Brilliant Digital Reports Second Quarter Results.

LOS ANGELES--(BUSINESS WIRE)--August 13, 1999--

Brilliant(TM) Digital Entertainment, Inc. (AMEX: BDE), a leading interactive entertainment content and tools developer and owner of The Auction Channel, a UK-based provider of Internet- and television-based auction services, announced results today for the second quarter and six months ended June 30, 1999. Brilliant Digital acquired The Auction Channel on July 1, 1999, and therefore The Auction Channel's operating results are not reflected herein.

Brilliant's results from operations continue to reflect its ongoing investments in the development of its Internet capabilities, the production of 3-D, digitally animated Multipath Movie episodes/Webisodes (including the Multipath Adventures of Superman, released on CD-ROM in July), continued enhancement of its proprietary software tools and Internet Digital Projector(TM) technology, and sales and marketing costs related to the ongoing development of third party distribution relationships. Recent distribution agreements include the Fox Kids website, Road Runner (a high-speed online service), and The Learning Company, Inc. for retail CD-ROM distribution.

Brilliant Digital reported a second quarter net loss of $(2,221,000), or $(0.20) per share. This compares with a net loss of $(2,758,000), or $(0.29) per share, for the same period a year ago. Net revenues for the second quarter of 1999 were $127,000, primarily reflecting retail sales of the Company's newest Multipath Movies, compared to net revenues for the second quarter of 1998 of $1,000.

The Company reported a net loss of $(4,112,000), or $(0.41) per share, for the first six months of 1999, compared with a net loss of $(4,050,000), or $(0.43) per share, for the same period a year ago. Net revenues for the first six months of 1999 were $334,000 compared to $32,000 in the comparable period a year ago.

Commenting on the Company's progress, Kevin Bermeister, President, stated: "In step with the rapid evolution and growth of the Internet marketplace, Brilliant continues to fine-tune its business model with an increasing focus on developing advertising based revenue-sharing arrangements on the Internet with well known high-traffic portals, web sites and broad band services. Supporting our Internet focus, we are pursuing non-Internet opportunities including television and DVD. Though the Internet has achieved tremendous worldwide visibility and interest, it is still quite young as both a commercial forum and a source of entertainment. We therefore expect Internet based revenues from our animation content to be modest until the second half of 2000. With the recent completion of Superman, we believe we have set a new standard for Internet-distributed interactive animation. This new content highlights the significant gains we have made in the past year in our graphics capabilities and speed as well as diminished file sizes that support the very large, `narrow-band' marketplace. Our progress is further validated by the initiation of recent discussions with studios regarding content distribution and co-production programs.

"Our first Webisodes of Superman are now complete. We intend to release Superman on the Internet early in Q4 supported by a strong marketing and public relations campaign.

"With respect to our The Auction Channel subsidiary (http://www.auctionchannel.com), we are aggressively developing this business, brand and its strong base of auction community relationships into a broad commercial enterprise. To date its auction activity has been limited to times when auction houses are conducting live auctions. We expect to expand upon this approach and begin offering `around-the-clock' web auctions in the first quarter of 2000. This new area of electronic auction services is likely to result in increased e-commerce activity for The Auction Channel. We are also focussed on expanding The Auction Channel's viewing audience into new markets including the United States as well as the development of additional auction house relationships. To this end, we are currently engaged in a search for senior management to head The Auction Channel's U.S. operations."

About Brilliant Digital Entertainment

BDE is engaged in the development and distribution of cutting-edge interactive content and related e-commerce capabilities for the Internet, broadband, television and other media. Brilliant is focused on two markets: (1) 3-D, digitally animated content developed using Brilliant's proprietary software tool set and Brilliant's B3D file format, and displayed on Brilliant's Digital Projector; and (2) "live" online and television auction broadcasts as well as Internet and telephone bidding and e-commerce services, in conjunction with top auction houses through its The Auction Channel subsidiary. More information on Brilliant Digital Entertainment may be found at http://www.bde3d.com and on The Auction Channel at http://www.theauctionchannel.com.

