EXHIBIT 99.1 Contacts: Herman Chin, Public Relations Christine Rogers, Investor Relations 631-962-1163 631-962-1160 herman.chin@falconstor.com christine.rogers@falconstor.com FALCONSTOR ANNOUNCES FIRST QUARTER 2003 FINANCIAL RESULTS REVENUES INCREASE 86% FROM PRIOR YEAR MELVILLE, N.Y., April 24, 2003--FalconStor Software, Inc. (Nasdaq: FALC), a leading developer of network storage infrastructure software, today announced its financial results for the first quarter endED March 31, 2003. For the first quarter of 2003, net revenues increased 86% to $3.7 million, compared with $2.0 million for the same period a year ago. Net loss for the quarter was $1.7 million, down 33% from $2.6 million for the same period a year ago. Diluted net loss per share for the first quarter of 2003 was $0.04 per share, down from $0.06 per share for the same period a year ago. The Company closed the quarter financially strong with $45 million in cash, cash equivalents and marketable securities, after deducting net liabilities of discontinued operations. "Despite the uncertainty concerning the world economy, we are very pleased with the positive revenue growth we have achieved this quarter," said ReiJane Huai, FalconStor Chairman and CEO. "The number of customer reference sites running IPStor in mission-critical environments around the world continues to escalate, contributing to our 86% year-over-year revenue growth and the increasing number of sales opportunities currently in the pipeline. Most importantly, we continue to earn recognition from a wide range of key, well respected industry players in the form of strategic business initiatives, such as the Hitachi Data Systems Real-Time Data Migration program powered by IPStor, and other OEM engagements where IPStor is the key driver of the business solutions branded by our strategic partners." FIRST QUARTER HIGHLIGHTS: Throughout the first quarter, FalconStor continued to make significant progress towards achieving business, partner and product goals: o FalconStor continued to focus on enhancing business and applications relationships with the world's leading companies, including: Hitachi Data Systems, a leader in storage solutions to simplify, protect and optimize information infrastructures; Alacritech, an innovator of network accelerator solutions that enable fast and efficient servers and storage systems; GE IT Solutions, one of Canada's largest providers of information technology products and services; and NetGear, a worldwide provider of easy-to-use high performance networking products. o New customers from a variety of industries continue to select FalconStor's IPStor(R) solution to ensure the highest reliability and availability of their mission-critical storage infrastructure. Key customers highlighted in the first quarter include: The American Museum of Natural History, one of the world's preeminent institutions of scientific and cultural research and education, who chose IPStor software to efficiently manage the storage of multiple terabytes of data; Public Abstract Corporation, a division ofFirst American Title Insurance Company of New York, who chose IPStor software to meet its need to exercise greater control over the time, resources, and money invested in its storage resources; Lehman Brothers-owned financial services company Southern Pacific Mortgage Limited, who chose IPStor software for centralized storage management and for scalability of its three terabytes of data; and A&I System Co., Ltd., an IT total solutions and hosting services provider, who chose IPStor software to provide disaster recovery services to its customers. o FalconStor continues to enhance the company's solutions offering with the debut of version 4.0 of its IPStor(R) software. The new version offers innovative features and new options in the areas of storage consolidation, business continuity/disaster recovery, backup/recovery acceleration, and performance optimization. In addition to disk storage, IPStor version 4.0 can provision virtual tape or library, simulated via disk, to allow third party backup servers to leverage FC-SAN and IP-SAN to perform high-speed backup and restore, as well as remote archiving and vaulting, with minimal operating cost and maximum ROI. The company will host a conference call on Thursday, April 24 at 5:15 p.m. Eastern Time to discuss the results. To participate in the call, dial: 973-582-2710. To listen to a replay of the call beginning April 24 at 7:15 PM Eastern Time, dial 973-341-3080, access code 3883025, or visit www.falconstor.com/investors.asp. ABOUT IPSTOR IPStor Software delivers an intelligent SAN/NAS infrastructure across heterogeneous environments by providing a comprehensive set of storage services for enterprise applications - simplifying management, ensuring data availability and recoverability, and maximizing performance. ABOUT FALCONSTOR FalconStor Software, Inc. (Nasdaq: FALC) is a leading developer of network storage infrastructure