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SHAREHOLDER ALERT     

 e.DIGITAL CORPORATION PROVIDES BUSINESS UPDATE

ON eVU™ BUSINESS AND EFFORTS TO MONETIZE

FLASH MEMORY-RELATED PATENT PORTFOLIO

(SAN DIEGO, CA, – December 21, 2006) – e.Digital Corporation (OTC: EDIG), a leading innovator of proprietary secure digital video technology and products, and patented technology in the utilization of flash memory in portable devices, provided the following update today on the status of its eVU™  mobile entertainment system business and efforts to monetize the Company’s flash memory-related patent portfolio:  

eVU™ Mobile Entertainment System Business 

Through U.K.-based Mezzo Movies and through our own direct sales efforts we are currently working with several Asian, European and North American airlines on eVU order deliveries, pilot programs and RFP requests. We are also in the process of finalizing our first IFE orders to a major European airline.

Additionally, we are working with one of the world’s largest airlines on an eVU trial that is scheduled to begin next quarter.  

We have also made progress in introducing eVU to well-known healthcare facilities in the U.S. These facilities have completed successful trials and are moving ahead with plans for eVU deployments. With the assistance of our partners who are focused on this business, we expect to begin delivering significant eVU orders to the healthcare industry in 2007.  

Revenue Update 

We expect to recognize $713,000 in revenue associated with the delivery of the 1250 unit digEplayer™ order this quarter ending December 31, 2006. With the assistance of our U.S.-based contract manufacturer, the majority of the over $1 million in eVU orders we reported in November are expected to ship this quarter. We expect to ship the balance of these orders early next quarter as well as receive new eVU orders in calendar Q1 2007.  

Flash Memory Patent Portfolio  

Because our flash memory-related patent portfolio covers hundreds of companies and thousands of products and extends our rights under the patents until 2015, the law firms we have contacted are being very thorough in their searches for prior art and their due diligence of our patent portfolio.  

Under the direction of veteran intellectual property (IP) consultant, Pat Nunally, and with the assistance of outside law firms, we have assembled the first comprehensive list of potential licensees of our flash memory-based patent portfolio. To date, we have identified 174 companies with 1,372 products that appear to employ our patent portfolio.