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Melville software maker sees steeper quarterly losses

ReiJane Huai, then chief executive of FalconStor Software,

ReiJane Huai, then chief executive of FalconStor Software, in his Melville office. (September 2009) Photo Credit: File / Howard Schnapp

Data storage specialist FalconStor Software Inc., of Melville, on Tuesday reported deeper losses and lower sales in its most recent quarter, ended June 30.

FalconStor said it lost $5.8 million on revenues of $19.6 million, compared to the same quarter last year when it also had a loss -- $3.3 million — on $20.2 million revenue.

The results come as FalconStor faced a series of recent problems, notably the resignation last year of its founder, ReiJane Huai, after law enforcement began investigating “improper payments” made to a customer.

FalconStor also faces a federal class-action lawsuit claiming that its executives made inside trades of more than 125,000 company shares, selling them for $545,000 at “artificially inflated prices” while withholding negative financial data from the public. And it is undergoing a Securities and Exchange Commission investigation into its accounting practices.

“We continue to see some momentum in our sales as a result of our market focus and the investments that we’ve made in our sales force and our channel partnerships in the first half of the year,” chief executive Jim McNiel said in a Tuesday news release. McNeil replaced Huai.

“Since we adopted our current mission and direction, we have made great strides in becoming a more focused and efficient organization in all functional areas,“ he said.

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