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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                     FORM 10-K
      (Mark One)
         [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                      FOR THE FISCAL YEAR ENDED: JUNE 30, 2000

                                       OR

         [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from _____ to _____

                         Commission File Number: 0-22071

                               OVERLAND DATA, INC.
             (Exact name of registrant as specified in its charter)

                CALIFORNIA                                95-3535285
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)

              8975 Balboa Avenue, San Diego, California 92123-1599
          (Address of principal executive offices, including zip code)

                                 (858) 571-5555
              (Registrant's telephone number, including area code)
                           ---------------------------

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, no par value

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant as of September 22, 2000 was $68,595,000 based on the closing price
reported on such date by the Nasdaq National Market System. Shares of Common
Stock held by officers and directors and by persons who hold 5% or more of the
outstanding Common Stock have been excluded from the calculation of this amount
because such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily conclusive.

As of September 22, 2000, the number of outstanding shares of the registrant's
Common Stock was 10,328,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement to be filed in connection with registrant's
Annual Meeting of Shareholders to be held on November 14, 2000 (the "Proxy
Statement") are incorporated herein by reference into Part III of this Report.

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                                     PART I

         THIS REPORT CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING NATURE
RELATING TO FUTURE EVENTS OR THE FUTURE PERFORMANCE OF THE COMPANY.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS
AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH
STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER VARIOUS
FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH BELOW
UNDER THE CAPTION "RISK FACTORS," WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

ITEM 1.  BUSINESS

         Founded in 1980, Overland Data, Inc. (herein "Overland Data",
"Overland" or the "Company") designs, develops, manufactures, markets and
supports magnetic tape data storage drives and automation solutions.
Businesses use these solutions for backup, archival and data interchange
functions in high-availability network computing environments, including
PC/LAN (Microsoft Windows NT and Novell NetWare), UNIX and Linux
client/server networks and mini-computers.

         Overland's products address the data storage needs of businesses,
from small businesses and branch offices to large enterprises, that have
become increasingly dependent upon their stored digital computer data. For
many businesses, the management and protection of that data have moved from a
peripheral concern to the central issue in computing, due to several factors,
including:

     -   The shift from large mainframe computers to network server computing;

     -   The exponential growth in digital content made possible by new
         technologies that make it easy and cost-effective to transform, move,
         access and store mass amounts of digital content including graphics,
         video and audio; and

     -   The dramatic growth of the Internet and electronic commerce, which has
         significantly increased stored digital content.

         Overland's storage system solutions are designed to reliably and
efficiently capture, protect, manage, back up and archive stored digital
content, so that it is recoverable after a disaster and is available 24 hours
a day, seven days a week.

         The Company's primary products are automated tape libraries,
minilibraries, loaders and tape drives, which combine electro-mechanical
robotics, electronic hardware and firmware developed by the Company with an
emphasis on efficiency of design, functionality and reliability. Overland
also distributes products manufactured by other original equipment
manufacturers ("OEMs") and markets various other products including storage
management software supplied by third parties, spare parts and tape media.
The Company also licenses a proprietary tape encoding technology that it
developed and patented under the name Variable Rate Randomizer or "VR(2)"-TM-.

         During fiscal year 2000, the Company embarked on a new strategy to
capture a portion of the entry-level server tape backup market. This strategy
was based on the concept of developing a next generation tape drive, which
would incorporate the Company's proprietary VR(2) tape encoding technique
onto a Travan NS tape drive. To this end, in September 1999, the Company
entered into a joint development and manufacturing agreement with Tecmar
Technologies, Inc., a leader in the Travan, DAT and Ditto tape technologies.
However, Tecmar Technologies, Inc. encountered financial difficulties and, in
February 2000, the Company's subsidiary, Tecmar, Inc. acquired certain
inventories, fixed assets, supplies, intellectual property, trademarks and
Internet addresses from Tecmar Technologies International, Inc. and certain
of its affiliates, including Tecmar Technologies, Inc. (collectively,
"Tecmar"), in a prepackaged bankruptcy plan. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Fiscal Year 2000
compared to Fiscal Year 1999."

         Subsequent to the acquisition, Tecmar, Inc. sustained operating
losses and sales of the Ditto line of tape drive products declined more
rapidly than expected. In addition, the Company determined that a
disproportionate amount of Tecmar, Inc.'s resources was dedicated to support
the Ditto product line. Consequently, subsequent to June 30, 2000, the
Company discontinued the Ditto product line and took steps to restructure
Tecmar Inc.'s operations. This resulted in a one-time, pre-tax charge of $1.7
million recorded in the Company's operating results for the fourth quarter
ended June 30, 2000.

PRODUCTS

         Overland is one of the leading suppliers of automated tape storage
solutions based on DLTtape, a half-inch tape technology supplied by Quantum
Corporation that is the industry standard for data back-up in the mid-range
network server market. The Company also offers products based on "AIT"
(Advanced Intelligent Tape) tape drives supplied by Sony and "SLR" (Scalable
Linear Recording) tape drives supplied by Tandberg Data ASA, as well as a
line of IBM compatible

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36-track products called TapeXpress that serve the large installed base of
AS400 and RS6000 minicomputers. With the assets acquired from Tecmar in
February 2000, the Company now manufactures tape drives for the entry-level
server market using DAT and Travan-based technologies. The Company has
announced new products which will incorporate "LTO" (Linear Tape Open) tape
drives to be supplied by Seagate Technology, Inc., and in fiscal year 2001
intends to introduce a next generation Travan-based tape drive.

-    LIBRARIES - Automated tape libraries are devices capable of managing
     multiple data cartridges and incorporate two or more tape drives to provide
     unattended backup of large quantities of data. Overland currently offers
     the following library products:

     -    SCALABLE LIBRARYXPRESS - a library system based upon three unique
          modules that can be rack-mounted up to nine modules high and
          configured to meet a customer's individual needs. The LXB base module
          is a library with one or two DLT 4000, 7000 or 8000 drives and a
          10-cartridge magazine. The LXG global control module provides an
          additional 16-cartridge magazine and represents the single point of
          control for the entire library system. The LXC capacity module
          consists of a 16-cartridge magazine and no drives. Overland's
          SmartScale Storage Architecture enables users to rack mount LXB, LXG
          and LXC modules, and links them together with the Company's unique
          integrated XpressChannel. The library then has the ability to pass
          cartridges from module to module as one integrated unit and provides
          true scalability so that end-users can start with a single LXB module
          and later expand their storage capacity to meet their growing business
          needs while protecting their original LXB module investment.

     -    ENTERPRISEXPRESS - two separate expandable library systems for
          larger customers based upon the LibraryXpress modules. The 4-module
          system can accommodate two to six DLT 7000 or 8000 drives and 26 to 58
          cartridges. The 7-module system can accommodate four to ten drives and
          52 to 100 cartridges.

     -    AIT LIBRARYPRO - a desktop or rack-mountable library with one or two
          AIT-1 or AIT-2 drives and a 19-cartridge magazine plus one mail slot.
          The LibraryPro follows Overland's expandable library concept and
          SmartScale design and can be rack-mounted and scaled up to nine units
          high to comprise an integrated library system with up to 18 drives and
          171 cartridges.

     -    LIBRARYXPRESS - a desktop or rack-mountable library with one or two
          DLT 4000, 7000 or 8000 drives and a 10-cartridge
          magazine. The LibraryXpress base module or LXB can be incorporated
          into a scalable system as noted above.

     -    MINILIBRARYXPRESS - a desktop or rack-mountable library with one or
          two DLT 4000, 7000 or 8000 drives and a 15-cartridge magazine.

-    LOADERS - Automated tape loaders are devices capable of managing multiple
     data cartridges and incorporate a single tape drive to provide unattended
     backup of data. Overland currently offers the following loader products:

     -    LOADERXPRESS - a single-drive automated desktop solution with a DLT
          4000 drive and a 5 or 10-cartridge magazine or a DLT 7000, 8000 or
          DLT1 drive and a 10-cartridge magazine.

     -    SLR LOADER - a single-drive automated desktop solution with an SLR
          24, 50 or 100 drive and an 8-cartridge magazine. This product is
          sold only on an OEM basis to Tandberg Data ASA.

-    DRIVES - These desktop or internal upgrade tape drives accommodate a
     single data cartridge. Overland currently offers the following tape drives:

     -    DLTTAPE - a DLT 4000, 7000 or 8000 drive supplied by Quantum.

     -    DLT1 - a DLT1 drive supplied by Benchmark Electronics, Inc.

     -    WANGDAT - a DDS-2, DDS-3 or DDS-4 drive supplied by Seagate.

     -    TRAVAN - an NS8, NS20 or EDT20 drive.

-    TAPEXPRESS - The TapeXpress is a desktop T490E drive or a single-drive,
     10-cartridge L490E loader based on IBM's legacy 3480/3490/3490E
     technologies. These products are used extensively on AS400 and RS6000
     minicomputers, and were the first products in the marketplace that could
     read and write in both 18 and 36-track formats.

-    OTHER PRODUCTS AND SERVICES- The Company has a variety of products and
     services supporting its tape drives, libraries and loaders. Overland
     currently offers the following additional products and services:

     -    Spares and post warranty return-to-factory and on-site service.


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     -    Media including tape cartridges for DLT, AIT, DLT1, WangDat, Travan
          and 36-track formats.

     -    SANPIPER - desktop and rack-mountable SCSI-to-Fibre Channel bridges
          to bring the benefits of SAN technology to users of Overland's
          automated libraries and loaders, including the Company's DLT-based
          LibraryXpress, MiniLibraryXpress, LoaderXpress, EnterpriseXpress and
          AIT LibraryPro. SANPiper is offered in two models with support for
          single-ended and differential SCSI and copper, short and long-wave
          Fibre Channel interfaces: the Model 400 provides one or two Fibre
          Channel ports and two SCSI connections and the Model 1000 features a
          maximum configuration of six Fibre Channel connections and four SCSI
          ports.

     -    WEB TLC (Total Library Control) - the first platform-independent
          solution built around a thin web server that allows a central
          administrator to remotely configure, monitor, diagnose and control
          any of Overland's automated tape storage solutions from anywhere in
          the world via a standard web browser.

-    VR(2) (Variable Rate Randomizer) - VR(2) is Overland's patented data
     encoding technology based on Partial Response Maximum Likelihood
     ("PRML"). This technology, which can be embedded in an Applications
     Specific Integrated Circuit ("ASIC") chip, is capable of doubling the
     native capacity and native data transfer rate performance of existing
     linear tape technologies without requiring any changes in tape path
     design, recording heads, and/or media. This performance is accomplished
     by achieving encoding efficiency of greater than 99%. The Company has
     licensed VR(2) to Tandberg Data ASA for use in its Scalable Linear
     Recording ("SLR") tape drives, to Imation Corporation for use in Travan
     NS tape drives and to Seagate for use in its future tape drive
     offerings. In July 2000, the Company licensed VR(2) to Storage
     Technology Corporation ("StorageTek-TM-") for use in its 9840 Eagle
     drives and future tape drive products. The Company also plans to license
     VR(2) to other customers.

         The Company's drives, loaders and libraries are installed on
specific computer platforms with the appropriate backup, data interchange or
storage management software. Overland actively works with a number of backup
and storage management software companies to confirm that its products are
properly supported. Currently, more than 80 different software packages
support the Company's products. For example, on the Novell NetWare and
Microsoft Windows NT platforms, the software packages include products from
Computer Associates International, Inc., Veritas Software Corporation, Legato
Systems Incorporated ("Legato Systems"), and Dantz Development Corp. On UNIX
platforms, the software packages include products from Legato Systems,
IBM/Tivoli, Hewlett Packard Company and Veritas Software Corporation. On
Linux platforms, software packages supported include Knox Software and
BakBone Software, Inc.

SALES AND MARKETING

         The Company sells its products primarily through three channels: (i)
OEMs; (ii) commercial distributors; and (iii) volume, consisting of systems
integrators, technical distributors and value added resellers ("VARs").
Overland's products are sold both domestically and internationally. Regardless
of the channel through which they are sold, all of Overland's products are
designed and manufactured to meet OEM level requirements and reliability
standards. Because the OEM qualification process can take 6 to 18 months to
complete, the Company's often makes initial sales of new products to non-OEM
customers that typically evaluate, integrate and adopt new technologies and
products more quickly. After qualification and acceptance, OEM sales generally
represent an increasing proportion of a product's unit sales and are important
to the Company in terms of validating its products in the marketplace and
achieving desirable production volume.

-    OEM CHANNEL - The Company currently has supply agreements with Compaq
     Computer Corporation ("Compaq"), International Business Machines ("IBM"),
     Siemens Nixdorf Informationssysteme AG, Groupe Bull S.A., Intergraph
     Corporation, NCR Corporation and Symbios Logic, Inc., all of which
     incorporate Overland's products into their system offerings. Prior to its
     acquisition by Compaq, Digital Equipment Corporation ("DEC") had been an
     OEM customer of the Company since 1993. In June 1999, Compaq selected
     Overland as an OEM supplier for DLT automated storage products, supporting
     the leading Compaq ProLiant server line; and in June 2000, Compaq added the
     Company's AIT LibraryPro. Overland often works with its OEM customers early
     in a new product development cycle to design its products to meet their
     specifications. The OEM sales cycle is often lengthy and typically consists
     of a general technology evaluation, qualification of product
     specifications, verification of product performance against these
     specifications, integration testing of the product within the customers'
     systems, product announcement and volume shipment. As is typical in the
     industry, the Company's OEM contracts provide for annual price reviews and
     the customers are not required to purchase minimum quantities. Compaq
     (including DEC) has been the Company's largest customer, accounting for
     approximately 54%, 25% and 25% of sales in fiscal years 2000, 1999 and
     1998, respectively. Shipments to IBM, which became a customer during fiscal
     year 1997, accounted for 8%, 20% and 15% of sales in fiscal years 2000,
     1999 and

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     1998, respectively. No other customer accounted for more than 10%
     of sales in any year during the three-year period. The Company supports
     this channel through a field sales office and other field representatives.

