 473% increase from product revenues of
$180,969 for the quarter ending September 30, 2002. The $855,102 increase in
product revenues resulted primarily from the recognition of approximately
$614,000 of product revenues from deliveries on the Softeq contract, as well
increased sales of components and recognition of revenues from sales of
Odyssey(TM) 1000 products.

Service revenues for the three months ended September 30, 2003 were $61,844
compared to $109,321 for the comparable period of the prior year. The timing and
amount of service revenues is dependent upon a limited number of projects. At
September 30, 2003 we had $413,091 of deferred revenue from development
contracts that will be recognized based on the terms and conditions of each
agreement.

For the three months ended September 30, 2003, we reported a gross profit of
$135,501 compared to a gross loss of $897,938 for the three months of fiscal
2003. Cost of sales for the three months ended September 30, 2003 consisted of
$893,729 of product costs and $68,684 of service costs, consisting mostly of
research and development labor funded in part by OEM development agreements.
Although we do not anticipate any significant future contract losses, we cannot
guarantee that we can maintain positive gross margins in the future or with
future customers. Gross profit as a percentage of revenue improved from negative
309% to a positive 12.3% due primarily to the fulfillment of the Softeq contract
and positive margins from the sale of Odyssey(TM) 1000 products and components.
In addition, in the quarter ended September 30, 2002, we incurred the write-down
of inventory by $355,508 related to slow moving and obsolete products and
certain APL Direct Logistics' costs. At the present time, warranty costs are not
significant. We generally sell our branded products with a six-month
manufacturing warranty.

Total operating expenses (consisting of research and related expenditures and
selling and administrative expenses) for the three months ended September 30,
2003, were $861,241, as compared to $1,476,338 for the three months ended
September 30, 2002. Selling and administrative costs aggregated $385,101 for the
three months of fiscal 2003 compared to $1,056,998 in the prior period. The
$671,897 decrease in selling and administrative costs resulted primarily from
the following: a decrease in personnel and benefit costs of $374,472, a decrease
of $196,873 in professional fees, a decrease of $40,500 from the elimination of
outsourced customer service at APL and a decrease of $54,770 for shareholder
relations costs.

Research and related expenditures for the three months ended September 30, 2003
were $476,140, as compared to $419,340 for the three months ended September 30,
2002. The current period costs consisted primarily of personnel and related
costs. Research and development costs are subject to significant quarterly
variations depending on the use of outside services, the assignment of engineers
to development projects, reimbursement by OEM contracts and the availability of
financial resources.

We reported an operating loss of $725,740 for the three months ended September
30, 2003, as compared to an operating loss of $2,374,276 for the three months
ended September 30, 2002. The decrease in operating loss resulted primarily from
the gross profit for the three months ended September 30, 2003 as compared to a
gross loss for the three months ended September 30, 2002, as well as a decrease
of $615,097 in operating expenses. We believe, but we can not guarantee, that
our strategy of investing in OEM developments with supply or royalty provisions
and selectively branding and marketing our own branded e.Digital portable audio
players will continue to provide positive margins in future periods. The timing
and amount of product sales and the recognition of contract service revenues
impact our operating losses. Accordingly, there is uncertainty about future
operating results and the results for the three months are not necessarily
indicative of operating results for future periods or the fiscal year.


14


We reported reduced interest expense of $28,272 for the three months ended
September 30, 2003 versus $299,867 and the comparable period of 2002 due to
lower average debt outstanding.

We reported a loss on disposal of assets of $36,713 for the three months ended
September 30, 2003 due to the shutdown of our wedig.com music site. We reported
other income of $67,014 for the three months ended September 30, 2002, due
primarily to a $67,814 settlement with one of our manufacturers.

We reported a loss for the three months of the current fiscal year of $754,013
as compared to a loss of $2,673,578 for the prior year's three months.

The loss attributable to common stockholders for the three months ended
September 30, 2003 and 2002 was $815,513 and $2,673,578, respectively. Included
in the loss available to common stockholders for the period ending September 30,
2003 were accrued dividends of $61,500 on the Series D stock issued in December
2002.

Liquidity and Capital Resources

At September 30, 2003, we had working capital deficit of $1,927,425 compared to
a working capital deficit of $1,427,978 at March 31, 2003. We had $25,099 of
working capital invested in inventory at September 30, 2003. Cash used in
operating activities for the six month period ended September 30, 2003 was
$708,339 resulting primarily from the $1,335,125 loss for the period, a decrease
of $18,663 in prepaid expenses and other, a decrease of $45,467 in accounts
receivable, a decrease of $39,965 in deferred contract charges, a decrease of
$90,389 in other accounts payable and accrued liabilities, an increase of $2,695
in accounts payable offset by an increase of $384,840 in deferred revenue.
During the six months ended September 30, 2003, the Company purchased $88,439 in
property and equipment. For the six months ended September 30, 2003, cash
provided by financing activities was $1,270,068 resulting primarily from
$933,500 proceeds from issuance of shares, $200,000 proceeds from the issuance
of the 24% Unsecured Promissory Notes, $69,300 proceeds from the 24% Unsecured
Note and $50,000 proceeds from exercise of warrants, offset by payments of
$104,757 on the 24% Unsecured Note. For the six months ended September 30, 2003,
net cash and cash equivalents increased by $296,577.

At September 30, 2003, we had net accounts receivable of $136,069 as compared to
$181,536 at March 31, 2003. This represented approximately 32 days of revenues.
Receivables can vary dramatically due to the timing of product shipments and
contract arrangements on development agreements.

