… And Shuman Law Firm

The Shuman Law Firm announced that a class action lawsuit has been filed on behalf of purchasers of FalconStor Software, Inc. common stock during the period between February 5, 2009 and September 29, 2009, inclusive.

The complaint charges FalconStor and certain of its officers and directors with violations of federal securities laws.

Specifically, the Complaint alleges that defendants misrepresented and/or failed to disclose the following adverse facts:

• that the Company was experiencing weak demand for its products and services;
• that FalconStor was making improper payments to secure a contract with at least one of the Company’s customers and
• as a result of the foregoing, defendants lacked a reasonable basis for their positive statements about FalconStor and its prospects.

On September 29, 2010, FalconStor announced that, effective immediately, the Company’s founder, ReiJane Huai, had resigned from his positions as Chairman of the Board of Directors, President, and Chief Executive Officer of FalconStor. Mr. Huai tendered his resignation following the disclosure that certain improper payments were allegedly made in connection with the Company’s contract with one customer. As a result of this announcement, shares of FalconStor fell to $3.15, a decline of more than 22% from the closing price of $4.06 on September 28, 2010.