-    COMMERCIAL DISTRIBUTION CHANNEL - In April 1998, the Company entered the
     commercial distribution channel when it signed distribution agreements with
     Bell Microproducts and Tech Data Corporation. In July 1999, the Company
     signed a distribution agreement with Ingram Micro, Inc. These distributors
     sell the Company's DLT LibraryXpress and AIT LibraryPro products to
     resellers nationwide. Tech Data is the preferred master distributor for
     Overland in Latin America. The agreements include provisions for stock
     rotation and price protection, common terms in the commercial distribution
     area. To reduce exposure for returned product or price adjustments, the
     Company does not record revenue in this channel until the distributor sells
     the related inventory.

-    VOLUME CHANNEL - The Company's volume channel includes systems integrators,
     technical distributors and VARs, each of which sells to both resellers and
     end-users. Some of the Company's volume channel customers specialize in the
     insurance, banking, financial, geophysical or medical industries, and offer
     a variety of value-added services relating to the Company's products.
     Overland's products frequently are packaged by these customers as part of a
     complete data processing system or combined with other storage devices,
     such as redundant array of independent disks (RAID) systems, to deliver a
     complete storage subsystem. These customers also recommend the Company's
     products as replacement solutions when backup systems are upgraded, and
     bundle its products with storage management software specific to the
     end-user's system. The Company supports this channel through a field sales
     office and other field representatives.

-    INTERNATIONAL BUSINESS - The Company has wholly-owned subsidiaries located
     in Wokingham, England, Paris, France and Munich, Germany. The subsidiary in
     England provides sales, technical support, repair and manufacturing
     integration for the European marketplace, while the subsidiaries in France
     and Germany provide sales and technical support. The Company assigns to its
     international distributors the right to sell Overland's products in a
     country or group of countries. These distributors then sell the Company's
     products to systems integrators, VARs and end-users. In addition, many
     domestic customers ship a portion of the Company's products to their
     overseas customers. Sales personnel are located in various cities
     throughout Europe, while sales personnel located in the Company's corporate
     offices serve the Pacific Rim, South America, Australia, New Zealand and
     Mexico. Foreign sales by the Company, predominantly in Europe, for fiscal
     years 2000, 1999 and 1998 were approximately $23.5 million, $25.8 million
     and $20.2 million, respectively.

         Overland supports its sales efforts with various marketing programs
designed to build its brand name and attract new customers. Its channel
partners are provided with a full range of marketing materials, including
product specification literature, software connectivity information and
application notes. The Company's sale management and engineering personnel
provide support to the channel partners and, in certain instances, visit
potential customer sites to explain and demonstrate the technical advantages
of the Company's products. In addition, the Company holds two conferences
each year to inform its channel partners of new product developments and
programs and to discuss emerging trends in their markets. The Company also
maintains press relations both domestically and in Europe, advertises in
computer systems publications targeted to its endusers and channel partners,
and offers market development funds to its channel partners. Overland
participates in national and regional trade shows both domestically and
internationally, including displaying its products at the CeBIT show in
Germany and domestically at NetWorld+Interop, PC Expo and at a
private suite in conjunction with Comdex. The Company also maintains a
website (http://www.overlanddata.com) that features marketing information,
product specifications, news releases and application, service and technical
support notes and investor relations information.

CUSTOMER SERVICE AND SUPPORT

         Overland's technical support personnel are trained with respect to
the Company's products and assist customers with "plug-and-play"
compatibility between multiple hardware platforms, operating systems and
backup, data interchange and storage management software. The Company's
application engineers are available to solve more complex customer problems
and visit customer sites when necessary. Customers that need service and
support can contact the Company through its toll-free telephone lines,
facsimile and Internet e-mail. Application notes and user manuals can be
obtained directly from the Company's website at www.overlanddata.com.

         The Company's standard warranty is a three-year (two years for
non-LibraryXpress products) return-to-factory policy that covers both parts
and labor. For products that it distributes and for drives and tapes used in
its products that are manufactured by a third party, the Company passes on to
the customer the warranty provided by the manufacturer. The Company also
offers two year on-site service for many of its scalable LibraryXpress
products, including 24-hour service,

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seven days a week, for which it contracts with third-party service providers.
The Company offers the XchangeNOW program on its minilibraries and loaders,
enabling customers to receive a replacement unit free of charge within one to
two business days after placing a service request. Overland offers this
warranty service during the 3-year return-to-factory warranty period.

         In addition, the Company has instituted the Guaranteed Up Time
Service (GUTS-TM-) program for its LibraryXpress products. The guarantee has
two features: (1) the end-user customer receives an additional year of return
to factory warranty if the customer experiences more than 1% down-time during
any one year period, and (2) a guarantee that all data written to tape using
a covered Overland product will be recoverable or the customer can return the
product for a full refund.

RESEARCH AND DEVELOPMENT

         The Company currently employs 58 people in its research and
development ("R&D") department who have extensive experience in the tape
industry, including 13 engineers located at the Company's Longmont, Colorado
facility. Many of these engineers are former employees of tape drive
companies such as Cipher Data Products ("Cipher"), Archive Corporation,
Conner Peripherals, Inc. and Tecmar. They have developed significant
expertise in electrical, mechanical and firmware design. Martin D. Gray, the
Company's co-founder, Vice President and Chief Technical Officer, formerly
served as Manager of R&D at Cipher, has over 26 years of experience in the
tape industry, is the inventor of numerous tape patents and leads the
Company's R&D efforts to develop new technologies.

         The Company's R&D department is capable of developing both tape
drives and robotic mechanisms, including the development of various aspects
of data channels, data compression, intelligent interfaces and firmware
(embedded systems software). This department also has the ability to develop
and test a tape path, the core of any tape technology. Overland believes that
these capabilities distinguish it from its competitors by providing it with a
better understanding of tape technologies in general and enabling it to
provide higher value-added content by designing reliable products that better
utilize the advantages of specific technologies.

         Current R&D efforts focus on various ways of implementing the
Company's VR(2) tape encoding technology. Other projects include the
development of next generation automated tape libraries, modification of
existing storage solutions to accommodate new tape technologies, development
of next generation entry-level tape drives and storage automation solutions,
and new software and hardware solutions. The Company's R&D expenditures
amounted to $7.3 million, $5.4 million and $4.1 million in fiscal years 2000,
1999 and 1998, respectively, representing 5.9%, 5.8% and 5.5% of net sales,
respectively. Despite its R&D focus, the Company may not identify, develop,
manufacture, market or support new or enhanced products successfully or on a
timely basis and any new products may not gain market acceptance.

MANUFACTURING

         The Company has a fully integrated factory in San Diego, California.
Major OEM customers have certified all of its production lines and
manufacturing processes. Overland performs product assembly, integration and
testing, while leaving component and piece-part manufacturing to its supplier
partners. The Company works closely with a group of regional, national and
international suppliers, which are carefully selected based on their ability
to provide quality parts and components that meet the Company's
specifications, as well as meet present and future volume requirements. Key
suppliers are under contract to provide just-in-time deliveries. The Company
specifically designs a number of its parts and components that are not
available off the shelf for integration into its products. The Company
maintains a minimum number of suppliers and utilizes their specific
capabilities across several product lines.

         In general, product is not manufactured until an order is received.
The typical lead-time for manufacturing products is 3 days. The Company's
largest OEM customer, Compaq, provides weekly forecast information that
allows Overland to closely manage both raw material and finished goods
inventories. As part of its agreement with Compaq, the Company ships products
to various distribution hubs around the world and retains ownership of that
inventory until it is pulled by Compaq to fulfill customer orders, at which
time Overland records a sale. As a result, backlog is not a significant
factor to Overland's business.

         In April 2000, the Company relocated its UK subsidiary to a new,
larger facility, which the Company believes should accommodate its European
sales growth for the next five years. The lease on its San Diego headquarters
facility is due to expire in approximately 24 months, and the Company is
currently making plans to move to a larger and more appropriately configured
space in the same general area within San Diego. In its current facility, the
Company believes that it has the

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capacity to support unit production levels several times greater than its
current run rate, but has an immediate need for additional off-site storage
to house increased finished goods inventory levels. Subsequent to June 30,
2000, the Company leased an additional warehouse facility located in San
Diego to accommodate this need.

         During fiscal year 2000, the Company expanded its traditional single
shift operation by adding a partial second shift to handle greater production
levels, and could expand further by adding to the second shift or moving to a
full-time factory. Staffing levels are carefully controlled and adjusted to
meet the requirements at any specific time.

PROPRIETARY RIGHTS

         GENERAL - The Company believes that, because of the rapid pace of
technological change in the tape storage industry, patent, copyright,
trademark and trade secret protection are less significant than factors such
as the knowledge, ability and experience of the Company's personnel, new
product introductions and product enhancements. Despite these factors, the
Company still relies on a combination of patent, copyright, trademark and
trade secret protection, non-disclosure agreements and licensing arrangements
to establish and protect its proprietary rights. These rights, however, may
not prevent competitors from developing substantially equivalent or superior
products to those of the Company. In addition, there can be no assurance that
any patents held by, or that may be issued to, the Company will not be
challenged, invalidated or circumvented, or that any rights granted would
provide proprietary protection to the Company.

         VR(2) TECHNOLOGY - The Company has entered into various intellectual
property licensing agreements relating to its VR(2) technology. These
agreements typically call for an initial payment to Overland for the delivery
of the VR(2) technology platform and royalty fees based on sales by licensees
of products containing VR(2). In certain instances, Overland may elect to
sell to the licensee ASIC chips embodying VR(2) priced to include the cost of
the chip plus an embedded royalty fee.

         IBM LICENSE - The Company entered into a five-year cross-license
agreement with IBM, effective January 1, 1996. Pursuant to the terms of the
agreement, the Company may use any of the patents owned by IBM within certain
designated areas of technology, and IBM may use any of the patents of the
Company that were in existence at the effective date of the agreement or
which are issued during the term of the agreement. In consideration for this
agreement, the Company is required to pay royalty fees to IBM in an amount
equal to 2.7% of worldwide revenues generated from the Company's 18 and
36-track product sales, exclusive of those sold to IBM.

EMPLOYEES

         The Company had 334 employees as of June 30, 2000, including 74 in
sales and marketing, 58 in research and development, 152 in manufacturing and
operations and 50 in finance, information systems, human resources and other
management. There are no collective bargaining contracts covering any of the
Company's employees and management believes that its relationship with its
employees is good.


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                                  RISK FACTORS

         AN INVESTMENT IN THE COMPANY'S COMMON STOCK INVOLVES A HIGH DEGREE
OF RISK. THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS, THE ACCURACY OF
WHICH IS SUBJECT TO MANY RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL
RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING RISK FACTORS, WHICH SHOULD BE
CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS BUSINESS.

RAPID TECHNOLOGICAL CHANGE AND DEPENDENCE ON NEW PRODUCT DEVELOPMENT

         The market for the Company's products is generally characterized by
rapid technological change and evolving industry standards and is highly
competitive with respect to timely innovation. The future success of the
Company will depend on its ability to anticipate changes in technology, to
develop new and enhanced products on a timely and cost-effective basis and to
introduce, manufacture and achieve market acceptance of these new and
enhanced products. In particular, the Company's future success will likely
depend on the development of a next generation product to succeed its
LibraryXpress product line. LibraryXpress is facing increasing competition
from automated tape library products, and likely will face competition from
other storage devices that may be developed in the future. Development
schedules for high technology products are inherently subject to uncertainty
and there can be no assurance that the Company will be able to meet its
product development schedules, including those for products based on its new
VR(2) tape coding technique (both by the Company and its licensees), or that
development costs will be within budgeted amounts. If the products or product
enhancements that the Company develops are not deliverable due to
developmental problems, quality issues or component shortage problems, or if
such products or product enhancements do not achieve market acceptance or are
unreliable, the Company's business, financial condition and results of
operations may be materially and adversely affected. The introduction
(whether by the Company or its competitors) of new products embodying new
technologies such as new sequential or random access mass storage devices and
the emergence of new industry standards could render existing products
obsolete or not marketable.

COMPETITION AND PRICE PRESSURE

         The worldwide tape storage market is intensely competitive as a
large number of manufacturers of alternative tape technologies and library
systems compete for a limited number of customers. In addition, barriers to
entry are relatively low in the market for library systems. The Company
currently participates in four segments of the tape backup market: (1)
enterprise-level applications, (2) mid-sized applications for workgroups,
departments and small enterprises, (3) the small business/branch office
market for low-cost servers and (4) interchange based on IBM compatible
3480/3490 technology. In all of these areas, many of the Company's
competitors have substantially greater financial and other resources, larger
research and development staffs, and more experience and capabilities in
manufacturing, marketing and distributing products than the Company. In the
enterprise and mid-range markets, the Company's products currently compete
with products made by Advanced Digital Information Corporation, the DLT &
Storage Systems group of Quantum, Hewlett-Packard Company, Exabyte
Corporation, Qualstar Corporation, StorageTek and Breece Hill Technologies,
Inc. In the small business/branch office market, the Company's products
currently compete with products made by Hewlett-Packard, Seagate and Sony.
For the market based on IBM compatible 3480/3490 technology, the Company's
products compete primarily with products made by Fujitsu Computer Products of
America, Inc., Hitachi Data Systems Corporation, Plasmon Laser Magnetic
Storage (LMS), a division of Plasmon, Plc., Qualstar and StorageTek. The
markets for the Company's products are characterized by significant price
competition, and the Company anticipates that its products will face
increasing price pressure. This pressure could result in significant price
erosion, reduced profit margins and loss of market share, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.

