EXHIBIT 99.1 FALCONSTOR SOFTWARE Contact: Joanne Ferrara, Investor Relations 631-773-5813 joanne.ferrara@falconstor.com FALCONSTOR SOFTWARE ANNOUNCES Q1 QUARTERLY RESULTS REVENUES INCREASE 77% FROM PRIOR YEAR MELVILLE, N.Y., April 26, 2007--FalconStor Software, Inc. (NASDAQ: FALC), the leading developer of data protection solutions, today announced financial results for its first quarter ended March 31, 2007. Revenues for the first quarter of 2007 increased 77% to $16.3 million, compared with $9.2 million for the same period a year ago. Net loss for the quarter was $0.6 million or $0.01 per share, which includes $2.2 million in expenses related to stock-based compensation, compared with a net loss of $3.6 million or $0.08 per share in Q1 2006, which included $2.3 million in expenses related to stock-based compensation. Pro forma net income, which excludes stock-based compensation expense, was $1.6 million or $0.03 per share in the first quarter 2007, compared with a pro forma net loss of $1.4 million or $0.03 per share for the first quarter of 2006. The Company closed the quarter with $52.3 million in cash, cash equivalents and marketable securities, which is an increase of $11.3 million compared with the previous quarter. Deferred revenue at March 31, 2007, increased to $17.8 million, or by 17%, compared with the previous quarter, and by 76% compared with the same period a year ago. "We are pleased with the impressive year-over-year growth rate of our sales by product, channel and geography. The consistent top-line and bottom-line expansion is a direct result of our operating efficiency and discipline," said Reijane Huai, Chairman and CEO of FalconStor. "We are confident that our continuing investment in R&D, sales, marketing and technical services will enable us to sustain our technological leadership and our business momentum, and should yield the best ROI for our shareholders and our business partners." The company will host a conference call on Thursday, April 26th at 4:30 p.m. EDT, to discuss the results. To participate in the conference call, please dial: Toll Free: 1 800-218-0530 International: 1 303-205-0033 To view the presentation, please copy and paste the following link into your browser and register for this meeting. Once you have registered for the meeting, you will receive an email message confirming your registration. https://falconstor.webex.com/falconstor/j.php?ed=98139162&rg=1Meeting: FalconStor Q1 2007 Earnings Meeting password: q1numbers Meeting Number: 480 006 739 A conference call replay is scheduled to be available beginning 4/26 at 6:30 PM EDT through 11:59 PM EDT on 5/1. To listen to the replay of the call, dial toll free: 1 800-405-2236 or International: 1 303-590-3000, passcode: 11088513#, or visit our website at www.falconstor.com/investors.asp NON-GAAP FINANCIAL MEASURES The non-GAAP financial measures used in this press release are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The Company's management refers to these non-GAAP financial measures in making operating decisions because they provide meaningful supplemental information regarding the Company's operating performance. In addition, these non-GAAP financial measures facilitate management's internal comparisons to the Company's historical operating results and comparisons to competitors' operating results. We include these non-GAAP financial measures (which should be viewed as a supplement to, and not a substitute for, their comparable GAAP measures) in this press release because we believe they are useful to investors in allowing for greater transparency to supplemental information used by management in its financial and operational decision-making. For a reconciliation of our GAAP and non-GAAP financial results, please refer to our ProForma Condensed Consolidated Statements of Operations, presented in this release. ABOUT FALCONSTOR FalconStor Software, Inc. (NASDAQ: FALC) is the premier developer of adaptive data protection solutions that optimize data center efficiency and business continuity for all IT infrastructures. The company's innovative storage virtualization, continuous data protection (CDP), disaster recovery, and virtual tape library (VTL) solutions integrate seamlessly to ensure rapid data recovery and simplified storage management. Available from major OEMs, system integrators, and resellers, FalconStor products -- including award-winning IPStor(R), VirtualTape Library, and DiskSafe(TM) software -- are deployed worldwide by governments, educational institutions, and Fortune 1000 enterprises across industries including aerospace, energy production, financial services, healthcare, law, manufacturing, and telecommunications. FalconStor is headquartered in Melville, New York, with offices throughout Europe and the Asia Pacific region. FalconStor is an active member of the Storage Networking Industry Association (SNIA). For more information, visit www.falconstor.com or call 1-866-NOW-FALC (866-669-3252). ### 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 network storage software market; the potential failure of FalconStor's OEM partners to introduce or to market products incorporating FalconStor's products; 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, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2007 2006 ----------- ----------- (unaudited) ASSETS Current assets: Cash and cash equivalents ................................... $20,613,005 $15,605,329 Marketable securities ....................................... 