Mainframe Virtual Tape over IPStor is first of several mainframe storage applications

San Francisco, CA, August 19, 2002 - FalconStor Software, Inc. (NASDAQ: FALC), a leading provider of network storage infrastructure software, and Luminex Software, Inc., a leading provider of storage and mainframe I/O technology, announced their partnership to collaborate on enabling mainframe storage management using FalconStor's IPStor storage management software. The announcement was made today at the IBM "SHARE" users' conference being held in San Francisco.

Under the agreement, FalconStor and Luminex will develop and certify interoperability with IPStor, in an ongoing basis, to manage mainframe related storage applications. For the first interoperability product, FalconStor has certified VirtualBLUE VTS, a Luminex virtual tape application with IPStor. Certification for other Luminex mainframe storage related applications will be announced in the coming months.

"Storage ranks with its peers, processing and communicating, as one of the only three things IT really does in order to accomplish business functions for enterprises," said Dan Tanner, Director of Storage Research at Aberdeen Group. "But, like Rodney Dangerfield, mainframe storage has not been getting any respect. Until now, that is. This collaboration between FalconStor and Luminex sounds promising and bears close watching."

"Luminex has a roadmap that aligns nicely with our own," said Bernie Wu, vice president of business development at FalconStor. "With its expertise in mainframe I/O technologies, Luminex and its VirtualBLUE products allow us to extend IPStor to mainframe storage. Storage Administrators can now use our two products to provide disk-based alternatives for mainframe storage backup as well as facilitate data interchange with other types of platforms in Open SAN environments."

VirtualBLUE VTS uses SCSI or Fibre Channel attached disk drives to emulate 3490 tape drives. These disks can now be managed with IPStor's storage services, including high availability, synchronous mirroring, remote replication, zero-impact backup enabler, DynaPath for Dynamic multi-pathing, and TimeMark/TimeView for scheduled disk-based change-journaling and instant data recovery.

"FalconStor has established itself at the leading edge of storage management software," said Peter LaPorte, director of marketing and business development at Luminex. "Through our VirtualBLUE products and IPStor, data center executives can now begin to think in terms of consolidated and consistent management of both open system and mainframe storage resources."

VirtualBLUE VTS and IPStor interoperability was certified using Sun Solaris servers. The companies are expected to announce interoperability of Luminex's VirtualBLUE 3490 - a mainframe to open systems tape application being introduced at SHARE.

About FalconStor
FalconStor Software, Inc. (NASDAQ: FALC), 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, NY. 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 1-631-777-5188.

About Luminex

For large data centers with complex storage operations, Luminex develops and markets hardware and software for data backup, archiving, distribution and management. The Luminex VirtualBLUE family of products enables the use of low cost open system storage resources with IBM and plug-compatible mainframe servers. Its line of award-winning optical recording products simplifies and improves the preservation and distribution of data.

Founded in 1994, Luminex is headquartered in Riverside, California. It has development offices in San Diego, California, and Beaverton, Oregon. Luminex products are available directly from the company and through partnerships with leading systems integrators and resellers worldwide. Call 1.888.LUMINEX or email us at info@luminex.com for more information. We invite you to visit our web site www.luminex.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. Luminex and VirtualBLUE are trademarks of Luminex Software, Inc. All other company and product names contained herein are trademarks of the respective holders.