On June 10, 2003, we sold 5,109,073 shares of Common Stock for gross proceeds of
$982,763 and utilized $74,137 to redeem all principal and accrued interest on
the 24% Unsecured Note to a director, $3,067 for interest on the 24% Unsecured
Promissory Notes with the balance of $905,559 retained for working capital
purposes.

At September 30, 2003, we had cash and cash equivalents of $380,483. Other than
cash and cash equivalents and accounts receivable, we have no material unused
sources of liquidity at this time. We have no material commitments for capital
expenditures or resources. Based on our cash position assuming (a) continuation
of existing OEM arrangements, and (b) currently planned expenditures and level
of operation, we believe we will require approximately $800,000 of additional
funds for the next twelve months of operations plus amounts required to make
payments on the 15% Unsecured Note in the approximate amount of $600,000.
However, actual results could differ significantly from management plans. We
believe we may be able to obtain additional funds from future product margins
from branded and OEM product sales but actual future margins to be realized, if
any, and the timing of shipments and the amount and quantities of shipments,
orders and reorders are subject to many factors and risks, many outside our
control. We have a forebearance agreement on the $750,000 principal and accrued
interest on the 15% Unsecured Note and the timing and schedule of amounts due
thereafter are not currently known. Accordingly we may need to seek equity or
debt financing in the next twelve months for working capital if product margins
are insufficient and we may need to seek equity or debt financing for payments
of the 15% Unsecured Note (or renegotiate terms thereon) and other obligations
reflected on our balance sheet.

There can be no guarantee that we will be able to raise additional equity or
debt financing, if required, and/or renegotiate the terms of debts as they
arise. We may also require additional capital to finance future developments and
improvements to our technologies or develop new technologies.


15


Should additional funds not be available, we may be required to curtail or scale
back staffing or operations. Failure to obtain additional financings will have a
material adverse affect on our company. Potential sources of such funds include
exercise of outstanding warrants and options, or debt financing or additional
equity offerings. However, there is no guarantee that warrants and options will
be exercised or that debt or equity financing will be available when needed. Any
future financing may be dilutive to existing stockholders.

Future Commitments and Financial Resources

The accrued lease liability reflects management's best estimate of amounts due
for matters in dispute. Settlement of this liability may either be more or less
than the amount recorded in the unaudited items consolidated financial
statements and accordingly may be subject to measurement uncertainty in the near
term. In the future, if our operations increase significantly, we may require
additional funds. We also may require additional capital to finance future
developments, acquisitions or expansion of facilities. We currently have no
plans, arrangements or understandings regarding any acquisitions.

In September 2000, we entered into a three-year sublease agreement which
subsequently expired on July 31, 2003. We continue to occupy approximately 7,750
square feet with aggregate monthly lease payments of $9,291 inclusive of
utilities and costs. We are currently leasing on a month-to-month basis while we
negotiate a new lease.

Business Risks

This report contains a number of forward-looking statements that reflect our
current views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical results or those
anticipated. In this report, the words "anticipates," "believes," "expects,"
"intends," "future" and similar expressions identify forward-looking statements.
Readers are cautioned to consider the specific and substantial business risk
factors described above and in the Company's Annual Report on Form 10-K for the
year ended March 31, 2003 and not to place undue reliance on the forward-looking
statements contained herein, which speak only as of the date hereof. We
undertake no obligation to publicly revise these forward-looking statements, to
reflect events or circumstances that may arise after the date hereof.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market risk represents the risk of loss that may impact our financial position,
results of operations or cash flows due to adverse changes in market prices,
including interest rate risk and other relevant market rate or price risks.

Our exposure to market risk for changes in interest rates relates primarily to
our investment in cash and cash equivalents of $380,483 and our debt of
$834,375, consisting of accrued interest, the 15% Unsecured Note. We do not use
derivative financial instruments in our investment portfolio and due to the
nature of our investments, do not expect our operating results or cash flows to
be significantly affected by potential changes in interest rates. At September
30, 2003, the market value of these investments, which were all classified as
cash and cash equivalents and certificate of deposit, and debt approximated
cost.

Item 4. Controls and Procedures

The Company's Chief Executive Officer and Principal Accounting Officer
(collectively, the "Certifying Officers") are responsible for establishing and
maintaining disclosure controls and procedures for the Company. Such officers
have concluded (based upon their evaluation of these controls and procedures as
of a date within 90 days of the filing of this report) that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in this report is accumulated and
communicated to the Company's management, including its principal executive
officers as appropriate, to allow timely decisions regarding required
disclosure.

The Certifying Officers also have indicated that there were no significant
changes in the Company's internal control over financial reporting during the
Company's most recent fiscal quarter that has materially affected or is
reasonably likely to materially affect the Company's internal control over
financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings


16


We are involved in routine litigation incidental to the conduct of our business.
There are currently no material pending legal proceedings to which we are a
party or to which any of our property is subject.

Item 2. Changes in Securities

(a) NONE
(b) NONE
(c) NONE

Item 3. Defaults Upon Senior Securities

NONE

Item 4. Submission of Matters to a Vote of Security Holders

NONE

Item 5. Other Information

NONE

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 31.1 - Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Alfred H.
Falk, Chief Executive Officer.

Exhibit 31.2 - Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Renee
Warden, Principal Accounting Officer.

Exhibit 32.1 - Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Alfred H.
Falk, Chief Executive Officer and Renee Warden, Principal Accounting Officer.

(b) Reports on Form 8-K

NONE


17


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

e.DIGITAL CORPORATION


Date: November 13, 2003 By: /s/ RENEE WARDEN
-------------------------------------
Renee Warden, Chief Accounting
Officer (Principal Accounting and
Financial Officer and duly authorized
to sign on behalf of the Registrant)