31,672,638 25,354,259 Accounts receivable, net .................................... 19,568,956 24,134,257 Prepaid expenses and other current assets ................... 1,435,385 1,244,937 ----------- ----------- Total current assets .................................... 73,289,984 66,338,782 ----------- ----------- Property and equipment, net ................................... 6,197,554 5,960,317 Goodwill ...................................................... 3,512,796 3,512,796 Other intangible assets, net .................................. 404,587 407,316 Other assets .................................................. 1,936,471 2,011,433 ----------- ----------- Total assets ............................................ $85,341,392 $78,230,644 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ............................................ $ 1,404,441 $ 1,432,510 Accrued expenses ............................................ 5,258,556 6,505,536 Deferred revenue ............................................ 13,715,851 11,466,552 ----------- ----------- Total current liabilities ............................... 20,378,848 19,404,598 Other long-term liabilities ................................... 137,317 137,317 Deferred revenue .............................................. 4,035,984 3,645,482 ----------- ----------- Total liabilities ....................................... 24,552,149 23,187,397 ----------- ----------- Commitments Total stockholders' equity .............................. 60,789,243 55,043,247 ----------- ----------- Total liabilities and stockholders' equity .............. $85,341,392 $78,230,644 =========== =========== FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, -------------------------------------- 2007 2006 (unaudited) (unaudited) ------------ ------------ Revenues: Software license revenue ........................................ $ 10,437,505 $ 5,676,689 Maintenance revenue ............................................. 4,333,539 2,591,003 Software services and other revenue ............................. 1,569,634 940,628 ------------ ------------ 16,340,678 9,208,320 ------------ ------------ Operating expenses: Amortization of purchased and capitalized software .............. 25,536 151,722 Cost of software services and other revenue ..................... 2,744,288 1,984,597 Software development costs ...................................... 5,516,185 4,607,103 Selling and marketing ........................................... 6,968,751 4,904,005 General and administrative ...................................... 1,937,780 1,321,294 ------------ ------------ 17,192,540 12,968,721 ------------ ------------ Operating loss ....................................... (851,862) (3,760,401) ------------ ------------ Interest and other income ....................................... 499,371 286,651 ------------ ------------ Loss before income taxes ........................................ (352,491) (3,473,750) ------------ ------------ Provision for income taxes ...................................... 202,084 163,136 ------------ ------------ Net loss ........................................................ $ (554,575) $ (3,636,886) ============ ============ Basic and diluted net loss per share ............................ $ (0.01) $ (0.08) ============ ============ Weighted average basic and diluted shares outstanding ..................................................... 48,594,410 48,006,309 ============ ============ FALCONSTOR SOFTWARE, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2007 (UNAUDITED) GAAP RECONCILIATION Three Months Ended Three Months Ended March 31, 2007 March 31, 2006 (unaudited) (unaudited) Net loss (GAAP) .................................................... $ (554,575) $ (3,636,886) Adjustment (1) ..................................................... 2,190,085 2,264,520 -------------- -------------- Adjusted net income (2) ........................................... 1,635,510 (1,372,366) ============== ============== Basic EPS (GAAP) .................................................... $ (0.01) $ (0.08) Adjustment .......................................................... 0.05 0.05 -------------- -------------- Adjusted Basic EPS .................................................. 0.03 (0.03) ============== ============== Diluted EPS (GAAP) .................................................. $ (0.01) $ (0.08) Adjustment .......................................................... 0.04 0.05 -------------- -------------- Adjusted Diluted EPS ................................................ 0.03 (0.03) ============== ============== Weighted average basic shares outstanding (GAAP and as adjusted) .................................................... 48,594,410 48,006,309 ============== ============== Weighted average diluted shares outstanding (as adjusted) ....................................................... 51,732,042 48,006,309 ============== ============== (1) Represents the stock-based compensation expense associated with FAS 123R. (2) Pro forma amounts exclude stock-based compensation expenses recognized for GAAP purposes under FAS 123R. As discussed earlier in this release, these supplemental non-GAAP financial measures should not be used as a substitute for their comparable GAAP measures. The adjusted amounts exclude tax related effects of FAS 123R expenses, as these effects are not deemed to be material.
Falconstor Software (FALC) 8-KResults of Operations and Financial Condition
Filed: 26 Apr 07, 12:00am