DEPENDENCE ON CERTAIN CUSTOMERS

         The Company's revenues are highly dependent upon the level of sales
to certain major OEM customers. The Company's largest customer, Compaq
(including DEC), accounted for approximately 54%, 25% and 25% of sales in
fiscal years 2000, 1999 and 1998, respectively. Shipments to IBM, who became
a customer during fiscal year 1997, accounted for 8%, 20% and 15% of sales in
fiscal years 2000, 1999 and 1998, respectively. No other customer accounted
for more than 10% of sales in any year during the three-year period. No
customer is presently obligated to purchase a specific amount of products or
provide binding forecasts of purchases for any period.

                                      8
<PAGE>


         The Company expects that Compaq will continue to represent a
significant portion of the Company's revenues in future periods.
Consequently, the Company's future operating results would be materially
adversely impacted by the loss of the Compaq account, or the reduction, delay
or cancellation of Compaq orders.

DEPENDENCE ON CERTAIN SUPPLIERS

         The Company's products have a large number of components and
subassemblies produced by outside suppliers. Accordingly, Overland is highly
dependent on these suppliers for tape drives, read-write heads, printed
circuit boards and integrated circuits, which are essential to the
manufacture of the Company's products. In addition, for certain of these
items, the Company qualifies only a single source, which can magnify the risk
of shortages and decrease the Company's ability to negotiate with its
suppliers on the basis of price. If such shortages occur, or if the Company
experiences quality problems with suppliers, shipments of products could be
significantly delayed or costs significantly increased, which would have a
material adverse effect on the Company's business, financial condition and
results of operations. Specifically, a large portion of the Company's
products incorporate DLTtape drives manufactured by Quantum, which is also a
competitor of the Company because Quantum markets its own tape drives and
tape automation products. Although Quantum has licensed Tandberg Data to be a
second source manufacturer of DLTtape drives, Overland has not qualified
Tandberg as its alternative supplier. The Company does not have a long-term
contract with Quantum, which could cease supplying DLTtape drives directly to
the Company. From time to time in the past, the Company has not been able to
obtain as many drives as it has needed from Quantum due to drive shortages or
quality issues. Any prolonged inability to obtain adequate deliveries could
require the Company to pay more for components, parts and other supplies,
seek alternative sources of supply, delay shipment of products and damage
relationships with current and prospective customers. Any such delay or
damage could have a material adverse effect on the Company's business,
financial condition and results of operations. In the past, the Company
experienced problems with the supply of a newly introduced DLTtape drive and
such problems adversely affected the Company's sales and earnings. No
assurance can be given that such problems will not re-occur, or that the
Company will not experience similar or more serious disruptions in supply in
the future with current versions of DLT drives, the new SDLT drive or any
future DLT drive version.

FLUCTUATION IN RESULTS

         The Company's results can fluctuate substantially from time to time
for various reasons. All of the markets served by the Company are volatile
and subject to market shifts, which may or may not be discernible in advance
by the Company. A slowdown in the demand for workstations, mid-range computer
systems, networks and servers could have a significant adverse effect on the
demand for the Company's products in any given period. The Company has
experienced delays in receipt of purchase orders and, on occasion,
anticipated purchase orders have been rescheduled or have not materialized
due to changes in customer requirements. The Company's customers may cancel
or delay purchase orders for a variety of reasons, including the rescheduling
of new product introductions, changes in their inventory practices or
forecasted demand, general economic conditions affecting the computer market,
changes in pricing by the Company and its competitors, new product
announcements by the Company or others, quality or reliability problems
related to the Company's products or selection of competitive products as
alternate sources of supply.

         In addition, because a portion of the Company's sales are generated
by its European channel, the first fiscal quarter (July through September) is
commonly impacted by seasonally slow European orders, reflecting the summer
holiday period in Europe. The Company's operations may reflect substantial
fluctuations from period to period as a consequence of such industry shifts,
price erosion, general economic conditions affecting the timing of orders
from customers, the supply of tape drives, as well as other factors discussed
herein. In particular, the Company's ability to forecast sales to
distributors, integrators and VARs is especially limited as such customers
typically provide the Company with relatively short order lead times or are
permitted to change orders on short notice.

         Portions of the Company's expenses are fixed and difficult to reduce
should revenues not meet the Company's expectations, thus magnifying the
material adverse effect of any revenue shortfall. The Company's gross profit
has fluctuated and will continue to fluctuate quarterly and annually based
upon a variety of factors such as:

         -        Changes in customer mix (e.g., OEM vs. branded)
         -        The level of utilization of the Company's production capacity
         -        Changes in product mix
         -        Average selling prices

                                      9
<PAGE>


         -        Manufacturing yields
         -        Increases in production and engineering costs associated with
                  initial production of new products
         -        Changes in the cost of or limitations on availability of
                  materials
         -        Labor shortages

         Generally, new products have higher gross margins than more mature
products. Therefore, the Company's ability to introduce new products in a
timely fashion is an important factor to its profitability. Based upon all of
the foregoing, the Company believes that period-to-period comparisons of its
revenues and operating results will continue to fluctuate and are not
necessarily meaningful and should not be relied on as indications of future
performance. Furthermore, in some future quarter, the Company's revenues and
operating results could be below the expectations of public market analysts
or investors, which could result in a material adverse effect on the price of
the Common Stock.

INTERNATIONAL OPERATIONS

         Direct international sales accounted for 19%, 28% and 27% of sales
in fiscal years 2000, 1999 and 1998, respectively. Sales to customers outside
the U.S. are subject to various risks, including:

         -        The imposition of governmental controls mandating compliance
                  with various foreign and U.S. export laws
         -        Political and economic instability
         -        Trade restrictions
         -        Changes in tariffs and taxes
         -        Longer payment cycles (typically associated with international
                  sales)
         -        Greater difficulty of administering business overseas

         Furthermore, there can be no assurance that the Company will be able
to comply with changes in foreign standards in the future, even though the
Company endeavors to meet standards established by foreign regulatory bodies.
The inability of the Company to design products that comply with foreign
standards could have a material adverse effect on the Company's business,
financial condition and results of operations. Currently, 100% of the
Company's international sales are denominated in U.S. Dollars and
fluctuations in the value of foreign currencies relative to the U.S. Dollar
could, therefore, make the Company's products less price competitive.
Additionally, the expenses of the Company's international subsidiaries are
denominated in their local currencies. The Company currently does not engage
in foreign currency hedging transactions, and is therefore exposed to some
level of currency risk.

DEPENDENCE ON KEY EMPLOYEES

         The Company's future success depends in large part on its ability to
retain its key executives and other key personnel, many of whom have been
instrumental in developing new technologies and setting strategic plans. The
Company's growth also will depend in large part on its continuing ability to
hire, motivate and retain highly qualified management, technical, sales and
marketing team members. Competition for such personnel is intense and there
can be no assurance that the Company will retain existing personnel or
attract additional qualified personnel in the future.

TECHNOLOGY AND INTELLECTUAL PROPERTY

         The Company's ability to compete effectively depends in part on its
ability to develop and maintain proprietary aspects of its technology. There
can be no assurance that any future patents will be granted or that any
patents will be valid or provide meaningful protection for the Company's
product innovations. In addition, the laws of certain foreign countries may
not protect the Company's intellectual property to the same extent as U.S.
laws. Furthermore, competitors may independently develop similar products,
duplicate the Company's products or, if patents are issued to the Company,
design around the patents issued to the Company. The Company also relies on a
combination of copyright, trademark, trade secret and other intellectual
property laws to protect its proprietary rights. These rights, however, may
not prevent competitors from developing substantially equivalent or superior
products to those of the Company's. With the exception of a lawsuit, which
management believes is not material, related to Overland's use of its "GUTS"
and "Guaranteed Up Time Service" trademarks, the Company is not engaged in
any intellectual property litigation or proceedings. There can be no
assurance that the Company will not become involved in other such litigation
in the future or that its products or other trademarks do not infringe any
intellectual property or other proprietary right of any third party. An
adverse outcome in litigation or similar proceedings could subject the
Company to significant liabilities to third parties, require disputed rights
to be licensed from

                                     10
<PAGE>

others or require the Company to cease marketing or using certain products,
any of which could have a material adverse effect on the Company's business,
financial condition and results of operations.

RISKS ASSOCIATED WITH POSSIBLE MERGERS AND ACQUISITIONS

         In the future, the Company may pursue mergers and acquisitions of
complementary businesses, products or technologies as it seeks to expand and
increase the value-added component of its product offerings. Mergers and
acquisitions involve numerous risks, including difficulties in the
assimilation of the operations and personnel of the acquired business, the
diversion of management's attention from other business concerns, risks of
entering markets in which the Company has no direct prior experience, and the
potential loss of key employees of the acquired business.

         An example of such risks are the operating losses and the one-time
$1.7 million pre-tax write-off recorded in the fourth quarter of fiscal year
2000 related to the rapid decline and eventual discontinuance of the Ditto
product line, which was included as part of the Company's acquisition of
certain assets from Tecmar in February 2000. Future mergers and acquisitions
by the Company may also result in dilutive issuances of equity securities and
the incurrence of additional debt and amortization expenses related to
goodwill and other intangible assets, which could adversely affect the
Company's business, financial condition and results of operations.

WARRANTY EXPOSURE

         The Company generally provides three-year (two years for
non-LibraryXpress products), return-to-factory warranty on its products. For
certain products, it provides or offers for sale a two-year on-site warranty,
which is supplied by a third party service provider. The Company pays the
negotiated price of the contract to the service provider in advance and the
service provider is then responsible for the costs of providing warranty
service during the term of the contract. For products which the Company
distributes and for tape drives used in the Company's products but
manufactured by a third party, the Company passes on to the customer the
related manufacturer's warranty. Although the Company has established
reserves for the estimated liability associated with product warranties,
there can be no assurance that such reserves will be adequate or that the
Company will not incur substantial warranty expenses in the future with
respect to new or established products.

LIMITED TRADING HISTORY; POSSIBLE VOLATILITY OF STOCK PRICE

         The market price of the Common Stock has experienced significant
fluctuations since it commenced trading in February 1997. There can be no
assurance that the market price of the Common Stock will not fluctuate
significantly in the future. Many factors could cause the market price of the
Common Stock to fluctuate substantially, including; announcements concerning the
Company or its competitors, quarterly variations in operating results, the
introduction of new technology or products, changes in product pricing policies
by the Company or its competitors, changes in earnings estimates by analysts and
the purchasing decisions of our significant customers. In addition, stock
markets have experienced extreme price and volume volatility in recent years.
This volatility has had a substantial effect on the market prices of securities
of many smaller public companies for reasons frequently unrelated or
disproportionate to the operating performance of the specific companies. These
broad market fluctuations may adversely affect the market price of the Common
Stock.

ITEM 2.  PROPERTIES

         The Company leases all facilities used in its business. Its
headquarters are located in San Diego, California in a 3-building light
industrial complex comprising approximately 121,000 square feet. The lease
expires in August 2002. This San Diego facility houses all of the Company's
research and development and administrative functions as well as a major
portion of manufacturing, sales, sales administration, marketing and customer
support. The Company is currently making plans to move to a larger and more
appropriately configured space towards the end of the lease term. In its
current facility, the Company believes that it has the capacity to support
unit production levels several times greater than its current run rate, but
has an immediate need for additional off-site storage to house increased
finished goods inventory levels. Subsequent to June 30, 2000, the Company
leased an additional 22,000 square foot warehouse facility located in San
Diego to accommodate this need. The lease on this facility expires in
February 2002.

           The Company recently entered into a lease on a new 17,000 square
foot facility located in Wokingham, England, which houses sales, technical
support, repair and manufacturing integration for the European marketplace.
The lease expires in January 2018. The Company also maintains small sales
offices located close to Paris, France and Munich, Germany.

                                     11
<PAGE>


         The lease on the facility that houses Tecmar, Inc., located in
Longmont, Colorado expires in December 2000. The Company has identified an
alternative site and is currently negotiating the terms of a new lease. The
Company also leases two other small facilities located in Longmont, Colorado
and in Nashua, New Hampshire for the development of R&D prototypes and an OEM
sales office, respectively.

