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January 27, 2005 | 05:07 PM

The atmosphere outside the de Lanerolle home in Poquott is serene and peaceful. Snow from last weekend's blizzard blankets the property, and the surf is always audible.

But inside, their home tells a different story. Boxes of donated goods lie scattered about the front entrance as if they had just moved in — and on their computer Dr. Suranganee (Sue) de Lanerolle and her husband Nimal, an engineer, guide visitors through 300 digital images of human suffering taken during Dr. de Lanerolle's recent trip back to her native country of Sri Lanka.

The country was one of many in South Asia devastated by the terrible tsunami that struck the day after Christmas 2004. When the water receded, more than 220,000 people in Indonesia, Sri Lanka, Thailand and other countries were gone. Sri Lanka, the island nation off the southeast coast of India, was the second hardest hit, with more than 30,000 lives lost in the flooding. In response to the disaster, Dr. de Lanerolle, a neurologist at St. Catherine of Siena Hospital and Medical Center and an adjunct professor of neurology at Stony Brook, joined a small group of doctors to go to the hardest hit areas of Sri Lanka to do what they could do.

Dr. de Lanerolle's family comes from the west coast town of Dehiwala, which is near the Sri Lankan capital of Colombo. Fortunately, much of the area suffered minimal damage. However, she described the people there as unusually agitated.

"They all looked very hyper, very agitated," she said. Dr. de Lanerolle spent time with her family and then made the nine-hour trek across the island through territory controlled by the separatist rebel Tamil Tigers, to Polonnaruwa, where her party set up a base for what were going to be exhausting days of treating tsunami refugees.

In the following days they visited the towns of Kalkudah and Passekudah, former beachfront resort areas that had been leveled by the December 26 tsunami.

"It was a big camp," she said of Kalkudah. "There were thousands of people there."

Dr. de Lanerolle said that she found herself and her colleagues, who included a pediatrician and a psychologist, with no shortage of work, dressing wounds, and treating children with antibiotics.

"There were children with neurological problems, scabies, scorpion bites," she said. "We saw one patient a minute for several hours."

She said that early fears that refugees in the camps would be stricken with disease, raising the already astronomical death toll, had been calmed by the time she arrived. The refugees she saw, she said, had access to toilets, purified water and cooked meals. She also said that the Sri Lankan government and the International Red Cross had provided the refugees with an ample amount of clothing. If there was one thing they needed, de Lanerolle reported, it was some kind of shelter. Many of the refugee camps are actually based in public schools which will have to ask the refugees to leave as their spring semesters start. She recommended that those who wish to donate goods donate tents for the thousands of homeless refugees.

During her trip to Sri Lanka, Dr. de Lanerolle said, she also visited devastated areas on the island's southeast coast, where in some instances, all that was left were the foundations of once-sturdy brick houses.

"Nothing close to the water line was left," she said. "The coconut trees survived the tsunami, but these brick houses were all smashed to the ground."

Dr. de Lanerolle and her group, which also included a reporter from the New Jersey Star-Ledger, were unfortunate enough to witness funeral pyres where the bodies had not been completely cremated. In some of her photos people are wearing masks over their faces to protect them from the stench of decomposing bodies.

Still, despite the terror that the tsunami left in its wake, she says that the human spirit is strong in Sri Lanka.

"The kids were happy — they were playing and drawing," she said. "I think they were still in a state of shock."

She was also surprised to hear that people whose livelihoods were destroyed by the tsunami in the coastal fishing communities had every intention of going back to sea.

"People wanted to stay near the beach," she said. "They were afraid the government would relocate them. They wanted their boats back and their nets back. They still wanted to go back to fishing and to their lives."

In addition to being a neurologist, Dr. de Lanerolle is also the treasurer of SLMANA-East, the Sri Lanka Medical Association North America, a group founded in 1996 as a volunteer program to improve healthcare in Sri Lanka.

De Lanerolle said that any donations can be made to the SLMANA Eastern Region Tsunami Relief Fund, 2500 Nesconset Highway, Building 16, Stony Brook, NY 11790.

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FalconStor Software Announces Q4 and Full Year Financial Results; Achieves Profitability and Positive Cash Flow for Q4 2004; Revenues Increase 87% from Same Period a Year Ago

MELVILLE, N.Y.--(BUSINESS WIRE)--Feb. 8, 2005--FalconStor Software, Inc. (Nasdaq: FALC), a leading provider of network storage software solutions, today announced financial results for its fourth quarter and fiscal year ended December 31, 2004.

