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Share Name | Share Symbol | Market | Type |
---|---|---|---|
FalconStor Software Inc (PK) | USOTC:FALC | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.25 | 2.15 | 2.45 | 77 | 21:00:02 |
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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77-0216135
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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701 Brazos Street, Suite 400, Austin, TX
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78701
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(Address of principal executive offices)
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(Zip Code)
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631-777-5188
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(Registrant’s telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last report)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer x
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Smaller reporting company x
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Emerging growth company o
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Page
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March 31, 2020
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December 31, 2019
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||||
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(unaudited)
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Assets
|
|
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|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
976,121
|
|
|
$
|
1,475,166
|
|
Accounts receivable, net of allowances
|
|
1,758,213
|
|
|
3,406,550
|
|
||
Prepaid expenses and other current assets
|
|
2,127,422
|
|
|
2,252,372
|
|
||
Contract assets
|
|
593,834
|
|
|
749,515
|
|
||
Inventory
|
|
14,173
|
|
|
30,014
|
|
||
Total current assets
|
|
5,469,763
|
|
|
7,913,617
|
|
||
Property and equipment, net of accumulated depreciation and amortization
|
|
321,714
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|
|
369,273
|
|
||
Operating lease right-of-use assets, net
|
|
1,488,539
|
|
|
1,842,254
|
|
||
Deferred tax assets, net
|
|
259,008
|
|
|
258,841
|
|
||
Software development costs, net
|
|
24,221
|
|
|
27,012
|
|
||
Other assets
|
|
911,425
|
|
|
829,335
|
|
||
Goodwill
|
|
4,150,339
|
|
|
4,150,339
|
|
||
Other intangible assets, net
|
|
84,249
|
|
|
57,718
|
|
||
Long-term contract assets
|
|
254,397
|
|
|
327,757
|
|
||
Total assets
|
|
$
|
12,963,655
|
|
|
$
|
15,776,146
|
|
Liabilities and Stockholders' Deficit
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
868,266
|
|
|
$
|
1,302,290
|
|
Accrued expenses
|
|
2,280,901
|
|
|
2,533,824
|
|
||
Current portion of lease liabilities
|
|
1,699,377
|
|
|
1,655,522
|
|
||
Short-term loan, net of debt issuance costs and discounts
|
|
1,001,327
|
|
|
947,501
|
|
||
Deferred revenue
|
|
3,478,006
|
|
|
5,270,190
|
|
||
Total current liabilities
|
|
9,327,877
|
|
|
11,709,327
|
|
||
Other long-term liabilities
|
|
768,910
|
|
|
745,254
|
|
||
Notes payable, net of debt issuance costs and discounts
