<PAGE>   1

                       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 SEPTEMBER 30, 1999

                                       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 October 31, 1999: 22,720,061








<PAGE>   2

                    nSTOR TECHNOLOGIES, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
                                                                    Page
                                                                   Number
                                                                   ------
<S>                                                                <C>
  Item 1.    Financial Statements

        Consolidated Balance Sheets as of September 30,
          1999 (Unaudited) and December 31, 1998                       3

        Consolidated Statements of Operations
          (Unaudited) for the three and nine months
          ended September 30, 1999 and 1998                            4

        Consolidated Statements of Stockholders'
          Equity (Unaudited) for the nine months
          ended September 30, 1999                                     5

        Consolidated Statement of Cash Flows
          (Unaudited) for the nine months ended
          September 30, 1999 and 1998                                 6-7

        Notes to Consolidated Financial Statements
          (Unaudited)                                                 8-13



  Item 2.    Management's Discussion and Analysis of
             Financial Condition and Results of Operations           14-20


  Item 3.    Not applicable


Part II.     OTHER INFORMATION                                       21-22



SIGNATURES                                                            22
</TABLE>



                                       2
<PAGE>   3

PART 1.  FINANCIAL INFORMATION

Item 1.  Financial Statements


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



<TABLE>
<CAPTION>
                                                                 Sept. 30,
                                                                    1999        Dec. 31,
                                                                (unaudited)       1998
                                                                -----------     --------
<S>                                                              <C>            <C>

         ASSETS (Notes 2 and 4)

Current assets:
  Cash and cash equivalents:
    Unrestricted                                                 $    235       $    147
    Restricted (Note 4)                                               523             21
  Accounts receivable  (Note 3)                                     8,958          2,462
  Inventories (Note 3)                                              7,946          3,028
  Prepaid expenses and other                                        1,468            364
                                                                 --------       --------
     Total current assets                                          19,130          6,022

Property and equipment, net  (Note 3)                               3,620          1,653
Goodwill and other intangible assets,
  net (Notes 2 and 3)                                              15,875          5,953
Restricted cash and other non-current
  assets  (Note 4)                                                    259            500
                                                                 --------       --------
                                                                 $ 38,884       $ 14,128
                                                                 ========       ========
         LIABILITIES

Current liabilities:
  Current maturities of long-term debt (Note 4)                  $  1,717       $    500
  Accounts payable and other                                       13,316          3,435
                                                                 --------       --------
     Total current liabilities                                     15,033          3,935
Long-term debt  (Note 4)                                           16,533          7,043
Minority interests                                                    (30)          --
                                                                 --------       --------
     Total liabilities                                             31,536         10,978
                                                                 --------       --------
Commitments and contingencies

         STOCKHOLDERS' EQUITY (Notes 2 and 5)

Preferred stock, $.01 par; shares authorized 1,000,000;
  shares issued and outstanding at September 30, 1999 -
  Series A, Series C, Series D, Series E and Series F
  Convertible Preferred Stock, 1,667, 3,000, 2,700,
  3,500 and 4,654 shares, respectively; at December 31,
  1998 - Series A, C and D Convertible Preferred Stock,
  1,667, 3,000 and 2,700 shares, respectively                        --             --
Common stock, $.05 par; shares authorized 75,000,000;
  22,715,061 and 20,515,425 shares issued and outstanding
  at September 30, 1999 and December 31, 1998, respectively         1,135          1,025
Additional paid-in capital                                         53,897         40,409
Deficit                                                           (47,684)       (38,284)
                                                                 --------       --------
     Total stockholders' equity                                     7,348          3,150
                                                                 --------       --------
                                                                 $ 38,884       $ 14,128
                                                                 ========       ========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       3
<PAGE>   4

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



<TABLE>
<CAPTION>
                                                  Three Months                      Nine Months
                                                 Ended Sept. 30,                   Ended Sept. 30,
                                          -----------------------------     -----------------------------
                                              1999             1998             1999             1998
                                                   (unaudited)                      (unaudited)
                                          ------------     ------------     ------------     ------------
<S>                                       <C>              <C>              <C>              <C>
Sales                                     $     17,546     $      5,826     $     28,355     $     15,170
Cost of sales                                   12,531            5,015           22,020           12,700
                                          ------------     ------------     ------------     ------------
     Gross profit                                5,015              811            6,335            2,470
                                          ------------     ------------     ------------     ------------
Operating expenses:
  Selling, general and administrative            4,639            1,945            9,521            6,638
  Research and development                         835              748            2,053            1,897
  Depreciation and amortization                  1,124              361            2,102              991
                                          ------------     ------------     ------------     ------------
     Total operating expenses                    6,598            3,054           13,676            9,526
                                          ------------     ------------     ------------     ------------
     Loss from operations                       (1,583)          (2,243)          (7,341)          (7,056)

Interest and other income                           77               16              185               56
Interest expense                                  (650)            (242)          (1,451)            (723)
Minority interests                                 109               --              145               --
                                          ------------     ------------     ------------     ------------
Net loss                                        (2,047)          (2,469)          (8,462)          (7,723)

Preferred stock dividends                         (300)             (68)            (606)            (128)
Embedded dividends attributable to
  beneficial conversion privileges and
  warrants issued in connection with
  Convertible Preferred Stock                       (6)            (323)            (332)          (1,045)
                                          ------------     ------------     ------------     ------------

Net loss applicable to common stock            ($2,353)         ($2,860)         ($9,400)         ($8,896)
                                          ============     ============     ============     ============

Basic and diluted net loss per
  common share                                   ($.10)           ($.15)           ($.43)           ($.47)
                                          ============     ============     ============     ============