software solutions designed to optimize the performance and availability of today's complex IT infrastructures. Deployed by a wide range of Fortune 1000 enterprises, FalconStor's flagship product, IPStor, optimizes storage utilization, accelerates backup and recovery, maximizes I/O performance and ensures business continuity via sophisticated data replication services. It is available and supported through major OEMs, system integrators and resellers worldwide. Founded in 2000, FalconStor is headquartered in Melville, NY, with offices throughout Europe and the Asia Pacific regions including Paris, Tokyo and Taiwan. FalconStor is an active member of the Technical Support Alliance Network (TSANet), Storage Networking Industry Association (SNIA) and Fibre Channel Industry Association (FCIA). For more information visit www.falconstor.com or call 1-631-777-5188. This press release includes forward-looking statements that involve risk and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include: the early stage of FalconStor's business; delays in product development; market acceptance of FalconStor's products and services; technological change in the storage and networking industries; competition in the storage networking software market; the ability to achieve profitability; intellectual property issues; and other risk factors discussed in FalconStor's reports on Forms 10-K, 10-Q and other reports filed with the Securities and Exchange Commission. ### FalconStor Software and IPStor are registered trademarks of FalconStor Software, Inc. All other company and product names contained herein are trademarks of the respective holders. FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March December 31, 2003 2002 ------------- ------------- (unaudited) Assets Current assets: Cash and cash equivalents ............................... $15,600,619 $14,191,075 Marketable securities ................................... 30,731,311 36,910,448 Accounts receivable, net ................................ 3,941,408 4,285,892 Prepaid expenses and other current assets ............... 733,498 1,167,174 ----------- ----------- Total current assets ........................... 51,006,836 56,554,589 ----------- ----------- Property and equipment, net ................................ 2,476,644 2,068,001 Goodwill ................................................... 3,301,599 3,301,599 Other intangible assets, net ............................... 319,722 309,491 Other assets ............................................... 3,061,987 2,476,306 ----------- ----------- Total assets ................................... $60,166,788 $64,709,986 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Accounts payable ........................................ $ 450,770 $ 437,088 Accrued expenses ........................................ 1,942,677 1,987,651 Deferred revenue ........................................ 2,225,983 2,182,729 Liabilities of discontinued operations................... 1,291,398 4,201,465 ----------- ----------- Total current liabilities ...................... 5,910,828 8,808,933 ----------- ----------- Commitments Total stockholders' equity ..................... 54,255,960 55,901,053 ----------- ----------- Total liabilities and stockholders' equity ..... $60,166,788 $64,709,986 =========== =========== FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2003 2002 (unaudited) (unaudited) ----------- ----------- Revenues: Software license revenue .............................. $ 2,686,818 $ 1,634,944 Software services and other revenue ................... 992,089 345,898 ------------ ------------ 3,678,907 1,980,842 ------------ ------------ Operating expenses: Amortization of purchased and capitalized software .... 261,213 7,881 Cost of software services and other revenue ........... 592,001 311,339 Software development costs ............................ 1,634,792 1,694,756 Selling and marketing ................................. 2,548,930 2,311,822 General and administrative ............................ 692,320 617,488 ------------ ------------ 5,729,256 4,943,286 ------------ ------------ Operating loss ............................. (2,050,349) (2,962,444) ------------ ------------ Interest and other income ............................. 318,311 381,059 ------------ ------------ Loss before income taxes .............................. (1,732,038) (2,581,385) ------------ ------------ Provision for income taxes ............................ 6,815 -- ------------ ------------ Net loss .............................................. $ (1,738,853) $ (2,581,385) ============ ============= Basic and diluted net loss per share .................. $ (0.04) $ (0.06) ============ ============ Weighted average basic and diluted shares outstanding ........................................... 45,499,862 45,184,257 ============ ============
FalconStor Software (FALC) 8-KRegulation FD Disclosure
Filed: 25 Apr 03, 12:00am