SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC  20549


                            FORM 10-Q


__X___  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE   
        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

                                OR

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

For the transition period from ________________________________

     
                 Commission File Number:  0-8354


                     nSTOR TECHNOLOGIES, INC.
      (Exact name of Registrant as specified in its Charter)


          Delaware                                95-2094565

(State of other jurisdiction of                (I.R.S. Employer
incorporation or organization)                Identification No.) 


                        100 Century Blvd.
                    West Palm Beach, FL  33417
             (Address of principal executive office)

                          (561) 640-3103
                 (Registrant's telephone number)


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 _____ 


  Number of shares outstanding of the Registrant's Common Stock, 
  par value $.05 per share, as of March 31, 1998: 18,670,477


<PAGE>

PART I.   FINANCIAL INFORMATION



Item 1.   Financial Statements



          The condensed financial statements included herein have
been prepared by the registrant, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. 
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations; however, the registrant believes that
the disclosures are adequate to make the information presented not
misleading.  It is suggested that these condensed financial
statements be read in conjunction with the financial statements and
the notes thereto included in the registrant's annual report on
Form 10-K for the year ended December 31, 1997.

          The condensed financial statements for the interim
periods included herein, which are unaudited, include, in the
opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial
position and results of operations of the registrant for the
periods presented.  The results of operations for interim periods
should not be considered indicative of results to be expected for
the full year.  

                                      2
<PAGE>


nSTOR TECHNOLOGIES, INC.    
CONSOLIDATED BALANCE SHEETS
(dollars in thousands) 

                                                   Mar. 31,    Dec. 31,
             ASSETS  (Note 3)                        1998        1997
             ----------------                     ---------   ---------
Current assets:
  Cash and cash equivalents:
    Unrestricted                                   $    82     $    61
    Restricted                                       1,031       1,024
  Accounts receivable  (Note 2)                      3,458       3,863
  Inventories (Note 2)                               3,166       3,577
  Prepaid expenses and other                           266         262
                                                   -------     -------
     Total current assets                            8,003       8,787
                                             

Property and equipment, net  (Note 2)                2,154       2,060
Goodwill and other intangible assets,
  net  (Note 2)                                      5,830       5,915
                                                   -------     -------
                                                   $15,987     $16,762
                                                   =======     =======
              LIABILITIES
              -----------
Current liabilities:
  Borrowings  (Note 3)                             $ 3,500     $ 3,445
  Accounts payable and other                         4,219       6,568
  Royalty liability                                    208         208
                                                   -------     -------
     Total current liabilities                       7,927      10,221
                                                   
Long-term debt  (Note 3)                             5,563       1,504
                                                   -------     -------
     Total liabilities                              13,490      11,725
                                                   -------     -------

Commitments and contingencies


         STOCKHOLDERS' EQUITY 
         --------------------

Preferred stock, $.01 par; shares                                    
  authorized 1,000,000; outstanding none                -           -
Common stock, $.05 par; shares authorized
  24,000,000; outstanding 18,670,477                   934         934
Additional paid-in capital                          30,499      30,499 
Deficit                                            (28,936)    (26,396)
                                                   -------     -------
     Total stockholders' equity                      2,497       5,037
                                                   -------     -------
                                                   $15,987     $16,762
                                                   =======     =======





See accompanying notes to consolidated financial statements.

                                    3
<PAGE>

nSTOR TECHNOLOGIES, INC.    
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)



                                                Three Months
                                               Ended March 31,
                                             --------------------
                                               1998       1997
                                             ---------  ---------

Sales                                         $ 3,606    $ 9,003
Cost of sales                                   2,958      5,892
                                              -------    -------
     Gross profit                                 648      3,111
                                              -------    -------

Operating expenses:
  Selling, general and administrative           2,474      2,158
  Research and development                        568        662  
                                              -------    -------
     Total operating expenses                   3,042      2,820
                                              -------    -------

     Income (loss) from operations             (2,394)       291


Interest income                                    16         31
Interest expense                                 (162)       (18)
                                              -------    -------

