(My highlights on Anandpura`s conclusion)

e.digital CORPORATION REPORTS

fiscal THIRD QUARTER REVENUEs

Company Expanding Into Direct Business Opportunities for

Proprietary Video/Audio Technology Platform

(SAN DIEGO, CA, February 14, 2005) – e.Digital Corporation (OTC: EDIG), a leading innovator and provider of proprietary digital technology platforms, today reported revenues for the third quarter of fiscal 2005, ended December 31, 2004. Revenues for the quarter were $1.419 million, a 98% increase over the $0.718 million recorded in the third quarter of fiscal 2004.

The company reported a gross profit of $0.438 million in the third quarter compared to $0.130 million for the same quarter in fiscal 2004. The company also reported a smaller operating loss of $0.348 million for the quarter compared to $0.470 million for the same period in fiscal 2004. For the quarter, net loss attributable to common stockholders after deducting non-cash dividends on preferred stock was less than $(0.01) per share.

Revenues for the first nine months ended December 31, 2004 were $3.540 million compared to $2.970 million for the same nine months last year. Gross profit for the first nine months of fiscal 2005 improved to $0.874 million compared to $0.336 million for the same period in fiscal 2004. The company reported a smaller operating loss of $1.447 million the first nine months compared to $1.706 million for the same period in fiscal 2004. For the nine months ended December 31, 2004, net loss attributable to common stockholders after deducting non-cash dividends on preferred stock was $(0.01) per share compared to $(0.02) for the same nine months in fiscal 2004.

The company also reported $0.967 million in advance payments (customer deposits) at December 31, 2004.

MANAGEMENT COMMENTARY

“Our focus on expanding the business opportunities and capabilities of our MicroOS™-based video/audio technology platform is proving successful. This calendar year, we expect most of our business and revenue will be fueled by sales of secure versions of this platform for both open and closed content systems.” said Atul Anandpura, president and chief executive officer of e.Digital Corporation.

“Most of our revenues are currently being derived from APS/Wencor through sales and support of their growing digEplayer™ market opportunities. The digEplayer is now on board ten airlines; it is the only portable in-flight entertainment (IFE) product with content security approved by five major movie studios. At the request of APS/Wencor, we are enhancing the digEplayer to expedite the content logistics process and expand customer transaction options. These enhancements are expected to enable APS/Wencor to support larger orders from existing and new airline customers as well as position them to land IFE business from the major carriers.”

Anandpura continued, “Last quarter, we refined and augmented the Kino™ version of our video/audio technology platform for meetings with prospective customers at the January 2005 Consumer Electronics Show (CES). Based on the meetings held by us, and those of an established Asian customer, we expect revenues this year from the sales of branded Kino-based devices.”

“We also continue to develop promising opportunities for devices based on our secure video/audio technology platform for high-speed video download kiosk-centered businesses.”

Concluded Anandpura. “Companies outside of the travel and leisure industry are approaching us, seeking to work with e.Digital to supply direct-to-customer closed system versions of our secure video/audio technology platform. As we turn these direct business opportunities into orders, we expect to be able to command higher margins and exercise greater control over distribution, marketing and product deliveries. We look forward to providing more information in upcoming corporate communications on this and other business developments.”

HIGHLIGHTS AND ANNOUNCEMENTS FOR THE THIRD FISCAL QUARTER

Welcomed Wencor’s purchase of customer, APS.

Announced greater focus on business opportunities for customized products derived from secure, proprietary video/audio technology platform.

Closed Series EE $1.85 million financing.

Received $1.2 million IFE order from APS/Wencor.

Extended the term of the $750,000 note until June 30, 2006.

Filed patent application on proprietary hardware encryption technology.

Expanded business opportunities for Kino™ versions of the video/audio

technology platform for both open and closed systems