FalconStor's Wendy Petty Named One of the ''Power 50 Women of the Channel'' by VARBusiness Magazine; North America VP of Sales Recognized by Leading Technology Publication for Contributions to Channel Initiatives

Business Wire, August 21, 2006

MELVILLE, N.Y. -- FalconStor Software, Inc. (NASDAQ: FALC), the leading developer of proven data protection solutions, today announced that Wendy Petty, Vice President of North America Sales, will be honored alongside 49 other IT industry luminaries in VARBusiness magazine's first ever "Power 50 Women of the Channel." The list, which recognizes the achievement and stature of women in channel-related facets of the IT industry, appears in the August 21, 2006 edition of VARBusiness magazine.

VARBusiness is the leading source of channel-centric news, strategy, and technology trends for the IT industry. Its "Power 50" includes 50 of today's most influential, powerful, and successful women from top IT solution providers, vendors, and distributors including Microsoft, IBM, Intel, Symantec, Lexmark, SAP, Trend Micro, HP, Alliance Technology Group, and Tech Data. "To be placed on the same list as these exemplary women who I deeply respect and admire is a tremendous honor and privilege," said Wendy Petty.

The "Power 50" were chosen by the editors of the magazine based on their achievements as executives and the amount of influence they wield over the technology channel. "The Power 50 epitomizes what it means to be a female business IT leader and role model for other women in an industry that has been traditionally male-dominated," declared Lawrence M. Walsh, editor of VARBusiness. "By recognizing those who have made significant marks in this industry, we celebrate their achievements and promote their contributions, acknowledging such an amazing pool of talent."

"At FalconStor, we have built our business based on the channel, and we are devoted to continued growth through strategic partnerships with the solution provider community. For that reason, this title is particularly gratifying to me," said Petty. "I hope that our presence in the Power 50 inspires other women to pursue new opportunities both within the channel and throughout the technology industry."

About VARBusiness Magazine

VARBusiness is the leading magazine providing channel news, strategy and technology trends for solution providers, VARs, IT consultants, reseller companies, and network and technology integrators. VARBusiness, as well as VARBusiness.com, provides strategic news, partner program updates, in-depth analysis, research and management advice, along with strategic insight and technology direction to solution providers that are driving demand for IT solutions across business and government markets.

VARBusiness exclusive research reports include the VARBusiness 500, Annual Report Card, Partner Programs Guide, State of the Market, State of the Midmarket, State of Software, State of Technology and State of the Enterprise. VARBusiness includes GovernmentVAR, which provides channel news and analysis for VARs serving government, military & education markets, along with the VARBusiness Podcast, providing the best of VARBusiness.com in audio MP3 format, and our VARBusiness Insider, Executive Advisor, VARBusiness 500, GovernmentVAR and Linux e-newsletters.

About FalconStor

FalconStor Software, Inc. (Nasdaq: FALC) is the premier developer of adaptive data protection solutions that optimize data center efficiency and business continuity for all IT infrastructures. The company's innovative storage virtualization, continuous data protection (CDP), disaster recovery, and virtual tape library (VTL) solutions integrate seamlessly to ensure rapid data recovery and simplified storage management. Available from major OEMs, system integrators, and resellers, FalconStor products -- including award-winning IPStor(R), VirtualTape Library, and DiskSafe software -- are deployed worldwide by governments, educational institutions, and Fortune 1000 enterprises across industries including aerospace, energy production, financial services, healthcare, law, manufacturing, and telecommunications.

FalconStor is headquartered in Melville, New York, with offices throughout Europe and the Asia Pacific region. FalconStor is an active member of the Storage Networking Industry Association (SNIA). For more information, visit www.falconstor.com or call 1-866-NOW-FALC (866-669-3252).

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: delays in product development; market acceptance of FalconStor's products and services; technological change in the storage and networking industries; competition in the network storage software market; the potential failure of FalconStor's OEM partners to introduce or to market products incorporating FalconStor's products; 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 is a registered trademark of FalconStor Software, Inc. All other company and product names contained herein may be trademarks of their respective holders.