|
|
3,015,993
|
|
|
2,906,133
|
|
||
Operating lease liabilities, net of current portion
|
|
177,905
|
|
|
624,859
|
|
||
Deferred tax liabilities, net of current portion
|
|
457,060
|
|
|
432,520
|
|
||
Deferred revenue, net
|
|
2,671,420
|
|
|
2,085,080
|
|
||
Total liabilities
|
|
16,419,165
|
|
|
18,503,173
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
|
||
Series A redeemable convertible preferred stock, $.001 par value, 2,000,000 shares authorized, 900,000 shares issued and outstanding, redemption value of $12,548,444 and $12,262,685, respectively
|
|
11,616,129
|
|
|
11,304,279
|
|
||
Stockholders' deficit:
|
|
|
|
|
|
|
||
Common stock - $.001 par value, 30,000,000 shares authorized, 5,919,837 shares and 5,918,733 shares issued and outstanding, respectively
|
|
5,920
|
|
|
5,919
|
|
||
Additional paid-in capital
|
|
111,420,547
|
|
|
111,727,888
|
|
||
Accumulated deficit
|
|
(124,591,693
|
)
|
|
(123,871,853
|
)
|
||
Accumulated other comprehensive loss, net
|
|
(1,906,413
|
)
|
|
(1,893,260
|
)
|
||
Total stockholders' deficit
|
|
(15,071,639
|
)
|
|
(14,031,306
|
)
|
||
Total liabilities and stockholders' deficit
|
|
$
|
12,963,655
|
|
|
$
|
15,776,146
|
|
|
|
Three Months Ended March 31,
|
||||||
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2020
|
|
2019
|
||||
Revenue:
|
|
|
|
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||||
Product revenue
|
|
$
|
1,048,963
|
|
|
$
|
1,745,784
|
|
Support and services revenue
|
|
2,131,224
|
|
|
2,747,194
|
|
||
Total revenue
|
|
3,180,187
|
|
|
4,492,978
|
|
||
Cost of revenue:
|
|
|
|
|
|
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||
Product
|
|
139,460
|
|
|
79,669
|
|
||
Support and service
|
|
407,920
|
|
|
563,745
|
|
||
Total cost of revenue
|
|
547,380
|
|
|
643,414
|
|
||
Gross profit
|
|
2,632,807
|
|
|
3,849,564
|
|
||
Operating expenses:
|
|
|
|
|
|
|
||
Research and development costs
|
|
674,924
|
|
|
947,384
|
|
||
Selling and marketing
|
|
981,191
|
|
|
1,040,289
|
|
||
General and administrative
|
|
1,093,169
|
|
|
1,476,296
|
|
||
Restructuring costs
|
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287,460
|
|
|
157,693
|
|
||
Total operating expenses
|
|
3,036,744
|
|
|
3,621,662
|
|
||
Operating income (loss)
|
|
(403,937
|
)
|
|
227,902
|
|
||
Interest and other expense
|
|
(245,839
|
)
|
|
(265,223
|
)
|
||
Loss before income taxes
|
|
(649,776
|
)
|
|
(37,321
|
)
|
||
Income tax expense
|
|
70,064
|
|
|
87,586
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|
||
Net loss
|
|
$
|
(719,840
|
)
|
|
$
|
(124,907
|
)
|
Less: Accrual of Series A redeemable convertible preferred stock dividends
|
|
285,760
|
|
|
247,027
|
|
||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock
|
|
26,090
|
|
|
129,239
|
|
||
Net loss attributable to common stockholders
|
|
$
|
(1,031,690
|
)
|
|
$
|
(501,173
|
)
|
Basic net loss per share attributable to common stockholders
|
|
$
|
(0.17
|
)
|
|
$
|
(0.09
|
)
|
Diluted net loss per share attributable to common stockholders
|
|
$
|
(0.17
|
)
|
|
$
|
(0.09
|
)
|
Weighted average basic shares outstanding
|
|
5,919,643
|
|
|
5,887,988
|
|
||
Weighted average diluted shares outstanding
