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Item 1.01. Entry Into a Material Definitive Agreement.
Amendment to Purchase Order Financing
On June 30, 2008 the Company completed an amendment dated effective as of June 23, 2008 of a short-term working capital financing arrangement originally funded in March 2007. The Company has made cash payments to reduce the principal amount to $400,000. The due date of the note from lender, ASI Technology Corporation, is December 23, 2008. The Company has agreed to pay a $4,000 finance charge by issuing 40,404 shares of common stock (“Common Stock”) in connection with the renewal. Security and other terms of the note and related security agreement remain unchanged.

A complete copy of the amendment is filed herewith as Exhibit 99.1 and is incorporated herein by reference [except that the Company does not intend for any person other than ASI Technology Corporation to rely upon the representations and warranties contained in the exhibit]. 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 and the original financing documents previously filed.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Secured Promissory Note
The Company is obligated on a short-term promissory note, as amended, in the principal amount of $400,000 as described above. A description of the material terms of the obligation, as amended, are described above and in Form 8-K filed on January 4, 2008. The Company is obligated to make monthly interest payments of $6,000 and to pay the principal on or before December 23, 2008.

Item 3.02. Unregistered Sales of Equity Securities
Sale of Series AA Convertible Preferred Stock
The Company entered into a Convertible Preferred Stock Purchase Agreement dated as of June 27, 2008 with a group of accredited investors (collectively, the "Investors") for the sale of 75,000 shares of Series AA Convertible Preferred Stock (the "Series AA Stock") at a per share price of $10 for an aggregate amount of $750,000.

Dividends of 5% per annum are payable, with certain exceptions, either in cash or in shares of Common Stock at the election of the Company. The stated dollar amount of Series AA Stock, is convertible into fully paid and nonassessable shares of Common Stock at a conversion price of $0.10 per share. The Series AA Stock shall be subject to automatic conversion on or about June 30, 2010 subject to certain conditions.

At the Investors’ option the Series AA Stock is redeemable at June 30, 2009 should sufficient shares of Common Stock not be authorized and reserved for conversion of all shares of Series AA Stock by such date. The cash redemption price shall be the greater of (i) $20.00 per share of Series AA Stock plus a sum equal to all accrued but unpaid dividends, or (ii) the five day average closing price immediately preceding June 30, 2009 multiplied by the number of shares of Common Stock that could be obtained on conversion of the Series AA Stock.

The Company also issued to the Investors, warrants to purchase 7,500,000 shares of Common Stock at $0.10 per share exercisable until June 30, 2011 (“Warrants”). The Warrants are redeemable at June 30, 2009 at the Investors option should sufficient shares of Common Stock not be authorized and reserved for exercise of all the Warrants by such date. The cash redemption price shall be the greater of (i) $0.01 per share of Common Stock underlying the Warrants, or (ii) the five day average closing price immediately preceding June 30, 2009 multiplied by the number of shares of Common Stock that could be obtained on a net exercise basis, if any.

One officer/director of the Company, Mr. Robert Putnam purchased for cash an aggregate of $100,000 of this placement and was issued 10,000 shares of Series AA Stock and 1,000,000 Warrants on the same terms as unaffiliated Investors.

The Company received gross cash proceeds from this financing of $700,000 and the balance of $50,000 was paid through conversion of debt. The Company paid no placement fees. The Company expects to use the net proceeds of the financing for debt and vendor payments and for working capital purposes to support its business.

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The Company offered and sold the securities without registration under the Securities Act of 1933 to a limited number of accredited investors in reliance upon the exemption provided by Rule 506 of Regulation D thereunder. The Series AA Stock and Warrants may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements under the Securities Act. An appropriate legend was placed on the securities issued, and will be placed on the common shares issuable upon exercise of the Warrants or conversion of the Series AA Stock, unless registered under the Securities Act prior to issuance. The Investors were not granted any registration rights in connection with this placement.
A complete copy of the Form of Convertible Preferred Stock Purchase Agreement, the Form of Warrant, the Certificate of Designation of Preferences, Rights and Limitations of Series AA Preferred Stock and the related shareholder release of the Company describing the private placement financing, are filed herewith as Exhibits 99.2, 99.3, 99.4 and 99.5, respectively, and are incorporated herein by reference [except that the Company does not intend for any person other than the purchasers to rely upon the representations and warranties contained in the Convertible Preferred Stock Purchase Agreement]. 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.
This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy any of these securities. This portion of the report is being filed pursuant to and in accordance with Rule 135c under the Securities Act.
Additional Issuances of Unregistered Shares of Common Stock
On April 9, 2008 the Company issued 40,000 shares of Common Stock to the Jerry E. Polis Family Trust in consideration of a $4,800 finance fee on a one year $40,000 note. The shares were sold upon the exemption provided by Section 4(2) under the Securities Act of 1933, no commissions were paid and a restrictive legend was placed on the shares issued.

