... a problem for EDIG, once DM gets a FAVORABLE MARKMAN RULING...

What follows are some excerpts from a 2001 10K...

Know what you own!?!...

GLTA...

Gil...

ITEM 1. DESCRIPTION OF BUSINESS



General Overview


e.Digital Corporation is a holding company that operates through a
wholly-owned California subsidiary of the same name. We develop, brand, market, and sell consumer electronics products, focusing on digital music players, digital voice recorders, related items and accessories such as removable digital storage media, carrying cases, and rechargeable batteries. Our consumer electronics products are sold to consumers through retailers with traditional and online outlets, and through an e.Digital storefront on the Internet. Our distribution system, through a third party logistics and fulfillment provider, allows for processing of sales of individual units directly to consumers and processing of large quantity orders to retailers or other distributors. We also provide support services for our consumer electronics products including technical support, warranty support and some repairs.

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. (Where was BOW and digecor in 2001? And they hope to convince UTAH Court EDIG stole the tech from them?!? TEE HEE HAH!.)...Lol...

We have relationships with ISO certified manufacturers with facilities in the United States, Malaysia, Taiwan, China, Singapore, and Korea. The ISO, or International Standards Organization, creates uniform, measurable quality standards used around the world. They measure, judge, and certify companies based upon compliance with stringent standards applicable to their industry.

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.

Services offered include custom hardware, firmware (an instruction set programmed into a chip which determines the product's functionality and user interface), and 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, fees from engineering services, fees or royalties from technology licensing, 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.

Company


Our company, then known as Norris Communications, was incorporated in the Province of British Columbia, Canada on February 11, 1988 and on November 22, 1994 changed its domicile to the Yukon Territory, Canada. On August 30, 1996, we filed articles of continuance to change our jurisdiction to the State of Wyoming, then on September 4, 1996, reincorporated in the State of Delaware. On
January 13, 1999, the stockholders approved a name change to e.Digital Corporation. Our principal executive offices and primary operating facilities are located at 13114 Evening Creek Drive South, San Diego, California 92128 and our telephone number is (858) 679-1504. Our Internet site is located at www.edig.com. Information contained in our Internet site is not part of this annual report.


Recent Developments


In September 2001, we announced plans to brand and sell our own line of digital audio products for consumers. The first product in this program is a digital audio player named "MXP™100" which incorporates our MicroOS™ 2.0 and VoiceNav™ technologies into a handheld digital music and voice recorder/player.

This product, which was launched on our website store on November 2, 2001, incorporates a proprietary personal computer ("PC") software interface program designed and developed by us, called "MXP Music Explorer", that allows users to download MP3 and Windows Media™ files from their PC's hard drive to the portable
player. The "MXP100" player uses either Microdrive™ storage media from IBM or CompactFlash™ storage media from SanDisk.

The second product in our e.Digital branding program is the TRE 10 portable large-capacity digital jukebox. This product incorporates a 10-gigabyte (GB) capacity embedded 2.5-inch hard disk drive and, using our proprietary MXP Music Explorer PC software interface,
allows users to download MP3 and Windows Media files from their PC's hard drive to the portable player. This product was launched on our website store on December 4, 2001. In December, 2001 we also introduced and began selling through our website store the MXP 100 "Sport" model, a version of the MXP 100 featuring a yellow, rubberized finish. This product has similar features to the MXP 100.


MicroOS™ Core Technology


Our MicroOS™ is a low-level real time operating system designed to transparently manage the difficulties of writing, reading, and editing data on Flash or related memory. It serves as system software to manage all operations in handheld devices using either removable or embedded Flash (or related media) for data storage. MicroOS™is compatible with virtually all types of portable storage memory as well as other standard Integrated Drive Electronics ("IDE") drives.
MicroOS™facilitates advanced functionality, ease of use, flexibility, and reliable performance in products and supports all types of data files including voice, text, images, video and/or music.

We believe our MicroOS™ technology is an efficient, portable storage memory file management system. The patented software architecture takes a unique approach to file management that is robust, high-speed and efficient. This approach is suited for the high-speed portable product market because it requires minimal micro-controller support while providing broad product functionality. This architecture offers OEMs the ability to reduce new product development time and
time to market, as well as produce a product featuring a reduced chip count and correspondingly lower cost and power requirements. MicroCAM Technology (MicroOS™-based Compressed Audio Manager)

We have employed MicroOS™in portable digital recorders and extended the technology for implementation into various product concepts. One extension is our MicroCAM technology, which can support multiple compression formats such as MP3, AAC, ATRAC3, WMA, ePAC, and others in a single device. MicroCAM allows for high-bandwidth speech and music playback from a CompactFlash cartridge, other removable or embedded Flash memory, or other Advanced Technology Attachment/IDE/Advanced Technology Attachment Packet Interconnect embedded or removable rotating drives such as Microdrive or DataPlay. MicroCAM is an integral part of our digital music player designs and is being incorporated as a standard feature set in future versions of MicroOS™.

We believe we have developed a leading comprehensive file management system capable of customization for individual customer requirements. Other companies offering file management systems include M-Systems Flash Disk Pioneers Ltd., Intel Corporation, FullPlay (formerly known as Interactive Objects Inc.), Digital5 Inc., PortalPlayer Inc., and Datalight Inc. In addition to licensing file management systems, some companies develop their own file management systems for a particular product, either in total or by adapting from one of the competitive vendors. While this self-development is common in simple memory management devices, we offer a system attractive for more complex applications.

We believe our existing know-how, contracts, patents, copyrights, trade secrets and potential future patents and copyrights, will be significant in enabling us to compete successfully in the field of digital sound processing for portable storage media.