Overland Receives Another Deficiency Letter From Nasdaq

Overland Storage, Inc. received a Nasdaq Staff Deficiency Letter indicating that, based on the Company’s shareholders’ equity as reported in its Quarterly Report on Form 10-Q for the period ended December 28, 2008, the Company does not comply with the minimum shareholders’ equity requirement of $10 million for continued listing on The Nasdaq Global Market as set forth in Nasdaq Marketplace Rule 4450(a)(3). The Nasdaq Letter provides the Company 15 calendar days from the date of the letter to submit a plan to regain compliance, or, alternatively, to elect to transfer listing of its common stock to The Nasdaq Capital Market provided the Company meets the criteria for continued listing on The Nasdaq Capital Market other than the minimum bid price requirement.

After considering the alternatives, the Board of Directors has determined to request transfer to The Nasdaq Capital Market, and the Company intends to file a transfer application no later than February 27, 2009. The Company believes, based on its December 28, 2008 balance sheet and other quantitative data available at this time, that it satisfies the applicable quantitative continuing listing requirements for inclusion in The Nasdaq Capital Market. If Nasdaq approves the transfer application, the transfer is expected to occur nine calendar days following Nasdaq’s receipt of the transfer application. However, there can be no assurance that the Company’s transfer application will be approved. If it is not approved, the Company would consider alternatives at that time.

The Nasdaq Capital Market is one of the three tiers for Nasdaq-listed securities and includes over 400 companies. Companies listed on The Nasdaq Capital Market must adhere to the same corporate governance standards applicable to companies listed on The Nasdaq Global Market. The Nasdaq Capital Market operates in substantially the same manner as The Nasdaq Global Market and following transfer the Company’s shares will continue to trade under the symbol ‘OVRL’.