On April 30, 2008 the Company issued 243,704 shares of Common Stock to Davric Corporation in consideration of a $30,000 monthly payment for April on its 7.5% term note. The shares were sold upon the exemption provided by Section 4(2) under the Securities Act of 1933, no commissions were paid and a restrictive legend was placed on the shares issued.

On May 30, 2008 the Company issued 267,379 shares of Common Stock to Davric Corporation in consideration of a $30,000 monthly payment for May on its 7.5% term note. The shares were sold upon the exemption provided by Section 4(2) under the Securities Act of 1933, no commissions were paid and a restrictive legend was placed on the shares issued.

On June 30, 2008 the Company issued 300,000 shares of Common Stock to Davric Corporation in consideration of a $30,000 monthly payment for June on its 7.5% term note. The shares were sold upon the exemption provided by Section 4(2) under the Securities Act of 1933, no commissions were paid and a restrictive legend was placed on the shares issued.

Item 3.03 Material Modification to Rights of Security Holders.
The Certificate of Designation of Preferences, Rights and Limitations of Series AA Preferred Stock (the “Certificate”) provides for voting rights of 100 votes per each of the 75,000 shares of Series AA Stock sold. The Certificate provides the holders of Series AA Stock certain dividend and liquidation preferences over holders of Common Stock. On any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the Series AA Stock shall receive, out of assets legally available therefor, an amount equal to $10.00 per share, plus all accrued but unpaid dividends thereon, before any amount shall be paid to the holders of any other class of stock.

The Series AA Stock is redeemable at June 30, 2009 at the Investors option should sufficient shares of Common Stock not be authorized and reserved for conversion of all shares of Series AA Stock by such date. The cash redemption price shall be the greater of (i) $20.00 per share of Series AA Stock plus a sum equal to all accrued but unpaid dividends thereon to the date fixed for redemption, or (ii) the five day average closing price immediately preceding June 30, 2009 multiplied by the number of shares of Common Stock that could be obtained on conversion. Accordingly, should the optional redemption be triggered by the Investors due to insufficient shares of Common Stock being available, the Company would be obligated for a minimum cash redemption of approximately $1.5 million or more depending on the Common Stock price.


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A complete copy of the Certificate is filed herewith as Exhibit 99.4 and is incorporated herein by reference The summary set forth above does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Item 9.01. Financial Statements and Exhibits
(c)
Exhibits
99.1
Loan Extension Agreement dated June 30, 2008
99.2
Form of Convertible Preferred Stock Purchase Agreement, dated June 27, 2008
99.3
Form Warrant, issued June 27, 2008
99.4
Certificate of Designation of Preferences, Rights and Limitations of Series AA Preferred Stock as filed on June 26, 2008
99.5
Shareholder Release, issued July 1, 2008
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

e.DIGITAL CORPORATION
Date: July 1, 2008
e.DIGITAL CORPORATION
By: /s/ ROBERT PUTNAM
—————&...
Robert Putnam, Senior Vice President, Interim Financial Officer and Secretary
(Principal Financial and Accounting Officer and duly authorized to sign on behalf of the Registrant)
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EX-99.1

