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 2004 FINANCIAL RESULTS
REVENUES INCREASE 43% FROM PRIOR YEAR
MELVILLE, N.Y., April 28, 2004--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, 2004.
For the first quarter of 2004, net revenues increased 43% to $5.3 million,
compared with $3.7 million for the same period a year ago. Net loss for the
quarter was $2.2 million compared with $1.7 million for the first quarter of
2003. Diluted net loss per share for the first quarter of 2004 was $0.05 per
share compared with $0.04 per share for the same period a year ago.
Deferred revenue increased 27% from $2.6 million at the end of the fourth
quarter 2003 to $3.3 million at the end of the first quarter 2004. Cash, cash
equivalents and marketable securities decreased $1.0 million from $36.7 million
as of December 31, 2003 to $35.7 million as of March 31, 2004.
"Our leading edge technology and our grasp of the market direction remain the
key drivers for our success," said FalconStor Chairman and CEO ReiJane Huai. "We
are well positioned to reap the benefits of our OEM relationships. We will
continue to leverage our innovative, proven solutions and strategic OEM
partnerships to expand our worldwide presence in the areas of server/storage
consolidation, data replication, disk-based backup/recovery and iSCSI-based
storage services."
RECENT HIGHLIGHTS:
FalconStor continues to win domestic and international customers, receive
industry recognition of IPStor, and expand its product portfolio.
o New customers from the financial, government, legal, and manufacturing
sectors continue to select FalconStor's IPStor(R)solution to ensure the
highest reliability and availability of their mission-critical storage
infrastructure. Key customers announced in the first quarter include:
Robeco USA, Inc., an asset management firm which selected IPStor to
replicate its business data in New York to a secondary data center as part
of its business continuity strategy; Park Group plc, a financial and
marketing services firm, who implemented an IPStor-powered SAN solution for
storage consolidation and high availability; Fareham Borough Council, who
chose IPStor for storage consolidation and disaster recovery; Skadden,
Arps, Slate, Meagher & Flom LLP, which decided on IPStor for high
availability, and to replicate critical business data from its European and
Asia-Pacific regional data centers to its secondary data center in New York
state; and Kubota Corporation, a leading company in tractor engine and
construction machinery based in Japan, which elected to implement IPStor to
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provide advanced replication, high availability, and business continuity at
its machine foreign division.
o FalconStor continues to receive recognition by leading industry
publications, including being awarded a silver medal in TechTarget's
STORAGE and SearchStorage.com's Annual "Products of the Year" Awards for
2003 in the category of "Backup & Disaster Recovery Software," and earning
COMPUTER TECHNOLOGY REVIEW Editor's Choice of "People and Organizations
that Made a Difference in 2003" in the category of "Technology Innovators."
o FalconStor is delivering affordable, easy-to-use, full-featured iSCSI
storage services to accelerate the acceptance of IP-based unified network
storage infrastructures. Besides expanding FalconStor's product portfolio,
the "iSCSI Storage Server for Windows Storage Server 2003" will enable
FalconStor to engage additional strategic industry and channel partners to
broaden the market for IP-based SAN solutions.
o FalconStor is extending its technological lead in the disk-based virtual
tape library market by incorporating advanced host connectivity (IP/iSCSI,
IBM iSeries and NDMP) and tape emulation options. FalconStor expects the
adoption of IPStor/VTL (Virtual Tape Library) by strategic industry
partners as well as solution providers to continue on a worldwide basis.
The company will host a conference call on Wednesday, April 28 at 4:30 PM ET to
discuss the results. To participate in the live call, dial 1-800-257-1836 in the
United States or 303-262-2211 outside the United States. To view the
synchronized slide presentation during the call, visit:
HTTPS://FALCONSTOR.WEBEX.COM/FALCONSTOR/J.PHP?ED=81444876&UID=16851016>. To
listen to a replay of the call beginning April 28 at 6:30 PM ET, dial
1-800-405-2236 in the United States or 303-590-3000 outside the United States,
Passcode 577151#, 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
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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.
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FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2004 2003
------------ -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ......................... $13,117,614 $ 8,486,144
Marketable securities ............................. 22,537,598 28,199,242
Accounts receivable, net .......................... 6,873,215 7,109,922
Prepaid expenses and other current assets ......... 1,261,963 1,273,125
----------- -----------
Total current assets ..................... 43,790,390 45,068,433
----------- -----------
Property and equipment, net .......................... 4,077,184 3,861,069
Goodwill ............................................. 3,473,326 3,366,642
Other intangible assets, net ......................... 368,831 396,940
Other assets ......................................... 3,487,749 3,799,949
----------- -----------
Total assets ............................. $55,197,480 $56,493,033
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................. $ 774,495 $ 562,305
Accrued expenses .................................. 2,592,876 2,777,391
Deferred revenue .................................. 2,712,131 2,202,179
----------- -----------
Total current liabilities ................ 6,079,502 5,541,875
Deferred revenue ..................................... 582,191 395,609
----------- -----------
Total liabilities ........................ 6,661,693 5,937,484
----------- -----------
Commitments
Total stockholders' equity ............... 48,535,787 50,555,549
----------- -----------
Total liabilities and stockholders' equity $55,197,480 $56,493,033
=========== ===========
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FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
----------------------------
2004 2003
(unaudited) (unaudited)
------------ ------------
Revenues:
Software license revenue ......................... $ 3,547,831 $ 2,686,818
Maintenance revenue .............................. 821,853 284,211
Software services and other revenue .............. 889,114 707,878
------------ ------------
5,258,798 3,678,907
------------ ------------
Operating expenses:
Amortization of purchased and capitalized software 415,048 283,741
Cost of software services and other revenue ...... 978,005 592,001
Software development costs ....................... 2,161,916 1,612,264
Selling and marketing ............................ 3,313,538 2,548,930
General and administrative ....................... 810,643 692,320
------------ ------------
7,679,150 5,729,256
------------ ------------
Operating loss ........................ (2,420,352) (2,050,349)
------------ ------------
Interest and other income ........................ 202,925 318,311
------------ ------------
Loss before income taxes ......................... (2,217,427) (1,732,038)
------------ ------------
Provision for income taxes ....................... 4,080 6,815
------------ ------------
Net loss ......................................... $ (2,221,507) $ (1,738,853)
============ ============
Basic and diluted net loss per share ............. $ (0.05) $ (0.04)
============ ============
Weighted average basic and diluted shares
outstanding ...................................... 46,638,740 45,499,862
============ ============
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