FalconStor: Preliminary 3Q08 Financial Results

FalconStor Software, Inc. announced preliminary financial results for its third quarter ended September 30, 2008. Based on preliminary financial data, the Company expects third quarter revenue to be in the range of $19 to $19.5 million and non-GAAP earnings per share to be breakeven. Non-GAAP results exclude the effects of stock-based compensation expense net of the related income taxes.

Based on year-to-date results and on projections for the fourth quarter of 2008, the Company now anticipates revenue for the full year 2008 will be in the range of $85 to $87 million, compared with its previous projection of a range of $100 to $104 million. The Company now anticipates that non-GAAP net income will be between $0.12 and $0.14 per diluted share, which excludes stock-based compensation, net of income taxes, compared with its prior projection of a range of $0.31 to $0.36 per diluted share. In addition to these revised projections, due to the impact of the weak economy on our business, the Company advises investors not to continue to rely on the other aspects of its previously issued financial guidance for 2008.

“The difficult economic conditions at the end of the third quarter resulted in many companies freezing or lowering their information technology spending, which caused our revenues for the quarter to fall short of our projections,” said ReiJane Huai, Chairman and Chief Executive Officer of FalconStor. “We remain confident in the capabilities of our products. But given the continuing difficult global economic conditions, we are projecting that revenues for the fourth quarter will also be below our previous expectations.”