Net income (loss)                            ($ 2,540)   $   304
                                              =======    =======

Basic and diluted net income (loss)
  per common share                           ($   .14)   $   .02
                                              =======    =======
                                            
Average number of common
  shares outstanding:

    Basic                                   18,670,477 18,670,477
                                            ========== ==========
    Diluted                                 18,670,477 18,778,204
                                            ========== ==========




See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
nSTOR TECHNOLOGIES, INC.    
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)





                                        Addi-
                       Common Stock    tional
                    -----------------  Paid-In
                      Shares   Amount  Capital  Deficit   Total
                    ---------- ------  -------  -------  -------

Balances, December
  31, 1997          18,670,477  $934   $30,499 ($26,396) $ 5,037


Net loss for the
  three months
  ended March
  31, 1998                -       -        -     (2,540)  (2,540)
                    ----------  ----   -------  -------  -------
Balances, March 
  31, 1998          18,470,477  $934   $30,499 ($28,936) $ 2,497
                    ==========  ====   =======  =======  =======
  

















See accompanying notes to consolidated financial statements.

                                   5
<PAGE>


nSTOR TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)         



                                                          Three Months 
                                                        Ended  March 31,
                                                       -------------------
                                                         1998       1997
                                                       --------   --------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income  (loss)                                  ($  2,540)  $    304
  Adjustments to reconcile net income (loss)
    to net cash used by operating activities:
      Depreciation and amortization                         281        180
      Changes in assets and liabilities: 
        Decrease (increase) in accounts receivable          405       (767)
        Decrease (increase) in inventories                  411     (1,490)
        Increase in prepaid expenses and other              (11)       (47)
        Decrease in accounts payable and other           (2,340)      (470)
                                                       --------   --------
Net cash used by operating activities                    (3,794)    (2,290)
                                                       --------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                      (290)       (82)
                                                       --------   --------
Net cash used by investing activities                      (290)       (82)
                                                       --------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings                               12,563        -
  Repayment of borrowings                                (8,458)       -
                                                       --------   --------
Net cash provided by financing activities                 4,105        -
                                                       --------   --------

Net increase (decrease) in unrestricted cash and
  cash equivalents during the period                         21     (2,372)

Unrestricted cash and cash equivalents at the
  beginning of the period                                    61      4,619
                                                       --------   --------
Unrestricted cash and cash equivalents at the
  end of the period                                    $     82   $  2,247
                                                       ========   ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during period for:
    Interest                                           $    154   $    -
                                                       ========   ========











See accompanying notes to consolidated financial statements.

                                         6
<PAGE>
nSTOR TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


     Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of nStor
Technologies, Inc. and all wholly-owned subsidiaries (collectively,
the "Company").  Significant intercompany balances and transactions
have been eliminated in consolidation.

     Business

The Company is engaged as a manufacturer and supplier of
information storage solutions, including external RAID (Redundant
Array of Independent Disks) subsystems and data storage enclosures,
UNIX-based memory products, storage management hardware and
software, digital media products, and enterprise resource planning
manufacturing solutions.

     Use of Estimates

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 disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

     Revenue Recognition

Sales revenue is recognized upon shipment provided that there are
no significant post-sale obligations and the collectibility is
reasonably assured.  During the periods presented in the
accompanying consolidated Statements of Operations, there were no
significant post-sales obligations except for normal warranty 
costs.

     Warranty Costs

Warranty costs are provided on the basis of estimated net future
costs related to products sold.

     Research and Development Costs

Research and development costs are expensed as incurred.

                                     7
<PAGE>

     Reclassifications

Certain prior years' amounts have been reclassified to conform to
the current year's presentations.  These reclassifications had no
impact on operating results previously reported.



(2)  BALANCE SHEET COMPONENTS (in thousands)

Substantially all assets are pledged as collateral for
indebtedness.  See Note 3 to Consolidated Financial Statements.