Average number of common shares
  outstanding, basic and diluted            22,692,189       18,852,103       21,895,876       18,732,882
                                          ============     ============     ============     ============
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       4
<PAGE>   5

                            nSTOR TECHNOLOGIES, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                             (dollars in thousands)



<TABLE>
<CAPTION>
                                                                Preferred
                                       Common Stock               Stock           Additional
                                 -----------------------   -----------------       Paid-In
                                   Shares       Amount     Shares    Amount        Capital        Deficit        Total
                                 ----------   ----------   ------   --------      ----------    ----------    ----------
<S>                              <C>          <C>           <C>     <C>           <C>           <C>           <C>
Balances, December
 31, 1998                        20,515,425   $    1,025    7,367   $     --      $   40,409      ($38,284)   $    3,150

Issuance of Convertible
 Preferred Stock:
   Series E                                                 3,500         --           3,484                       3,484
   Series F                                                 4,654         --           4,633                       4,633

Issuance of common stock
 in connection with:
   Satisfaction of borrowings       645,000           32                               1,258                       1,290
   Exercise of options and
     warrants                       987,969           50                               1,526                       1,576
   Other                            566,667           28                               1,118                       1,146

Common stock warrants issued
 in connection with:
   Long-term debt                                                                        791                         791
   Acquisition                                                                           200                         200

Common stock options granted
 to non-employees                                                                        146                         146

Preferred stock dividends                                                                             (606)         (606)

Embedded dividend attribut-
 able to beneficial conver-
 sion privilege of Series A
 Convertible Preferred Stock                                                             181          (181)         --

Embedded dividend attributable
 to common stock warrants
 issued in connection with
 Series E Convertible
 Preferred Stock                                                                         151          (151)         --

Net loss for the nine
 months ended Sept. 30, 1999                                                                        (8,462)       (8,462)
                                 ----------   ----------    -----   --------      ----------    ----------    ----------
Balances, Sept. 30,
 1999 (unaudited)                22,715,061   $    1,135   15,521   $     --      $   53,897      ($47,684)   $    7,348
                                 ==========   ==========   ======   ======--      ==========    ==========    ==========
</TABLE>


          See accompanying notes to consolidated financial statements.



                                       5
<PAGE>   6

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



<TABLE>
<CAPTION>
                                                              Nine  Months
                                                             Ended Sept. 30,
                                                       --------------------------
                                                           1999           1998
                                                       (unaudited)    (unaudited)
                                                       -----------    -----------
<S>                                                      <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                ($8,462)       ($7,723)
  Adjustments to reconcile net loss to net
    cash used by operating activities:
      Depreciation and amortization                         2,102            991
      Provision for losses on accounts receivable             883            561
      Provision for inventory obsolescence                    782            995
      Amortization of deferred financing costs                474             94
      Amortization of deferred compensation                   157             --
      Minority interests and other                            (15)            --
      Changes in assets and liabilities, net of
        effects from acquisitions:
           Increase in accounts receivable                   (669)          (754)
           Decrease in inventories                            516             85
           Increase in prepaid expenses and other             (16)           (46)
             Decrease in accounts payable and other          (942)        (2,315)
                                                         --------       --------
Net cash used by operating activities                      (5,190)        (8,112)
                                                         --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                        (337)          (434)
  Cash paid for acquisitions                               (1,058)          (379)
                                                         --------       --------
Net cash used by investing activities                      (1,395)          (813)
                                                         --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds (repayments) on revolving
    credit facilities                                      (2,267)          (841)
  Additions to other borrowings                             6,880         24,155
  Repayment of other borrowings                            (1,990)       (17,996)
  Issuance of preferred stock, net                          1,962          3,237
  Proceeds from exercise of stock options
    and warrants                                            1,576             --
  Issuance of common stock                                  1,000             --
  Cash paid for preferred stock dividends                    (488)            (5)
  Increase in restricted cash and cash equivalents             --            503
                                                         --------       --------
Net cash provided by financing activities                   6,673          9,053
                                                         --------       --------
Net increase in unrestricted cash
  and cash equivalents during the period                       88            128

Unrestricted cash and cash equivalents at the
  beginning of the period                                     147             61
                                                         --------       --------
Unrestricted cash and cash equivalents at the
  end of the period                                      $    235       $    189
                                                         ========       ========
</TABLE>



                                       6
<PAGE>   7

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



<TABLE>
<CAPTION>
                                                             Nine Months
                                                           Ended  Sept. 30,
                                                     --------------------------
                                                         1999           1998
                                                     (unaudited)    (unaudited)
                                                     -----------    -----------
<S>                                                    <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 Cash paid during period for interest                  $    944       $    528
                                                       ========       ========


SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

  Non-Cash Investing Activities:
    Acquisitions (Note 2):
      Fair value of assets acquired                    $ 27,940       $    527
      Liabilities assumed                               (16,782)            --
      Acquisition Notes issued                           (5,100)            --
      Series F Convertible Preferred Stock issued        (4,654)            --
      Common stock issued                                  (146)            --
      Warrants issued                                      (200)          (148)
                                                       --------       --------
          Cash paid                                    $  1,058       $    379
                                                       ========       ========

  NON-CASH FINANCING ACTIVITIES:
    Issuance of common stock in satisfaction of
      borrowings  (Note 4)                             $  1,290       $     --
                                                       ========       ========
      Issuance of preferred stock in satisfaction
      of borrowings (Note 4)                           $  1,500       $  2,500
                                                       ========       ========
</TABLE>



          See accompanying notes to consolidated financial statements.