|
|
5,919,643
|
|
|
5,887,988
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net loss
|
|
$
|
(719,840
|
)
|
|
$
|
(124,907
|
)
|
Other comprehensive loss, net of applicable taxes
|
|
|
|
|
|
|
||
Foreign currency translation
|
|
(13,153
|
)
|
|
19,392
|
|
||
Total other comprehensive loss, net of applicable taxes:
|
|
(13,153
|
)
|
|
19,392
|
|
||
Total comprehensive loss
|
|
$
|
(732,993
|
)
|
|
$
|
(105,515
|
)
|
Less: Accrual of Series A redeemable convertible preferred stock dividends
|
|
285,760
|
|
|
247,027
|
|
||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock
|
|
26,090
|
|
|
129,239
|
|
||
Total comprehensive loss attributable to common stockholders
|
|
$
|
(1,044,843
|
)
|
|
$
|
(481,781
|
)
|
|
|
Common Stock Outstanding
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss, Net
|
|
Total Stockholders' Deficit
|
|||||||||||
Balance at January 1, 2020
|
|
5,918,733
|
|
|
$
|
5,919
|
|
|
$
|
111,727,888
|
|
|
$
|
(123,871,853
|
)
|
|
$
|
(1,893,260
|
)
|
|
$
|
(14,031,306
|
)
|
Net loss
|
|
|
|
|
|
|
|
(719,840
|
)
|
|
|
|
(719,840
|
)
|
|||||||||
Restricted stock issued
|
|
1,104
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
|
|
—
|
|
|||||||
Share-based compensation to employees
|
|
|
|
|
|
4,510
|
|
|
|
|
|
|
4,510
|
|
|||||||||
Accretion of Series A redeemable convertible preferred stock
|
|
|
|
|
|
(26,090
|
)
|
|
|
|
|
|
(26,090
|
)
|
|||||||||
Dividends on Series A redeemable convertible preferred stock
|
|
|
|
|
|
(285,760
|
)
|
|
|
|
|
|
(285,760
|
)
|
|||||||||
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
(13,153
|
)
|
|
(13,153
|
)
|
|||||||||
Balance at March 31, 2020
|
|
5,919,837
|
|
|
$
|
5,920
|
|
|
$
|
111,420,547
|
|
|
$
|
(124,591,693
|
)
|
|
$
|
(1,906,413
|
)
|
|
$
|
(15,071,639
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at January 1, 2019
|
|
5,872,252
|
|
|
$
|
5,873
|
|
|
$
|
113,243,227
|
|
|
$
|
(122,907,794
|
)
|
|
$
|
(1,895,102
|
)
|
|
$
|
(11,553,796
|
)
|
Net income
|
|
|
|
|
|
|
|
(124,907
|
)
|
|
|
|
(124,907
|
)
|
|||||||||
Share-based compensation to employees
|
|
|
|
|
|
9,251
|
|
|
|
|
|
|
9,251
|
|
|||||||||
Accretion of Series A redeemable convertible preferred stock
|
|
|
|
|
|
(129,239
|
)
|
|
|
|
|
|
(129,239
|
)
|
|||||||||
Dividends on Series A redeemable convertible preferred stock
|
|
|
|
|
|
(247,027
|
)
|
|
|
|
|
|
(247,027
|
)
|
|||||||||
Foreign currency translation
|
|
|
|
|
|
|
|
|
|
19,392
|
|
|
19,392
|
|
|||||||||
Balance at March 31, 2019
|
|
5,872,252
|
|
|
$
|
5,873
|
|
|
$
|
112,876,212
|
|
|
$
|
(123,032,701
|
)
|
|
$
|
(1,875,710
|
)
|
|
$
|
(12,026,326
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(719,840
|
)
|
|
$
|
(124,907
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
|
||
Depreciation and amortization
|
|
33,563
|
|
|
127,871
|
|
||
Amortization of debt discount on notes payable
|
|
109,861
|
|
|
57,785
|
|
||
Amortization of right of use assets
|
|
353,715
|
|
|
398,203
|
|
||
Share-based payment compensation
|
|
4,510
|
|
|
9,251
|
|
||
Provision for (recovery of) returns and doubtful accounts
|
|
(81,244
|
)
|
|
(35,649
|
)
|
||
Deferred income taxes (benefit)
|
|