ITEM 3.  LEGAL PROCEEDINGS

         The Company, its directors and certain of its officers were named as
defendants in two class action lawsuits filed on April 21, 1997 and May 2,
1997 in the U.S. District Court for the Southern District of California. In
both cases, the plaintiffs purported to represent a class of all persons who
purchased the Company's Common Stock between February 21, 1997 and March 14,
1997. The complaints alleged that the defendants violated various federal
securities laws through material misrepresentation and omissions in
connection with the Company's initial public offering and its Registration
Statement on Form S-1, which the Securities and Exchange Commission declared
effective on February 21, 1997. On November 23, 1999, the defendants entered
into a Stipulation of Settlement for this litigation, and on March 6, 2000,
the Court approved the settlement. In accordance with the settlement, the
litigation was dismissed with prejudice.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None


<PAGE>


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

         The Company's Common Stock trades on the Nasdaq National Market
under the symbol "OVRL". As of September 22, 2000, there were approximately
123 shareholders of record. The Company has not paid any dividends on its
Common Stock and does not anticipate paying any dividends in the foreseeable
future. The high and low closing prices of Overland Data Common Stock from
July 1, 1998 through June 30, 2000 were as follows:

<TABLE>
<CAPTION>

                                          High                  Low
                                          ----                  ---
              <S>                        <C>                <C>
              Fiscal 2000:
                 First quarter           $ 7.47             $  5.19
                 Second quarter            9.00                4.75
                 Third quarter            16.69                7.50
                 Fourth quarter           15.00                7.56

              Fiscal 1999:
                 First quarter           $ 5.38             $  3.75
                 Second quarter            7.13                3.50
                 Third quarter            10.88                6.13
                 Fourth quarter            9.00                5.88

</TABLE>


                                      13
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

         The following selected financial data has been derived from the
Company's audited consolidated financial statements and the notes thereto.
This information should be read in conjunction with Item 7 of this Report
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and with the Company's consolidated financial statements and the
related notes thereto set forth at the pages indicated in Item 14(a)(1).

<TABLE>
<CAPTION>

                                                                  At or for Years Ended June 30,
                                          --------------------------------------------------------------------------------------
                                              2000              1999              1998               1997               1996
                                          ------------     ------------     -------------       ------------        ------------
                                                             (in thousands, except for per share data)

<S>                                        <C>               <C>              <C>              <C>                <C>
INCOME STATEMENT DATA
Net revenue................................  $122,979         $92,227          $75,164            $59,146            $ 47,226
Gross profit...............................    30,519          27,891           23,199             20,371              16,081
Income from operations.....................     2,811           5,614            3,640              4,736               3,541
Income before income taxes.................     3,416           6,581            4,543              4,987               3,413
Net income.................................     2,067           3,982            2,792              3,100               3,159 (1)
Net income per share (2):
    Basic..................................      0.20            0.39             0.27               0.44                0.71
    Diluted................................      0.19            0.37             0.25               0.33                0.41

BALANCE SHEET DATA
Cash and cash equivalents..................  $ 15,774         $16,199          $15,550            $18,926            $     19
Working capital............................    43,257          40,981           39,498             36,733              10,307
Total assets...............................    71,383          56,230           53,996             48,260              19,771
Long-term debt,
  net of current portion...................         -               -                -                  -               1,500
Convertible redeemable
  preferred stock..........................         -               -                -                  -               5,200
Shareholders' equity.......................    47,497          44,807           43,368             40,317               5,858
</TABLE>

-----------------
(1)  The Company's effective tax rate for the year ended June 30, 1996 was
     affected by a one-time tax valuation allowance adjustment, which reduced
     income tax expense and correspondingly increased net income by $997,000, or
     $.13 per share. Without this adjustment, for the year ended June 30, 1996
     net income and net income per share would have been $2,162,000 and $.28,
     respectively.

(2)  See Note 1 of Notes to Consolidated Financial Statements for an explanation
     of shares used in computing net income per share.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

         THIS REPORT CONTAINS CERTAIN STATEMENTS OF A FORWARD-LOOKING NATURE
RELATING TO FUTURE EVENTS OR THE FUTURE PERFORMANCE OF THE COMPANY.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT SUCH STATEMENTS ARE ONLY PREDICTIONS
AND THAT ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. IN EVALUATING SUCH
STATEMENTS, PROSPECTIVE INVESTORS SHOULD SPECIFICALLY CONSIDER VARIOUS
FACTORS IDENTIFIED IN THIS REPORT, INCLUDING THE MATTERS SET FORTH UNDER THE
CAPTION "RISK FACTORS," WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

GENERAL

         Overland Data designs, develops, manufactures, markets and supports
magnetic tape data storage systems and tape drives used by businesses for
backup, archival and data interchange functions in environments from small
businesses to large enterprises requiring high-availability networks. The
Company's primary products are automated tape libraries, minilibraries and
loaders, which combine electromechanical robotics, electronic hardware and
firmware developed by the Company. Its products are based on a number of
different tape technologies including DLTtape, AIT, DLT1, SLR, IBM compatible


                                      14
<PAGE>


3480/3490/3490E, Travan and DAT. The Travan and DAT products were acquired as
part of the acquisition of Tecmar assets in February 2000, and the Company is
currently introducing a next-generation Travan-based product aimed at
capturing a share of the entry-level server tape backup market. A third
product family called Ditto also was included in the Tecmar asset purchase.
However, deteriorating sales led to the discontinuance and one-time $1.7
million pre-tax writeoff of the Ditto line in June 2000. See "Business."

         During the three year period ended June 30, 2000, the Company
experienced a significant shift in the composition of its product mix. Before
that period, more than 50% of the Company's sales were derived from products
based on IBM compatible 3480/3490/3490E technologies and less than 30% of its
sales were based on DLT products. By June 30, 2000, IBM compatible products
have become "legacy" products and declined significantly to approximately 10%
of the Company's fiscal year 2000 sales. Conversely, sales of DLT-based
products now represent approximately 80% of the Company's revenues. This
change is primarily the result of the progressive dominance of DLT in the
marketplace, as well as Compaq's decision in June 1999 to have Overland fill
its mid-range tape automation requirement with the Company's DLT
LibraryXpress.

         In addition to its own products, the Company also distributes products
supplied by third parties including controller cards, interchange software,
storage management software, spare parts and tape media. Finally, the Company
licenses its proprietary tape encoding technology, which it developed and
patented under the name VR(2).

RESULTS OF OPERATIONS

         The following tables set forth certain financial data as a percentage
of net sales:


               STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                                  Fiscal Years Ended June 30,
                                                     --------------------------------------------------
                                                         2000              1999               1998
                                                     -------------      ------------       ------------
               <S>                                         <C>               <C>                <C>
               Net sales............................       100.0%            100.0%             100.0%
               Cost of goods sold...................        75.2%             69.8%              69.2%
                                                     -------------      ------------       ------------
               Gross profit.........................        24.8%             30.2%              30.8%
                                                     -------------      ------------       ------------
               Operating expenses:
                 Sales and marketing................        11.6%             12.8%              12.2%
                 Research and development...........         5.9%              5.8%               5.5%
                 General and administrative.........         5.0%              5.5%               8.3%
                                                     -------------      ------------       ------------
                                                            22.5%             24.1%              26.0%
                                                     -------------      ------------       ------------
               Income from operations...............         2.3%              6.1%               4.8%
               Interest and other, net..............         0.5%              1.0%               1.3%
                                                     -------------      ------------       ------------
               Income before income taxes...........         2.8%              7.1%               6.1%
               Provision for income taxes...........         1.1%              2.8%               2.4%
                                                     -------------      ------------       ------------
               Net income...........................         1.7%              4.3%               3.7%
                                                     =============      ============       ============
</TABLE>


                                      15
<PAGE>

               PRODUCT MIX TABLE

<TABLE>
<CAPTION>
                                                                  Fiscal Years Ended June 30,
                                                     --------------------------------------------------
                                                         2000              1999               1998
                                                     -------------      ------------       ------------
               <S>                                         <C>               <C>                <C>
               Company products:
                 Library Xpress....................       77.9%             57.2%               49.9%
                 36-track..........................       10.2%             26.3%               26.1%
                 18-track..........................        0.0%              0.1%                2.8%
                 9-track...........................        0.0%              4.2%                7.4%
                 Ditto, Travan, WangDAT............        2.0%              0.0%                0.0%
                 Spare parts, controllers, other...        5.1%              5.5%                7.2%
                 VR(2).............................        0.3%              0.5%                0.0%

               Other:
               DLT distributed products............        4.5%              6.2%                6.6%
               Other distributed products..........        0.0%              0.0%                0.0%
                                                     ----------        ----------           ---------
                                                         100.0%            100.0%              100.0%
                                                     ==========        ==========           =========
</TABLE>

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

         NET SALES. The Company's net sales of $123.0 million in fiscal year
2000 grew by $30.8 million or 33.4% over net sales of $92.2 million in fiscal
year 1999. Sales within the Company's LibraryXpress product line grew 81.8%
to $95.9 million, compared to $52.7 million in fiscal year 1999, due
primarily to increased shipments to Compaq. Sales to Compaq accounted for 54%
of total net sales in fiscal year 2000, compared to 25% in fiscal year 1999.
Sales of the Company's 36-track products decreased by 48.8% to $12.4 million
in fiscal year 2000, compared to $24.3 million in fiscal year 1999, due
primarily to lower shipments to IBM. Sales to IBM accounted for 8% of total
net sales in fiscal year 2000, compared to 20% in fiscal year 1999. Sales of
the Tecmar, Inc. line of Travan, DAT and Ditto products amounted to $2.5
million or 2.0% of net sales. Sales of the Company's 9-track products, which
were discontinued in June 1999, fell 98.0% to $81,000 in fiscal year 2000,
compared to $3.9 million in fiscal year 1999.

         GROSS PROFIT. The Company's gross profit amounted to $30.5 million
in fiscal year 2000, an increase of $2.6 million or 9.3% from $27.9 million
in fiscal year 1999, resulting from the higher sales volumes, offset by lower
average sales prices. The gross margin percentage declined to 24.8% in fiscal
year 2000 from 30.2% in fiscal year 1999, reflecting a greater mix of sales
to OEM customers, which are typically at lower margins compared to other
channel business, as well as a $1.7 million write down for discontinued Ditto
inventory.

         SALES AND MARKETING EXPENSES. Sales and marketing expenses amounted to
$14.3 million, representing 11.6% of net sales in fiscal year 2000, compared to
$11.8 million or 12.8% of net sales in fiscal year 1999. Increased expenditures
were due primarily to additional personnel and increased travel, a higher level
of advertising and promotional programs and the addition of expenses relating to
the assets acquired from Tecmar. The Company continued to focus in fiscal year
2000 on building its brand name and expansion of its commercial distribution
channel.

         RESEARCH AND DEVELOPMENT EXPENSES. R&D expenses amounted to $7.3
million or 5.9% of net sales in fiscal year 2000, compared to $5.4 million or
5.8% of net sales in fiscal year 1999. The increased expenses were
attributable to the hiring of additional personnel to support new product
development, including primarily the personnel formerly employed by Tecmar,
and higher developmental material costs related to new product development
programs.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses amounted to $6.2 million or 5.0% of net sales in fiscal year 2000,
compared to $5.1 million or 5.5% of net sales in fiscal year 1999. The
increased level of expenses in fiscal year 2000 was due primarily to the
addition of former Tecmar personnel and increased legal fees relating
primarily to the Company's licensing, patent and business development
activities. Offsetting this increase was a decrease in the Company's bad debt
provision due to a higher concentration of OEM accounts receivable balances,
reflecting a reduced credit risk.

                                      16
<PAGE>

         INTEREST INCOME/EXPENSE. In fiscal year 2000, the Company generated net
interest income of $714,000, compared to net interest income of $810,000 in
fiscal year 1999. The lower net interest income in fiscal year 2000 is due
primarily to the reduced cash balances resulting from the $3.4 million purchase
of certain Tecmar assets on February 23, 2000.

         INCOME TAXES. The Company's fiscal year 2000 provision for state and
federal income taxes amounted to $1.3 million. This equated to an effective tax
rate of 39.5% in fiscal year 2000, unchanged from fiscal year 1999.

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

         NET SALES. The Company's net sales of $92.2 million in fiscal year 1999
grew by $17.1 million or 22.7% over net sales of $75.2 million in fiscal year
1998. Sales of the Company's LibraryXpress product line grew 40.5% to $52.7
million, compared to $37.5 million in fiscal year 1998. This included strong
sales of the LoaderXpress product, primarily through the commercial distribution
channel, and initial sales of the new MinilibraryXpress product. Sales of the
Company's 36-track products, which were extremely strong in the first half of
fiscal year 1999, grew by 24.0% to $24.3 million in fiscal year 1999, compared
to $19.6 million in fiscal year 1998. Sales of the Company's 9-track products
fell 30.4% to $3.9 million in fiscal year 1999, compared to $5.6 million in
fiscal year 1998. The Company discontinued this product line in June 1999.

         GROSS PROFIT. The Company's gross profit amounted to $27.9 million in
fiscal year 1999, an increase of $4.7 million from $23.2 million in fiscal year
1998, resulting from the higher sales volumes. The gross margin percentage
declined to 30.2% in fiscal year 1999 from 30.8% in fiscal year 1998, reflecting
a greater mix of sales to OEM and commercial distribution customers, which are
typically at lower margins compared to other channel business.

         SALES AND MARKETING EXPENSES. Sales and marketing expenses amounted to
$11.8 million, representing 12.8% of net sales in fiscal year 1999, compared to
$9.2 million or 12.2% of net sales in fiscal year 1998. Increased expenditures
were due primarily to additional personnel, a higher level of advertising and
promotional programs and greater travel expenses. The Company continued to focus
in fiscal year 1999 on building its brand name and expansion of its commercial
distribution channel. Incremental expenses also were incurred in the fourth
quarter of fiscal year 1999 relating to the introduction of the Company's
LibraryXpress product into the Compaq sales channels after Compaq selected
Overland in June, 1999 to be the supplier of its departmental secondary
automated storage products supporting the Compaq ProLiant server line.

         RESEARCH AND DEVELOPMENT EXPENSES. R&D expenses amounted to $5.4
million or 5.8% of net sales in fiscal year 1999, compared to $4.1 million or
5.5% of net sales in fiscal year 1998. The increased expenses included
additional personnel and developmental materials relating to the design and
support of the new MinilibraryXpress product, Web TLC, the EnterpriseXpress, and
SLR Loader, as well as ASIC production and design assistance provided to
licensees of VR(2).