                                       7

<PAGE>   8

                            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 majority owned subsidiaries (the "Company").
Significant intercompany balances and transactions have been eliminated in
consolidation.

In the opinion of management, the unaudited consolidated financial statements
furnished herein include all adjustments, consisting only of recurring
adjustments necessary for a fair presentation of the results of operations for
the interim periods presented. These interim results of operations are not
necessarily indicative of results for the entire year. The consolidated
financial statements contained herein should be read in conjunction with the
consolidated financial statements and related notes contained in the Company's
1998 Annual Report on Form 10-K/A.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required for complete financial statements.

Certain items in the 1998 consolidated financial statements have been
reclassified to conform with the current presentation. These reclassifications
had no impact on operating results previously reported.

        Business

The Company is engaged as a manufacturer and supplier of high availability,
high-performance information storage and Storage Area Networking (SAN)
solutions, including external RAID (Redundant Array of Independent Disks)
solutions, desktop storage systems, advanced storage management software and
AdaptiveRAID(R) technology. nStor products are marketed through a worldwide
network of OEMs and distributors.

        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.


        Net Loss Per Common Share ("EPS")

The effect of including potentially dilutive securities in the EPS calculation
would have been anti-dilutive. Accordingly, basic and diluted EPS for all
periods presented are equivalent.



                                       8
<PAGE>   9

As of September 30, 1999, outstanding potentially dilutive securities include
2,365,000 shares underlying stock options, 10,084,666 shares underlying
convertible preferred stock, 2,411,997 shares underlying warrants and 160,000
shares underlying convertible debt.


(2) ACQUISITION

Effective June 1, 1999, the Company acquired approximately 76% of the
outstanding common stock of Andataco, Inc. ("Andataco") from affiliates of W.
David Sykes ("Mr. Sykes"), Andataco's president at that time. In addition, the
Company acquired a promissory note in the amount of $5.2 million payable by
Andataco to Mr. Sykes. The aggregate purchase price was $10.5 million,
consisting of: (i) $.5 million in cash, (ii) $5.1 million in promissory notes
("Acquisition Notes" - Note 4), (iii) $4.7 million of Series F Convertible
Preferred Stock (Note 5) which is convertible into 1,551,333 shares of the
Company's common stock and (iv) warrants to purchase 155,133 shares of the
Company's common stock, exercisable upon issuance for three years at $3.30 per
share, valued at $.2 million on the date of closing using the Black-Scholes
option pricing model. In addition, the Company incurred transaction costs of $.7
million. Andataco was a publicly held company headquartered in San Diego,
California which designed, manufactured and distributed information storage
solutions for Windows NT and UNIX environments.

On July 16, 1999, the Company acquired newly issued shares of Andataco common
stock from Andataco for $.5 million in cash, increasing the Company's ownership
to 77.2% (Note 4(b)).

Pursuant to an Agreement and Plan of Merger dated August 27, 1999, on November
2, 1999, the Company acquired the remaining 22.8% of Andataco from Andataco's
minority shareholders for an aggregate purchase price of $1.8 million,
consisting of 924,000 shares of the Company's common stock. In addition, the
Company incurred transaction costs of approximately $.3 million. Pursuant to the
Merger Agreement, a wholly-owned subsidiary of the Company was merged into
Andataco with Andataco becoming a wholly-owned subsidiary of the Company (the
"Merger").

The Andataco acquisition has been accounted for using the purchase method of
accounting with assets acquired and liabilities assumed recorded at their fair
values as of the respective dates of acquisition and the results of Andataco's
operations included in the Company's consolidated financial statements from
those dates. Allocation of the purchase price of the Andataco acquisition has
been made on a preliminary basis subject to adjustment should new or additional
facts about the business become known. The excess of the aggregate purchase
price over the fair value of net assets acquired (goodwill) approximated $13
million (consisting of $10.8 million as of September 30, 1999 and $2.2 million
arising from the Merger) and is being amortized over seven years.



                                       9
<PAGE>   10

(3)  BALANCE SHEET COMPONENTS (in thousands)

Substantially all assets are pledged as collateral for indebtedness (Note 4).

<TABLE>
<CAPTION>
                                             Sept.30,       Dec.31,
                                               1999          1998
                                           (unaudited)
                                           -----------      --------
<S>                                        <C>              <C>
Accounts Receivable
   Trade receivables                         $ 10,511       $  2,964
   Less allowance for doubtful accounts        (1,553)          (502)
                                             --------       --------
                                             $  8,958       $  2,462
                                             ========       ========
Inventories
   Raw materials                             $  7,321       $  2,641
   Work-in-process                                369             95
   Finished goods                                 256            292
                                             --------       --------
                                             $  7,946       $  3,028
                                             ========       ========
</TABLE>


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 and slow moving inventory to estimated net
realizable value.

<TABLE>
<CAPTION>
                                             Sept.30,       Dec.31,
                                               1999          1998
                                           (unaudited)
                                           -----------      --------
<S>                                        <C>              <C>
Property and Equipment
   Equipment                                 $  3,670       $  1,313
   Computer software                              749            729
   Furniture and fixtures                         505            288
   Leasehold improvements                         875            332
   Other                                          296            243
                                             --------       --------
                                                6,095          2,905
   Less accumulated depreciation               (2,475)        (1,252)
                                             --------       --------
                                             $  3,620       $  1,653
                                             ========       ========
</TABLE>


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

<TABLE>
<S>                                          <C>            <C>
Goodwill and Other Intangible Assets
   Goodwill                                  $ 17,346       $  6,545
   Intellectual assets                            347            347
                                             --------       --------
                                               17,693          6,892
   Less accumulated amortization               (1,818)          (939)
                                             --------       --------
                                             $ 15,875       $  5,953
                                             ========       ========
</TABLE>



                                       10
<PAGE>   11


Goodwill represents the excess cost of acquired businesses over the fair value
of net assets acquired. Intellectual assets consist of trademarks and
proprietary technology. Goodwill and intellectual assets are carried at cost and
are being amortized on a straight-line basis over seven to fifteen years.
Amortization of intangible assets was $506,000 and $879,000 for the three and
nine months ended September 30, 1999, respectively, and $122,000 and $347,000
for the three and nine months ended September 30, 1998, respectively.


