Rhapsody Networks and Falconstor Ink Agreement for Networked Storage Management Solution

Business Wire, August 21, 2002

Business Editors/High-Tech Writers

FREMONT, Calif. and MELVILLE, N.Y.--(BUSINESS WIRE)--Aug. 21, 2002

Agreement Paves Way for First True Multi-Protocol Solution that

Lowers Storage Management Costs and Protects Customer SAN Investment

Rhapsody Networks and FalconStor Software, Inc. (Nasdaq:FALC), a leading provider of network storage infrastructure software, today announced that they will deliver an advanced solution to help enterprises more effectively manage large and growing corporate data requirements. The companies believe that the solution will bring unprecedented efficiencies to storage administrators responsible for the ongoing management and protection of corporate data attached to storage area networks (SANs).

Rhapsody Networks develops and markets a line of intelligent storage networking platforms that run storage applications within a storage area network (SAN). FalconStor's IPStor provides enterprise class storage services, including remote replication, mirroring, capacity-on-demand, snapshot, zero-impact backup/restore enablers, active-active failover, and more through a software-only design that runs on existing industry standard hardware over Fibre Channel, iSCSI and IP/SCSI. Major system, storage and appliance vendors and system integrators throughout the world have embraced IPStor, including companies such as NEC Corporation and Fujitsu Limited.

"The race to move intelligence off the host and out of the array is on," said Steve Kenniston of The Enterprise Storage Group. "There are some very efficient economies of scale one can gain by putting storage optimized applications into the fabric."

Based on patent-pending XPath(TM) technology and architecture, the Rhapsody family of Storage Application Directors allows the execution of the storage application software to be located within the SAN itself, not just on the host or storage systems. Storage application software running in the SAN has significant cost and scalability advantages over traditional approaches. Rhapsody platforms provide robust hardware and system support to ensure that leading storage applications achieve unprecedented performance and scalability within the SAN, thereby extending end-user storage management efficiencies.

According to Rhapsody Networks president and CEO, Mike Klayko, the FalconStor agreement continues the Rhapsody strategy of partnering with the leading and most innovative storage application providers. "FalconStor has outstanding enterprise visibility and exceptional support from a number of key storage vendors. Together with our intelligent network platforms, the IPStor solution will deliver increasing value to enterprises worldwide," Klayko said.

ReiJane Huai, chairman and CEO of FalconStor, added, "Rhapsody has a roadmap that corresponds well with our own. Our solutions and functionality are very complementary, and when combined, enable businesses to protect their information assets across heterogeneous SAN environments, while maintaining 24 x 7 operations. Ensuring interoperability between Rhapsody and FalconStor, who both value applications and storage services running in the SAN, provides a storage infrastructure to customers with the flexibility to grow with their enterprise."

About FalconStor

FalconStor Software, Inc. offers network storage infrastructure software that dramatically reduces storage operating costs by aggregating and provisioning storage capacity and management services over Fibre Channel and IP-based storage networks. With unprecedented reliability, performance, manageability, and availability, FalconStor's flagship product, IPStor(TM), enables leading IT organizations and Service Providers to deploy a highly available network storage infrastructure to ensure business continuity.

Founded in 2000, FalconStor is headquartered in Melville, N.Y. International offices include Paris, Tokyo and Taichung, Taiwan. FalconStor is a voting member of the Storage Networking Industry Association (SNIA) and Fibre Channel Industry Association (FCIA). For more information, visit www.falconstor.com or call 631/777-5188.

About Rhapsody Networks

Rhapsody Networks is a provider of intelligent storage networking products that reduce the complexity and cost of managing corporate information. Rhapsody products are based on patent-pending XPath(TM) technology, which provides unprecedented scalability and flexibility for the management of enterprise storage area networks. Rhapsody Networks is headquartered in Fremont, Calif., and can be reached at 510/743-3000 and www.rhapsodynetworks.com.

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. FalconStor and IPStor are trademarks of FalconStor Software, Inc. Rhapsody Networks and XPath are trademarks or registered trademarks of Rhapsody Networks, Inc. Other company names, product names, and/or slogans mentioned herein may be trademarks or registered trademarks of their respective companies.