24,545
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Accounts receivable
|
|
1,720,163
|
|
|
325,914
|
|
||
Prepaid expenses and other current assets
|
|
121,591
|
|
|
170,927
|
|
||
Contract assets
|
|
229,042
|
|
|
(86,397
|
)
|
||
Inventory
|
|
15,539
|
|
|
(15,829
|
)
|
||
Other assets
|
|
(51
|
)
|
|
(467,367
|
)
|
||
Accounts payable
|
|
(433,791
|
)
|
|
(64,080
|
)
|
||
Accrued expenses and other long-term liabilities
|
|
(171,461
|
)
|
|
137,972
|
|
||
Operating lease liabilities
|
|
(403,100
|
)
|
|
(463,781
|
)
|
||
Deferred revenue
|
|
(1,201,373
|
)
|
|
(74,142
|
)
|
||
Net cash used in operating activities
|
|
(398,331
|
)
|
|
(104,229
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Purchases of property and equipment
|
|
—
|
|
|
(42,586
|
)
|
||
Security deposits
|
|
(82,908
|
)
|
|
146
|
|
||
Purchase of intangible assets
|
|
(11,360
|
)
|
|
(26,365
|
)
|
||
Net cash used in investing activities
|
|
(94,268
|
)
|
|
(68,805
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Payments of long term-debt
|
|
—
|
|
|
(489,321
|
)
|
||
Net cash provided by (used in) financing activities
|
|
—
|
|
|
(489,321
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(6,446
|
)
|
|
(29,173
|
)
|
||
Net decrease in cash and cash equivalents
|
|
(499,045
|
)
|
|
(691,528
|
)
|
||
Cash and cash equivalents, beginning of period
|
|
1,475,166
|
|
|
3,059,677
|
|
||
Cash and cash equivalents, end of period
|
|
$
|
976,121
|
|
|
$
|
2,368,149
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
||
Cash paid for interest
|
|
$
|
52,546
|
|
|
$
|
60,833
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
||
Undistributed Series A redeemable convertible preferred stock dividends
|
|
$
|
285,760
|
|
|
$
|
247,027
|
|
Accretion of Series A redeemable convertible preferred stock
|
|
$
|
26,090
|
|
|
$
|
129,239
|
|
Right of use assets
|
$
|
1,488,539
|
|
Lease liability obligations, current
|
1,699,377
|
|
|
Lease liability obligations, less current portion
|
177,905
|
|
|
Total lease liability obligations
|
$
|
1,877,282
|
|
Weighted-average remaining lease term
|
1.13
|
|
|
Weighted-average discount rate
|
6.02
|
%
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Components of lease expense:
|
|
|
|
||
Operating lease cost
|
354,400
|
|
|
417,765
|
|
Sublease income
|
155,944
|
|
|
155,944
|
|
Net lease cost
|
510,344
|
|
|
573,709
|
|
|
|
Three Months Ended March 31,
|
||||
|
|
2020
|
|
2019
|
||
Stock options and restricted stock
|
|
1,178,974
|
|
|
11,855
|
|
Series A redeemable convertible preferred stock
|
|
87,815
|
|
|
87,815
|
|
Total anti-dilutive common stock equivalents
|
|
1,266,789
|
|
|
99,670
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross carrying amount
|
|
$
|
18,722,635
|
|
|
$
|
18,735,885
|
|
Accumulated depreciation
|
|
(18,400,921
|
)
|
|
(18,366,612
|
)
|
||
Property and Equipment, net
|
|
$
|
321,714
|
|
|
$
|
369,273
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross carrying amount
|
|
$
|
2,950,132
|
|
|
$
|
2,950,132
|
|
Accumulated amortization
|
|
(2,925,911
|
)
|
|
(2,923,120
|
)
|
||
Software development costs, net
|
|
$
|
24,221
|
|
|
$
|
27,012