(4)  LONG-TERM DEBT

(a) The Company's borrowings consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                              Sept.30,       Dec.31,
                                                1999          1998
                                            (unaudited)
                                            -----------      --------
<S>                                        <C>              <C>
Asset based revolving credit facilities:
  Andataco Revolver  (Note 4(b))              $  4,481       $     --
  nStor Revolver  (Note 4(c))                      952          1,738

Acquisition Notes, interest at 9.5%
  per annum, due July 2004  (Note 2)             5,100             --

Subordinated Notes (net of $633 and
  $287 unamortized discount) (Note 4(d))         6,167          4,713

Notes convertible into 160,000 shares
  of common stock (net of $220 and $214
  unamortized discount), due in 2000               620            592

Other (Note 4(e))                                  930            500
                                              --------       --------
                                                18,250          7,543
Less current maturities                         (1,717)          (500)
                                              --------       --------
                                              $ 16,533       $  7,043
                                              ========       ========
</TABLE>

(b)  Andataco Revolver

The Andataco Revolver provides for borrowings based on the lesser of $10 million
or: (i) 85% of eligible accounts receivable, as defined, plus (ii) the lesser of
$1.75 million or 23% of eligible inventory, as defined. The Andataco Revolver
currently bears interest at prime plus 1/2 percent (8.75% at September 30, 1999)
and matures in December 2002. Andataco pays a facility fee of .25% based on the
average unused portion of the maximum borrowings. Advances under the Andataco
Revolver are collateralized by substantially all assets of Andataco. The
Andataco Revolver provides for certain financial covenants, including Andataco
maintaining a certain minimum working capital and tangible net worth. During the
second quarter ended June 30, 1999, Andataco was not in compliance with the
financial covenant regarding tangible net worth; however, effective July 13,
1999, the lender agreed to waive the default, subject to, among other things,
receipt from nStor of a $.5 million capital contribution. On July 16, 1999,
nStor contributed $.5 million in cash as a capital contribution to Andataco
(Note 2).



                                       11
<PAGE>   12

(c)  nStor Revolver

The nStor Revolver provides for borrowings based on the lesser of $5 million or
80% of eligible accounts receivable, as defined, bears interest, based on prime
plus 2% (10.25% at September 30, 1999), and matures on August 3, 2000. The
Company pays a facility fee equal to 1% per annum on the total facility of $5
million. Advances under the nStor Revolver are collateralized by substantially
all assets of the Company (excluding those of Andataco), including $.5 million
reflected as Restricted Cash. The nStor Revolver provides for certain financial
covenants including current ratio and net worth requirements, limitations on
operating losses for the six month period ending December 31, 1998, and
restrictions on the incurrence of additional debt, capital expenditures and the
payment of dividends, other than preferred stock dividends. At December 31,
1998, the Company was not in compliance with the financial covenant concerning
the Company's operating loss for 1998; however, effective February 4, 1999, the
lender agreed to forbear from declaring a default. The Company has agreed to
repay the outstanding balance under the nStor Revolver by December 1999.

(d)  Subordinated Notes

At September 30, 1999, the Subordinated Notes amounted to $6.8 million
(including $1.8 million borrowed from unrelated investors in January 1999). The
Subordinated Notes bear interest at 8%-10% per annum and mature on September 5,
2001, as extended. Of this amount, $5 million is collateralized by substantially
all assets of the Company (excluding those of Andataco). The Subordinated Notes
include $1 million held by H. Irwin Levy, Chairman of the Board of Directors and
a principal stockholder of the Company, or companies controlled by him
(collectively, "Mr. Levy"), $250,000 held by Bernard R. Green, a director,
$125,000 held by a company controlled by Mark F. Levy, a director and Mr. Levy's
son, and $125,000 held by a company controlled by other members of Mr. Levy's
family.

In connection with the Subordinated Notes, the Company issued warrants to
purchase 2,266,668 shares of the Company's common stock (including 600,000 in
1999). The warrants were valued under the Black-Scholes option-pricing model as
of their respective dates of issuance at an aggregate of $1.2 million (including
$.8 million in 1999) and were recorded as a discount to the Subordinated Notes,
of which $162,000 and $446,000 was amortized as interest expense for the three
and nine months ended September 30, 1999, respectively, and $41,000 and $94,000
was amortized as interest expense for the three and nine months ended September
30, 1998, respectively.

(e)  Other

Included in other long-term debt at December 31, 1998 was $.3 million due to Mr.
Levy. The loan bore interest at 10% per annum and was repaid by the Company in
February 1999.

In March 1999, the Company borrowed $.8 million from Mr. Levy and $.5 million
from an unrelated private investor, respectively. Both loans bore interest at
10% per annum and were payable in September 1999. Effective as of March 30,
1999, the Company issued 645,000 of the Company's common stock (including
395,000 shares to Mr. Levy) in satisfaction of both notes.

From April 1, 1999 through June 10, 1999, Mr. Levy advanced an additional net
amount of $1.5 million to the Company (consisting of $2.3 million advanced, less
$.8 million repaid), with interest at 10% per annum. Effective June 8, 1999, the
Company issued Series E Convertible Preferred Stock with a stated value of $1.5
million in satisfaction of those borrowings (Note 5).



