FalconStor and Solution-Soft Enter Into Strategic Technology Alliance

SANTA CLARA, Calif. and MELVILLE, N.Y., February 25, 2002 — Solution-Soft Systems Inc, a leading provider of Intelligent Data Optimization (IDO) solutions, and FalconStor Software, Inc. (Nasdaq:FALC), a leading storage networking infrastructure software company, today announced the licensing and integration of Solution-Soft's SafeCapacity technology with FalconStor's IPStor™. The technology licensing agreement will enable FalconStor customers to take advantage of Solution-Soft's leading storage availability, reliability and capacity protection functionality.

IPStor's network storage infrastructure aggregates and provisions storage resources over Fibre Channel, IP/iSCSI, NFS or CIFS protocols with end-to-end manageability. This technology alliance will enable IPStor to offer policy-based storage resource optimization and capacity downtime protection to mainstream Operating Systems.

"The advanced capacity optimization technology from Solution-Soft makes it a perfect fit with IPStor,'' said ReiJane Huai, FalconStor chairman and CEO. "This provides customers with automated storage expansion, continuous data availability and business continuity without any storage downtime -a critical factor for IT enterprises.''

"The licensing of SafeCapacity technology to FalconStor re-affirms the value proposition of our software, which is greater availability and efficiencies in storage network environments,'' said Paul Wang, CEO of Solution-Soft. "The technological combination significantly improves user's abilities to manage their current storage resources and simplifies future expansion.''

SafeCapacity uses a policy-based configuration to continuously monitor an application server's file systems, seamlessly allocating more storage space whenever needed. Additionally, SafeCapacity decreases the need to over-provision storage resources on individual systems, thus reducing storage related costs. As opposed to management by crisis, SafeCapacity automatically notifies system administrators when problems occur, and, based on pre-set rules, takes corrective action immediately. By automating capacity management, enterprises can greatly reduce total storage system ownership costs, thereby maximizing the return on investment.

IPStor, a storage networking software infrastructure, enables corporate IT to contain storage management costs and increase storage efficiency by aggregating, virtualizing and provisioning storage services over the network with high performance, security, scalability and availability. The IPStor server runs on off-the-shelf hardware under Linux or Solaris. It supports industry standard protocols such as SCSI, IP, iSCSI, Fibre Channel and SNMP to facilitate rapid deployment and seamless integration with the existing storage equipment and 3rd party management software throughout the enterprise. As the result of its hardware-agnostic architecture, vendor-independent storage services and industrial performance, IPStor has been embraced by major system, storage and appliance vendors and system integrators throughout the world.

About FalconStor

FalconStor Software, Inc. (Nasdaq: FALC), helps enterprises rise above ever-expanding storage complexities and costs by providing a state-of-the-art software-only storage networking solution, consolidating storage management while drastically improving storage efficiency and quality of service. With unprecedented manageability, performance, security, and flexibility, FalconStor's flagship product, IPStor™ transcends the limitations that have historically confined SANs to local data centers.

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). For more information, visit www.falconstor.com or call 1-631-777-5188.

About Solution-Soft

Solution-Soft is the leading provider of Intelligent Data Optimization (IDO) solutions, which address the urgent need for automated management of data in complex networking environments. IDO solutions facilitate automated data selection, movement and redirection that optimize high availability, storage scalability and system performance. The company has developed robust data management software solutions for corporate data centers, XSP Infrastructure providers, and storage solution providers. Solution-Soft boasts more than 1,500 customers, including AT&T, Boeing, Cable&Wireless, and 3M. Solution-Soft's market presence is also bolstered by partnerships with Citrix Systems (NASDAQ:CTXS), FalconStor. (Nasdaq:FALC), Hewlett-Packard (NYSE:HWP), Microsoft (NASDAQ:MSFT), and Sun Microsystems (NASDAQ:SUNW).

Founded in 1993, Solution-Soft is privately held and based in Santa Clara, Calif. For more information, visit www.solution-soft.com or call +1.408.346.1415.

Michael Morrison

Herman Chin

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.