EXHIBIT 99.1

LOAN EXTENSION AGREEMENT
This Loan Extension Agreement is dated as of this 30th day of June 2008, by and between ASI Technology Corporation, a Nevada Corporation with a place of business at 980 American Pacific Dr., Ste. 111, Henderson, Nevada, 89114 (the “Lender”), E.Digital Corporation, a Delaware corporation with an office at 16770 West Bernardo Drive, San Diego, California, 92127 (the “Borrower”), in consideration of the mutual covenants contained herein and the benefits to be derived herefrom.
W I T N E S S E T H:
WHEREAS, the Lender and the Borrower have entered into a certain loan arrangement (the “Loan Arrangement”), which Loan Arrangement is evidenced by, among other documents and instruments, a certain Promissory Note dated as of December 23, 2007 made by the Borrower payable to the Lender in the original principal amount of $450,000.00 (the “Note”); and
WHEREAS, the Borrower has requested that the Lender extend the maturity date of the Note as set forth herein and the Lender has agreed to do so upon the terms and conditions set forth herein.
NOW, THEREFORE, it is agreed by and between the Lender and the Borrower as follows:
1. The Lender and the Borrower hereby agree that the maturity date of the Note is extended until December 23, 2008. Until the Maturity Date, the Borrower shall continue to pay, as and when due, all unpaid interest required pursuant to the terms of the Loan Agreement and the Note.
2. The Borrower acknowledges and agrees that, as of the date herein, the outstanding principal balance due under the Note is $400,000.00.
3. Upon the execution hereof, the Borrower shall pay to the Lender an extension fee of $4,000.00, in addition to all fees and expenses incurred by the Lender in connection with the Loan Arrangement. The Borrower may pay the extension fee by delivery of 40,404 restricted shares (“Restricted Shares”) of the common stock, $.001 par value of the Borrower with a deemed value of $.099 per share (which is the average closing price of the common stock for the five trading days immediately preceding the date hereof).
4. Provided no Default or Event of Default shall then be in existence, the Lender shall extend the Maturity Date for an additional period through December 23, 2008, upon the satisfaction of the following conditions:
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4.1 Payment by the Borrower of an extension fee equal to 100 basis points of the outstanding balance of the Note as of June 30, 2008; and
4.2 The Borrower provides written notice to the Lender of its request for an extension of the Maturity Date no later than June 30, 2008.
6. The Borrower acknowledges and agrees that any and all collateral granted by the Borrower or any other party to secure the obligations of the Borrower under the Note and the Loan Agreement shall remain in full force and effect and shall continue to secure the obligations of the Borrower to the Lender.
7. It is intended that this Extension Agreement take effect as an instrument under the seal of the laws of the State of Nevada. This Extension Agreement constitutes the entire agreement of the parties with respect to the matters set forth herein and shall not be modified by any prior oral or written discussions.
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E.Digital, a Delaware corporation
By:
/s/ WILLIAM BLAKELEY
Name:
William Blakeley
Title:
President and CTO
ASI Technology Corporation, a Nevada Corporation
By:
/s/ JERRY E. POLIS
Jerry E. Polis
Chairman of the Board
ACKNOWLEDGED, CONSENTED TO AND AGREED:
E.Digital, a Delaware corporation
By:
/s/ WILLIAM BLAKELEY
Name:
William Blakely
Title
President and CTO
By:
/s/ ROBERT PUTNAM
Name:
Robert Putnam
Title:
Senior Vice President
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EX-99.2

EXHIBIT 99.2

CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

THIS CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 27, 2008, is entered into by and among e.Digital Corporation, a Delaware corporation (the “Company”), and the investors signatory hereto (each such investor is a “Purchaser” and all such investors are, collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933 (the “Securities Act”), as amended, the Company desires to issue and sell to the Purchasers and the Purchasers, severally and not jointly, desire to purchase from the Company (i) shares of the Company’s 5% Series AA Convertible Preferred Stock, par value $.001 per share (the “Preferred Stock”), which are convertible into shares of the Company’s common stock, par value $.001 per share (the “Common Stock”), and (ii) certain other securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows:

ARTICLE I
PURCHASE AND SALE

1.1 The Closing.

(a) The Closing (i) Subject to the terms and conditions set forth in this Agreement the Company shall issue and sell to the Purchasers and the Purchasers shall, severally and not jointly, purchase an aggregate of up to 100,000 shares of Preferred Stock (“Shares”) and certain Common Stock purchase warrants as described below in this Section for an aggregate purchase price of up to $1,000,000. The purchase and sale of such securities shall take place at one or more closings (collectively, the “Closing”) at the offices of McConnell, Dunning & Barwick LLP (“MD&B”), 15 Enterprise, Suite 360, Aliso Viejo, California 92656, immediately following the execution hereof or such later date as the parties shall agree. The date of the Closing is hereinafter referred to as the “Closing Date.”

(ii) At the Closing, the parties shall deliver or shall cause to be delivered the following: (A) the Company shall deliver to each Purchaser (1) a stock certificate registered in the name of such Purchaser, representing a number of Shares equal to the quotient obtained by dividing the purchase price indicated below such Purchaser’s name on the signature page to this Agreement by 10, and (2) a Common Stock purchase warrant, in the form of Exhibit A, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire the number of Warrant Shares (as defined in the Warrant) indicated below such Purchaser’s name on the signature page to this Agreement (collectively, the “Warrants”) and (B) each Purchaser shall deliver (1) the purchase price indicated below such Purchaser’s name on the signature page to this Agreement in United States dollars in immediately available funds by wire transfer to an account designated in writing by the Company for such purpose or, with the consent of the Company, through conversion of outstanding indebtedness, and (2) an executed copy of this Agreement.