                                       12
<PAGE>   13

From July 15, 1999 through November 12,1999, Mr. Levy loaned an additional net
amount of $.9 million (consisting of $1 million advanced, less $.1 million
repaid) under a promissory note which currently allows the Company to borrow up
to $1 million on a revolving basis with interest at 10% per annum, due 30 days
from demand. At September 30, 1999, the amount outstanding under this note was
$.6 million.


(5)  CONVERTIBLE PREFERRED STOCK

The Company has five classes of convertible preferred stock (Series A, C, D, E
and F) with an aggregate stated value of $14.9 million (including $4.5 million
held by Mr. Levy). Series A, C and D preferred stock, with an aggregate stated
value of $6.7 million, accrues dividends at 8% per annum, payable quarterly, is
convertible at any time into an aggregate of 7,366,666 shares of the Company's
common stock, and has automatic conversion features in which each share not
converted by October 2001 (as to 2,700,000 shares) and July 2000 (as to
4,666,666 shares) is automatically converted into common stock. Series E and F
preferred stock, with an aggregate stated value of $8.2 million, accrues
dividends at 8% through June 7, 2000, 9% commencing June 8, 2000 and 10%
commencing June 8, 2001, and is convertible at any time into an aggregate of
2,718,000 shares of the Company's common stock.

In connection with the issuance of the Series E and F preferred stock in June
1999, the Company issued warrants to purchase 271,799 shares of the Company's
common stock (including 50,000 to Mr. Levy), exercisable upon issuance at $3.30
per share and expiring on June 8, 2002. The warrants issued in connection with
the Series E preferred stock (116,666 shares) were valued under the
Black-Scholes option-pricing model as of June 8, 1999 at $151,000 and were
recorded as an additional embedded dividend. The warrants issued to Mr. Sykes in
connection with the Series F preferred stock (155,133 shares) were also valued
under the Black-Scholes option-pricing model at $200,000 and were included in
the acquisition costs of Andataco (Note 2).


(6)  INCOME TAXES

As of December 31, 1998, there were unused net operating loss carryforwards (the
"NOL's") for regular federal income tax purposes of approximately $18.4 million
principally expiring in 2012 and 2018, for which no financial statement benefit
had been recognized. In addition, the Company has research and development tax
credit carryforwards of approximately $802,000 which expire from 2002 through
2018 and in conjunction with the Alternative Minimum Tax ("AMT") rules, the
Company has available AMT credit carryforwards of approximately $332,000, at
December 31, 1998, which may be used indefinitely to reduce regular federal
income taxes.

At October 31, 1998, Andataco reported unused net operating loss carryforwards
for regular federal income tax purposes of approximately $13.9 million which
expire through 2018. Due to a change of control, nStor's ability to utilize
these carryforwards is limited.

(7)  SEGMENT INFORMATION AND SIGNIFICANT CUSTOMERS

The Company operates predominantly in one business segment, information storage
solutions, including external RAID subsystems. During the nine months ended
September 30, 1999, one customer, Silicon Graphics, Inc., accounted for 21% of
the Company's sales.



                                       13
<PAGE>   14

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


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, our 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 our new product lines, price
competition, conditions in the technology industry and the economy in general,
our customers and vendors ability to achieve year 2000 functionality, our
ability to effectively integrate Andataco's operations with ours, as well as
legal proceedings. The economic risk associated with materials cost fluctuations
and inventory obsolescence is significant to our company. The ability to manage
our 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.

Subsequent written and oral forward looking statements attributable to our
company or persons acting on our behalf are expressly qualified in their
entirety by cautionary statements in this Form 10-Q and in other reports filed
by our 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.


OVERVIEW

nStor Technologies, Inc. and our subsidiaries (collectively "nStor") are engaged
as manufacturers and suppliers of high-availability high-performance information
storage and Storage Area Networking (SAN) solutions, including external RAID
(Redundant Array of Independent Disks) solutions, desktop storage systems,
Network Attached Storage, data storage enclosures, advanced storage management
software solutions and AdaptiveRAID technology. We design, manufacture and sell
high performance fault tolerant data storage solutions that serve both the UNIX
and NT platforms.

nStor's activities in the information storage industry have evolved through
several acquisitions, the first of which occurred in June 1996 when we acquired
certain assets associated with the RAID business in Lake Mary, Florida, from
Seagate Peripherals, Inc. In December 1996, we acquired substantially all the
net assets of Parity Systems, Inc. In April 1998, we acquired Borg Adaptive
Technologies, Inc. which brought to our company the next generation of RAID
technology, AdaptiveRAID. In June and July 1999, we acquired approximately 77%
of the outstanding common stock of Andataco and in November 1999, we acquired
the remaining 23% of Andataco (collectively, the "Andataco Acquisition") (Note
2). Andataco is based in San Diego, California. As a result of the Andataco
Acquisition, we believe that period to period comparisons for the three and nine
months ended September 30, 1999 may not be meaningful.



                                       14
<PAGE>   15

THREE MONTHS ENDED SEPTEMBER 30, 1999 VS. SEPTEMBER 30, 1998

SALES

Net sales for the three months ended September 30, 1999 were $17.5 million as
compared to $5.8 million for the three months ended September 30, 1998, an
increase of $11.7 million or 202%. The increase was attributable to the Andataco
Acquisition, partially offset by delays in the market introduction of certain
new generation products and our elimination of non-storage related businesses,
including our memory and integrated system divisions.

