E.DIGITAL PURSUES PARTNERSHIPS TO EXPAND EVU™ BUSINESS

Company Shifts Business Strategy Due to Growing IP Monetization Success & Management Change

(SAN DIEGO, CA, – January 21, 2009) – e.Digital Corporation (OTC: EDIG), a leading technology innovator of dedicated portable entertainment systems and patented flash memory-related technology, announced today a shift in its business strategy due to the Company’s improving financial condition brought about by the growing success of its intellectual property (IP) monetization efforts and a change in management. Fred Falk has been named president and chief executive officer and appointed to the Board of Directors of e.Digital. The Company’s former president and chief technical officer, William Blakeley, has left the Company to pursue other interests.

Mr. Falk has been the Company’s vice president of corporate development since July 2004. He formerly served as president and a member of the Board of e.Digital from January 1997 (and from July 1998 as chief executive officer) until July 2004. From March 1995 to January 1997, he served as vice president of corporate development and vice president of OEM and international sales for the Company. Prior to joining e.Digital, Falk worked for Resources Internationale as director of U.S. sales from 1993 to 1995. From 1988 to 1993, he was the manager of OEM sales and technology licensing for Personal Computer Products, Inc. From 1978 to 1988, he held several management positions at DH Technology.

"e.Digital has been at the forefront of many fundamental innovations since it was founded over 20 years ago,” stated Allen Cocumelli, chairman of e.Digital. “These innovations include, the first earset for cell phones, which subsequently evolved into today’s Jabra earphone; the first portable recorder to utilize removable flash memory, which served as the foundation for the Company’s increasingly successful Flash-R™ patent portfolio; the first multi-codec, multi-DRM portable music products; and, the first dedicated, hard drive-based closed structure, portable video entertainment system, which gave rise to our eVU™ business.”

“While we have a great record of innovation, until recently, we have not had the resources to grow our eVU business into other markets beyond in flight entertainment (IFE),” continued Cocumelli. “With the recent and expected influx of new licensing revenues, we are in a better position to pursue business opportunities and partnerships in the medical industry, and in other segments of the travel and leisure industry. Fred Falk’s experience in building and managing partnering and licensing relationships align with the Company’s shift in business direction. We’re happy to have him back at the helm.”

“We are encouraged by our recent IP success and Robert Putnam, our senior vice president, will continue to manage our patent portfolio monetization efforts,” remarked Fred Falk. “Our strategy is to expand our eVU business through partnering with companies that share our vision of building a successful full service, dedicated portable entertainment business in multiple markets.”