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Goodwill
|
|
$
|
4,150,339
|
|
|
$
|
4,150,339
|
|
Other intangible assets:
|
|
|
|
|
|
|
||
Gross carrying amount
|
|
$
|
3,958,462
|
|
|
$
|
3,947,103
|
|
Accumulated amortization
|
|
(3,874,213
|
)
|
|
(3,889,385
|
)
|
||
Net carrying amount
|
|
$
|
84,249
|
|
|
$
|
57,718
|
|
|
|
Shares
|
|
Shares Available
|
|
Shares
|
Name of Plan
|
|
Authorized
|
|
for Grant
|
|
Outstanding
|
FalconStor Software, Inc. 2018 Incentive Stock Plan
|
|
1,471,997
|
|
281,837
|
|
1,190,160
|
Name of Plan
|
|
Shares Available for Grant
|
|
Shares Outstanding
|
FalconStor Software, Inc., 2016 Incentive Stock Plan
|
|
—
|
|
3,850
|
FalconStor Software, Inc., 2006 Incentive Stock Plan
|
|
—
|
|
7,445
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cost of revenue - support and service
|
|
103
|
|
|
1,593
|
|
||
Research and development costs
|
|
428
|
|
|
4,745
|
|
||
Selling and marketing
|
|
184
|
|
|
2,410
|
|
||
General and administrative
|
|
3,795
|
|
|
503
|
|
||
|
|
$
|
4,510
|
|
|
$
|
9,251
|
|
Notes payable principal balance
|
$
|
3,000,000
|
|
Deferred issuance costs
|
(254,247
|
)
|
|
Discount
|
(288,504
|
)
|
|
Total notes payable, net at inception on February 23, 2018
|
2,457,249
|
|
|
Proceeds from issuance of long-term debt
|
1,000,000
|
|
|
Revaluation of long-term debt
|
(447,008
|
)
|
|
Accretion of discount
|
202,195
|
|
|
Deferred issuance costs
|
(87,609
|
)
|
|
Total notes payable, net at December 31, 2018
|
$
|
3,124,827
|
|
Repayment of long-term debt
|
(489,321
|
)
|
|
Proceeds from issuance of long-term debt
|
1,000,000
|
|
|
Accretion of discount
|
273,521
|
|
|
Deferred issuance costs
|
(55,393
|
)
|
|
Total notes payable, net at December 31, 2019
|
$
|
3,853,634
|
|
Accretion of discount
|
163,686
|
|
|
Total notes payable, net at March 31, 2020
|
$
|
4,017,320
|
|
•
|
Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities. At March 31, 2020, the Company did not have any Level 1 category assets included in the condensed consolidated balance sheets.
|
•
|
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly. At March 31, 2020 and December 31, 2019, the Company did not have any Level 2 category assets included in the condensed consolidated balance sheets.
|
•
|
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. At March 31, 2020 and December 31, 2019, the Level 3 category included derivatives, which are included within other long-term liabilities in the condensed consolidated balance sheets. The Company did not hold any cash and cash equivalents categorized as Level 3 as of March 31, 2020 or December 31, 2019.
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant other Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivative Instruments
|
|
481,052
|
|
|
—
|
|
|
—
|
|
|
481,052
|
|
||||
Total derivative liabilities
|
|
481,052
|
|
|
—
|
|
|
—
|
|
|
481,052
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total assets and liabilities measured at fair value
|
|
$
|
481,052
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
481,052
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant other Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivative Instruments