During the second quarter, we entered into an Original Equipment Manufacturer
(OEM) agreement to supply high-performance RAID storage enclosures to Silicon
Graphics, Inc. (SGI). We began shipping products under SGI's initial purchase
order in May 1999. In the third quarter SGI announced that it had reached a
preliminary understanding with another computer systems company to form a joint
venture to assume the further development and distribution of its line of
Windows NT(R) platform-based workstations. As a direct result of this SGI
decision, actual shipments to SGI in the third quarter were below forecast and
are expected to be significantly below recent forecasts for the future. The
reduction in SGI shipments have been offset by the addition of Andataco sales
and expected replacement OEM agreements. There can be no assurance, however,
that such OEM agreements will be executed on terms acceptable to us.


COST OF SALES/GROSS MARGINS

Gross margins increased to 29% for the three months ended September 30, 1999 as
compared to 14% for the quarter ended September 30, 1998. Contributing to the
improved gross margins were the Andataco product sales and the utilization of
Andataco's sales channels to market our products. Our gross margins are
dependent, in part, on dynamic market pricing and on product mix which fluctuate
from time to time.


OPERATING EXPENSES

     SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $4.6 million and $1.9 million
for the three months ended September 30, 1999 and 1998, respectively, an
increase of $2.7 million or 142%. This increase is primarily the result of the
Andataco Acquisition, which added $3.5 million in expenses for the third
quarter, which was partially offset by a $.8 million reduction in nStor
operating expenses. This reduction is primarily the result of the reduced levels
of salaries and travel costs associated with our integrated systems division
which was phased out and sold in October 1998.

     RESEARCH AND DEVELOPMENT

Research and development expenses were $.8 million and $.7 million for the three
months ended September 30, 1999 and 1998, respectively. We believe that
considerable investments in research and development will be required to remain
competitive and expect that these expenses will increase in future periods.

Research and development costs are expensed as incurred and 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 result in generating revenues.



                                       15
<PAGE>   16

     DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $1.1 million and $.4 million for the three
months ended September 30, 1999 and 1998, respectively. The increase was
primarily due to the Andataco Acquisition (Note 2) which added $.4 of
depreciation from property and equipment and $.4 of amortization of goodwill for
the three months ended September 30, 1999.


INTEREST EXPENSE

Interest expense for the three months ended September 30, 1999 increased to $.7
million from $.2 million in 1998 primarily as a result of indebtedness arising
from the Andataco Acquisition (Notes 2 and 4), an increase in other borrowings
and the amortization of financing costs arising from certain indebtedness (Note
4).

PREFERRED STOCK DIVIDENDS

For the quarter ended September 30, 1999, we recorded $6,000 as an embedded
dividend attributable to the beneficial conversion privilege on our Series A
Convertible Preferred Stock, as compared to $323,000 during the third quarter of
1998, which related to a series of preferred stock that was redeemed in October
1998.

For the three months ended September 30, 1999, all classes of our convertible
preferred stock ($14.9 million aggregate face amount) required cash dividends at
8% per annum which aggregated $300,000 (Note 5). For the three months ended
September 30, 1998, we had one class of preferred stock which earned $68,000 in
dividends.


NINE MONTHS ENDED SEPTEMBER 30, 1999 VS. SEPTEMBER 30, 1998

SALES

Net sales for the nine months ended September 30, 1999 were $28.4 million
representing an increase of $13.2 million or 87% over the nine months ended
September 30, 1998. The increase was attributable to the Andataco Acquisition,
partially offset by delays in market introduction of certain new generation
products and our elimination of non-storage related businesses including our
memory and integrated systems division (approximately $2.1 million in 1998). See
the quarterly discussion regarding SGI and Andataco for future sales
expectations.


COST OF SALES/GROSS MARGINS

Gross margins for the nine months ended September 30, 1999 were 22% as compared
to 16% for the nine months ended September 30, 1998. Included in cost of goods
sold for the nine months ended September 1999 was a $.8 million provision for
slow moving inventory (compared to $1.0 million in 1998). Excluding the
inventory adjustment, overall gross margins for the nine months ended September
30, 1999 were 25% as compared to 23% in 1998. Our gross margins are dependent,
in part, on dynamic market pricing and on product mix which fluctuate from time
to time.



                                       16
<PAGE>   17

OPERATING EXPENSES

     SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses for the nine months ended September
30, 1999 were $9.5 million as compared to $6.6 million for the nine months
ended September 30, 1998. This $2.9 million or 44% increase is primarily the
result of the Andataco Acquisition which added $4.7 million in expenses for the
nine months ended September 1999, and a $.9 million provision for uncollectible
accounts receivable (compared to $.6 million in 1998), partially offset by a
$2.7 million reduction in operating expenses at our Lake Mary location. The
reduction in expenses at that location is primarily attributable to the
elimination of expenses associated with the integrated system division which was
sold in October 1998.

     RESEARCH AND DEVELOPMENT

Research and development expenses were $2.1 million and $1.9 million for the
nine months ended September 30, 1999 and 1998, respectively. Research and
development costs are expensed as incurred and 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
result in generating revenues.

     DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $2.1 million and $1.0 million for the nine
months ended September 30, 1999 and 1998, respectively. The increase was
primarily due to the Andataco Acquisition (Note 2) which added $.5 million of
depreciation from property and equipment and $.5 of amortization of goodwill for
the nine months ended September 30, 1999.


INTEREST EXPENSE

Interest expense for the nine months ended September 30, 1999 increased to $1.5
million from $.7 million in 1998 as a result of indebtedness arising from the
Andataco Acquisition (Notes 2 and 4), an increase in other borrowings and the
amortization of financing costs arising from certain indebtedness (Note 4).