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses amounted to $5.1 million or 5.5% of net sales in fiscal year 1999,
compared to $6.2 million or 8.3% of net sales in fiscal year 1998. The decreased
level of expenses in 1999 reflected a reduction of recruiting and legal fees, as
well as reduced computer-related expenses. Additionally, the Company's bad debt
provision was lower than in the prior year, reflecting the higher concentration
of OEM customers with reduced credit risk.

         INTEREST INCOME/EXPENSE. In fiscal year 1999, the Company generated net
interest income of $810,000, compared to net interest income of $940,000 in
fiscal year 1998. The lower income in fiscal year 1999 resulted from reduced
cash balances caused by increased working capital requirements and repurchases
of Company stock.

         INCOME TAXES. The Company's fiscal year 1999 provision for state and
federal income taxes amounted to $2.6 million, or an effective tax rate of
39.5%. The effective rate in 1999 was higher than the fiscal year 1998 rate of
38.5% due primarily to reduced state R&D tax credits.

RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. Management does not expect SFAS No. 133 to have a material effect on the
Company's financial position or results of operations.

                                      17

<PAGE>

Implementation of this standard has recently been delayed by the FASB for a
12-month period. The Company will adopt SFAS 133 as required in fiscal year
2002.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
SEC Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB 101 summarized certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB 101 will be effective for the Company in the first quarter of fiscal year
2001. The Company is reviewing the requirements of SAB 101 and currently
believes that its revenue recognition policy is consistent with the guidance of
SAB 101.

         In March 2000, FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation--an
Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN 44
clarifies the following: the definition of an employee for purposes of applying
APB Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of the previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. Management
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

         During fiscal year 2000, the Company generated $4.4 million in cash
from its operations. An additional $723,000 was generated during the year from
the sale of Common Stock under the Company's Employee Stock Purchase Plan and
from the exercise of stock options. Capital expenditures during the year for
machinery and tooling equipment and software consumed $2.0 million, and an
additional $3.4 million was used to purchase certain Tecmar assets.

         At June 30, 2000, the Company had $15.8 million of cash and cash
equivalents, $27.5 million of additional net working capital, an unused bank
line of credit of $5 million and no other funded debt. The Company believes that
these resources will be sufficient to fund its operations and to provide for its
growth into the foreseeable future.

INFLATION

         Inflation has not had a significant negative impact on the Company's
operations during the periods presented. With the exception of its OEM
contracts, which contain fixed pricing for up to one year, the Company
historically has been able to pass on to its customers increases in raw material
prices caused by inflation. There can be no assurance, however, that the Company
will be able to continue to pass on any future increases should they occur.
Although the Company's exposure to the effects of inflation will be magnified by
the expected increase in OEM business, the Company believes that its continuous
efforts at material and labor cost reductions will minimize such effects.

YEAR 2000

         Beginning in 1999, the Company took steps designed to ensure that
its products, information technology and facilities computer systems were
Year 2000 compliant. To date, the Company has not experienced Year 2000
issues with regard to its internal systems, any third party systems or any of
the Company's products. The Company's expenditures relating directly to Year
2000 compliance have not been material. Despite the fact that the Year 2000
has commenced and the Company has experienced no problems to date, there can
be no assurance that the risks posed by Year 2000 issues will not adversely
affect the Company's business in the future, either as a result of
unanticipated difficulties related to its systems or those of third parties.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         As a multinational corporation, the Company is exposed to changes in
foreign exchange rates. These exposures may change over time and could have a
material adverse effect on the Company's operating results. The Company
currently does not utilize any derivative instruments to manage the risk of
exchange rate fluctuations.

         The Company is exposed to changes in market interest rates, which
affect interest income earned on the Company's cash equivalents and short-term
investments. The Company does not enter into derivative transactions relating to
its cash,

                                      18

<PAGE>

cash equivalents or short-term investments. At June 30, 2000, the Company had
an investment portfolio of money market funds and certificates of deposit of
$6.8 million. If market interest rates were to decrease immediately and
uniformly by 10% from the levels as of June 30, 2000, the decline in the
Company's interest income would not be material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The consolidated financial statements and supplementary data of the
Company required by this item are set forth at the pages indicated in Item
14(a)(1).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         Not applicable.

                                      19


<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

         The information required by this item is included under the captions
entitled "Election of Directors" and "Information Concerning Directors and
Executive Officers" in the Company's Proxy Statement and is incorporated herein
by reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this item is included under the caption
entitled "Executive Compensation" in the Company's Proxy Statement and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is included under the caption
entitled "Security Ownership of Certain Beneficial Owners and Management" in the
Company's Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN TRANSACTIONS

         The information required by this item is included under the caption
entitled "Certain Relationships and Transactions" in the Company's Proxy
Statement and is incorporated herein by reference.

                                      20
<PAGE>

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)(1) FINANCIAL STATEMENTS. The following Consolidated Financial
Statements of Overland Data, Inc. and Report of Independent Accountants are
included in a separate section of this Report at the page numbers so indicated:

<TABLE>
<S>                                                                      <C>
           Report of Independent Accountants...........................  F-1
           Consolidated Balance Sheet as of June 30, 2000 and 1999.....  F-2
           Consolidated Statement of Operations for the Years
               Ended June 30, 2000, 1999 and 1998......................  F-3
           Consolidated Statement of Shareholders' Equity and
               Comprehensive Income for Years Ended June 30, 2000,
               1999, and 1998..........................................  F-4
           Consolidated Statement of Cash Flows for the Years Ended
               June 30, 2000, 1999 and 1998............................  F-5
           Notes to Consolidated Financial Statements..................  F-6 to F-17

</TABLE>

         (a)(2) FINANCIAL STATEMENT SCHEDULE. The following financial statement
schedule of Overland Data, Inc. for the years ended June 30, 2000, 1999 and 1998
is filed as part of this Report on the page number so indicated and should be
read in conjunction with the Consolidated Financial Statements of Overland Data,
Inc.:

           Schedule II - Valuation and Qualifying Accounts.............S-1

 Schedules not listed above have been omitted because they are not applicable or
are not required or the information required to be set forth therein is included
in the Consolidated Financial Statements or Notes thereto.

         (a)(3)  EXHIBITS

<TABLE>
<S>      <C>
 2.1     Asset Purchase Agreement, dated as of January 7, 2000, by among the
         Registrant, Tecmar Acquisition Corporation, Tecmar Technologies
         International, Tecmar Technologies, and Ditto, Inc. (1) +
 3.1     Registrant's Amended and Restated Articles of Incorporation. (2)
 3.2     Registrant's By-Laws. (2)
 4.1     Specimen stock certificate. (2)
 4.2     Investors' Rights Agreement, dated May 21, 1993, between the Registrant
         and the parties named therein.(2)
10.1     Basic Order Agreement #16529, dated July 1, 1993 and as amended through
         November 10, 1995, between the Registrant and Digital Equipment
         Corporation. (2)
10.2     Production Procurement Agreement #RMSS-ODI-96-01-0, dated October 25,
         1996, between the Registrant and International Business Machines
         Corporation. (2)
10.3     Credit Agreement, dated as of June 27, 1997, by and between the
         Registrant and Imperial Bank. (3)
10.4     Standard Industrial Lease--Multi-Tenant, dated May 26, 1993, between
         the Registrant and Mitsui/SBD America Fund 87-1. (2)
10.5     First Amendment to the 1995 Stock Option Plan dated January 21, 1997. (2)
10.6     1996 Employee Stock Purchase Plan adopted December 12, 1996. (2)
10.7     Agreement between Overland Data and Tandberg Data Concerning MLR and
         VR(2) Technology, dated as of March 30, 1998, by and between the
         Registrant and Tandberg Data ASA. (4) +
10.8     Travan-TM- and VR(2) ASIC License and Supply Agreement, dated as of
         February 25, 1999, by and between Overland Data and Imation
         Corporation. (5) +
10.9     Supply Agreement, dated November 5, 1999, by and between Overland Data
         and Seagate Technology, Inc. (6) +
10.10    Credit Agreement, dated as of November 9, 1999, by and between Overland
         Data and Imperial Bank. (6) +
10.11    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between Overland Data and Scott McClendon. (7)
10.12    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between the Company and Steven E. Richardson. (7)
</TABLE>

                                      21
<PAGE>

<TABLE>
<S>      <C>
10.13    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between the Company and Robert J. Scroop. (7)
10.14    VR(2) Technology License Agreement dated as of April 27, 2000 by and
         between Overland Data and Storage Technology Corp. (8) +
10.15    Purchase Agreement, dated as of June 7, 2000, by and between Compaq
         Computer Corporation and its Affiliates and Overland Data. +
21.1     Subsidiaries of the Registrant.
23.1     Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.1     Power of Attorney (included on Signature Page).
27.1     Financial Data Schedule (for EDGAR use only).
</TABLE>
-----------------
(1)  Incorporated by reference to the Company's Form 8-K dated March 8,
     2000.
(2)  Incorporated by reference to the Company's Registration Statement No.
     333-18583 dated February 21, 1997.
(3)  Incorporated by reference to the Company's Form 10-K dated September
     29, 1997.
(4)  Incorporated by reference to the Company's Form 10-K dated September
     28, 1998.
(5)  Incorporated by reference to the Company's Form 10-K dated September
     27, 1999.
(6)  Incorporated by reference to the Company's Form 10-Q dated February 16,
     2000.
(7)  Incorporated by reference to the Company's Form 10-Q dated May 17,
     2000.
(8)  Incorporated by reference to the Company's Form 8-K dated July 25,
     2000.
+    The Company has requested confidential treatment for certain portions
     of this Exhibit.

(b) REPORTS ON FORM 8-K. The Company filed the following Current Reports on Form
8-K during the fourth quarter of the year ended June 30, 2000:

         (1)      Current Report on Form 8-K/A, filed on filed on May 5, 2000,
amending and completing the Registrant's Current Report on Form 8-K, filed on
March 8, 2000. This Current Report on Form 8-K/A included audited financial
statements of Tecmar Technologies, Inc. for the year ended May 31, 1997, audited
financial statements of Tecmar Technologies International, Inc. for the year
ended January 31, 1999, unaudited interim financial statements of Tecmar
Technologies International, Inc. for the nine months ended October 31, 1999 and
1998, and pro forma financial information of the Registrant reflecting the
acquisition of certain assets from Tecmar Technologies International, Inc. and
certain affiliated entities on February 23, 2000.

                                      22

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                     OVERLAND DATA, INC.

                                     By: /s/  SCOTT McCLENDON
                                         -------------------------
                                         Scott McClendon
                                         President & Chief Executive Officer

Dated:  September 28, 2000

                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Scott McClendon and Vernon A. LoForti,
jointly and severally, as his or her attorney-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Annual Report on Form 10-K and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said attorneys-in-
fact, or his substitute or substitutes, may do or cause to be done by virtue
hereof. Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
       SIGNATURE                           TITLE                                  DATE
       ---------                           -----                                  -----
<S>                                         <C>                                   <C>

/s/ SCOTT McCLENDON                        President, Chief Executive             September 28, 2000
-----------------------                    Officer and Director
  Scott McClendon


/s/ MARTIN D. GRAY                         Vice President, Chief Technical        September 28, 2000
-----------------------                    Officer, Asst. Secretary and
    Martin D. Gray                         Director


/s/ VERNON A. LoFORTI                      Vice President, Chief                  September 28, 2000
-----------------------                    Financial Officer and
   Vernon A. LoForti                       Secretary


/s/ ROBERT A. DEGAN                        Director                               September 28, 2000
-----------------------
   Robert A. Degan


/s/ PETER PREUSS                           Director                               September 28, 2000
-----------------------
    Peter Preuss


/s/ JOHN A. SHANE                          Director                               September 28, 2000
-----------------------
    John A. Shane
</TABLE>

                                      23
<PAGE>

                               OVERLAND DATA, INC.
                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Shareholders
of Overland Data, Inc.:

         In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a)(1) on page 21 present fairly, in all
material respects, the financial position of Overland Data, Inc. and its
subsidiaries at June 30, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended June 30,
2000 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial
statement schedule listed in the index appearing under Item 14(a)(2) on page
21 presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and financial statement schedule are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Diego, California
August 17, 2000


                                   F-1
<PAGE>


                               OVERLAND DATA, INC.
                           CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>

                                                                                      JUNE 30,
                                                                         ---------------------------------
                                                                             2000                 1999
                                                                         ------------          -----------
                                                                       (in thousands, except number of shares)
<S>                                                                      <C>                    <C>
ASSETS

Current assets:
  Cash and cash equivalents............................................   $   15,774            $   16,199
  Accounts receivable, less allowance for doubtful accounts
     of $252 and $748, respectively....................................       22,798                13,885
  Inventories..........................................................       22,108                17,704
  Deferred income taxes................................................        3,391                 1,375
  Other current assets.................................................        1,684                 2,136
                                                                          ----------            ----------

       Total current assets............................................       65,755                51,299

Property and equipment, net............................................        5,033                 4,657
Other assets...........................................................          595                   274
                                                                          ----------            ----------

                                                                          $   71,383            $   56,230
                                                                          ==========            ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable ....................................................   $   13,965            $    5,615
  Accrued liabilities..................................................        6,262                 2,876
  Accrued payroll and employee compensation............................        2,271                 1,827
                                                                          ----------            ----------

       Total current liabilities.......................................       22,498                10,318

Deferred income taxes..................................................          466                   441
Other liabilities......................................................          922                   664
                                                                          ----------            ----------

