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Safe Harbor Statement
Except for the factual statements made herein, the information contained in this news release consists of forward-looking statements that involve risks, uncertainties and assumptions that are difficult to predict. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believes," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates" and variations thereof, or the use of future tense, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Such forward-looking statements are not guarantees of performance and our actual results could differ materially from those contained in such statements. Factors that could cause or contribute to such differences include, but are not limited to: our ability to maintain and increase sales volumes of our products; our ability to continue to aggressively control costs and operating expenses; our ability to achieve the intended cost savings and maintain quality with our new manufacturing partner; our ability to generate cash from operations; the ability of our suppliers to provide an adequate supply of components for our products at prices consistent with historical prices; our ability to raise outside capital and to repay our debt as it comes due; our ability to introduce new competitive products and the degree of market acceptance of such new products; the timing and market acceptance of new products introduced by our competitors; our ability to maintain strong relationships with branded channel partners; our ability to maintain the listing of our common stock on the NASDAQ Capital Market; customers', suppliers' and creditors' perceptions of our continued viability; rescheduling or cancellation of customer orders; loss of a major customer; our ability to enforce our intellectual property rights and protect our intellectual property; general competition and price measures in the market place; unexpected shortages of critical components; worldwide information technology spending levels; and general economic conditions. Reference is also made to other factors detailed from time to time in our periodic reports filed with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this release and we undertake no obligation to publicly update any forward-looking statements to reflect new information, events or circumstances after the date of this release.

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                           OVERLAND STORAGE, INC.              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                   (In thousands, except per share data)                                  Three Months Ended     Six Months Ended                                     December 31,          December 31,                                 --------------------  --------------------                                    2012       2011       2012       2011                                 ---------  ---------  ---------  ---------                                      (Unaudited)           (Unaudited)Net revenue                      $  12,599  $  15,105  $  24,310  $  29,180Cost of revenue                      8,002     10,083     15,770     19,571                                 ---------  ---------  ---------  ---------Gross profit                         4,597      5,022      8,540      9,609                                 ---------  ---------  ---------  ---------Operating expenses:  Sales and marketing                4,353      4,073      8,478      8,538  Research and development           1,591      2,151      3,188      4,634  General and administrative         2,765      3,048      5,649      6,129                                 ---------  ---------  ---------  ---------   Total expenses                    8,709      9,272     17,315     19,301                                 ---------  ---------  ---------  ---------Operating loss                      (4,112)    (4,250)    (8,775)    (9,692)Interest income                          -          -          3          -Interest expense                       (46)       (26)       (88)       (35)Other income (expense), net            (47)        (8)      (159)       207                                 ---------  ---------  ---------  ---------Loss before income taxes            (4,205)    (4,284)    (9,019)    (9,520)Provision for income taxes              68          8        117        127                                 ---------  ---------  ---------  ---------Net loss                         $  (4,273) $  (4,292) $  (9,136) $  (9,647)                                 =========  =========  =========  =========Net loss per share:  Basic and diluted              $   (0.15) $   (0.18) $   (0.33) $   (0.42)                                 =========  =========  =========  =========Shares used in computing net loss per share:  Basic and diluted                 28,339     23,382     28,108     23,219                           OVERLAND STORAGE, INC.              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                   (In thousands, except per share data)                                                Three Months   Three Months                                                   Ended          Ended                                                December 31,  September 30,                                               -------------  -------------                                                    2012           2012                                               -------------  -------------                                                (Unaudited)    (Unaudited)Net revenue                                    $      12,599  $      11,711Cost of revenue                                        8,002          7,768                                               -------------  -------------Gross profit                                           4,597          3,943                                               -------------  -------------Operating expenses:  Sales and marketing                                  4,353          4,125  Research and development                             1,591          1,597  General and administrative                           2,765          2,884                                               -------------  -------------    Total expenses                                     8,709          8,606                                               -------------  -------------Operating loss                                        (4,112)        (4,663)Interest income                                            -              3Interest expense                                         (46)           (42)Other income (expense), net                              (47)          (112)                                               -------------  -------------Loss before income taxes                              (4,205)        (4,814)Provision for income taxes                                68             49                                               -------------  -------------Net loss                                       $      (4,273) $      (4,863)                                               =============  =============Net loss per share:  Basic and diluted                            $       (0.15) $       (0.17)                                               =============  =============Shares used in computing net loss per share:  Basic and diluted                                   28,339         27,876                           OVERLAND STORAGE, INC.                     SELECTED BALANCE SHEETS INFORMATION                               (In thousands)                                                 December 31,     June 30,                                                     2012           2012                                                -------------  -------------                                                 (Unaudited)    (Unaudited)ASSETSCash and cash equivalents                       $       3,163  $      10,522Accounts receivable, net                                7,669          9,193Inventories                                            10,375         10,658Other current assets                                    2,886          3,779                                                -------------  -------------  Total current assets                                 24,093         34,152Property and equipment, net                             1,875          1,446Other assets                                            2,342          2,662                                                -------------  -------------  Total assets                                  $      28,310  $      38,260                                                =============  =============LIABILITIES & EQUITY (DEFICIT)Current liabilities                             $      26,828  $      26,759Long-term debt                                              -          3,500Other long-term liabilities                             4,408          4,960Shareholders' equity (deficit)                         (2,926)         3,041                                                -------------  -------------  Total liabilities and equity (deficit)        $      28,310  $      38,260                                                =============  =============