|
|
483,804
|
|
|
—
|
|
|
—
|
|
|
483,804
|
|
||||
Total derivative liabilities
|
|
483,804
|
|
|
—
|
|
|
—
|
|
|
483,804
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total assets and liabilities measured at fair value
|
|
$
|
483,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
483,804
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Beginning Balance
|
|
$
|
483,804
|
|
|
$
|
498,086
|
|
Total income recognized in earnings
|
|
(2,752
|
)
|
|
(5,759
|
)
|
||
Ending Balance
|
|
$
|
481,052
|
|
|
$
|
492,327
|
|
|
Payments
|
Sublease Income
|
Net Commitments
|
||||||
2020
|
1,329,957
|
|
(467,832
|
)
|
862,125
|
|
|||
2021
|
639,526
|
|
(207,925
|
)
|
431,601
|
|
|||
Thereafter
|
—
|
|
—
|
|
—
|
|
|||
|
$
|
1,969,483
|
|
$
|
(675,757
|
)
|
$
|
1,293,726
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Beginning Balance
|
|
$
|
483,804
|
|
|
$
|
498,086
|
|
Total income recognized in earnings
|
|
(2,752
|
)
|
|
(5,759
|
)
|
||
Ending Balance
|
|
$
|
481,052
|
|
|
$
|
492,327
|
|
Probability of redemption as part of a fundamental sale transaction
|
0.5%
|
Probability of redemption absent a fundamental sale transaction
|
4.75%
|
Annual volatility
|
65%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net loss
|
|
$
|
(719,840
|
)
|
|
$
|
(124,907
|
)
|
Effects of Series A redeemable convertible preferred stock:
|
|
|
|
|
|
|
||
Less: Accrual of Series A redeemable convertible preferred stock dividends
|
|
285,760
|
|
|
247,027
|
|
||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock
|
|
26,090
|
|
|
129,239
|
|
||
Net loss attributable to common stockholders
|
|
$
|
(1,031,690
|
)
|
|
$
|
(501,173
|
)
|
Series A redeemable convertible preferred stock principal balance
|
$
|
9,000,000
|
|
Accrued dividends
|
1,312,112
|
|
|
Discount
|
(1,602,428
|
)
|
|
Total Series A redeemable convertible preferred stock, net at inception on February 23, 2018
|
8,709,684
|
|
|
Accrued dividends
|
683,742
|
|
|
Accretion of preferred stock
|
363,280
|
|
|
Total Series A redeemable convertible preferred stock, net at December 31, 2018
|
$
|
9,756,706
|
|
Accrued dividends
|
1,157,762
|
|
|
Accretion of preferred stock
|
389,811
|
|
|
Total Series A redeemable convertible preferred stock, net at December 31, 2019
|
$
|
11,304,279
|
|
Accrued dividends
|
285,760
|
|
|
Accretion of preferred stock
|
26,090
|
|
|
Total Series A redeemable convertible preferred stock, net at March 31, 2020
|
$
|
11,616,129
|
|
|
|
Foreign Currency
Translation |
|
Net Minimum
Pension Liability |
|
Total
|
||||||
Accumulated other comprehensive income (loss) at December 31, 2019
|
|
$
|
(1,926,826
|
)
|
|
$
|
33,566
|
|
|
$
|
(1,893,260
|
)
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|||
Other comprehensive loss before reclassifications
|
|
(13,153
|
)
|
|
—
|
|
|
(13,153
|
)
|
|||
Total other comprehensive loss
|
|
(13,153
|
)
|
|
—
|
|
|
(13,153
|
)
|
|||
Accumulated other comprehensive income (loss) at March 31, 2020
|
|
$
|
(1,939,979
|
)
|
|
$
|
33,566
|
|
|
$
|
(1,906,413
|
)
|
|
|
Foreign Currency
Translation |
|
Net Minimum
Pension Liability |
|
Total
|
||||||
