Overland To Be Delisted From Nasdaq

On December 15, 2009, Overland Storage, Inc. received the expected written notification from The Nasdaq Stock Market, Inc. that because the Company has not regained compliance with the minimum market value of publicly held shares of $15 million requirement set forth in Nasdaq Listing Rule 5450(b)(1)(C) by the December 14, 2009 expiration of the 90-day compliance period for this requirement, the Company’s common stock would be delisted from The Nasdaq Global Market unless the Company requests an appeal of this determination to a Nasdaq Hearings Panel no later than 4:00 p.m. Eastern Time on December 22, 2009.

On December 18, 2009, the Company requested such an appeal, which request automatically delayed the delisting of the Company’s common stock at least until the Panel issues a decision. The Panel has the discretion to grant the Company an exception for up to 180 days after the Nasdaq Staff’s initial delisting decision to regain compliance with the continued listing standards of The Nasdaq Global Market or to transfer listing to The Nasdaq Capital Market if the Company’s common stock meets the continued listing requirements for The Nasdaq Capital Market at the time of transfer. There can be no assurance that the Panel will grant an exception or that the Company will be able to comply with the conditions of the exception or with the continued listing requirements of The Nasdaq Global Market or The Nasdaq Capital Market by the Panel’s decision date or by the expiration of any exception the Panel grants. The Company’s common stock does not currently meet the continued listing requirements for The Nasdaq Capital Market.

If the Panel determines to sustain the Nasdaq Staff’s delisting determination at the hearing or following an extension granted at the hearing, the Company may file an appeal to the Nasdaq Listing and Hearings Review Council, or the Listing Council may review the Panel’s decision on its own accord. A review by the Listing Council does not delay the delisting decision unless the Listing Council determines in its discretion to do so. The Listing Council currently has discretion to grant an exception for up to 360 days after the Nasdaq Staff’s initial delisting decision, but the Company can provide no assurance that the Listing Council would delay an unfavorable delisting decision or grant any exception.

Any delisting of the Company’s common stock by Nasdaq could adversely affect the Company’s ability to attract new investors, decrease the liquidity of the outstanding shares of common stock, reduce its flexibility to raise additional capital, reduce the price at which such shares trade and increase the transaction costs inherent in trading such shares with overall negative effects for the Company’s shareholders. In addition, delisting of the Company’s common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in the Company’s common stock, and might deter certain institutions and persons from investing in the Company’s stock at all.

Nasdaq has filed with the Securities and Exchange Commission a rule change proposal which, if approved by the SEC in its current form, would extend the compliance period for deficiencies in MVPHS from 90 days to 180 days prior to a delisting determination from the Nasdaq Staff. The proposed rule in its current form would not grant additional time to an issuer that has received a delisting notification prior to the adoption of the proposed rule. Accordingly, even if this proposed rule is approved by the SEC, it may not affect the Company’s appeal process or result in additional time for the Company to demonstrate compliance with the listing standards of The Nasdaq Global Market or The Nasdaq Capital Market.