MELVILLE, N.Y., July 10, 2002 -FalconStor Software, Inc. (Nasdaq: FALC), a leading provider of network storage infrastructure software, today announced that IPStor has successfully completed interoperability testing with IBM’s TotalStorage Enterprise Storage Server (ESS) and the IBM Fibre Array Storage Technology (FAStT) family of products to earn IBM TotalStorage™ Proven status.

The IBM TotalStorage™ Proven program builds on IBM’s already extensive interoperability efforts to develop and deliver products and solutions that work together with third party products. FalconStor’s IPStor was scrutinized through the rigorous testing principles of the IBM TotalStorage™ Proven program

"This program provides FalconStor’s partners and customers with pre-tested solutions and configurations to simplify the adoption of our storage software technology," said Wayne Lam, vice president of FalconStor. "Already ServerProven validated and successful interoperating with the ProFibre Storage Array family of RAID subsystems, our participation in IBM’s TotalStorage Proven program again demonstrates that FalconStor and IBM are committed to working together to increase customer satisfaction by promoting greater interoperability."

IPStor provides servers and applications with high availability and business continuity through a suite of enterprise-class, storage network-based data management services across diverse OS platforms. IBM Enterprise Storage Server (code-named Shark) and FaStT users can immediately take advantage of IPStor’s Snapshot Agent for Lotus Notes, replication, Snapshot Copy, TimeMark/TimeView, mirroring, and IPStor Sentry options to help protect their live data against hardware failures, software failures, virus attacks, and even human errors.

"With the increased visibility of FalconStor’s IPStor solution to the IBM Business Partner and sales representative community, FalconStor can have greater visibility with customers and look towards smoother, reliable implementations. This can lead to reduced sales cycles and ultimately increasing customer satisfaction," said Kathleen Smith, vice president, Storage Solutions for IBM’s Storage Systems Group.

The IBM TotalStorage Proven program supports the ability of Independent Software Vendors (ISVs) to build high-quality solutions with the latest technology on leading storage platforms as well as reduce solution design time when multiple, tested building blocks have already been pre-tested.

IT administrators can leverage the innovative storage networking infrastructure delivered by IPStor in providing capacity-on-demand, end-to-end high availability, key-based security, any-to-any storage network connectivity, and total storage hardware/vendor independence.

About FalconStor
FalconStor Software, Inc. (Nasdaq: FALC), offers network storage infrastructure software that dramatically reduces storage operating costs by aggregating and provisioning storage capacity and management services over Fibre Channel and IP-based storage networks. With unprecedented reliability, performance, manageability, and availability, FalconStor’s flagship product, IPStor™, enables leading IT organizations and Service Providers to deploy a highly available network storage infrastructure to ensure business continuity.

Founded in 2000, FalconStor is headquartered in Melville, NY. International offices include Paris, Tokyo and Taichung, Taiwan. FalconStor is a voting member of the 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.
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FalconStor and IPStor are trademarks of FalconStor Software, Inc. All other company and product names contained herein are trademarks of the respective holders.