       Total liabilities...............................................       23,886                11,423
                                                                          ----------             ---------

Commitments and contingencies (Note 7)

Shareholders' equity:
  Common stock, no par value, 25,000,000 shares
      authorized; 10,270,402 and 10,089,668 shares issued
      and outstanding at June 30, 2000 and 1999, respectively..........       31,753                31,030
  Accumulated other comprehensive income (loss)........................         (159)                  (59)
  Retained earnings....................................................       15,903                13,836
                                                                          ----------            ----------

      Total shareholders' equity.......................................       47,497                44,807
                                                                          ----------            ----------

                                                                           $  71,383            $   56,230
                                                                           =========            ==========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                     F-2

<PAGE>


                                    OVERLAND DATA, INC.
                           CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   YEAR ENDED JUNE 30,
                                                  ---------------------------------------------------
                                                     2000                 1999                1998
                                                  ------------         -----------        -----------
                                                        (in thousands, except per share amounts)
<S>                                               <C>                  <C>                <C>
Net revenue:
   Product sales................................  $    122,703         $    91,777        $    75,164
   License fees and royalties...................           276                 450                  -
                                                  ------------         -----------        -----------

                                                       122,979              92,227             75,164

Cost of product sales...........................        92,460              64,336             51,965
                                                  ------------         -----------        -----------

Gross profit....................................        30,519              27,891             23,199

Operating expenses:
  Sales and marketing...........................        14,272              11,825              9,245
  Research and development......................         7,253               5,373              4,093
  General and administrative....................         6,183               5,079              6,221
                                                  ------------         -----------        -----------

                                                        27,708              22,277             19,559
                                                  ------------         -----------        -----------

Income from operations..........................         2,811               5,614              3,640

Other income (expense):
  Interest income, net..........................           714                 810                940
  Other (expense) income, net...................          (109)                157                (37)
                                                  ------------         -----------        -----------

Income before income taxes......................         3,416               6,581              4,543

Provision for income taxes......................         1,349               2,599              1,751
                                                  ------------         -----------        -----------

Net income .....................................  $      2,067         $     3,982        $     2,792
                                                  ============         ===========        ===========


Net income per share:
     Basic......................................  $       0.20         $      0.39         $     0.27
                                                  ============         ===========         ==========
     Diluted....................................  $       0.19         $      0.37         $     0.25
                                                  ============         ===========         ==========

Shares used in computing net income per share:
     Basic......................................        10,123              10,222             10,525
                                                  ============          ==========         ==========
     Diluted....................................        10,688              10,652             11,069
                                                  ============          ==========         ==========
</TABLE>

               See accompanying notes to consolidated financial statements.

                                     F-3
<PAGE>

                               OVERLAND DATA, INC.
    CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME


<TABLE>
<CAPTION>

                                                                                        Accumulated
                                                              Common Stock                 Other
                                                     ------------------------------     Comprehensive     Retained
                                                          Shares           Amount       Income (Loss)     Earnings        Total
                                                     ---------------   ------------    --------------- ------------- ---------------
                                                                         (in thousands, except number of shares)
<S>                                                      <C>             <C>            <C>              <C>          <C>
Balance at June 30, 1997...........................      10,434,593      $  33,246      $          9     $   7,062    $     40,317

     Exercise of stock options.....................         135,287            152                                             152
     Exercise of stock warrants....................           5,934
     Sale of stock through the Company's
       Employee stock purchase plan................          73,172            383                                             383
     Company repurchases of stock..................         (99,500)          (509)                                           (509)
     Tax benefits from exercise of stock options...                            224                                             224
     Comprehensive income:
       Net income..................................                                                          2,792           2,792
       Foreign currency translation................                                                9                             9
                                                     ----------------- ------------ ------------------ ------------ ---------------
Balance at June 30, 1998...........................      10,549,486         33,496                18         9,854          43,368
                                                     ----------------- ------------ ------------------ ------------ ---------------

     Exercise of stock options.....................          55,975             98                                              98
     Sale of stock through the Company's
       Employee stock purchase plan................          92,155            338                                             338
     Company repurchases of stock..................        (607,948)        (3,006)                                         (3,006)
     Tax benefits from exercise of
       stock options...............................                            104                                             104
     Comprehensive income:
       Net income..................................                                                          3,982           3,982
       Foreign currency translation................                                              (77)                          (77)
                                                     ----------------- ------------ ------------------ ------------ ---------------
Balance at June 30, 1999...........................      10,089,668         31,030               (59)       13,836          44,807
                                                     ----------------- ------------ ------------------ ------------ ---------------

     Exercise of stock options.....................         186,771            365                                             365
     Sale of stock through the Company's
       Employee stock purchase plan................          63,463            300                                             300
     Company repurchases of stock..................         (69,500)          (415)                                           (415)
     Tax benefits from exercise of
       stock options...............................                            473                                             473
     Comprehensive income:
       Net income..................................                                                          2,067           2,067
       Foreign currency translation................                                             (100)                         (100)
                                                     ----------------- ------------ ------------------ ------------ ---------------
Balance at June 30, 2000...........................      10,270,402      $  31,753         $    (159)    $  15,903      $   47,497
                                                     ================= ============ ================== ============ ===============

</TABLE>

          See accompanying notes to consolidated financial statements.

                                    F-4

<PAGE>


                                                OVERLAND DATA, INC.
                                       CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                           Year Ended June 30,
                                                                            --------------------------------------------
                                                                                2000             1999           1998
                                                                            -----------       ----------     -----------
                                                                                            (in thousands)
<S>                                                                         <C>                  <C>        <C>
Operating activities:
    Net income .............................................................   $ 2,067           $ 3,982       $ 2,792
    Adjustments to reconcile net income to
       net cash provided by (used in) operating activities:
           Deferred tax (expense) benefit...................................    (1,991)              437           449
           Depreciation and amortization....................................     1,619             1,462         1,479
           Bad debt expense (benefit).......................................      (447)                7           243
           Tax benefits from exercise of stock options......................       473               104           224
           Gain on disposal of property and equipment.......................         -                 -             9
           Changes in assets and liabilities:
               Accounts receivable..........................................    (8,466)            1,791        (4,775)
               Inventories .................................................      (592)           (1,627)       (3,976)
               Other assets.................................................       131            (1,489)         (266)
               Accounts payable and accrued/other liabilities...............    11,592               (88)        2,346
               Accrued payroll and employee compensation....................       444               629           152
                                                                               -------           -------       -------

                  Net cash provided by (used in) operating activities.......     4,830             5,208        (1,323)
                                                                               -------           -------       -------

Investing activities:
    Capital expenditures....................................................    (1,995)           (1,912)       (2,088)
    Acquisition of certain Tecmar assets....................................    (3,410)                -             -
                                                                               -------           -------       -------

                  Net cash used in investing activities.....................    (5,405)           (1,912)       (2,088)
                                                                               -------           -------       -------

Financing activities:
    Proceeds from issuance of common stock..................................       300               338           383
    Proceeds from exercise of stock options.................................       365                98           152
    Stock repurchases.......................................................      (415)           (3,006)         (509)
                                                                               -------           -------       -------
                  Net cash (used in) provided by financing activities.......       250            (2,570)           26
                                                                               -------           -------       -------
Effect of exchange rate changes on cash.....................................      (100)              (77)            9
                                                                               -------           -------       -------
Net increase (decrease) in cash and cash equivalents........................      (425)              649        (3,376)
Cash and cash equivalents, beginning of year................................    16,199            15,550        18,926
                                                                               -------           -------       -------
Cash and cash equivalents, end of year......................................   $15,774           $16,199       $15,550
                                                                               =======           =======       =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for income taxes .............................................   $   648           $ 2,578       $   854
                                                                               =======           =======       =======
    Cash paid for interest..................................................   $     -           $     5       $     1
                                                                               =======           =======       =======
    Acquisition of businesses:
     Fair value of:
      Assets acquired.......................................................   $ 3,812           $     -       $     -
      Liabilities assumed...................................................      (402)                -             -
                                                                               -------           -------       -------
    Cash paid for acquisitions..............................................   $ 3,410           $     -             -
                                                                               =======           =======       =======

SUPPLEMENTAL NON-CASH ACTIVITIES:
    Compensation recognized as equity upon exercise
    of common stock options ................................................   $    12           $     6       $    38
                                                                               =======           =======       =======

</TABLE>

           See accompanying notes to consolidated financial statements


                                    F-5
<PAGE>


                               OVERLAND DATA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

         Overland Data, Inc. (the "Company") was incorporated on September 8,
1980 under the laws of the state of California. The Company designs, develops,
manufactures, markets and supports magnetic tape data storage systems and tape
drives used by businesses for backup, archival and data interchange functions in
environments from small businesses to large enterprises requiring
high-availability networks. The Company's fiscal year ends on the Sunday closest
to June 30. For ease of presentation, the Company's year-end is deemed to be
June 30. Fiscal year 2000 included 53 weeks, while fiscal years 1999 and 1998
each included 52 weeks.

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Overland Data (Europe) Ltd., Overland
Data SARL, Overland Data GmbH, Tecmar, Inc. and Overland Data Export Limited, a
foreign sales corporation. All significant intercompany accounts and
transactions have been eliminated.

MANAGEMENT ESTIMATES AND ASSUMPTIONS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

REVENUE RECOGNITION

          Revenue on direct product sales (excluding sales to commercial
distributors and Compaq) is recognized upon shipment of products to such
customers as they are not subject to any specific right of return or price
protection, except for any defective product which may be returned under the
Company's warranty policy. Title and risk of loss transfer to the customer
when the product leaves the Company's dock. Product sales to commercial
distribution customers are subject to certain rights of return, stock
rotation privileges and price protection. Revenue from shipments to these
customers is not recognized until the related products are in turn sold
through by the commercial distributor. At June 30, 2000, there was
approximately $1,368,000 of product that had been shipped to the Company's
commercial distributors, but not yet shipped to ultimate customers.

         As part of its agreement with Compaq, the Company ships products to
various distribution hubs around the world and retains ownership of that
inventory until it is pulled by Compaq to fulfill customer orders, at which time
the Overland sale is recorded.

WARRANTY COSTS

         The Company generally provides a three-year return-to-factory warranty
on its LibraryXpress products and a two-year return-to-factory warranty on its
other products. In addition, with the exception of sales to OEM customers,
on-site warranties are provided for certain of the Company's line of
LibraryXpress products. The Company records a provision for estimated future
warranty costs at the time of shipment for both the return-to-factory and
on-site warranties. Separately priced on-site warranties are offered for sale to
customers of other product lines. The Company contracts with outside vendors to
provide service relating to all on-site warranties. Warranty revenues and
amounts paid in advance to outside service organizations are recognized in the
financial statements in sales and cost of goods sold, respectively, over the
warranty period.

                                     F-6

<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

RESEARCH AND DEVELOPMENT COSTS

         Research and development costs are expensed as incurred.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         It is management's belief that the carrying amounts shown for the
Company's financial instruments are reasonable estimates of their related fair
values based on their terms or short-term nature.

COMPREHENSIVE INCOME

         Comprehensive income for the Company includes net income and foreign
currency translation effects, which are charged or credited to accumulated other
comprehensive income (loss) within shareholders' equity.

SEGMENT DATA

         The Company reports segment data based on the management approach. The
management approach designates the internal reporting that is used by management
for making operating and investment decisions and evaluating performance as the
source of the Company's reportable segments. The Company also discloses
information about products and services, geographic areas and major customers.
The Company's U.S. and foreign operations are considered a single operating
segment.

INFORMATION ABOUT GEOGRAPHIC AREAS

         Export sales by the Company, principally in Europe, for the years ended
June 30, 2000, 1999 and 1998 were $23,548,000, $25,769,000 and $20,175,000,
respectively. Long-lived assets other than deferred tax assets located in the
Company's foreign subsidiaries, principally in Europe, at June 30, 2000, 1999
and 1998 were $829,000, $113,000 and $115,000, respectively.

CONCENTRATIONS OF RISK

         The Company's customers include original equipment manufacturers,
integrators, distributors, and value added resellers. Financial instruments
which potentially subject the Company to concentrations of credit risk are
primarily accounts receivable. The Company performs ongoing credit
evaluations of its customers, generally requires no collateral and maintains
allowances for potential credit losses and sales returns.

         The Company's largest single customer accounted for approximately
54%, 25% and 25% of sales in fiscal years 2000, 1999 and 1998, respectively,
and approximately 56%, 23% and 28% of accounts receivable at June 30, 2000,
1999 and 1998, respectively. The second largest customer accounted for 8%,
20% and 15% of sales in fiscal year 2000, 1999 and 1998, respectively, and
9%, 18% and 17% of accounts receivable at June 30, 2000, 1999 and 1998,
respectively. No other customer accounted for 10% or more of sales in any of
the three years presented.

CASH EQUIVALENTS

         Highly liquid investments with original maturities of three months or
less are classified as cash equivalents.

INVENTORIES

         Inventories are stated at the lower of cost (first-in-first-out method)
or market.

                                     F-7
<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

PROPERTY AND EQUIPMENT

         Property and equipment are recorded at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
depreciable assets (generally two to five years). Leasehold improvements are
amortized on a straight-line basis over the shorter of the useful life of the
asset or the lease term. Expenditures for normal maintenance and repair are
charged to expense as incurred, and improvements are capitalized. Upon the sale
or retirement of property or equipment, the asset cost and related accumulated
depreciation are removed from the respective accounts and any gain or loss is
included in the results of operations.