PREFERRED STOCK DIVIDENDS

For the nine months ended September 30, 1999, we recorded $181,000 as an
embedded dividend attributable to the beneficial conversion privilege on our
Series A Convertible Preferred Stock. In addition, in connection with our Series
E Convertible Preferred Stock issued in June 1999, we recorded $151,000 as an
embedded dividend attributable to the valuation of warrants to purchase 116,666
shares of our common stock (Note 5). The aggregate embedded dividends amounted
to $332,000 for the nine months ended September 30, 1999 as compared to $1
million during the nine months ended September 30, 1998, which related to a
series of preferred stock that was redeemed in October 1998.

For the nine months ended September 30, 1999, all classes of our convertible
preferred stock ($14.9 million aggregate face amount, including $8.2 million
issued in June 1999) required cash dividends at 8% per annum which aggregated
$606,000. For the nine months ended September 30, 1998, we had one class of
preferred stock which earned $128,000 in dividends.



                                       17
<PAGE>   18

                         LIQUIDITY AND CAPITAL RESOURCES


CONSOLIDATED STATEMENTS OF CASH FLOWS

     OPERATING ACTIVITIES

Net cash used by operating activities amounted to $5 million and $8.1 million
for the nine months ended September 30, 1999 and 1998, respectively. The most
significant use of cash was our loss from operations (before changes in assets
and liabilities) of $4.1 million and $5.1 million for the nine months ended
September 30,1999 and 1998, respectively. Other significant uses of cash during
1999 included a reduction of accounts payable and other liabilities of $.9
million and an increase in accounts receivables in the amount of $.7 million.
During 1998, we used cash of $2.3 million in the reduction of accounts payable
and other liabilities and $.8 million in the increase of accounts receivable.

     INVESTING ACTIVITIES

Net cash used by investing activities was approximately $1.5 million and $.8
million for the nine months ended September 30, 1999 and 1998, respectively,
with $1.2 million and $.4 million, respectively, used for acquisitions (see Note
2 to Consolidated Financial Statements for a description of the 1999 Andataco
Acquisition).

     FINANCING ACTIVITIES

Net cash provided by financing activities for the nine months ended September
30, 1999 was $6.7 million and primarily consisted of net borrowings of $4.9
million from private investors, including $2.6 million from Mr. Levy, of which
$1.5 million was satisfied by the issuance of convertible preferred stock and
$.8 million was satisfied by issuance of common stock; $1.6 million in proceeds
from the exercise of stock options and warrants, $1 million from the issuance of
common stock, and $2 million from the issuance of convertible preferred stock,
partially offset by net repayments on revolving credit facilities. Cash provided
by financing activities for the nine months ended September 30, 1998 amounted to
$9.1 million and included net borrowings of $6.2 million from private investors,
including $2.4 million from Mr. Levy and $3.2 million in net proceeds from the
issuance of convertible preferred stock, including $1 million from Mr. Levy.


INDEBTEDNESS RESULTING FROM THE ANDATACO ACQUISITION

In connection with the Andataco Acquisition, we issued $5.1 million in
promissory notes due in July 2004. In addition, Andataco has an asset based
revolving credit facility (Note 4) which provides for borrowings based on the
lesser of $10 million or (i) 85% of eligible accounts receivable, as defined,
plus (ii) the lesser of $1.75 million or 23% of eligible inventory, as defined.
The Andataco Revolver provides for certain financial covenants, including
Andataco maintaining a certain minimum working capital and tangible net worth.
During the quarter ended June 30, 1999, Andataco was not in compliance with the
financial covenant regarding tangible net worth; however, effective July 13,
1999, the lender agreed to waive the default, subject to, among other things,
receipt from nStor of a $.5 million capital contribution. On July 16, 1999,
nStor contributed $.5 million



                                       18
<PAGE>   19

in cash as a capital contribution to Andataco.


NSTOR REVOLVER

The nStor Revolver, another asset based revolving credit facility, provides for
borrowings based on the lesser of $5 million or 80% of our eligible accounts
receivable, as defined (Note 4). The nStor Revolver provides for certain
financial covenants including current ratio and net worth requirements,
limitations on operating losses for the six month period ended December 31,
1998, and restrictions on the incurrence of additional debt and capital
expenditures and the payment of dividends, other than preferred stock dividends.
At December 31, 1998, we were not in compliance with the financial covenant
concerning our operating loss for 1998; however, effective February 4, 1999 the
lender agreed to forebear from declaring a default. The Company has agreed to
repay the outstanding balance under the nStor Revolver by December 1999.


FINANCING ACTIVITIES WITH PRIVATE INVESTORS

Since late 1997, and through September 30, 1999, we have obtained net cash
proceeds of approximately $23 million (including $9.4 million during the nine
months ended September 30, 1999) from private investors, consisting of $8.5
million of convertible preferred stock, $10.2 million of net borrowings
(including $1.3 million which we satisfied by issuing 645,000 shares of our
common stock and $1.5 million which we satisfied by issuing convertible
preferred stock), $3.3 million from the exercise of warrants and options to
purchase 2,439,968 shares of our common stock and $1 million from the issuance
of 500,000 shares of newly issued common stock. Of these amounts, Mr. Levy has
advanced or invested a net amount of $6.8 million.

From July 1999 through November 12, 1999, Mr. Levy advanced an additional net
amount of $.9 million under a promissory note which currently allows the Company
to borrow up to $1 million, due 30 days from demand.