Accumulated other comprehensive income (loss) at December 31, 2018
|
|
$
|
(1,921,905
|
)
|
|
$
|
26,803
|
|
|
$
|
(1,895,102
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|||
Other comprehensive income before reclassifications
|
|
19,392
|
|
|
—
|
|
|
19,392
|
|
|||
Total other comprehensive income
|
|
19,392
|
|
|
—
|
|
|
19,392
|
|
|||
Accumulated other comprehensive income (loss) at March 31, 2019
|
|
$
|
(1,902,513
|
)
|
|
$
|
26,803
|
|
|
$
|
(1,875,710
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Revenue:
|
|
|
|
|
||||
Americas
|
|
$
|
1,094,904
|
|
|
$
|
2,073,314
|
|
Asia Pacific
|
|
983,795
|
|
|
1,000,817
|
|
||
Europe, Middle East, Africa and Other
|
|
1,101,488
|
|
|
1,418,847
|
|
||
Total Revenue
|
|
$
|
3,180,187
|
|
|
$
|
4,492,978
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Long-lived assets:
|
|
|
|
|
||||
Americas
|
|
$
|
6,537,094
|
|
|
$
|
6,811,578
|
|
Asia Pacific
|
|
786,340
|
|
|
860,023
|
|
||
Europe, Middle East, Africa and Other
|
|
170,458
|
|
|
190,928
|
|
||
Total long-lived assets
|
|
$
|
7,493,892
|
|
|
$
|
7,862,529
|
|
|
|
Severance Related Costs
|
|
Facility and Other Costs
|
|
Total
|
||||||
Balance at December 31, 2018
|
|
$
|
461,362
|
|
|
$
|
453,446
|
|
|
$
|
914,808
|
|
Additions (Reductions)
|
|
—
|
|
|
157,693
|
|
|
157,693
|
|
|||
Utilized/Paid
|
|
—
|
|
|
(187,833
|
)
|
|
(187,833
|
)
|
|||
Balance at March 31, 2019
|
|
$
|
461,362
|
|
|
$
|
423,306
|
|
|
$
|
884,668
|
|
Additions (Reductions)
|
|
—
|
|
|
202,679
|
|
|
202,679
|
|
|||
Utilized/Paid
|
|
—
|
|
|
(238,090
|
)
|
|
(238,090
|
)
|
|||
Balance at June 30, 2019
|
|
$
|
461,362
|
|
|
$
|
387,895
|
|
|
$
|
849,257
|
|
Additions (Reductions)
|
|
214,050
|
|
|
170,779
|
|
|
384,829
|
|
|||
Utilized/Paid
|
|
(214,050
|
)
|
|
(257,453
|
)
|
|
(471,503
|
)
|
|||
Balance at September 30, 2019
|
|
$
|
461,362
|
|
|
$
|
301,221
|
|
|
$
|
762,583
|
|
Additions (Reductions)
|
|
31,860
|
|
|
327,257
|
|
|
359,117
|
|
|||
Utilized/Paid
|
|
(199,423
|
)
|
|
(390,985
|
)
|
|
(590,408
|
)
|
|||
Balance at December 31, 2019
|
|
$
|
293,799
|
|
|
$
|
237,493
|
|
|
$
|
531,292
|
|
Additions (Reductions)
|
|
76,708
|
|
|
210,752
|
|
|
287,460
|
|
|||
Utilized/Paid
|
|
(156,415
|
)
|
|
(225,835
|
)
|
|
(382,250
|
)
|
|||
Balance at March 31, 2020
|
|
$
|
214,092
|
|
|
$
|
222,410
|
|
|
$
|
436,502
|
|
|
Three Months Ended March 31,
|
|
Change
Period to Period |
|||||||||||||||||
|
2020
|
|
2019
|
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Product revenue
|
$
|
1,048,963
|
|
|
33
|
%
|
|
$
|
1,745,784
|
|
|
39
|
%
|
|
$
|
(696,821
|
)
|
|
(40
|
)%
|
Support and services revenue
|
2,131,224
|
|
|
67
|
%
|
|
2,747,194
|
|
|
61
|
%
|
|
(615,970
|
)
|
|
(22
|
)%
|
|||
Total revenue
|
3,180,187
|
|
|
100
|
%
|
|
4,492,978
|
|
|
100
|
%
|
|
(1,312,791
|
)
|
|
(29
|
)%
|
|||
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Product
|
139,460
|
|
|
4
|
%
|
|
79,669
|
|
|
2
|
%
|
|
59,791
|
|
|
75
|
%
|
|||
Support and service
|
407,920
|
|
|
13
|
%
|
|
563,745
|
|
|
13
|
%
|
|
(155,825
|
)
|
|
(28
|
)%
|
|||
Total cost of revenue
|
547,380
|
|
|
17
|
%
|
|
643,414
|
|
|
14
|
%
|
|
(96,034
|
)
|
|
(15
|
)%
|
|||
Gross profit
|
2,632,807
