IPStor Version 4.0 Optimizes Performance and Availability of Complex IT Infrastructures

MELVILLE, N.Y., February 11, 2003-JFurther strengthening its position as a leader in the development of network storage infrastructure software, FalconStor® Software, Inc. (NASDAQ: FALC), today announced a new version of IPStor®, which incorporates advanced functionality designed to deliver the highest availability and the most efficient backup and recovery capabilities available today, while maximizing resources and lowering administrative overhead.

FalconStor fully recognizes the challenges associated with data disruption, and the crippling effect it can have on business operations and administrative personnel. IPStor version 4.0 addresses these issues with the addition of new storage services that enable IT management and supporting personnel to focus their efforts and time on mission-critical operations. New services in IPStor version 4.0 include superior enterprise-class manageability; real time data migration and virus scanning; accelerated backup and recovery; expedited disaster recovery capabilities; and performance optimization.

"Businesses continue to struggle with striking the right balance between managing the cost of their complex IT storage infrastructures with the potentially paralyzing risk of downtime," said Jamie Gruener, senior analyst for the Yankee Group. "FalconStor has again incorporated powerful new functionality in IPStor that cost effectively meets these challenges and successfully addresses the immediate issues faced by enterprises."

IPStor version 4.0 offers comprehensive, fail-over services designed specifically to deliver rapid recovery from NIC, FC HBA, disk, system failures and disasters to optimize business continuity. In addition, IPStor version 4.0 enables Administrators to leverage costly investments in existing high-end media, transform inexpensive disks into high-speed storage, as well as minimize bandwidth utilization to maximize resources, reduce total cost of ownership and deliver the highest achievable performance.

"IPStor continues to gain widespread acceptance from a broad spectrum of enterprise-level customers across a diversity of industries. Their input, as well as the feedback we obtained from our strategic business partners and solution providers, had a significant impact on the development of the new functionality in IPStor version 4.0," said Wayne Lam, FalconStor vice president. "FalconStor is committed to developing innovative software solutions that focus on real world business challenges including business continuity, disaster recovery, and the skyrocketing cost of storage management."

New storage services in IPStor version 4.0 include:

Enterprise-Class Manageability

• Classes of Storage - By pooling storage based on performance, availability and additional customer defined criteria, IPStorÕs storage classification feature ensures that systems and applications are allocated only storage that meets specified business requirements.
• Hierarchical Management - Provides scalable administration that enables Administrators to delegate rights and responsibilities based on customer-defined criteria (e.g., by organization, application, geography, etc.).
• Call Home Support Service - Remote monitoring service provided by FalconStor, complements usersÕ internal monitoring capabilities and increases availability via recognition of critical events, including impending component failures, and then proactively alerts Administrators for corrective action.
• RealTime Data Migration - Leverages existing SAN to transport data in real-time between similar and dissimilar storage subsystems during storage upgrades, data center relocations, and server consolidations, while maintaining full availability of application servers.
• RealTime Virus Scanning - Prevents the network-attached storage (NAS) from being infiltrated and contaminated by malicious viruses.

• HyperTrac Backup Accelerator - Allows third party backup software to backup remote server's disk over IP-SAN or FC-SAN at speeds of up to 2 Gigabit per second. HyperTrac reduces network, host and administrative overhead by eliminating the need to install and manage ordinary backup agents for individual hosts.
• Virtual Tape Library - Allows third party backup software to transfer data to/from a disk-based, virtual tape library over FC-SAN or IP-SAN at speeds of up to 2 Gigabit per second. IPStor's high-availability infrastructure eliminates common failures caused by tape media or mechanical parts to optimize backup reliability. In addition to speed and reliability, customers will benefit from IPStor's underlying services, including tape mirroring, replication and capacity-on-demand to maximize ROI.

• Advanced Replication Services - Utilizes compression, encryption and auto-resume capabilities to optimize network bandwidth utilization and maximize end-to-end security for replicating SAN and NAS resources over the MAN/WAN.
• Bare Metal Recovery - Minimizes server/desktop downtime by providing an IP-based boot service that continues operations in the event of a boot disk failure (caused by head crash, virus infection, data corruption, etc.) Š system reboots and runs from a SAN-based disk until repair operations are complete.
• Message Recovery for Microsoft Exchange - Simplifies and accelerates the recovery of messaging/email systems by automating the process of restoring deleted mailboxes and messages via an off-line recovery server.

• RAID - Utilizes software RAID and/or certified third party RAID controllers to maximize throughput and fault tolerance.
• HotZone - Greatly increases I/O performance of mission-critical applications by transparently re-mapping the most frequently accessed data to higher performance storage devices, such as solid-state disks (SSDs).

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: 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 registered trademarks of FalconStor Software, Inc. All other company and product names contained herein are trademarks of the respective holders.

Editorial Contact:
Herman Chin, FalconStor
(631) 962-1163
Herman.Chin@FalconStor.com