The Company reached profitability for the first time in the fourth quarter of 2004. Revenues for the quarter increased 87% to $9.5 million, compared with $5.1 million for the same period a year ago. Net income for the fourth quarter of 2004 was $0.3 million, or $0.01 per share, compared with a net loss for the fourth quarter of 2003 of $2.2 million, or $0.05 per share. Non-GAAP net loss for the fourth quarter 2003 was $1.6 million, or $0.03 per share, which excludes a lease abandonment charge of $0.6 million.

For the twelve months ended December 31, 2004, revenues increased 69% to $28.7 million compared with $16.9 million for the year ended December 31, 2003. Net loss for 2004 was $5.9 million, or $0.13 per share, compared with a net loss for 2003 of $7.4 million or $0.16 per share. Non-GAAP net loss was $3.6 million, or $0.08 per share for 2004 and $6.8 million, or $0.15 per share for 2003. Non-GAAP net loss for 2004 excludes a litigation settlement charge of $1.3 million and legal fees of $1.0 million, each associated with patent infringement litigation that was resolved in the third quarter of 2004. Non-GAAP net loss for 2003 excludes a lease abandonment charge of $0.6 million.

Revenues for the fourth quarter of 2004 increased 27% compared with the previous quarter from $7.5 million to $9.5 million. Net income for the fourth quarter of 2004 was $0.3 million, or $0.01 per share, compared with a net loss for the third quarter of 2004 of $2.3 million, or $0.05 per share. Non-GAAP net loss for the third quarter of 2004 was $0.6 million, or $0.01 per share, which excludes a litigation settlement charge of $1.3 million and related legal fees of $0.4 million.

The Company achieved positive cash flow for the first time, closing the quarter with $34 million in cash, cash equivalents and marketable securities, an increase of $1.1 million compared with the previous quarter. Deferred revenue at December 31, 2004, increased by $2.8 million, or 107%, compared with the same period a year ago and by $1.2 million, or 28%, compared with the balance at September 30, 2004. Gross margins for the fourth quarter increased to 86% compared with 77% in the same period a year ago and 80% in the third quarter of 2004.

"In addition to the profitability and positive cash flow milestones, 2004 was a year of continued expansion across our product portfolio and global customer base, and in our market recognition and strategic partnerships with major players in the industry," said ReiJane Huai, Chairman and CEO of FalconStor Software. "We will leverage our business momentum to further our growth in 2005 and beyond."

2004 Company highlights include:

Strengthening FalconStor's leadership position in the network storage market through the development and delivery of innovative disk-based backup, business continuity/disaster recovery, compliance, information lifecycle management, and iSCSI-based software solutions for a wide range of customers including the SMB market and large enterprises.

The general availability of a disk-based library from a Tier 1 OEM powered by FalconStor's VirtualTape Library software.

The launching by another Tier 1 OEM of iSCSI Storage Services, powered by FalconStor's award-winning iSCSI Storage Server for Windows Storage Server 2003 software solution.

Establishment of new, and expansion of existing, agreements with OEM partners and distributors to deliver advanced storage services powered by FalconStor software.

Continued recognition by leading industry publications and events, including:

-- FalconStor's VirtualTape Library solution -named "Editor's Choice" by Storage Pipeline magazine, and "best of the best" by Computer Technology Review magazine

-- FalconStor's iSCSI Storage Server -- Network Computing Editor's Choice Award, Best of Microsoft TechEd Europe 2004 in the Data Management Solution category, and Best of Microsoft TechEd China 2004 in the Software Solution category.

Successful deployment of FalconStor's Business Continuity/Disaster Recovery (BC/DR), VirtualTape Library (VTL) and iSCSI Storage solutions in the financial, legal, telecommunications, insurance, manufacturing, healthcare, entertainment, retail, education, and government sectors around the world.

Joint certifications with technology companies to optimize interoperability in an IT environment including:

-- IPStor(R) Enterprise Edition solution- completed certification with LSI Logic PCI-X Fibre Channel HBAs.

-- iSCSI Storage Server solution- received Novell's "YES CERTIFIED" status for NetWare 6.5

-- VirtualTape Library solution - obtained Enterprise Backup Solution (EBS) certification from HP; certified with Sony Electronics' SAIT drives and PetaSite storage systems; IBM's TotalStorage Proven for TotalStorage FAStT, Enterprise 3494 Tape Library, Enterprise Tape Drive 3592 Model J1A, and 2109 Model S16 SAN Fibre Channel Switch; Network Appliance NearStore nearline storage systems and the NetApp Data ONTAP operating system; and Engenio Information Technologies.

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