LONG-LIVED ASSETS

         The Company assesses potential impairments to its long-lived assets
when there is evidence that events or changes in circumstances have made
recovery of an asset's carrying value unlikely. An impairment loss would be
recognized when the sum of the expected future net undiscounted cash flows is
less than the carrying amount of the asset. The Company has not recorded any
impairment losses.

FOREIGN CURRENCY TRANSLATION

         The financial statements of foreign subsidiaries, for which the
functional currency is the local currency, are translated into U.S. dollars
using the exchange rate at the balance sheet date for assets and liabilities and
the weighted average exchange rate during the year for revenues, expenses, gains
and losses. Translation adjustments are recorded as accumulated other
comprehensive income (loss) within shareholders' equity. Gains or losses from
foreign currency transactions are recognized currently in income. Such gains and
losses were not significant in any year presented.

INCOME TAXES

         The Company provides for income taxes utilizing the liability method.
Under the liability method, a deferred tax asset and/or liability is computed
for both the expected future impact of differences between the financial
statement and tax bases of assets and liabilities, and for the expected future
tax benefit to be derived from tax credits and loss carryforwards. Current
income tax expense or benefit represents the amount of income taxes expected to
be payable or refundable for the current year. A valuation allowance is
established when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized.

STOCK-BASED COMPENSATION

         The Company measures compensation expense for its stock-based employee
compensation plans using the intrinsic value method and provides pro forma
disclosures of net income and earnings per share as if the fair value-based
method had been applied in measuring compensation expense. Compensation changes
related to non-employee stock-based compensation are measured using fair value
methods.

NET INCOME PER SHARE

         Basic earnings per share is computed based on the weighted average
number of shares of common stock outstanding during the period. Diluted earnings
per share is computed based on the weighted average number of shares of common
stock outstanding during the period increased by the weighted average number of
dilutive common stock equivalents outstanding during the period, using the
treasury stock method. Anti-dilutive common stock equivalents excluded from the
computation of diluted earnings per share amounted to 337,000, 573,000 and
524,000 in the fiscal years ended June 30, 2000, 1999 and 1998, respectively.

                                     F-8

<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

         A reconciliation of the calculation of basic and diluted earnings per
share is as follows:


<TABLE>
<CAPTION>

                                                                                        Year Ended June 30,
                                                                            ------------------------------------------
                                                                               2000            1999           1998
                                                                            -----------     -----------    -----------
                                                                             (in thousands except for per share data)
<S>                                                                           <C>             <C>             <C>
Net income........................................................             $2,067          $3,982         $2,792
                                                                            ===========     ===========    ===========

Basic:

     Weighted average number
        of common shares outstanding..............................             10,123          10,222         10,525
                                                                            ===========     ===========    ===========
     Basic net income per share...................................              $0.20           $0.39          $0.27
                                                                            ===========     ===========    ===========

Diluted:

     Weighted average number
        of common shares outstanding..............................             10,123          10,222         10,525
     Common stock equivalents using
        the treasury stock method.................................                565             430            544
                                                                            -----------     -----------    -----------
     Shares used in computing net
        income per share..........................................             10,688          10,652         11,069
                                                                            ===========     ===========    ===========
     Diluted net income per share.................................              $0.19           $0.37          $0.25
                                                                            ===========     ===========    ===========
</TABLE>


RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at fair
value. Management does not expect SFAS No. 133 to have a material effect on the
Company's financial position or results of operations. Implementation of this
standard has recently been delayed by the FASB for a 12-month period. The
Company will adopt SFAS 133 as required in fiscal year 2002.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
SEC Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB 101 summarized certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
SAB 101 will be effective for the Company in the first quarter of fiscal year
2001. The Company is reviewing the requirements of SAB 101 and currently
believes that its revenue recognition policy is consistent with the guidance of
SAB 101.

         In March 2000, FASB issued FASB Interpretation No. 44 ("FIN 44"),
"Accounting for Certain Transactions Involving Stock Compensation--an
Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN 44
clarifies the following: the definition of an employee for purposes of applying
APB Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of the previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. Management
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.

                                     F-9

<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE 2 - ACQUISITION OF CERTAIN TECMAR ASSETS

         On February 23, 2000, the Company, through its subsidiary Tecmar, Inc.,
purchased certain inventories, fixed assets, supplies, intellectual property,
trademarks and Internet addresses (the "Acquisition") from Tecmar Technologies
International, Inc. and certain of its affiliates, including Tecmar
Technologies, Inc. (collectively, "Tecmar") in an acquisition accounted for as a
purchase. Tecmar, based in Longmont, Colorado, developed and manufactured tape
drives for the entry-level network storage market. Total consideration for the
Acquisition amounted to approximately $3,410,000 in cash. The assets were
acquired on a discounted basis free and clear of all liens, interests and claims
pursuant to a bankruptcy court order, and the Company assumed no liabilities of
Tecmar, other than customer warranty and payroll-related obligations. The
Company's reported statement of operations includes the results of Tecmar from
the February 23, 2000 acquisition date.

         Total consideration was preliminarily allocated to the assets acquired
and liabilities assumed based on their estimated fair values at the date of
acquisition. Based on the preliminary allocation, the estimated fair value of
the assets acquired exceeded the total consideration paid and the Company
allocated the excess amount to first reduce the value of non-current assets to
zero and then to negative goodwill. The negative goodwill was amortized to
reduce general and administrative expenses on a straight-line basis over 3
years, the estimated period of benefit.

         In the fourth quarter of fiscal year 2000, the Company finalized the
Tecmar purchase price allocation. The reallocation of the purchase price
resulted in a reduction of the value assigned to inventories and a corresponding
reversal of negative goodwill previously recorded. The inventory devaluation was
the result of a determination that certain chip components required to complete
a number of finished units could not be procured at a reasonable price.
Consequently, the remaining raw materials related to these units, which were
included in the inventory purchased from Tecmar, were valued at zero.

         Additionally, subsequent to June 30, 2000, the Company elected to
discontinue the Ditto line of products, which was included in the Tecmar
purchase. Ditto sales had declined more rapidly than expected, and significant
Tecmar, Inc. resources were dedicated to support the product line. The Company
recorded a $1.7 million pre-tax charge to cost of goods sold, recorded in the
fourth quarter of fiscal year 2000, to writeoff the related Ditto inventories.
To stem further losses at Tecmar, Inc., the Company also announced that it would
downsize the Tecmar, Inc. Colorado operation by consolidating certain functions
into its San Diego facility and expected to record a charge in the first quarter
of fiscal year 2001 relating to involuntary separations.

         The following supplemental pro forma financial information is presented
for illustrative purposes only. The pro forma results for the Company's fiscal
year ended June 30, 2000 and 1999 present the results for the Company as if the
Acquisition occurred on July 1, 1999 and 1998, respectively. These pro forma
results are not necessarily indicative of the results of the combined operations
which actually would have been reported had the Acquisition occurred as of those
dates, nor are they necessarily indicative of the Company's future financial
results of operations.

<TABLE>
<CAPTION>

                                                           2000                 1999
                                                     ---------------       --------------
       (In Thousands)                                            (unaudited)

<S>                                                  <C>                    <C>
       Net sales...................................  $  138,088             $  114,685
       Net income..................................      (4,484)                  (701)
       Diluted loss per share......................       (0.42)                 (0.07)

</TABLE>

                                     F-10


<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE 3 - COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS

<TABLE>
<CAPTION>

                                                                     JUNE 30,
                                                            ------------------------
                                                               2000          1999
                                                            ---------      ---------
                                                                 (in thousands)
        <S>                                                 <C>            <C>
        Inventories:
         Raw materials......................................$  15,857      $   9,119
         Work in process....................................    2,767          3,074
         Finished goods.....................................    3,484          5,511
                                                            ---------      ---------

                                                            $  22,108      $  17,704
                                                            =========      =========

        Property and equipment:
         Machinery and equipment............................$   4,759      $   4,730
         Computer equipment.................................    4,502          4,126
         Furniture and fixtures.............................      454            320
         Leasehold improvements.............................    1,584          1,190
                                                            ---------      ---------

                                                               11,299         10,366
         Less accumulated depreciation
             and amortization...............................   (6,266)        (5,709)
                                                            ---------      ---------
                                                            $   5,033      $   4,657
                                                            =========      =========
</TABLE>

Depreciation expense was $1,619,000, $1,462,000 and $1,371,000 in fiscal years
2000, 1999 and 1998, respectively.

NOTE 4 - LONG-TERM DEBT

         The Company has a $5,000,000 unsecured revolving credit facility at
June 30, 2000, which expires on November 11, 2001. Borrowings under the line may
be in the form of working capital loans, which bear interest at the bank's prime
rate, or banker's acceptances ("BA") priced at the bank's BA rate plus 2.25%.
The Company is required to maintain certain covenants and financial ratios
including working capital and net worth ratios. The Company is in compliance
with all terms of the agreement. At June 30, 2000 and 1999, there were no
borrowings outstanding under the credit line.

NOTE 5 - INCOME TAXES

          The components of income before income tax provisions were as
follows:

<TABLE>
<CAPTION>

                                                   Year ended June 30,
                                             ----------------------------------
                                               2000          1999        1998
                                             -------       --------     -------
                                                        (in thousands)
                  <S>                        <C>          <C>          <C>
                  Domestic.................  $  2,455     $  4,958     $  3,413
                  Foreign..................       961        1,623        1,130
                                             --------     --------     --------
                                             $  3,416     $  6,581     $  4,543
                                             --------     --------     --------
</TABLE>

                                     F-11
<PAGE>

                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The provision for income taxes includes the following:

<TABLE>
<CAPTION>
                                                          Year ended June 30,
                                                   -----------------------------------
                                                      2000         1999         1998
                                                   ---------     --------     --------
                                                             (in thousands)
                  <S>                             <C>          <C>          <C>
                  Current:
                       Federal..................  $  2,422     $  1,287     $    757
                       State....................       641          333          171
                       Foreign..................       277          542          374
                                                  --------     --------     --------
                                                     3,340        2,162        1,302
                                                  --------     --------     --------
                  Deferred:
                       Federal..................    (1,578)         350          360
                       State....................      (413)          87           89
                                                  --------     --------     --------
                                                    (1,991)         437          449
                                                  --------     --------     --------
                                                  $  1,349     $  2,599     $  1,751
                                                  ========     ========     ========
</TABLE>


A reconciliation of income taxes computed by applying the federal statutory
income tax rate of 34% to income before income taxes to the total income tax
provision reported in the Consolidated Statement of Operations is as follows:

<TABLE>
<CAPTION>
                                                           Year ended June 30,
                                                   ----------------------------------
                                                     2000         1999         1998
                                                   --------     --------     --------
                                                             (in thousands)
    <S>                                           <C>         <C>           <C>
    U.S. Federal income tax at statutory rate ..  $   1,162   $    2,238    $   1,545
    State income taxes, net of federal benefit..        151          377          172
    Foreign sales corporation benefit...........        (47)         (73)         (37)
    Permanent differences.......................         31           25           28
    Other.......................................         52           32           43
                                                  ---------    ---------    ---------
    Provision for income taxes..................  $   1,349    $   2,599    $   1,751
                                                  =========    =========    =========

</TABLE>


                                     F-12
<PAGE>

                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Deferred income taxes at June 30, 2000 and 1999 comprised:

<TABLE>
<CAPTION>

                                                              June 30,
                                                     --------------------------
                                                       2000              1999
                                                     -------           --------
                                                           (in thousands)
<S>                                                  <C>               <C>
Deferred tax assets:
    Inventory......................................   $ 1,862          $   586
    Warranty reserves..............................       761              209
    State income taxes.............................       222              117
    Vacation and deferred compensation.............       217              225
    Other..........................................       189              172
    Reserve for doubtful accounts and returns......       140               73
                                                     --------          -------
      Gross deferred tax asset.....................     3,391            1,382
                                                     --------          -------

Deferred tax liabilities:
    Property and equipment depreciation............      (181)            (234)
    Lawsuit expenses...............................         -             (111)
    Other..........................................      (285)            (103)
                                                     --------          -------
      Gross deferred tax liability.................      (466)            (448)
                                                     --------          -------
Net deferred income taxes..........................   $ 2,925          $   934
                                                     ========          =======
</TABLE>

NOTE 6  - STOCK OPTIONS

          The Company has two active stock option plans, administered by the
Compensation Committee of the Board of Directors, which provide for the
issuance of options to employees, officers, directors and consultants. The
exercise price of a stock option is generally equal to the fair market value
of the Company's Common Stock on the date the option is granted. Both of the
plans permit options granted to qualify as "Incentive Stock Options" under
the Internal Revenue Code. Options issued under certain of the Company's
predecessor plans call for 100% vesting of outstanding options upon a change
of control of the Company. Options generally vest at a rate of 25 percent per
year over a period of four years from the date of grant and expire after a
period not to exceed ten years, except in the event of termination, whereupon
vested shares must be exercised within 30 days, or upon death or disability,
where a six month exercise period is specified.