                                    
                                         Mar.31,    Dec.31,
                                          1998       1997 
                                         ------     ------
Accounts Receivable

     Trade receivables                   $3,609     $4,218
     Less allowance for   
       doubtful accounts                   (291)      (500)
                                         ------     ------
                                          3,318      3,718
     Other receivables                      140        145
                                         ------     ------
                                         $3,458     $3,863
                                         ======     ======

Inventories

     Raw materials                       $2,730     $3,299
     Work-in-process                        193         -
     Finished goods                         243        278
                                         ------     ------
                                         $3,166     $3,577        
                                         ======     ======

Inventories are stated at the lower of cost or market, with cost
being determined based on the first-in, first-out (FIFO) method. 
Reserves are recorded as necessary to reduce obsolete inventory to
estimated net realizable value.

                                    8
<PAGE>

                                         Mar.31,    Dec.31,
                                          1998       1997 
                                         ------     ------
Property and Equipment
 
     Computer equipment                  $1,023     $  809
     Computer software                      927        907
     Furniture, fixtures
       and office equipment                 286        286
     Leasehold improvements                 312        283
     Other                                  238        232
                                         ------     ------
                                          2,786      2,517
     Less accumulated depreciation         (632)      (457)
                                         ------     ------
                                         $2,154     $2,060  
                                         ======     ======

Property and equipment are stated at cost.  Depreciation is
provided under the straight-line method over the estimated useful
lives, principally five years.

Goodwill and Other Intangible Assets

     Goodwill                            $6,038      $6,038
     Intellectual assets                    347         347
     Other                                   21          -
                                         ------      ------
                                          6,406       6,385
     Less accumulated amortization         (576)       (470)
                                         ------      ------
                                         $5,830      $5,915 
                                         ======      ======

In connection with acquisitions completed in 1996, the Company
recorded goodwill representing the excess purchase price over the
fair value of assets acquired.  In addition, the Company recorded 
intellectual assets consisting of trademarks and proprietary
technology, both of which are carried at cost and are being
amortized on a straight-line basis over fifteen years.


(3)  BORROWINGS

The Company's short-term borrowings as of March 31, 1998
principally consisted of an asset based revolving bank credit
facility (the "Revolver") in the amount of $3,050,000.  The
Revolver bears interest, payable monthly, based on LIBOR plus 3%
(8.7% at March 31, 1998), is guaranteed by the Company and matures
on June 30, 1998, as extended.  The Company pays a commitment fee
on the unused portion of the Revolver at one-eighth of one percent
(1/8 of 1%) per annum.  Advances under the Revolver are

                                  9
<PAGE>

collateralized by substantially all assets of the Company,
including approximately $1 million reflected as Restricted Cash at
March 31, 1998.  The loan agreement provides for certain
restrictions on the payment of dividends, the incurrence of
additional indebtedness and capital expenditures, and requires
minimum working capital, tangible net worth and other financial
covenants.  The Company has not consistently been in compliance
with certain financial covenants which resulted in amendments to
the Revolver in December 1997 and February 1998.  Among other
modifications, the amendments waived compliance with the financial
covenants and reduced the original maximum loan amount from $7
million to $3,250,000 through April 30, 1998 and to $3 million
thereafter until maturity on June 30, 1998.  

As of March 31, 1998, long-term debt included borrowings of $5
million under promissory notes and $563,000 under convertible notes
(the "Convertible Notes").

At December 31, 1997, a significant portion of the Company's long
term debt consisted of a Promissory Note with H. Irwin Levy, a
director and principal stockholder of the Company, under which the
Company could borrower up to $1 million (the "Director Loan").  The
outstanding balance on that date was $950,000.  Through its March
1998 maturity date, the Director Loan bore interest, payable
monthly, at prime plus one and one-half percent (1.5%) per annum,
was subordinated to the Revolver and was collateralized by
substantially all assets of the Company.  In connection with the
Director Loan, as of March 31, 1998, the Company issued warrants to
Mr. Levy to purchase 65,000 shares of common stock of the Company
at a purchase price of $2.35 per share, exercisable on the date of
grant, and expiring on September 16, 2000.  

