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 of
First 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
============ ============
