Overland Storage Acquires Okapi Software And Enters the Disk-based Appliance Market

Overland Storage, Inc. (Nasdaq: OVRL) today announced that it has acquired Okapi Software, Inc., a privately-owned company based in San Diego. This acquisition marks Overland's entry into the powerful, emerging market of intelligent, disk-based appliances based on iSCSI and Serial ATA disk technologies. The acquisition price of $5.0 million was comprised of $2.5 million in Overland stock (134,551 shares), $1.8 million in cash, and Overland's assumption of approximately $700,000 in liabilities.

Okapi founder, president and CEO, John Matze, has been appointed vice president and chief technology officer of Overland. Matze has more than 14 years experience in the storage sector, having held positions at Veritas Software and Stac, Inc. He is one of the original architects of the IETF standard for the new iSCSI technology. Four other key personnel from Okapi have also joined Overland.

Christopher Calisi, president and CEO of Overland Storage, said: "We are excited about this new software technology and our entry into the market for intelligent disk-based appliances.

Over the last year our advance R&D extensively surveyed IT managers around the world to understand their greatest problems and challenges regarding storage and data protection. IT managers need a solution to help them reduce their backup window, speed restores, complement tape backup strategies and fit within existing infrastructures.

We believe the Okapi backup accelerator appliance is the ideal solution. It uses two of the most promising new technologies, iSCSI and Serial ATA drives, to produce a very affordable appliance that facilitates 'Disk-to-Disk-to-Tape' or D2D2T backup.

This appliance accelerates backup by up to eight times. After servers have been freed-up for normal operation, data is seamlessly streamed to tape at block storage transfer rates to facilitate offsite storage and archive. This solution provides customers fibre channel performance without fibre channel cost and complexity.

"This product complements our existing family of tape automation products," continued Calisi. "And, our existing worldwide sales team and distribution partners are well positioned to market our new disk-based appliance. In August we will formally introduce the product under the Overland label, and will commit incremental sales and marketing resources to its launch.

We currently estimate that during fiscal 2004, our entry into the disk-based appliance market will result in earnings dilution of approximately $0.11 per share, $0.07 of which is amortization of the Okapi purchase price, but will become accretive in fiscal 2005.

We believe this investment will allow Overland to take a leading position in the emerging disk-based appliance market. Further, John Matze, our new CTO, will contribute his significant knowledge and experience to develop a powerful roadmap of next generation products."

About Overland Storage
Overland Storage, Inc. (NASDAQ: OVRL) is a leading global supplier of innovative hardware and software storage solutions for mid-range computer networks. The Company delivers high availability products, including award-winning automated storage libraries that set the standard for intelligent, automated and scalable storage. Overland sells its products worldwide through leading OEMs, commercial distributors, storage integrators and value-added resellers. For more information, visit Overland's Web site at www.overlandstorage.com.