During the first quarter of 1998, Mr. Levy advanced an additional
net amount of $1.3 million (consisting of $1,710,000 advanced, less
$410,000 repaid).  On March 5, 1998, an Amended and Restated Loan
Agreement was executed increasing the Director Loan to $2 million. 
In March 1998, three private investors each loaned the Company an
additional $1 million (together with the $2 million Director Loan,
hereinafter collectively referred to as the "Subordinated Loans").

The Subordinated Loans bear interest at 10% per annum, payable
monthly, mature on September 5, 1999, are subordinated to the
Revolver and are collateralized by substantially all assets of the
Company.  In connection with the Subordinated Loans, warrants were
issued to purchase an aggregate of 1,666,668 shares (including
666,666 to Mr. Levy) of common stock of the Company, exercisable on
the date of grant at $1.50 per share, and expiring on March 5,
2001.

                                   10
<PAGE>

In connection with the Company's private placement of preferred
stock in April 1998 (see Note 5 to Consolidated Financial
Statements), Mr. Levy sold $1 million of participation interests in
the $2 million Director Loan to private investors, including
$250,000 to members of his family.  In addition, proceeds from the
private placement were used to repay $735,000 in advances made by
Mr. Levy during March and April which were in excess of the $2
million Director Loan, $250,000 of which had been advanced as of
March 31, 1998 and is included in current borrowings.

The Convertible Notes have a face amount of $400,000, have been
discounted based on an effective interest rate of 12%, include
accrued interest of $208,000 and $206,000 at March 31, 1998 and
December 31, 1997, respectively, mature in 2000 and are convertible
into 160,000 shares of common stock of the Company (based on one
common share for each $2.50 of  face amount).


(4)  INCOME TAXES

As of December 31, 1997, there were unused net operating loss
carryforwards (the "NOL's") for regular federal income tax purposes
of approximately $8.4 million principally expiring in 2012, for
which no financial statement benefit had been recognized.  In
addition, the Company has research and development tax credit
carryforwards of approximately $637,000 which expire from 2002
through 2012 and in conjunction with the Alternative Minimum Tax
("AMT") rules, the Company has available AMT credit carryforwards
of approximately $238,000, at December 31, 1997, which may be used
indefinitely to reduce regular federal income taxes.


(5) SUBSEQUENT EVENTS

     Borg Adaptive Technologies, Inc. ("Borg")

Effective April 23, 1998, the Company acquired all the outstanding
common stock of  Borg, a privately owned company headquartered in
Boulder, Colorado, and the developer of Adaptive RAID, a patented
next-generation RAID technology.  The purchase price consisted of
approximately $336,000, of which $311,000 was used for the
retirement of debt, and the issuance of  warrants to purchase
400,000 shares of common Stock of the Company, exercisable on May
1, 1998 at $1.38 per share and expiring on December 26, 2000.

                              11
<PAGE>

     Additional Financing/Convertible Preferred Stock

Effective April 14, 1998, the Company received $3.5 million in cash
(including $1 million from Mr. Levy) from a private placement of 8%
convertible preferred stock (the "Convertible Preferred Stock"),
including $1 million deposited in escrow to be released to the
Company upon stockholder approval of an increase in the authorized
shares of the Company's Common Stock at the next Annual Meeting,
expected to be held on June 8, 1998.  The Convertible Preferred
Stock is convertible into common stock, on various dates through
April 2000, at a conversion price equal to the lesser of $1.44 per
share or 77% of the market price at the date of conversion.  At
closing, the Company issued warrants to purchase 280,000 shares of
the Company's Common Stock (including 80,000 to Mr. Levy),
exercisable at any time through April 2001 at an exercise price of
$1.50 per share.  See Note 3 to Consolidated Financial Statements
in connection with Subordinated Loans.



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Overview

With the exception of discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward looking statements.  Such
statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown
risks that could cause actual results of operations to differ
materially from those projected or implied.  Further, certain
forward looking statements are based upon assumptions about future
events which may not prove to be accurate.

