EXHBIT 99.1
Contact: 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 Q3 QUARTERLY RESULTS
REVENUES INCREASE 43% FROM PRIOR YEAR
MELVILLE, N.Y., November 5, 2003--FalconStor Software, Inc. (Nasdaq: FALC), a
leading provider of network storage infrastructure software solutions, today
announced financial results for its third quarter ended September 30, 2003.
For the third quarter of 2003, revenues increased 43% to $4.1 million, compared
with $2.9 million for the same period a year ago. Operating expenses increased
only 9% from $5.7 million in the third quarter of 2002 to $6.2 million for the
third quarter of 2003. Net loss for the third quarter decreased to $1.9 million
compared with $3.6 million for the same period a year ago. Diluted net loss per
share decreased to $0.04 per share compared with $0.08 per share in the same
period a year ago. Results for the third quarter of 2002 include impairment
charges of $1.6 million.
For the first nine months of 2003, FalconStor recorded revenues of $11.9
million, an increase of 64% compared with $7.2 million for the same period a
year earlier. Operating expenses increased 12% from $16.0 million to $17.9
million. Net loss for the nine-month period was $5.2 million compared with a net
loss of $8.6 million reported in the corresponding period a year ago. Diluted
net loss per share during the nine-month period was $0.11 per share, compared
with $0.19 per share for the same period a year ago. Results for the nine months
ended September 30, 2002 include impairment charges of $1.6 million.
"The management team has taken a long range view since the inception of our
business," said ReiJane Huai, Chairman and CEO, FalconStor Software, Inc. "We
have made significant investments in nurturing strategic partnerships, building
innovative products and establishing a scalable sales/support infrastructure.
Based on our ability to successfully execute strategic OEM product designs,
worldwide product acceptance and a growing sales pipeline, we are confident we
can transform our early investments into Company value."
THIRD QUARTER HIGHLIGHTS:
Noteworthy achievements in the third quarter of 2003 include domestic and
international customer wins, the delivery of IPStor-powered appliances, product
enhancements, and further interoperability certifications with leading industry
solutions:
o IPStor continues to provide storage services, including centralized
storage management, high data availability and business continuity,
to domestic and international customers. New wins and deployments in
the quarter include such customers as Groupama Asset Management,
Humboldt University Berlin, Oppermann Druck and the State of Nevada.
o FalconStor and Network Engines delivered an IPStor-powered virtual
tape library appliance, leveraging the development, manufacturing
and distribution capabilities of Network Engines with the network
storage expertise of FalconStor. The VTL Appliance utilizes industry
standard disk and IP SAN or Fibre Channel, and is designed to
accelerate the backup and restoration of data with minimal operating
cost while consolidating the management and provisioning of backup
resources, with minimal operating cost and the quickest return on
investment.
o FalconStor shipped IPStor software version 4.0, which includes
advanced data replication, as well as enhanced backup and management
storage services, delivering one of the most comprehensive business
continuity and disaster recovery solutions on the market today.
o IPStor embraced the new Microsoft Exchange Server 2003 platform, as
well as a host of other Microsoft technologies, including Windows
Server 2003 and the Microsoft SQL Server. IPStor also successfully
completed interoperability testing with the Cisco MDS 9000 Family of
Multilayer storage area networking (SAN) switches, including the
recently introduced Cisco MDS 9000 IP Storage Services Module.
The company will host a conference call on Wednesday, November 5 at 4:30 p.m.
Eastern Time, to discuss the results. To participate in the call, dial:
973-582-2720. To view the presentation, visit: HTTP://VIAVID.NET/DCE.ASPX?
SID=000017B8. Registration will be required. A replay of the call will be
available beginning 11/5 at 6 PM ET through 6 PM on 11/12. To listen to the
replay of the call, please dial 1-973-341-3080 Replay Pin Number: 4260792 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
September 30, December 31,
2003 2002
---- ----
(unaudited)
Assets
Current assets:
Cash and cash equivalents .............................. $10,129,645 $14,191,075
Marketable securities .................................. 29,973,451 36,910,448
Accounts receivable, net ............................... 5,379,276 4,285,892
Prepaid expenses and other current assets .............. 1,374,743 1,167,174
----------- -----------
Total current assets .......................... 46,857,115 56,554,589
----------- -----------
Property and equipment, net ............................... 3,203,477 2,068,001
Goodwill .................................................. 3,315,315 3,301,599
Other intangible assets, net .............................. 365,732 309,491
Other assets .............................................. 3,472,734 2,476,306
----------- -----------
Total assets .................................. $57,214,373 $64,709,986
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ....................................... $ 637,359 $ 437,088
Accrued expenses ....................................... 2,305,705 1,987,651
Deferred revenue ....................................... 2,035,875 2,182,729
Liabilities of discontinued operations ................. -- 4,201,465
----------- -----------
Total current liabilities ..................... 4,978,939 8,808,933
----------- -----------
Commitments
Total stockholders' equity .................... 52,235,434 55,901,053
----------- -----------
Total liabilities and stockholders' equity .... $57,214,373 $64,709,986
=========== ===========
FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues
Software license revenue ................................. $ 2,878,448 $ 2,311,811 $ 8,589,186 $ 6,045,034
Software services and other revenue ...................... 1,204,169 543,711 3,263,215 1,167,948
------------ ------------ ------------ ------------
4,082,617 2,855,522 11,852,401 7,212,982
Operating expenses:
Amortization of purchased and capitalized software .... 358,798 230,659 981,337 648,921
Cost of software services and other revenue ........... 620,359 302,351 1,804,015 900,260
Software development costs ............................ 1,821,442 1,604,412 5,105,196 4,719,101
Selling and marketing ................................. 2,706,326 2,473,844 7,893,247 7,329,337
General and administrative ............................ 736,774 644,094 2,127,593 1,899,118
Impairment of prepaid royalty ......................... -- 482,715 -- 482,715
------------ ------------ ------------ ------------
6,243,699 5,738,075 17,911,388 15,979,452
------------ ------------ ------------ ------------
Operating loss ................................ (2,161,082) (2,882,553) (6,058,987) (8,766,470)
------------ ------------ ------------ ------------
Interest
and other income .................................... 270,075 405,033 867,914 1,242,894
Impairment of long-lived assets .......................... -- (1,084,935) -- (1,084,935)
------------ ------------ ------------ ------------
Loss before income taxes ........................ (1,891,007) (3,562,455) (5,191,073) (8,608,511)
------------ ------------ ------------ ------------
Provision for income taxes ............................... 3,191 -- 20,903 --
------------ ------------ ------------ ------------
Net loss ........................................ $ (1,894,198) $ (3,562,455) $ (5,211,976) $ (8,608,511)
============ ============ ============ ============
Basic and diluted net loss per share ..................... $ (0.04) $ (0.08) $ (0.11) $ (0.19)
============ ============ ============ ============
Weighted average basic and diluted
shares outstanding ....................................... 46,134,816 45,239,977 45,830,216 45,221,168
============ ============ ============ ============
