EXHBIT 99.1
Herman Chin Christine Rogers
Public Relations Investor Relations
631-962-1163 631-962-1160
herman.chin@falconstor.com christine.rogers@falconstor.com
FALCONSTOR SOFTWARE ANNOUNCES Q2 QUARTERLY RESULTS
REVENUES INCREASE 72% FROM PRIOR YEAR
MELVILLE, N.Y., July 24, 2003--FalconStor Software, Inc. (Nasdaq: FALC), a
leading developer of network storage infrastructure software solutions, today
announced financial results for its second quarter ended June 30, 2003.
Revenues for the second quarter of 2003 increased 72% to $4.1 million, compared
with $2.4 million for the same period a year ago. Operating expenses only
increased 12% from $5.3 million in the second quarter of 2002 to $5.9 million
for the second quarter of 2003. Net loss for the second quarter decreased to
$1.6 million compared with $2.5 million for the same period a year ago. Diluted
net loss per share for the second quarter was $0.03 per share, compared with
$0.05 per share for the same period a year ago.
For the first six months of fiscal 2003, FalconStor recorded revenues of $7.8
million, compared with $4.4 million for the same period a year earlier. Net loss
for the six month period was $3.3 million compared with a net loss of $5.0
million reported in the corresponding period a year ago. Diluted net loss per
share during the six-month period was $0.07, compared with $0.11 per share for
the same period a year ago.
For the second quarter of 2003, revenues increased 11% from $3.7 million in the
first quarter of 2003 to $4.1 million in the second quarter of 2003. This
increase in revenues occurred while operating expenses increased only 4%. Net
loss for the quarter was $1.6 million, down from $1.7 million in the previous
quarter. The Company closed the quarter financially strong with $43 million in
cash, cash equivalents and marketable securities, after deducting net
liabilities of discontinued operations.
"IPStor's unique approach to maximizing business continuity and minimizing
storage operating cost continues to gain widespread validation from major
customers and leading industry players," stated ReiJane Huai, Chairman and CEO,
FalconStor Software, Inc. "In addition to sustaining revenue growth, we will
continue to develop innovative network storage services to be distributed
through our expanding OEM and VAR channels. We will be employing more field
sales personnel and service engineers and opening additional foreign sales
offices to deliver timely, quality sales and technical support to our strategic
partners and end-user customers. With compelling products and strategic
partnerships on our side, the time is right for us to leverage our financial
strength and invest in our sales and support infrastructure to realize the
business opportunities presented to us around the globe."
SECOND QUARTER HIGHLIGHTS:
Highlights of the second quarter include new business relationships, customers,
products, IPStor-powered appliances, additional product enhancements, and
further interoperability certifications with leading industry solutions:
o StorageTek and FalconStor announced a global strategic relationship to
deliver business continuity/disaster recovery solutions. The global
agreement covers product development, and OEM, reseller and service
offerings.
o FalconStor and Network Engines announced a collaboration on providing an
IPStor-powered virtual tape library appliance, leveraging industry
standard disk and Fibre Channel or IP SAN, to accelerate the backup and
restoration of data with minimal operating cost and the quickest return on
investment.
o Premier solutions and service providers Sirius Computer Solutions, Cristie
Data Products Ltd., eSeSIX Computer, and Controlware teamed with
FalconStor on customer wins, delivering storage solutions providing
centralized storage management, uninterrupted data access and
cost-effective, comprehensive business continuity services.
o IPStor-powered appliances from industry solution providers included: the
MaXXan Storage Appliance, with the SA100f and the SA200f systems;
Chaparral's RAIDar Provisioning Services; Cristie Data Products's
GigaStream storage appliance; and eSeSIX Computer's SANCenter.
o FalconStor's R&D team continued to deliver breakthrough technologies to
advance our flagship product - IPStor:
o Starting in the third quarter, besides disk storage, Virtual Tape
Library, Powered by IPStor, will be able to aggregate tape resources
(such as media, tape libraries) and provision them over FC or IP
networks. This tape virtualization service helps end customers
leverage their SAN to quadruple backup performance and lower the
operating cost by consolidating the management.
o In addition to offering advanced replication service to mirror
critical information amongst data centers, FalconStor is expanding the
scope of IPStor by launching "host-based" replication services to
enable satellite offices and/or internal storage to be mirrored to
IPStor.
o To maximize security coverage, FalconStor has collaborated with Trend
Micro to integrate advanced Real-Time Virus Scanning service into
IPStor.
