FALCONSTOR SOFTWARE, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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0-23970
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77-0216135
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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2 Huntington Quadrangle, Melville, New York
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11747
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(Address of principal executive offices)
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(Zip Code)
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(Former name or former address, if changed since last report.)
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Exhibit Number
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Description
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99.1
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Press release of the Company dated July 31, 2012.
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FALCONSTOR SOFTWARE, INC.
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Dated: July 31, 2012
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By:
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/s/ Louis J. Petrucelly
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Name:
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Louis J. Petrucelly
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Title:
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Vice President
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Contact:
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Joanne Ferrara, Investor Relations
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631-773-5813
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joanne.ferrara@falconstor.com
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June 30,
2012
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December 31,
2011
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(unaudited)
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 16,484,132 | $ | 16,257,694 | ||||
Marketable securities
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16,622,687 | 20,894,328 | ||||||
Accounts receivable, net
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10,428,659 | 19,314,789 | ||||||
Prepaid expenses and other current assets
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1,860,686 | 1,912,831 | ||||||
Inventory
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1,100,644 | 1,769,007 | ||||||
Deferred tax assets, net
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169,089 | 177,798 | ||||||
Total current assets
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46,665,897 | 60,326,447 | ||||||
Property and equipment, net
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4,472,535 | 4,364,180 | ||||||
Long-term marketable securities
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464,999 | 611,082 | ||||||
Deferred tax assets, net
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209,843 | 217,771 | ||||||
Software development costs, net
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1,325,948 | 1,001,530 | ||||||
Other assets, net
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2,243,466 | 2,183,973 | ||||||
Goodwill
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4,150,339 | 4,150,339 | ||||||
Other intangible assets, net
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177,932 | 191,572 | ||||||
Total assets
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$ | 59,710,959 | $ | 73,046,894 | ||||
Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$ | 2,656,205 | $ | 2,883,844 | ||||
Accrued expenses
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9,569,410 | 17,609,766 | ||||||
Deferred revenue, net
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19,358,548 | 19,450,966 | ||||||
Total current liabilities
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31,584,163 | 39,944,576 | ||||||
Other long-term liabilities
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4,396,320 | 2,587,327 | ||||||
Deferred revenue, net
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6,919,380 | 7,698,053 | ||||||
Total liabilities
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42,899,863 | 50,229,956 | ||||||
Commitments and Contingencies
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Total stockholders’ equity
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16,811,096 | 22,816,938 | ||||||
Total liabilities and stockholders’ equity
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$ | 59,710,959 | $ | 73,046,894 |
Three Months Ended
June 30,
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Six Months Ended
June 30,
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2012
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2011
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2012
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2011
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Revenues:
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Product revenues
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$ | 7,835,568 | $ | 11,609,760 | $ | 18,498,521 | $ | 22,868,775 | ||||||||
Support and services revenues
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8,630,633 | 8,018,248 | 17,335,752 | 15,718,495 | ||||||||||||
16,466,201 | 19,628,008 | 35,834,273 | 38,587,270 | |||||||||||||
Cost of revenues:
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Product
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1,787,186 | 2,266,040 | 3,807,672 | 3,989,045 | ||||||||||||
Support and service
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3,091,055 | 3,418,589 | 6,252,411 | 6,537,808 | ||||||||||||
Total cost of revenues
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4,878,241 | 5,684,629 | 10,060,083 | 10,526,853 | ||||||||||||
Gross profit
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$ | 11,587,960 | $ | 13,943,379 | $ | 25,774,190 | $ | 28,060,417 | ||||||||
Operating expenses:
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Research and development costs
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4,771,691 | 5,245,119 | 9,472,286 | 11,350,107 | ||||||||||||
Selling and marketing
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9,266,762 | 10,521,307 | 19,029,987 | 18,995,399 | ||||||||||||
General and administrative
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3,018,154 | 2,957,460 | 6,129,029 | 5,558,995 | ||||||||||||
Investigation, litigation and settlement related costs
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851,123 | 1,188,671 | (439,797 | ) | 3,799,791 | |||||||||||
Total operating expenses
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17,907,730 | 19,912,557 | 34,191,505 | 39,704,292 | ||||||||||||
Operating loss
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(6,319,770 | ) | (5,969,178 | ) | (8,417,315 | ) | (11,643,875 | ) | ||||||||
Interest and other (loss) income, net
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(105,533 | ) | 150,007 | (244,864 | ) | 450,956 | ||||||||||
Loss before income taxes
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(6,425,303 | ) | (5,819,171 | ) | (8,662,179 | ) | (11,192,919 | ) | ||||||||
Provision for income taxes
