DISC, Inc. Announces Third Quarter and Nine Months Results.

Business Editors

MILPITAS, Calif.--(BUSINESS WIRE)--Nov. 14, 2001

DISC, INC. (Nasdaq: DCSR) today announced financial results for the third quarter and nine months ended September 30, 2001.

For the quarter ended September 30, 2001, net sales were $3,739,000 compared to net sales of $1,838,000 reported for the same quarter last year. For the third quarter of 2001, the Company reported a net loss of $(1,106,000), before taking into account the deemed preferred stock dividend, compared to a net loss of $(895,000) for the corresponding 2000 quarter. For the third quarter of 2001, the net loss attributable to common shareholders was $(1,713,000), or $(0.38) per share, compared to a net loss attributable to common shareholders of $(1,142,000), or $(0.30) per share for the corresponding 2000 quarter.

For the nine months ended September 30, 2001, net sales were $7,813,000 compared to net sales of $4,910,000 reported for the first nine months of 2000. Net loss for the period was $(3,535,000), before taking into account the deemed preferred stock dividend, compared to a net loss of $(2,849,000), for the corresponding 2000 period. Net loss attributable to common shareholders was $(4,961,000) or $(1.22) per share, compared to ($4,100,000), or $(1.08) per share for the corresponding 2000 period.

Commenting on the results, Richard Ellis, president and CEO said, "We are pleased with the revenue growth that we have experienced over the last two quarters. Our business continues to show good performance despite the current economic conditions and the overall state of the technology sector. Our government business is showing strength and our acquisition and integration of the NSM Storage business is on track. The third quarter of 2001 results include two months of financial results of NSM Storage GmbH (NSM), which we recently acquired, and accounts for approximately 21% of total sales and 27% of the net loss.

"We expected the NSM contribution to net sales to be somewhat higher. The longer-than-expected transition to a higher-density drive technology in the NSM products impacted revenues. However, we anticipate that this transition will be complete during the fourth quarter. Also, the third quarter summer months are historically slow in the Europe.

"Going forward our efforts will be focused on launching the enterprise products in the European markets, building the base of customers in the North American market for DVD technology and continuing to develop new customers that serve the needs of the horizontal storage market worldwide. "

About DISC: DISC, Inc. manufactures a family of automated library solutions for enterprise storage. DISC solutions are developed and produced at its ISO 9001-certified headquarters in Milpitas, Calif. DISC enterprise storage solutions range in capacity from 40GB to 9.5TB. DISC's sales offices are located in Boston, Washington D.C., Dallas, Phoenix, Northern California and London. DISC is traded over the Nasdaq stock exchange - Symbol DCSR.

Customers seeking more information on the Company's products can reach DISC by calling [phone] or [phone], or by accessing DISC's home page on the Internet at: http://www.disc-storage.com

With the exception of the actual reported financial results, statements made in this news release are forward looking statements that involve risks and uncertainties. These forward looking statements include statements relating to improving sales, our ability to offer low cost storage solutions, new business development and obtaining new accounts. As discussed in the Company's Annual Report on Form 10-K for the year ending December 31, 2000 and the Quarterly Report on Form 10-Q for the first and second quarter of fiscal 2001, the Company's future operating results are uncertain and may be impacted by the following risks and uncertainties, among others: Market acceptance of our products, our ability to keep pace with technological innovation and competitive developments, our ability to respond to changes in the data storage market, our ability to raise future capital which we anticipate will be required to finance our operations, the loss of key personnel, our history of losses, the loss of customers or distributors and increased competition and pricing pressure.

                               DISC INC.
                        STATEMENT OF OPERATIONS
                              (UNAUDITED)


                           Three months ended      Nine months ended
                             September 30,           September 30,
                           2001        2000       2001         2000
                           ----        ----       ----         ----
Net sales               $3,739,000  $1,838,000  $7,813,000  $4,910,000
                        ----------  ----------  ----------  ----------
Cost and expenses:
Cost of sales            2,818,000   1,450,000   6,310,000   4,148,000
Research and development   551,000     280,000   1,339,000     838,000
Marketing and sales      1,008,000     726,000   2,588,000   1,919,000
General
 and administrative        392,000     250,000     982,000     772,000
                         ---------   ---------  ----------   ---------
                         4,769,000   2,706,000  11,219,000   7,677,000
                         ---------   ---------  ----------   ---------

Loss from operations    (1,030,000)   (868,000) (3,406,000) (2,767,000)
Interest expense           (76,000)    (27,000)   (129,000)    (82,000)
                         ---------   ---------  ----------   ---------

Net loss                (1,106,000)   (895,000) (3,535,000) (2,849,000)
Deemed preferred
 stock dividend           (607,000)   (247,000) (1,426,000) (1,251,000)
                        ----------   ---------  ----------  ----------

Net loss
 attributable to
 Common shareholders   $(1,713,000)$(1,142,000)$(4,961,000)$(4,100,000)
                       =========== =========== =========== ===========
Net loss per share
 attributable to
 common shareholders

- basic and
 fully diluted             $ (0.38)    $ (0.30)    $ (1.22)    $ (1.08)
                           =======     =======     =======     =======

Weighted average
 common shares           4,548,000   3,816,000   4,080,000   3,796,000