GOVERNMENT

SAN DIEGO, CA -- nStor Technologies (Amex: NSO), a provider of information storage systems, today announced results for the third quarter and nine-months ended September 30, 2001. Net loss available to common stock for the third quarter decreased to $1.7 million, or $(0.05) per share, on revenues of $4 million, compared with a net loss of $4.2 million, or $(0.12) per share, on revenues of $9.5 million reported for 2000's third quarter and a net loss of $4.3 million, or $(0.12) per share, on revenues of $3.9 million during the second quarter ended June 30, 2001. Tom Makmann, President and Chief Operating Officer, stated, "Although our sales revenues continued to be adversely affected by the economy, our third quarter results clearly demonstrate an improvement compared to our second quarter. This improvement reflects our recent reorganization efforts, which allowed us to substantially reduce operating expenses while increasing efficiency." Mr. Makmann continued, "Interest in our NexStor family of storage solutions remains high, and we anticipate that our OEM customers will have begun to take production quantities in the fourth quarter. We are also continuing to implement a channel strategy, and remain focused on working with domestic and international resellers to penetrate new markets. Even while companies are scaling back on IT spending, new opportunities for nStor should continue to support growth. IT executives are now looking at lower end and midrange storage systems, which is the market space where nStor has traditionally been very competitive. Our midrange products offer an alternative to high-end storage deployments on a more cost-effective basis for many businesses." Net loss applicable to common stock for the first nine months of 2001 totaled $9.6 million, or $(0.27) per share, on revenues of $14.2 million, compared with a net loss of $4.8 million, or $(0.15) per share, on revenues of $32.9 million, for the same period one year ago. The net loss for the 2000 period includes a one-time $5.6 million gain on the sale of assets recognized in the first quarter of 2000. For more information visit www.nstor.com