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195,283 | 69,868 | 407,815 | 662,384 | ||||||||||||
Net loss
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$ | (6,620,586 | ) | $ | (5,889,039 | ) | $ | (9,069,994 | ) | $ | (11,855,303 | ) | ||||
Basic net loss per share
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$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.19 | ) | $ | (0.26 | ) | ||||
Diluted net loss per share
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$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.19 | ) | $ | (0.26 | ) | ||||
Weighted average basic shares outstanding
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47,472,909 | 46,643,349 | 47,258,696 | 46,453,196 | ||||||||||||
Weighted average diluted shares outstanding
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47,472,909 | 46,643,349 | 47,258,696 | 46,453,196 |
Three Months Ended
June 30,
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Six Months Ended
June 30,
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2012
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2011
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2012
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2011
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GAAP loss from operations
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$ | (6,319,770 | ) | $ | (5,969,178 | ) | $ | (8,417,315 | ) | $ | (11,643,875 | ) | ||||
Add: Non-cash stock option expense (1)
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1,090,076 | 1,340,353 | 2,538,378 | 2,655,300 | ||||||||||||
Legal related costs (3)
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851,123 | 1,188,671 | (439,797 | ) | 3,799,791 | |||||||||||
Non-GAAP loss from operations
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(4,378,571 | ) | (3,440,154 | ) | (6,318,734 | ) | (5,188,784 | ) | ||||||||
GAAP net loss
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$ | (6,620,586 | ) | $ | (5,889,039 | ) | $ | (9,069,994 | ) | $ | (11,855,303 | ) | ||||
Add: Non-cash stock option expense, net of income taxes (2)
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1,090,076 | 1,340,353 | 2,538,378 | 2,655,300 | ||||||||||||
Legal related costs (3)
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851,123 | 1,188,671 | (439,797 | ) | 3,799,791 | |||||||||||
Non-GAAP net loss
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(4,679,387 | ) | (3,360,015 | ) | (6,971,413 | ) | (5,400,212 | ) | ||||||||
GAAP gross margin – Product
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77 | % | 80 | % | 79 | % | 83 | % | ||||||||
Add: Non-cash stock option expense (1)
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0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Non-GAAP gross margin - Product
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77 | % | 80 | % | 79 | % | 83 | % | ||||||||
GAAP gross margin – Support and Service
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64 | % | 57 | % | 64 | % | 58 | % | ||||||||
Add: Non-cash stock option expense (1)
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0 | % | 2 | % | 0 | % | 2 | % | ||||||||
Non-GAAP gross margin – Support and Service
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64 | % | 59 | % | 64 | % | 60 | % | ||||||||
GAAP operating margin
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(38 | %) | (30 | %) | (23 | %) | (30 | %) | ||||||||
Add: Non-cash stock option expense (1)
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7 | % | 7 | % | 7 | % | 7 | % | ||||||||
Legal related costs (3)
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5 | % | 6 | % | (1 | %) | 10 | % | ||||||||
Non-GAAP operating margin
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(27 | %) | (18 | %) | (18 | %) | (13 | %) | ||||||||
GAAP Basic EPS
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$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.19 | ) | $ | (0.26 | ) | ||||
Add: Non-cash stock option expense, net of income taxes (2)
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0.02 | 0.03 | 0.05 | 0.06 | ||||||||||||
Legal related costs (3)
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0.02 | 0.03 | (0.01 | ) | 0.08 | |||||||||||
Non-GAAP Basic EPS
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(0.10 | ) | (0.07 | ) | (0.15 | ) | (0.12 | ) | ||||||||
GAAP Diluted EPS
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$ | (0.14 | ) | $ | (0.13 | ) | $ | (0.19 | ) | $ | (0.26 | ) | ||||
Add: Non-cash stock option expense, net of income taxes (2)
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0.02 | 0.03 | 0.05 | 0.06 | ||||||||||||
Legal related costs (3)
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0.02 | 0.03 | (0.01 | ) | 0.08 | |||||||||||
Non-GAAP Diluted EPS
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(0.10 | ) | (0.07 | ) | (0.15 | ) | (0.12 | ) | ||||||||
Weighted average basic shares Outstanding (GAAP and as adjusted)
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47,472,909 | 46,643,349 | 47,258,696 | 46,453,196 | ||||||||||||
Weighted average diluted shares Outstanding (GAAP and as adjusted)
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47,472,909 | 46,643,349 | 47,258,696 | 46,453,196 |
(1)
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Represents non-cash, stock-based compensation charges as follows:
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Three Months Ended
June 30,
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Six Months Ended
June 30,
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2012
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2011
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2012
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2011
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Cost of revenues - Product
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$ | 49 | $ | 741 | $ | 99 | $ | 1,473 | ||||||||
Cost of revenues – Support and Service
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(21,124 | ) | 129,714 | 49,844 | 273,201 | |||||||||||
Research and development costs
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125,231 | 329,369 | 444,188 | 808,411 | ||||||||||||
Selling and marketing
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398,031 | 462,555 | 884,656 | 885,279 | ||||||||||||
General and administrative
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587,889 | 417,974 | 1,159,591 | 686,936 | ||||||||||||
Total non-cash stock-based compensation expense
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$ | 1,090,076 | $ | 1,340,353 | $ | 2,538,378 | $ | 2,655,300 |
(2)
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Represents the effects of non-cash stock-based compensation expense recognized in accordance with the FASB Accounting Standards Codification, Topic 718, net of related income tax effects. For the three and six months ended June 30, 2012 and 2011, the tax expense for both GAAP and Non-GAAP basis approximate the same amount.
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(3)
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Legal related costs represent expenses in connection with the Company’s investigations, litigation and settlement related costs for each respective period presented.
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