We believe that amounts expected to be available under lending arrangements with
financial institutions and from Mr. Levy will be sufficient to satisfy our
working capital needs for the foreseeable future, as presently contemplated.
There can be no assurance, however, that we may not require additional capital
beyond our current forecasted needs nor that any such additional required funds
would be available on terms acceptable to us, if at all, at such time or times
as required by us.


                               EFFECT OF INFLATION

Inflation has not had an impact on our operations and we do not expect that it
will have a material impact in 1999.


                                 YEAR 2000 ISSUE

As many computer systems, software programs and other equipment with embedded
chips or processors (collectively, "Information Systems") use only two digits
rather than four to define the applicable year, they may be unable to process
accurately certain data, during or after the year 2000. As a result, business
and governmental entities are at risk for possible miscalculations or systems
failures causing disruptions in their business operations. This is commonly
known as the Year 2000 ("Y2K") issue. The Y2K issue concerns not only
Information Systems used solely within a company but also concerns third
parties, such as customers, vendors and creditors, using Information Systems
that may interact with or affect a company's operations.



                                       19
<PAGE>   20

     RISKS

If needed remediations and conversions to the Information Systems are not made
on a timely basis by our materially-significant customers or vendors, we could
be affected by business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could have a material
adverse effect on our operations, liquidity or financial condition. Factors
which could cause material differences in results, many of which are outside our
control, include, but are not limited to, the accuracy of representations by
manufacturers of our Information Systems that their products are Y2K compliant,
the ability of our customers and vendors to identify and resolve their own Y2K
issues and our ability to respond to unforeseen Y2K complications.

     OUR STATE OF READINESS

We have implemented a Y2K readiness program with the objective of having all of
our significant Information Systems functioning properly with respect to Y2K
before January 1, 2000. The first component of our readiness program was to
identify our internal Information Systems that are susceptible to system
failures or processing errors as a result of the Y2K issue. This effort is
substantially complete and no significant issues requiring remediation or
replacement have been identified. The review of our financial systems has been
completed and no issues have been identified.

As to the second component of the Y2K readiness program, we have identified our
significant customers, vendors and creditors that are believed, at this time, to
be critical to business operations subsequent to January 1, 2000. Through the
use of questionnaires, interviews and other available means we have ascertained
that we have no significant exposure to Y2K issues at this time. However, there
can be no assurance that the representations made to us by third parties are
accurate or complete and there is a possibility that normal business operations
could be disrupted.

The third component of our Y2K readiness program was the evaluation of our
existing products', and planned future products' Y2K functionality. All of the
date dependent software which we have developed has been validated as being Y2K
compliant using commercially acceptable methods, including: expanding year
fields to four digits: windowing; and date encoding techniques. Our other
products have been verified as Y2K compliant based on the absence of date
dependencies in hardware, software and firmware code.

     Y2K COSTS

Our total cost of these Y2K compliance activities is not expected to exceed
$50,000. The costs and time necessary to complete the Y2K modification and
testing processes are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no assurance that these estimates will be
achieved and actual results could differ from the estimates. Our Y2K readiness
program is an ongoing process and the estimates of costs and completion dates
for various components of the Y2K readiness program described above are subject
to change.



                                       20
<PAGE>   21

PART II  -  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In June 1998, a Complaint was filed in the Supreme Court of the State of New
York by AIBC Investment Services Corp. ("AIBC") claiming that the Company and a
former officer and director, R. Daniel Smith, breached an agreement with AIBC in
which AIBC was allegedly engaged as placement agent in connection with raising
funds for the Company. Effective June 3, 1999, the action was dismissed without
prejudice.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

        Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

        Not applicable

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

On November 1, 1999, the Company held an Annual Meeting of Stockholders. At the
meeting, the shareholders approved all matters considered with the
following vote distribution:

<TABLE>
<CAPTION>
Item                               Affirmative    Negative      Withheld
<S>                                 <C>           <C>          <C>
Election of Board of Directors
   Bernard R. Green                 25,861,061                   137,494
   H. Irwin Levy                    25,861,227                   137,328
   Mark F. Levy                     25,766,067                   232,486
   Lawrence F. Steffann             24,309,878                 1,688,677
   Michael L. Wise                  25,867,261                   131,294

Issuance of Common Stock in
  connection with acquisition of
  Andataco, Inc.                    19,343,393      37,067        52,843

Increase number of authorized
  shares to 75,000,000 from
  40,000,000                        19,630,284     263,350        25,442

Eliminate cumulative voting for
  directors                         19,584,133     234,642       100,601

Amend 1996 Stock Option Plan
  to increase number of shares
  reserved for issuance to
  7,000,000 from 2,500,000          18,630,961     740,066        62,276

Reappoint BDO Seidman LLP as
  independent auditors for
  fiscal 1999                       25,963,014       7,108        28,433
</TABLE>



                                       21
<PAGE>   22

ITEM 5.  Other Information

      Not applicable


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

   (a)   Exhibits:

      10.1   Modification of Demand Note dated July 15, 1999 between Registrant
             and H. Irwin Levy

      10.2   Form of Amended and restated Promissory Note dated January 29,
             1999, between Registrant and (i) Herbert Gimelstob ($600,000), (ii)
             Maurice Halperin ($600,000), (iii) Patricia Auld ($300,000) and
             (iv) James P. Marden ($300,000)

      10.3   Form of Amended and restated Promissory Note dated September 22,
             1998, between Registrant and Bernard Marden, Herbert Gimelstob,
             Fairway Partnership and H. Irwin Levy


       27    Financial Data Schedule


   (b) Reports on Form 8-K:

(i)     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/ Jack Jaiven
November 15, 1999                       ------------------------------------
                                        Jack Jaiven
                                        Principal Financial and
                                        Accounting Officer



                                       22