Company Announces New, Enhanced Digital Video/Audio Technology Platform

(SAN DIEGO, CA – August 5, 2005) – e.Digital Corporation (OTC: EDIG) held its annual meeting of shareholders yesterday at its corporate offices in San Diego, California, using the occasion to announce a new, enhanced version of its proprietary, secure digital video/audio technology platform (DVAP).

The Company’s formal business consisted of four proposals: Proposal #1, to elect Alex Diaz, Atul Anandpura, Robert Putnam, Allen Cocumelli and Renee Warden to the Board of Directors; Proposal #2, to increase the authorized number of shares from 200 million to 300 million; Proposal #3, to approve the 2005 Equity-Based Compensation Plan; and, Proposal #4, to ratify the appointment of Singer, Lewak, Greenbaum & Goldstein LLP as independent auditors of the Company for the fiscal year ending March 31, 2006; all four proposals were approved by shareholders.

At the conclusion of the formal business of the meeting, Atul Anandpura, e.Digital’s president and chief executive officer, reviewed the company’s recent financial and business performance, and then detailed the company’s technologies and business strategy.

“Looking beyond the successful design and implementation of the DVAP-based digEplayer™, we have identified promising business opportunities for closed system portable entertainment devices,” said Anandpura. “As a result, we have been enhancing our DVAP by adding a magnetic card reader as well as high speed content transfer which is achieved through e.Digital’s content downloading software. We are also developing a wireless download manager, which will enable secure content downloading.”

“Based on our extensive experience with user interfaces, we have developed a graphical user interface (GUI) builder, which enables non-technical users to develop a complete graphical user interface in just a few days. This GUI builder provides tremendous flexibility for customers seeking to develop their own user interface.”

Anandpura continued, “While we are experiencing increasing market growth and demand for secure versions of our DVAP, OEM business initiatives for consumer electronics-based versions of our players for the retail market have been mostly unsuccessful due to: the lack of desirable, legal, easy-to-download video content; very limited consumer acceptance of hard-drive based portable video players; our limited financial resources; and Apple’s dominance of the music player market.”

“From Apple, other companies, and our own experience, we have learned that good hardware by itself without either pre-loaded or easily accessible, desirable content will probably not be successful. Consequently, we have refined our business focus by aligning our secure DVAP with customers who share our vision of combining desirable, easily accessible video content with their branding of closed system e.Digital-powered devices.”

“While we are successfully supplying versions of our DVAP to the in flight entertainment (IFE) industry through APS/Wencor, we are also currently working with companies who desire to sell or lease branded, closed system video entertainment products based on our DVAP into the following markets:

• Healthcare

• Cruise lines

• Car rentals

• Kiosk-based businesses

“With the smaller screen, Kino™ version of our DVAP currently targeted for customers in kiosk-based businesses, we are moving to exploit the growing market for secure closed system video products by developing a new DVAP based on a powerful new processor providing significantly more functionality and feature sets than available in our current DVAP,” announced Anandpura.

The new DVAP, based on further augmentation of e.Digital’s MicroOS™, will come in the form of a fully finished product featuring:

• High resolution digital LCD

• Embedded magnetic card reader

• Touch screen capabilities

• Internet access

• Voice over IP (VOIP)

• Full featured graphical user interface

• Content security

• RFID for tracking and theft control

• Access to e.Digital-supplied desirable content

Anandpura then unveiled the initial industrial design for the first product based on the company’s new DVAP – The Mobile Entertainment Device, MedeViewer™ E7, featuring a high-resolution 7” LCD screen.

“We expect customer branded versions of the MedeViewer E7 will contribute revenues to e.Digital, along with additional and continuing sales of versions of our current DVAP, this fiscal year,” remarked Anandpura.

“I want to thank APS/Wencor for their business and the opportunity to be working with them on their IFE business. I would also like to thank our highly committed and talented engineering team, as well as express my appreciation to our board of directors and to our shareholders who have supported us this past year.”

“As I look at the progress we have made over the last year and the developments we are making in aligning e.Digital with companies and partners who share our desire to exploit new markets for closed system video devices, I am more confident than ever about our prospects for business and revenue growth,” concluded Anandpura. “Based on current and emerging business, and the information we have presented at this meeting, we expect fiscal 2006 revenues to increase over fiscal 2005 through expected growing sales and acceptance of products based on both new and current versions of our proprietary DVAP.”

A replay of the meeting is available through www.edigital.com for approximately 30 days.