1.2 Terms of Preferred Stock. The Preferred Stock shall have the rights preferences and privileges set forth in Exhibit B, and shall be incorporated into a Certificate of Designation (the “Certificate of Designation”) to be filed prior to the Closing by the Company with the Secretary of State of Delaware.

1.3 Certain Defined Terms. For purposes of this Agreement, “Original Issue Date” shall have the meaning set forth in Exhibit B, “Trading Day” shall mean any day on which the Common Stock is traded in the over the counter market, as reported by the NASD’s OTC Bulletin Board or on a Subsequent Market (as hereinafter defined) on which the Common Stock is then listed or quoted, as the case may be and “Business Day” shall mean any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of California are authorized or required by law or other governmental action to close. A “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

ARTICLE II
REPRESENTATIONS AND WARRANTIES


(a) Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company has no subsidiaries other than as set forth in Schedule 2.1(a) (collectively, the “Subsidiaries”). Each of the Subsidiaries is an entity, duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Each of the Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of the Securities (as defined below) or any of this Agreement, the Certificate of Designation or the Warrants (collectively, the “Transaction Documents”), (y) have or result in a material adverse effect on the results of operations, assets, prospects, or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (z) adversely impair the Company’s ability to perform fully on a timely basis its obligations under any of the Transaction Documents (any of (x), (y) or (z), a “Material Adverse Effect”).


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(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company. Each of the Transaction Documents has been duly executed by the Company and, when delivered (or filed, as the case may be) in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, by-laws or other organizational or charter documents.

(c) Capitalization. The number of authorized, issued and outstanding capital stock of the Company is set forth in Schedule 2.1(c). Except as disclosed in Schedule 2.1(c), the Company owns all of the capital stock of each Subsidiary. No shares of Common Stock are entitled to preemptive or similar rights, nor is any holder of the securities of the Company or any Subsidiary entitled to preemptive or similar rights arising out of any agreement or understanding with the Company or any Subsidiary by virtue of any of the Transaction Documents. Except as a result of the purchase and sale of the Shares and the Warrants and except as disclosed in Schedule 2.1(c), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings, or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Shares, Warrants or Underlying Shares (as hereinafter defined) will not obligate the Company to issue shares of Common Stock or other securities to any Person other than the Purchaser and will not result in a right of any holder of Company’s securities to adjust the exercise or conversion or reset price under such securities.

(d) Issuance of the Shares and the Warrants. The Shares and the Warrants are duly authorized and, when issued and paid for in accordance with the terms hereof, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of first refusal of any kind (collectively, “Liens”). The Company will use its reasonable best efforts to obtain an increase in its authorized shares of Common Stock, and will utilize its best efforts thereafter to reserve for issuance to the holders of the Shares and the Warrants sufficient shares to enable it to perform its conversion, exercise and other obligations under this Agreement, the Certificate of Designation and the Warrants. The shares of Common Stock issuable upon conversion of the Shares and upon exercise of the Warrants are collectively referred to herein as the “Underlying Shares.” The Shares, the Warrants and the Underlying Shares are collectively referred to herein as, the “Securities.” When issued in accordance with the Certificate of Designation and the Warrants, the Underlying Shares will be duly authorized, validly issued, fully paid and nonassessable, free and clear of all Liens.


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(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other charter documents (each as amended through the date hereof), or (ii) subject to making and/or obtaining the Required Filings and Approvals (as defined below), conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Company is not being conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, could not have or result in a Material Adverse Effect.

(f) Filings, Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the filing of the Certificate of Designation with the Secretary of State of Delaware, (ii) the filings required pursuant to Section 3.9, (iii) the filing with the Securities and Exchange Commission (the “Commission”) of a Notice of Sale of Securities Pursuant to Regulation D (“Form D”) meeting the requirements Rule 506 of Regulation D and, (iv) the filing of Form D and related filings in compliance with applicable state “blue sky” securities laws, and (v) in all other cases where the failure to obtain such consent, waiver, authorization or order, or to give such notice or make such filing could not have or result in, individually or in the aggregate, a Material Adverse Effect (collectively, the “Required Filings and Approvals”).


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