Risks and uncertainties inherent in forward looking statements
include, but are not limited to, the Company's future cash flows
and ability to obtain sufficient financing, timing and volume of
sales orders, level of gross margins and operating expenses, lack
of market acceptance of the Company's new product lines, price
competition, conditions in the technology industry and the economy
in general, as well as legal proceedings.  The economic risk
associated with materials cost fluctuations and inventory
obsolescence is significant to the Company.  The Company's ability
to manage its inventories through procurement and utilization of
component materials could have a significant impact on future
results of operations or financial condition.  Historical results
are not necessarily indicative of the operating results for any
future period.

                                   12
<PAGE>

Subsequent written and oral forward looking statements attributable
to the Company or persons acting on its behalf are expressly
qualified in their entirety by cautionary statements in this Form
10-Q and in other reports filed by the Company with the Securities
and Exchange Commission.  The following discussion should be read
in conjunction with the Consolidated Financial Statements and the
Notes thereto included elsewhere in this filing.

As a result of two acquisitions completed during 1996, (see Note 2
to Consolidated Financial Statements) the Company is engaged as a
manufacturer and supplier of information storage solutions,
including external RAID subsystems and data storage enclosures,
UNIX-based memory products, storage management hardware and
software, digital media products, and enterprise resource planning
manufacturing solutions.


Results of Operations

For the three months ended March 31, 1998 the Company incurred a
net loss of $2.5 million as compared to net income of $.3 million
for the quarter ended March 31, 1997.


Sales

Net sales for the three months ended March 31, 1998 decreased to
$3.6 million from $9 million during the three months ended March
31, 1997, principally attributable to the following:  (i) entering
1997 with a significantly higher backlog of sales orders than were
in place entering 1998;  (ii) delay of customer deliveries and in
some cases, missed sales orders caused by the Company's inability
to meet customer production schedules brought about by the
Company's cash flow difficulties;  and (iii) lost sales
opportunities while reorganizing and training the Company's sales
force under its new Vice President of Sales. 
 
During the three months ended March 31, 1998, the Company completed
several new distributor and OEM agreements, negotiated the
acquisition of new Adaptive RAID software (see Note 5 to
Consolidated Financial Statements) and finalized the reorganization
of the sales force, all of which are projected to positively affect
future sales of the Company.


Cost of Sales/Gross Margins

Gross margins for the three months ended March 31, 1998 decreased
to 18% from 35% for the comparable three months ended March 31,
1997.  The Company's gross margins are dependent, in part, on
product mix which fluctuates from time to time.  The decline in

                             13
<PAGE>

gross margins is primarily attributable to  an increased sales
level of products with overall lower margins and cash flow
difficulties which limited the Company's ability to purchase
products in the most cost efficient manner. 

Management expects an improvement in gross margins for the
remainder of fiscal 1998 resulting from concentrating sales efforts
on higher margin enhanced products, improved purchasing power
through the infusion of additional working capital and a reduction
in manufacturing overhead through strategic staffing.


Operating Expenses

Operating expenses which include both research and development and
selling, general and administrative expenses, increased to
approximately $3 million for the quarter ended March 31, 1998 from
$2.8 million for the quarter ended March 31, 1997, representing an
overall 8% increase.  Operating expenses for the 1998 quarter
represented 84% of net sales while like expenses during the 1997
quarter were only 34% of net sales.  This increase is primarily the
result of the decline in sales for the comparable periods rather
than an increase in the overall level of operating expenses.

Selling, general and administrative costs for the quarter ended
March 31, 1998 represented 69% of net sales and reflected a 15%
increase over the 1997 expenses.  Selling and marketing costs
primarily consist of salaries, commissions and related benefits,
expenses in connection with tradeshows, conferences and seminars,
facilities expenses and other miscellaneous costs allocated to
those personnel.  General and administrative costs primarily
consist of general corporate expenses, executive officers, finance
and accounting salaries and related benefits, professional fees
such as legal and accounting, facilities costs allocated to those
personnel, and amortization and depreciation of certain property,
equipment and intangibles, principally goodwill.  The Company does
not expect selling, general and administrative expenses to
significantly increase in the near future, except to the extent
that sales commissions and other marketing costs may increase due
to increases in sales revenue.

