Brilliant Digital Entertainment releases first quarter 1997 results.

LOS ANGELES--(BUSINESS WIRE)--May 13, 1997--Brilliant Digital Entertainment Inc. (ASE:BDE) Tuesday announced the results for the quarter ended March 31, 1997.

Revenues for the quarter ended March 31, 1997, were $74,000 compared with $584,000 for the quarter ended March 31, 1996. Net loss for the quarter ended March 31, 1997, was $996,000 or 14 cents per share, compared with net income of $173,000 or 4 cents per share for the comparable quarter in 1996.

The results for the quarter ended March 31, 1996, are prior to the formation of the group's parent company, the acquisition of Sega Australia New Developments (SAND), and the change in the group's focus. The results for the quarter ended March 31, 1996, are therefore not comparable to those for the quarter ended March 31, 1997.

The loss in the three months ended March 31, 1997, resulted primarily from an increase in operating expenses and development costs, and a reduction in revenues from traditional children's CD-ROM products as the company focused its efforts on development of its new generation of three-dimensional digitally created entertainment and expanded in anticipation of growth.

"We are pleased with our progress to date," said Chairman Mark Dyne. "`Cyberswine,' our first Multipath Movie, is fully laid up and is now in final Beta stage. `Gravity Angels' is in production as well as the first title in our Multipath Movie for kids series. `Amzor,' our fourth Multipath Movie, is currently in development."

Dyne went on to say: "We're also in production on the first title in the StoryTeller Series, `The Halloween Party,' which is part of our deal with Bantam Doubleday Dell Books For Young Readers. Two additional titles are now in development."

Dyne also noted that Brilliant has completed its new state-of-the-art production studio in Sydney, Australia, and has occupied the new space.

Brilliant was formed in July 1996 and combines the business of Brilliant Interactive Ideas, Pty. Ltd. ("BII Australia"), an entertainment software developer and producer, and the technology of SAND, a research and development operation for leading edge software tools, acquired by the company in September 1996. SAND was responsible for developing the company's suite of proprietary software tools and production process.

The company's historical operations reflect only the operations of BII Australia and are not necessarily indicative of future results. Since its founding in September 1993, BII Australia has developed and sold interactive education and entertainment CD-ROM titles primarily for children. With the acquisition of SAND, the nature and focus of the company's business has changed significantly.

Brilliant Digital Entertainment is the production and development studio responsible for the creation of Multipath Movies, a new generation of digital entertainment to be distributed over the Internet, on CD-ROM, as television programming and for home video.

Multipath Movies utilize proprietary, technologically advanced software tools to produce three-dimensional, digitally animated stories, each with hundreds of plot alternatives, or paths, that lead to multiple distinct conclusions that are influenced by the user.

Brilliant has previously announced a strategic alliance with Packard Bell NEC to distribute its Multipath Movies over the Internet's World Wide Web and has acquired the exclusive worldwide interactive rights from Bantam Doubleday Dell Books For Young Readers for the successful Choose Your Own Nightmare and Choose Your Own Adventure series of interactive books. -0-

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties. Potential risks and uncertainties include without limitation the market acceptance of Multipath Movies, the ability of the company to introduce and successfully market its initial release and additional Multipath Movies on a timely basis, the ability of the company to derive benefits expected from its strategic relationships and the effect of competitive products on the market for Multipath Movies.

Further information on potential factors that could affect the company's financial results are included in the company's Form 10-KSB previously filed with the SEC and will be included in the company's Form 10-QSB for its 1997 first quarter to be filed with the SEC. -0-

               BRILLIANT DIGITAL ENTERTAINMENT INC.
               CONDENSED CONSOLIDATED BALANCE SHEET
                          (in thousands)

                                                       March 31,
                                                         1997

Assets
Current assets:
  Cash and cash equivalents                            $6,841
  Accounts receivable, net                                 80
  Accounts receivable from related parties                 28
  Other assets                                            174
Total current assets                                    7,123
Property, plant and equipment, net                        401
Other assets                                              282
Total assets                                           $7,806

Liabilities and stockholders' equity
Current liabilities
  Accounts payable and accrued expenses                $1,134
  Deferred revenue                                        233
  Notes payable, related party                             82
Total current liabilities                               1,449
Stockholders' equity:
  Common stock                                              7
  Additional paid-in capital                           11,320
  Accumulated deficit                                  (4,951)
  Cumulative translation adjustment                       (19)
Total stockholders' equity                              6,357
Total liabilities and stockholders' equity             $7,806



                BRILLIANT DIGITAL ENTERTAINMENT INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              (in thousands, except per share data)

                            Three Months ended   Three Months Ended
                              March 31, 1997       March 31, 1996
                                (unaudited)         (unaudited)

Revenue:
   Total revenues                        74                   584

Cost of revenues and expenses:
Cost of revenues                          8                   136
Sales & marketing                        63                    37
General and administrative              540                   105
Research and development                489                    99
Depreciation                             51                    26
Total cost of revenues and expenses   1,151                   403

Income (loss) from operations        (1,077)                  181

Other income (expense):
Gain (loss) on foreign exchange         (10)                    3
Interest income (expense), net           92                   (11)
   Total other income (expense)          82                    (8)
Income (loss) before income taxes      (995)                  173
Provision for income taxes               (1)                   --
Net income (loss)                   $  (996)              $   173
Net income (loss) per share         $ (0.14)              $  0.04
Common shares used in computing
   income (loss) per share            7,200                 4,557

CONTACT: Brilliant Digital Entertainment Inc.

Mark Dyne/Michael Ozen, 818/346-3653

or

Coffin Communications Group

Bryan G. Crane, 818/789-0100