The company will host a conference call on Thursday, July 24 at 5:15 p.m.
Eastern Time, to discuss the results. To participate in the call, dial
1-973-582-2720. A replay of the call will be available beginning 7/24 at 7:15 PM
ET through 7:15 PM on 7/31. To listen to the replay of the call, please dial
1-973-341-3080 Replay Pin Number: 4047520 or visit our website at
http://www.falconstor.com/investors.asp.
ABOUT IPSTOR
IPStor(R) 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: 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, 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
June 30, December 31,
2003 2002
------------ ---------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents................................... $ 12,850,007 $ 14,191,075
Marketable securities....................................... 31,369,875 36,910,448
Accounts receivable, net.................................... 4,612,828 4,285,892
Prepaid expenses and other current assets................... 642,365 1,167,174
------------ ------------
Total current assets............................... 49,475,075 56,554,589
------------ ------------
Property and equipment, net.................................... 2,558,888 2,068,001
Goodwill....................................................... 3,301,599 3,301,599
Other intangible assets, net................................... 333,111 309,491
Other assets................................................... 3,267,627 2,476,306
------------ ------------
Total assets....................................... $ 58,936,300 $ 64,709,986
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable............................................ $ 486,603 $ 437,088
Accrued expenses............................................ 2,141,257 1,987,651
Deferred revenue............................................ 2,057,521 2,182,729
Liabilities of discontinued operations...................... 1,188,938 4,201,465
------------ -----------
Total current liabilities.......................... 5,874,319 8,808,933
------------ -----------
Commitments
Total stockholders' equity......................... 53,061,981 55,901,053
------------ ------------
Total liabilities and stockholders' equity......... $ 58,936,300 $ 64,709,986
============ ============
FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2003 2002 2003 2002
Revenues
Software license revenue ............................ $ 3,023,920 $ 2,098,279 $ 5,710,738 $ 3,733,223
Software services and other revenue ................. 1,066,957 278,339 2,059,046 624,237
------------ ------------ ------------ ------------
4,090,877 2,376,618 7,769,784 4,357,460
Operating expenses:
Amortization of purchased and capitalized software 338,798 7,881 600,011 15,762
Cost of software services and other revenue ...... 591,655 286,571 1,183,656 597,910
Software development costs ....................... 1,671,490 1,822,433 3,306,282 3,517,189
Selling and marketing ............................ 2,637,991 2,543,670 5,186,921 4,855,492
General and administrative ....................... 698,499 637,536 1,390,819 1,255,024
------------ ------------ ------------ ------------
5,938,433 5,298,091 11,667,689 10,241,377
------------ ------------ ------------ ------------
Operating loss ........................... (1,847,556) (2,921,473) (3,897,905) (5,883,917)
------------ ------------ ------------ ------------
Interest income
and other income (expense) ..................... 279,528 456,802 597,839 837,861
------------ ------------ ------------ ------------
Loss before income taxes ................... (1,568,028) (2,464,671) (3,300,066) (5,046,056)
------------ ------------ ------------ ------------
Provision for income taxes .......................... 10,897 -- 17,712 --
------------ ------------ ------------ ------------
Net loss ................................... $ (1,578,925) $ (2,464,671) $ (3,317,778) $ (5,046,056)
============ ============ ============ ============
Basic and diluted net loss per share ................ $ (0.03) $ (0.05) $ (0.07) $ (0.11)
============ ============ ============ ============
Weighted average basic and diluted
shares outstanding ................................ 45,848,994 45,238,657 45,675,392 45,211,607
============ ============ ============ ============