Research and development costs which are expensed as incurred,
represented 16% of net sales for the quarter ended March 31, 1998
and reflected a 14% decrease over the comparable 1997 expenses. 
Research and development expenses for the quarter ended March 31,
1997 included significant costs associated with the redesign,
standardization and receipt of agency certification for new product
development following the acquisition of Parity Systems, Inc. in
December 31, 1996. 

                                     14
<PAGE>
Research and development costs may fluctuate considerably from time
to time depending on a variety of factors.  These costs are
substantially incurred in advance of related revenues, or in
certain situations, may not ultimately result in generating
revenues.  Management anticipates an increase in these expenses for
the remainder of fiscal 1998 primarily brought about by the recent
acquisition (see Note 5 to Consolidated Financial Statements) of
Adaptive RAID technology which will require certain additional
development and integration into the Company's existing product
line.


Interest Expense

Interest expense incurred by the Company for the three months ended 
March 31, 1998 was $162,000, representing a significant increase
over the 1997 period as the Company was principally debt free
during the comparable period in 1997.  Management expects interest
expense to continue to increase over the remainder of fiscal 1998
due to additional borrowings incurred during the quarter ended
March 31, 1998 (see Note 3 to Consolidated Financial Statements)
and those expected to be incurred in the future.  See "Liquidity
and Capital Resources".


Convertible Preferred Stock

As a result of the Company's private placement of convertible
preferred stock (see Note 5 to Consolidated Financial Statements)
future earnings available to common stockholders will be reduced by
the amount of preferred stock dividends.


Liquidity and Capital Resources

Net cash used by operating activities amounted to $3.8 million and
$2.3 million for the three months ended March 31, 1998 and 1997,
respectively.  The most significant uses of cash for the 1998
period was the $2.5 million loss from operations and the reduction
of accounts payable and other liabilities of $2.3 million,
partially offset by cash provided by a reduction in accounts
receivable and inventories of approximately $.8 million.  The most
significant use of cash for the 1997 comparable period was an
increase in accounts receivable and inventories of $2.3 million.

Net cash used by investing activities was approximately $300,000
and $80,000 for the three months ended March 31, 1998 and 1997,
respectively, both resulting from investments in property and
equipment.

                                   15
<PAGE>
Net cash provided by financing activities for the three months
ended March 31, 1998 was $4.1 million and consisted of net
borrowings of $4.3 million under promissory notes with private
investors, including $1.3 million with H. Irwin Levy, a director
and principal stockholder of the Company, offset by a net reduction
of $195,000 under an asset based revolving bank credit facility. 
(See the following discussion and Note 3 to Consolidated Financial
Statements).

In May 1997, the Company obtained an asset based revolving bank
credit facility (the "Revolver") under which the Company could
borrow up to $7 million.  (See Note 3 to Consolidated Financial
Statements).  In the months that followed, the Company was not in
compliance with certain financial covenants of the Revolver
resulting in amendments to the Revolver in December 1997 and
February 1998, in which the bank waived compliance with those
covenants and the maximum borrowings were reduced to $3,250,000
through April 30, 1998 and $3 million thereafter, through the
revised maturity date of June 30, 1998.  The Revolver bears
interest, payable monthly, at LIBOR plus 3%, is guaranteed by the
Company and is collateralized by substantially all assets of the
Company, including approximately $1 million reflected as Restricted
Cash at March 31, 1998.  The outstanding balance under the Revolver
at March 31, 1998 was $3,050,000 and there was no additional
availability at that time.

In September 1997, H. Irwin Levy, agreed to loan up to $1 million
to the Company (the "Director Loan").  The Director Loan was
subordinated to the Revolver and was collateralized by
substantially all assets of the Company.  See Note 3 to
Consolidated Financial Statements for additional terms of the
Director Loan.

