FOR IMMEDIATE RELEASE

e.DIGITAL REPORTS RECORD REVENUES AND
PROFITABLE THIRD QUARTER RESULTS


(SAN DIEGO, CA, – February 10, 2009) – e.Digital Corporation (OTC: EDIG), a leading technology innovator of dedicated portable entertainment systems and patented flash memory-related technology, today reported record revenues and net income for its third fiscal quarter and for the nine months ended December 31, 2008. Revenues for Q3 of fiscal 2009 were $3.9 million, a 228% increase over $1.2 million for Q3 of fiscal 2008. Net income attributable to common stockholders for Q3 of fiscal 2009 was $1.5 million or $0.01 per diluted share, compared to a net loss attributable to common stockholders of $425,000 or $(0.00) per diluted share for Q3 of last year. The $1.9 million improvement was the result of higher margin patent license revenues that offset a decline in eVU™ product and service revenues.

Revenues for the first nine months of fiscal 2009 were $6.1 million, a 26% increase over $4.8 million for the same period last year. Revenues for the first nine months of fiscal 2009 included $5.25 million in licensing fees from the Company’s Flash-R™ patent portfolio. Net income attributable to common stockholders for the nine months ended December 31, 2008 was $0.8 million or $0.00 per diluted share, compared to a net loss attributable to common stockholders of $1.2 million or $(0.00) per diluted share for the same period last year. The $1.9 million improvement was the result of higher margin patent license revenues that offset a decline in eVU product and service revenues.

The net income attributable to common stockholders for the nine months ended December 31, 2008 of $0.8 million was the result of net income before taxes of $1.1 million reduced by $264,000 of foreign taxes paid and $88,000 of non-cash deemed and accrued dividends on preferred stock. Net income also reflected non-cash deductions of $230,000 for warrant revalution expenses, discount amortization and stock-based compensation costs.

“We’re pleased with the progress we’ve made this fiscal year in monetizing our fundamental flash memory-related intellectual property (IP),” remarked Fred Falk, president and CEO of e.Digital. “Per our recently announced shift in strategy, we are aggressively pursuing eVU business opportunities and partnerships beyond in flight entertainment (IFE).”

“We are quoting an increasing number of eVU proposals and have scheduled meetings with current and prospective customers at IFE and non-IFE trade shows later this quarter,” continued Falk. “While eVU business has been extremely slow this fiscal year due to airline economics, we expect eVU results to improve in fiscal 2010.”

Gross profit for the third fiscal quarter was $2.29 million or 58% of revenues, compared to $396,000 or 33% of revenues for the same period a year ago. The improved gross profit percentage resulted from higher margin patent license revenue. Operating expenses for Q3 of fiscal 2009 were $689,000, a decrease of 5% from $727,000 in Q3 of fiscal 2008. The small decrease resulted from reduced personnel and reassigning certain engineers and technicians to customer support and service roles, offset by increased legal expenses.
<>
Gross profit for the first nine months of fiscal 2009 was $3.6 million or 59% of revenues, compared to $1.2 million or 26% of revenues for the same period the prior year. The improved gross profit percentage resulted from higher margin patent license revenue. Operating expenses for the first nine months of fiscal 2009 were $2.1 million, comparable to $2.2 million for the first nine months of fiscal 2008. The slight decrease resulted from reduced personnel and reassigning certain engineers and technicians to customer support and service roles, offset by increased legal expenses and shareholder meeting costs.

The Company improved its balance sheet as of December 31, 2008, compared to the prior year’s end. Working capital of $923,000 at the end of Q3 was an improvement over the working capital deficit of $1.3 million at March 31, 2008. Stockholders equity improved to $919,000 compared to a stockholders’ deficit of $1.7 million at the end of fiscal 2008.
<>
“We anticipate additional licensing revenues in Q4 to result in a profitable quarter and fiscal year 2009,” said Robert Putnam, e.Digital’s senior vice president. “We expect the success of recent Flash-R patent licensing efforts to fuel new legal and licensing activity, contributing to further IP-generated revenues.”

About e.Digital Corporation: e.Digital is a leading innovator of dedicated portable in flight entertainment systems. More than 30 airlines have made dedicated portable systems powered by e.Digital technology their inflight entertainment choice. e.Digital also owns and is pursuing the monetization of its Flash-R™ portfolio of flash memory-related patents. e.Digital was the first company to employ and patent important aspects of the use of removable flash memory in portable recording devices. For more information about e.Digital and eVU, please visit: www.edigital.com.

Safe Harbor statement under the Private Securities Litigation Reform of 1995: All statements made in this document, other than statements of historical fact, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development, expected future developments and other factors that we believe are appropriate under the circumstances. These forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the businesses of the Company and the industries and markets in which the Company operates. Actual outcomes and results may differ materially from what is expressed or implied by the forward-looking statements. More information about potential factors that could affect the Company can be found in its most recent Form 10-K, Form 10-Q and other reports and statements filed with the Securities and Exchange Commission (“SEC”). e.Digital Corporation disclaims any intent or obligation to update these or any forward-looking statements, except as otherwise specifically stated by it.

CONTACT: e.Digital Corporation: Robert Putnam, (858) 304-3016 ext. 205, rputnam@edigital.com