Agreement for Legal Services


On March 23, 2007 e.Digital Corporation (the "Company") entered into an
agreement for legal services and contingent fee arrangement ("Agreement") with
Duane Morris LLP. The Agreement provides that Duane Morris will be the Company's
exclusive legal counsel in connection with the assertion of the Company's flash
memory related patents against infringers ("Patent Enforcement Matters').

Duane Morris has agreed to handle the Company's Patent Enforcement Matters and
certain related appeals on a contingent fee basis for Duane Morris time. Duane
Morris also has agreed to advance certain costs and expenses including travel
expenses, court costs and expert fees. The Company has agreed to pay Duane
Morris a fee equal to 40% of any license or litigation recovery related to
Patent Enforcement Matters, after recovery of expenses, and 50% of recovery if
appeal is necessary. The Company may seek alternate representation if Duane
Morris is unable or unwilling to represent specific litigation and any related
recovery is excluded from the contingent fee arrangement.

In the event the Company is acquired or sold or elects to sell the covered
patents or upon certain other corporate events or in the event the Company
terminates the Agreement for any reason, then Duane Morris shall be entitled to
collect accrued costs and a fee equal to three times overall time and expenses
accrued in connection with the Agreement and a fee of 15% of a good faith
estimate of the overall value of the covered patents. The Company has agreed to
provide Duane Morris a lien and a security interest in the patents to secure its
obligations under the Agreement.

A copy of the Agreement is filed herewith as Exhibit 99.1 and is incorporated
herein by reference. The summary of the transaction set forth above does not
purport to be complete and is qualified in its entirety by reference to such
exhibit.

Purchase Order Financing


On March 23, 2007 the Company entered into a short-term purchase order and
working capital financing arrangement providing cash proceeds of $750,000.00.
The lender, ASI Capital Corporation, is a Nevada based mortgage broker/banker.
The proceeds are intended to produce product for certain purchase orders and for
general working capital.

The obligation is documented by an 18% secured promissory note with interest
payable monthly for any full or partial month the principal is outstanding and
is secured pursuant to a security agreement providing a security interest in
substantially all of the Company's assets. The note is due the earlier of
September 23, 2007 or within two business days of receipt by the Company of
final payments from certain purchase orders, contains no prepayment fee and
provides customary late payment penalties and default provisions. The Company
also paid a $15,000 finance charge by issuing 73,385 restricted shares of the
Company's common stock with no registration rights. No finders fees or other
commissions or fees were incurred in connection with the financing.

A complete copy of the Secured Promissory Note and the Security Agreement are
filed herewith as Exhibits 99.3 and 99.4, respectively, and are incorporated
herein by reference [except that we do not intend for any person other than ASI
Capital Corporation to rely upon the representations and warranties contained in
the exhibits]. The summary of the transaction set forth above does not purport
to be complete and is qualified in its entirety by reference to such exhibits.