Information about Forward Looking Statements

Statements in this news release that relate to future plans, financial results or projections, events or performance are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Actual results may differ materially due to a variety of factors. Factors that could cause or contribute to such differences include, but are not limited to stock price movements, the commercial success of Brilliant's content, the commercial success of Brilliant's B3D toolset, the commercial success of the broadband Internet market, the ability of Brilliant to further expand the installed base of Digital Projectors, the availability of financial resources for marketing of the Digital Projector and Brilliant's content, the ability of Brilliant to attract talented sales and business development personnel in a highly competitive market, the ability of Brilliant to convince consumers to initiate larger downloads over lower bandwidth connections, the risk that Brilliant's promotional efforts and the promotional prominence provided for Brilliant's products may not be sufficient to attract consumer attention, Brilliant's ability to integrate The Auction Channel into its operations, The Auction Channel's ability to enter into additional agreements to provide services to auction houses, consumer interest in participating in live auctions via the Internet or telephone, Brilliant's ability to establish joint venture agreements and carriage agreements with television and media companies worldwide for The Auction Channel, the limited operating history of Brilliant and The Auction Channel, anticipated losses, unpredictability of future revenues, potential fluctuations in quarterly operating results, seasonality, competition with significantly larger competitors, risks associated with system development and operation, risks of new business areas, and all of the factors that may influence future business and financial results set forth in the Company's Form 10-KSB for the period ended December 31, 1998 and the Company's Form 10-QSB for the three months ended March 31, 1999. If Brilliant is unable to successfully implement its Internet strategies and strategy for The Auction Channel, timely release, market and distribute its new products, or if Brilliant's products are not commercially successful, Brilliant's results will be materially adversely affected. All forward-looking statements are based on information available to the Company on the date hereof, and the Company assumes no obligation to update such statements. Copies of the Company's most recently filed Form 10-KSB report and 10-QSB report and are available from Brilliant Digital Entertainment's Investor Relations department and may be obtained by calling or writing to our investor relations company, Jaffoni & Collins at 212-835-8500 or [e-mail]. -0-

                 BRILLIANT DIGITAL ENTERTAINMENT, INC.
                 Condensed Consolidated Balance Sheet
                            (in thousands)
                              (unaudited)

                                                    June 30,
                                                      1999
                                               -----------------
Assets
Cash and cash equivalents....................$            4,587
Other current assets.........................             2,735
                                               -----------------
Total current assets.........................             7,322
Other assets.................................             1,412
                                               -----------------
Total assets.................................$            8,734
                                               =================

Liabilities and stockholders' equity
Current liabilities..........................             1,716
Long-term liabilities........................               407
                                               -----------------
Total liabilities............................             2,123
Total stockholders' equity...................             6,611
                                               =================
Total liabilities and stockholders' equity...$            8,734
                                               =================


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

                        3 months    3 months     6 months    6 months
                          ended      ended        ended       ended
                         6/30/99    6/30/98       6/30/99     6/30/98
                      ------------- -----------  ------------ -------
                       (unaudited) (unaudited)  (unaudited)(unaudited)
Revenue:
     Total revenues  $     127    $      1   $       334   $      32
                      ----------   ---------  ------------  ----------

Cost of revenues
 and expenses:
Cost of revenues           141          80            349         346
Sales & marketing          257         670            479         991
General and
  administrative           937         733          1,536       1,244
Research and
  development              880       1,314          1,883       1,652
Depreciation               140         112            270         132
                      ----------   ---------  ------------  ----------
Total cost of
 revenues and expense    2,355       2,909         4,517       4,365
                      ----------   ---------  ------------  ----------


Income (loss)
  from operations       (2,228)     (2,908)       (4,183)     (4,333)

Other income
 (expense):
Export market
 development grant          90          32            127          33
Gain (loss) on
  foreign exchange          (4)          2            (5)         (6)
Debenture expense          (55)        --            (55)         --
Interest income
 (expense), net            (24)        116              4         256
                      ----------   ---------  ------------  ----------
     Total other
     income (expense)        7         150             71         283
                      ----------   ---------  ------------  ----------
Income (loss) before
  income taxes          (2,221)      (2,758)       (4,112)    (4,050)
Provision for
  income taxes               --          --             --          --
                      ----------   ---------  ------------  ----------

Net income (loss)    $ (2,221)   $   (2,758) $     (4,112) $  (4,050)
                      ==========   =========  ============  ==========
Basic and diluted
  net income
  (loss) per share   $  (0.20)   $   (0.29)  $     (0.41)  $   (0.43)

                      ==========   =========   ============  =========

Weighted average
 number of shares
 used in computing
 basic and diluted
 net income (loss)
 per share             10,852       9,403        10,131         9,403
                      ==========   =========  ============  ==========