FalconStor Reports Earnings

MELVILLE, N.Y. -- FalconStor Software, Inc. (NASDAQ: FALC - News), the leading developer of data protection solutions, today announced financial results for its fourth quarter and fiscal year ended December 31, 2006.

Revenues for the fourth quarter of 2006 increased 55% to $20.2 million, compared with $13.0 million for the same period a year ago. Net income for the quarter was $2.8 million or $0.06 per share, which includes $2.3 million in expenses related to stock options. Pro forma net income for the fourth quarter of 2006, excluding stock option expense, was $5.1 million or $0.10 per share, compared with net income of $1.7 million or $0.03 per share for the fourth quarter of 2005.

For the year ended December 31, 2006, revenues increased 34% to $55.1 million, compared with $41.0 million for the year ended December 31, 2005. Net loss for 2006 was $3.4 million, or $0.07 per share, which includes $9.4 million in expenses related to stock options. Pro forma net income for 2006, excluding stock option expense, was $6.0 million or $0.12 per share compared with net income of $2.3 million or $0.05 per share in 2005.

FalconStor Software Inc.