In the first quarter of 1998, Mr. Levy advanced an additional net
amount of $1,300,000 (consisting of $1,710,000 advanced, less
$410,000 repaid).   An Amended and  Restated  Loan  Agreement,
dated March 5, 1998, was executed between  the Company and  Mr.
Levy bringing the  total Director Loan to $2 million.  In March
1998, three private investors each loaned the Company an additional
$1 million (together with the $2 million Director Loan, hereinafter
collectively referred to as the "Subordinated Loans").  The
Subordinated Loans are subordinated to the Revolver and
collateralized by substantially all assets of the Company and
mature September 5, 1999.  See Note 3 to Consolidated Financial
Statements for additional terms of the Subordinated Loans.  In
April 1998, Mr. Levy advanced an additional $485,000 which together
with $250,000 advanced as of March 31, 1998, was repaid from
proceeds of a private placement of preferred stock (see below).

                             16
<PAGE>


In April 1998, the Company received $3.5 million in cash (including
$1 million from Mr. Levy) from a private placement of 8%
convertible preferred stock (see Note 5 to Consolidated Financial
Statements).  In addition, the Company is currently negotiating
with several potential lenders to obtain an asset based revolving
credit facility ("Potential Financing").  Management believes that
proceeds already received from the Subordinated Loans and private
placement, together with the Potential Financing, if consummated, 
will be sufficient to satisfy the Company's working capital needs
during 1998, as presently contemplated, including repayment of the
Revolver.   There can be no assurance, however, that the Company
may not require additional capital beyond its current forecasted
needs nor that any such additional required funds would be
available on terms acceptable to the Company, if at all, at such
time or times required by the Company.


Effect of Inflation

Inflation has not had an impact on the Company's operations and the
Company does not expect that it will have a material impact in
1998.



Part II  -  OTHER INFORMATION 


Item 1.  Legal Proceedings 

In June 1996, a Complaint was filed in the Supreme Court of the
State of New York, County of Nassau, against the Company and its
Chairman.  The plaintiffs claim to have contractual and proprietary
interests in the prospect of a transaction to purchase certain net
assets acquired by the Company and seek compensatory damages plus
punitive damages.

In August 1996, a Complaint was filed in the same Court making
similar allegations against a subsidiary, its president R. Daniel
Smith, and Intelligent Manufacturing Systems, Inc. ("IMS"), a
company for which Mr. Smith was the Chief Executive Officer and
sole shareholder.  In this action, the plaintiffs seek compensatory
damages plus punitive damages for alleged breach of contract.  

Both cases are currently in discovery. Counsel for the Company
believes that the Company has good defenses to both claims and that
it will not incur any material liability.  The Company is unaware
of any facts that would support any of the plaintiffs' claims and,
accordingly, the Company believes that the claims are without
merit.    

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From time to time, the Company is subject to legal proceedings and
other claims arising in the ordinary course of business.  In the
opinion of management, the Company is not a party to any litigation
the outcome of which would have a material adverse effect on its
business or operations.


Item 6.  Exhibits and Reports on Form 8-K:

   (a)   Exhibits:

         10.1  Stock Purchase Agreement dated February 2, 1998
               between nStor Corporation, Inc. and David Stallmo,
               Randy K. Hall and Gerald Hohoenstein 
 
         10.2  Form of amendment to Stock Purchase Agreement at
               10.1.  (four amendments, all of which extended the
               closing date of the proposed transaction).


   (b)   Reports on Form 8-K:

          The Company was not required to file Form 8-K during the
          quarter for which this report is filed.






                            SIGNATURE


Pursuant to the requirements 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.


                           nSTOR TECHNOLOGIES, INC.
                                 (Registrant)

                              
                         /s/ Larry J. Calise
May 14, 1998              _______________________________
                          Larry J. Calise, 
                          Principal Financial and
                          Accounting Officer
                              
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