                                     F-13
<PAGE>
                               OVERLAND DATA, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Option activity for the three years ended June 30, 2000 is summarized as
follows:

<TABLE>
<CAPTION>

                                                                                              Weighted-Average
                                                                         Shares               Exercise Price
                                                                      --------------       ---------------------
<S>                                                                   <C>                            <C>
Options outstanding at June 30, 1997.............................        756,191                       $1.24

       Options granted...........................................        572,768                        7.27
       Options exercised.........................................       (135,287)                       0.84
       Options canceled..........................................        (87,943)                       5.26
                                                                       ---------
Options outstanding at June 30, 1998.............................      1,105,729                        4.09

       Options granted...........................................        525,500                        6.03
       Options exercised.........................................        (55,975)                       1.65
       Options canceled..........................................        (95,625)                       6.36
                                                                       ---------
Options outstanding at June 30, 1999.............................      1,479,629                        4.73

       Options granted...........................................        720,500                        7.68
       Options exercised.........................................       (186,771)                       1.89
       Options canceled..........................................       (128,000)                       6.00
                                                                       ---------
Options outstanding at June 30, 2000.............................      1,885,358                       $6.05
                                                                       =========
</TABLE>


The following table summarizes all options outstanding and exercisable by price
range as of June 30, 2000:

<TABLE>
<CAPTION>

                                          Options Outstanding                                  Options Exercisable
                      -----------------------------------------------------------   -----------------------------------------

                                          Weighted-Average
      Range of              Number           Remaining        Weighted-Average           Number           Weighted-Average
      Exercise          Outstanding at      Contractual           Exercise           Exercisable at           Exercise
       Prices           June 30, 2000           Life               Price              June 30, 2000             Price
   ----------------   -------------------   -------------   ---------------------   ------------------   --------------------
   <S>                  <C>                    <C>                 <C>                  <C>                     <C>
     $ .20 -   .88         226,557              2.8               $ 0.62                 226,557              $ 0.62
      1.20 -  3.75         149,150              5.7                 2.43                 129,650                2.33
      4.50 -  6.94         755,250              8.5                 5.61                 219,375                5.56
      7.00 - 11.88         728,401              8.2                 8.62                 221,026                7.84
     13.88 - 16.69          26,000              9.8                14.52                       -                   -
                      -------------------                                           ------------------
       .20 - 16.69       1,885,358              7.5                 6.05                 796,608                4.26
                      ===================                                           ==================

</TABLE>

Shares available for future grant were 245,250, 837,750 and 592,500 at June 30,
2000, 1999 and 1998, respectively.


                                    F-14
<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

1996 EMPLOYEE STOCK PURCHASE PLAN

         In February 1997, the Company adopted the 1996 Employee Stock
Purchase Plan (the "ESPP") whereby 250,000 shares of Common Stock were
reserved for issuance and purchase by employees of the Company to assist them
in acquiring a stock ownership interest in the Company and to encourage them
to remain employees of the Company. In November 1998, the shareholders
approved an amendment to increase the total number of shares of Common Stock
from 250,000 to 500,000 shares. The ESPP is intended to qualify under Section
423 of the Internal Revenue Code and permits eligible employees to purchase
Common Stock at a discount through payroll deductions during specified
six-month offering periods. No employee may purchase more than $25,000 worth
of stock in any calendar year or 1,500 shares in any one offering period. The
ESPP is administered by an Administrative Committee appointed by the Board of
Directors and provides generally that the purchase price must not be less
than 85% of the fair market value of the Common Stock on the first or last
day of the offering period, whichever is lower. During fiscal year 2000, a
total of 63,463 shares were issued for combined proceeds of $300,000.

PRO FORMA INFORMATION

         The Company accounts for employee stock-based compensation using the
intrinsic value method. No compensation expense has been recognized for its
employee stock option grants, as they have been granted at the fair market
value of the underlying Common Stock at the date of grant. No compensation
expense has been recognized for purchase rights under the ESPP as they have
been granted in accordance with the terms of the ESPP. Had compensation
expense for the Company's employee stock-based compensation awards issued
during 2000, 1999 and 1998 been determined based on a fair value method, the
Company's net income and net income per share would have been reduced to the
pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                                    YEAR ENDED JUNE 30,
                                    ---------------------------------------------------
                                       2000                  1999                1998
                                    ---------            -----------          ---------
                                          (in thousands except per share amounts)
<S>                                 <C>                    <C>                  <C>
Net income:
     As reported................... $   2,067              $  3,982           $  2,792
     Pro forma.....................     1,410                 3,248              2,343

Diluted net income per share:
     As reported................... $     .19              $    .37           $    .25
     Pro forma.....................       .13                   .30                .21

</TABLE>


         The fair value of each option grant is estimated on the date of
grant using a Black-Scholes option-pricing model. The weighted-average
estimated fair value of employee stock options granted during fiscal years
2000, 1999 and 1998 were $1.29, $2.07 and $1.16 per share, respectively. The
weighted average assumptions used for grants during the fiscal years 2000,
1999 and 1998 were: no dividend yield for all years, risk-free interest rates
of 6.4%, 5.2% and 5.9%, respectively, expected volatility of 80%, 60% and
33%, respectively, and expected lives of 7.0 years for all fiscal years.

         The fair value of each share purchase right under the ESPP is
estimated at the inception of each offering period also using a Black-Scholes
option-pricing model. The weighted-average estimated fair value of each share
purchase right granted during fiscal years 2000, 1999 and 1998 were $3.39,
$1.86 and $1.45 per share, respectively. The weighted average assumptions
used during fiscal years 2000, 1999 and 1998 were: no dividend yield for all
years, risk-free interest rates of 6.4%, 5.2% and 5.9%, respectively,
expected volatility of 118%, 60% and 33%, respectively, and an expected life
of 6 months for all fiscal years.

                                    F-15
<PAGE>


                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE 7 - 401(k) PLAN

         In January 1994, the Company adopted an employee savings and retirement
plan (the "401(k) Plan") covering all of the Company's employees. The 401(k)
Plan permits but does not require matching contributions by the Company on
behalf of all participants. In January 1998, the Company began matching employee
contributions at 50% for up to 6% of an employee's pretax income. The totals of
these employer contributions were $290,000, $252,000 and $118,000 in fiscal
years 2000, 1999 and 1998, respectively.

NOTE 8 - COMMITMENTS AND CONTINGENCIES

COMMITMENTS

         The Company leases its office, production and sales facilities under
non-cancelable operating leases, which expire in various years through fiscal
year 2015. The leases provide for annual rent escalations intended to
approximate increases in cost of living indices, and certain of the leases
provide for rent abatement. At June 30, 2000, future minimum lease payments
under these arrangements are as follows:

<TABLE>
<CAPTION>
Year Ending               Minimum Lease
 June 30,                   Payments
 --------                 -----------
                         (in thousands)
  <S>                    <C>
   2001                     $ 1,369
   2002                       1,296
   2003                         433
   2004                         254
   2005                         254
   Thereafter                 2,434
                            -------
                            $ 6,040
</TABLE>

         Rental expense is recognized ratably over the respective lease terms
and aggregated $1,072,000, $983,000 and $1,001,000 for fiscal years 2000,
1998 and 1997, respectively.

CONTINGENCIES

         The Company, its directors and certain of its officers were named as
defendants in two class action lawsuits filed on April 21, 1997 and May 2,
1997 in the U.S. District Court for the Southern District of California. In
both cases, the plaintiffs purported to represent a class of all persons who
purchased the Company's Common Stock between February 21, 1997 and March 14,
1997. The complaints alleged that the defendants violated various federal
securities laws through material misrepresentation and omissions in
connection with the Company's initial public offering and its Registration
Statement on Form S-1, which the Securities and Exchange Commission declared
effective on February 21, 1997. On November 23, 1999, the defendants entered
into a Stipulation of Settlement for this litigation, and on March 6, 2000,
the Court approved the settlement. In accordance with the settlement, the
litigation was dismissed with prejudice.


                                    F-16
<PAGE>



                               OVERLAND DATA, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

NOTE 9 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         The following table presents selected quarterly financial information
for the periods indicated. This information has been derived from unaudited
quarterly consolidated financial statements, which in the opinion of management
includes all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such information. The quarterly per share
data presented below was calculated separately and may not sum to the annual
figures presented in item 14 of this report. These operating results are also
not necessarily indicative of results for any future period.

<TABLE>
<CAPTION>

                                                                    Quarters Ended
                        ------------------------------------------------------------------------------------------------------------
                                          Fiscal Year 1999                                         Fiscal Year 2000
                        -------------------------------------------------------- ---------------------------------------------------
                          Sept. 30       Dec. 31       Mar. 31       Jun. 30      Sept. 30      Dec. 31       Mar. 31       Jun. 30
                            1998           1998          1999          1999         1999         1999          2000          2000
                        -------------- ------------- ------------- ------------- ----------- ------------  ------------ ------------
<S>                       <C>          <C>             <C>           <C>         <C>          <C>           <C>          <C>
Net sales.............    $  24,372     $  24,240      $ 22,263      $ 21,352     $ 22,845     $ 27,469      $ 34,354     $  38,311
Gross profit..........        7,416         7,313         6,522         6,640        6,242        6,976         8,825         8,476
Income (loss)
  from operations.....        1,938         1,871           969           836         (107)         740         1,711           467
Income before
  income taxes........        2,209         2,169         1,213           990           64        1,007         1,919           426
Net income............        1,348         1,315           736           583           39          609         1,161           258

Net income per share:
  Basic                   $    0.13     $    0.13      $   0.07      $   0.06      $     -     $   0.06      $   0.11     $    0.03
  Diluted                      0.12          0.12          0.07          0.05            -         0.06          0.11          0.02


</TABLE>

                                   F-17
<PAGE>



                               OVERLAND DATA, INC.
                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                 FISCAL YEARS ENDED JUNE 30, 2000, 1999 AND 1998


<TABLE>
<CAPTION>


                                Balance at      Additions                         Deductions
                                 Beginning      Charged to                        Credited to       Balance at
                                  of Year         Income         Deductions*        Income         End of Year
                               -----------     ------------     -------------     ----------      -------------
<S>                              <C>             <C>             <C>                 <C>             <C>
Allowance for Doubtful Accounts Receivable

2000                             $  885          $   43            $    49            $490            $   389
1999                                922               7                 44               -                885
1998                                774             243                 95               -                922

Reserve for Inventory Obsolescence

2000                             $1,175          $2,674             $1,156               -            $ 2,693
1999                              1,848             315                988               -              1,175
1998                              1,879             300                331               -              1,848

</TABLE>
------------
*  Amounts written off against the allowance, net of recoveries.



                                   S-1
<PAGE>

<TABLE>
<CAPTION>

EXHIBIT INDEX
<S>     <C>
 2.1     Asset Purchase Agreement, dated as of January 7, 2000, by among the
         Registrant, Tecmar Acquisition Corporation, Tecmar Technologies
         International, Tecmar Technologies, and Ditto, Inc. (1) +

 3.1     Registrant's Amended and Restated Articles of Incorporation. (2)

 3.2     Registrant's By-Laws. (2)

 4.1     Specimen stock certificate. (2)

 4.2     Investors' Rights Agreement, dated May 21, 1993, between the Registrant
         and the parties named therein. (2)

10.1     Basic Order Agreement #16529, dated July 1, 1993 and as amended through
         November 10, 1995, between the Registrant and Digital Equipment
         Corporation. (2)

10.2     Production Procurement Agreement #RMSS-ODI-96-01-0, dated October 25,
         1996, between the Registrant and International Business Machines
         Corporation. (2)

10.3     Credit Agreement, dated as of June 27, 1997, by and between the
         Registrant and Imperial Bank. (3)

10.4     Standard Industrial Lease--Multi-Tenant, dated May 26, 1993, between
         the Registrant and Mitsui/SBD America Fund 87-1. (2)

10.5     First Amendment to the 1995 Stock Option Plan dated January 21, 1997. (2)

10.8     1996 Employee Stock Purchase Plan adopted December 12, 1996. (2)

10.9     Agreement between Overland Data and Tandberg Data Concerning MLR and
         VR(2) Technology, dated as of March 30, 1998, by and between the
         Registrant and Tandberg Data ASA. (4) +

10.9     Travan-TM- and VR(2) ASIC License and Supply Agreement, dated as of
         February 25, 1999, by and between Overland Data and Imation
         Corporation. (5) +

10.9     Supply Agreement, dated November 5, 1999, by and between Overland Data
         and Seagate Technology, Inc. (6) +

10.10    Credit Agreement, dated as of November 9, 1999, by and between Overland
         Data and Imperial Bank. (6) +

10.11    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between Overland Data and Scott McClendon. (7)

10.12    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between the Company and Steven E. Richardson. (7)

10.13    Officer's Retention Agreement, dated as of January 27, 2000, by and
         between the Company and Robert J. Scroop. (7)

10.14    VR(2) Technology License Agreement dated as of April 27, 2000 by and
         between Overland Data and Storage Technology Corp. (8) +

10.15    Purchase Agreement, dated as of June 7, 2000, by and between Compaq
         Computer Corporation and its Affiliates and Overland Data. +

21.1     Subsidiaries of the Registrant.

23.1     Consent of PricewaterhouseCoopers LLP, Independent Accountants.

24.1     Power of Attorney (included on Signature Page).

27.1     Financial Data Schedule (for EDGAR use only).

</TABLE>
-----------------

(1)      Incorporated by reference to the Company's Form 8-K dated March 8,
         2000.
(2)      Incorporated by reference to the Company's Registration Statement No.
         333-18583 dated February 21, 1997.
(3)      Incorporated by reference to the Company's Form 10-K dated September
         29, 1997.
(4)      Incorporated by reference to the Company's Form 10-K dated September
         28, 1998.
(5)      Incorporated by reference to the Company's Form 10-K dated September
         27, 1999.
(6)      Incorporated by reference to the Company's Form 10-Q dated February 16,
         2000.
(7)      Incorporated by reference to the Company's Form 10-Q dated May 17,
         2000.
(8)      Incorporated by reference to the Company's Form 8-K dated July 25,
         2000.
+        The Company has requested confidential treatment for certain portions
         of this Exhibit.