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E.Digital Reports Record Fiscal Year 2008 Revenues

June 17, 2008

e.Digital Corporation (OTCBB: EDIG), a leading technology innovator of dedicated portable inflight entertainment (IFE) systems and patented flash memory-related technology, today reported revenues for its fiscal year ended March 31, 2008 totaled $5.6 million, a 206% increase over revenues of $1.8 million for fiscal 2007. The increase was due to a full year of sales of the Company’s eVU(TM) IFE system to several airlines including Lufthansa, Malaysia Airlines, Air France, Alitalia, Neos Air, Corsairfly, and through IFE specialist, Mezzo.

e.Digital recorded a gross profit of $1.5 million in fiscal 2008 compared to a gross profit of $1.0 million for fiscal 2007. Gross profit in fiscal 2007 included a $603,750 reduction in costs due to the reversal of an impairment charge previously recorded in cost of sales in the prior year. The Company reported a net loss of $1.7 million for fiscal 2008, compared to a net loss of $3.1 million for fiscal 2007. The net loss available to common stockholders for both fiscal 2008 and fiscal 2007 was $(0.01) per share.

e.Digital also announced today that it received a new eVU order from another European airline that flies to over 100 destinations. The Company shipped the order to the air carrier this month.

“We are pleased to add another airline to the eVU family and expect additional IFE orders and customers,” said Will Blakeley, e.Digital’s president and chief technical officer. “Notwithstanding the dramatic rise in jet fuel costs and the possible impact on IFE spending plans by the airlines, we believe our IFE system is the best portable solution available to airlines offering no, or limited, inflight entertainment. We also believe eVU can contribute additional revenue airlines are seeking to help defray soaring costs.”

“During and subsequent to the March Aircraft Interiors Expo, we met with potential embedded eVU system partners and, given the state of the industry and the substantial development time and costs involved to complete and qualify the system, we have elected to focus these resources on portable eVU applications outside of IFE and diversify our customer base,” remarked Blakeley. “We are working on business opportunities that we expect will yield non-IFE eVU orders later this year.”

Addressing e.Digital’s efforts with Duane Morris LLC to monetize its Flash-R(TM) patent portfolio, Blakeley commented, “We are pleased with the progress made in fiscal 2008 through the patent infringement lawsuits filed against Avid Technology, Casio America, LG Electronics USA, Nikon, Olympus American, Samsung Electronics America, Sanyo North America and Vivitar in the United States District Court for the Eastern District of Texas. We are very encouraged with Duane Morris’ enforcement efforts and activities and look forward to providing more information on this important part of our business.”

“With the filing of our Form 10-K, we can move ahead with preparing our proxy and calling a shareholder’s meeting,” concluded Blakeley. “We look forward to announcing the meeting date and providing further business information later this month.”

About e.Digital Corporation: e.Digital is a leading innovator of dedicated portable inflight 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(TM) 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.

                    e.Digital Corporation and subsidiary                           Condensed Balance Sheet                   (000's omitted except per share amount)                                 (unaudited)                                                    March 31,    March 31,                                                       2008         2007                                                        $            $ ASSETS   Current     Cash                                                  122          695     Accounts receivable                                   175           37     Inventory                                             489          309     Deposits and prepaid expenses                          35           51                                                   -----------  -----------   Total current assets                                    821        1,092     Property and equipment, net                            40           36     Prepaid transaction costs                               -          629                                                   -----------  -----------   Total assets                                            861        1,757                                                   ===========  =========== LIABILITIES AND STOCKHOLDERS' DEFICIT   Current     Accounts payable                                      836          687     Other payable and accruals                            198          131     Accrued employee benefits                             149          150     Deferred revenue                                       37            -     Dividends                                               -          464     Customer deposits                                      80          119     Current maturity of convertible note, net             367          139     Secured promissory note, net                          446          750                                                   ===========  ===========   Total current liabilities                             2,113        2,439                                                   ===========  ===========   Long term liabilities                                   453          754     Stockholders' deficit                              (1,705)      (1,437)                                                   ===========  ===========   Total liabilities and stockholders' deficit             861        1,757                                                   ===========  ===========                    e.Digital Corporation and subsidiary                     Condensed Statement of Operations                   (000's omitted except per share amount)                                 (unaudited)                                                      For the year ended                                                           March 31,                                                       2008         2007                                                        $            $ Total revenue                                           5,553        1,815 Cost of revenue                                        (4,009)        (790)                                                   -----------  -----------   Gross profit                                          1,544        1,025                                                   ===========  =========== Operating expenses:   Selling and administrative                            1,980        1,619   Research and development                              1,006        1,474                                                   -----------  ----------- Total operating expenses                                2,986        3,093                                                   -----------  ----------- Operating profit (loss)                                (1,442)      (2,068) Other income (expenses):   Interest income                                          41           13   Interest expense                                       (237)      (1,357)   Other                                                   (81)         283                                                   -----------  ----------- Total other income (expenses)                            (277)      (1,061)                                                   -----------  ----------- Loss and comprehensive loss                            (1,719)      (3,129)   Dividends on convertible preferred stock                (82)        (123)                                                   ===========  =========== Loss attributed to common stockholders                 (1,801)      (3,252)                                                   ===========  =========== Loss per common share - basic and diluted               (0.01)       (0.01) Weighted average common shares outstanding            252,684      217,130 

 CONTACT: e.Digital Corporation Robert Putnam (858) 304-3016 ext. 205 Email Contact

SOURCE: e.Digital Corporation




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