|
|
|
83
|
%
|
|
3,849,564
|
|
|
86
|
%
|
|
(1,216,757
|
)
|
|
(32
|
)%
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Research and development costs
|
674,924
|
|
|
21
|
%
|
|
947,384
|
|
|
21
|
%
|
|
(272,460
|
)
|
|
(29
|
)%
|
|||
Selling and marketing
|
981,191
|
|
|
31
|
%
|
|
1,040,289
|
|
|
23
|
%
|
|
(59,098
|
)
|
|
(6
|
)%
|
|||
General and administrative
|
1,093,169
|
|
|
34
|
%
|
|
1,476,296
|
|
|
33
|
%
|
|
(383,127
|
)
|
|
(26
|
)%
|
|||
Restructuring costs
|
287,460
|
|
|
9
|
%
|
|
157,693
|
|
|
4
|
%
|
|
129,767
|
|
|
82
|
%
|
|||
Total operating expenses
|
3,036,744
|
|
|
95
|
%
|
|
3,621,662
|
|
|
81
|
%
|
|
(584,918
|
)
|
|
(16
|
)%
|
|||
Operating income (loss)
|
(403,937
|
)
|
|
(13
|
)%
|
|
227,902
|
|
|
5
|
%
|
|
(631,839
|
)
|
|
(277
|
)%
|
|||
Interest and other loss
|
(245,839
|
)
|
|
(8
|
)%
|
|
(265,223
|
)
|
|
(6
|
)%
|
|
19,384
|
|
|
(7
|
)%
|
|||
Loss before income taxes
|
(649,776
|
)
|
|
(20
|
)%
|
|
(37,321
|
)
|
|
(1
|
)%
|
|
(612,455
|
)
|
|
1,641
|
%
|
|||
Income tax expense
|
70,064
|
|
|
2
|
%
|
|
87,586
|
|
|
2
|
%
|
|
(17,522
|
)
|
|
(20
|
)%
|
|||
Net loss
|
$
|
(719,840
|
)
|
|
(23
|
)%
|
|
$
|
(124,907
|
)
|
|
(3
|
)%
|
|
$
|
(594,933
|
)
|
|
476
|
%
|
Less: Accrual of Series A redeemable convertible preferred stock dividends
|
285,760
|
|
|
9
|
%
|
|
247,027
|
|
|
5
|
%
|
|
38,733
|
|
|
16
|
%
|
|||
Less: Accretion to redemption value of Series A redeemable convertible preferred stock
|
26,090
|
|
|
1
|
%
|
|
129,239
|
|
|
3
|
%
|
|
(103,149
|
)
|
|
(80
|
)%
|
|||
Net loss attributable to common stockholders
|
$
|
(1,031,690
|
)
|
|
(32
|
)%
|
|
$
|
(501,173
|
)
|
|
(11
|
)%
|
|
$
|
(530,517
|
)
|
|
106
|
%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Cash used in:
|
|
|
|
|
||||
Operating activities
|
|
(398,331
|
)
|
|
(104,229
|
)
|
||
Investing activities
|
|
(94,268
|
)
|
|
(68,805
|
)
|
||
Financing activities
|
|
—
|
|
|
(489,321
|
)
|
||
Effect of exchange rate changes
|
|
(6,446
|
)
|
|
(29,173
|
)
|
||
Net decrease in cash and cash equivalents
|
|
$
|
(499,045
|
)
|
|
$
|
(691,528
|
)
|
|
Operating Leases
|
Note Payable (a)
|
Interest Payments (a)
|
Long-Term Income Tax Payable (b)
|
Series A Preferred Stock Mandatory Redemption
|
Dividends on Series A Preferred Stock
|
||||||||||||
2020
|
$
|
1,329,957
|
|
$
|
1,000,000
|
|
$
|
227,878
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
2021
|
639,526
|
|
3,510,679
|
|
70,274
|
|
—
|
|
—
|
|
—
|
|
||||||
2022
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other
|
—
|
|
—
|
|
—
|
|
115,227
|
|
9,000,000
|
|
4,906,673
|
|
||||||
Total contractual obligations
|
$
|
1,969,483
|
|
$
|
4,510,679
|
|
$
|
298,152
|
|
$
|
115,227
|
|
$
|
9,000,000
|
|
$
|
4,906,673
|
|
Sublease income
|
$
|
(675,757
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Net contractual obligations
|
$
|
1,293,726
|
|
$
|
4,510,679
|
|
$
|
298,152
|
|
$
|
115,227
|
|
$
|
9,000,000
|
|
$
|
4,906,673
|
|
|
(i)
|
unaudited Condensed Consolidated Balance Sheets – March 31, 2020 and December 31, 2019.
|
|
|
|
|
(ii)
|
unaudited Condensed Consolidated Statement of Operations – Three Months Ended March 31, 2020 and 2019.
|
|
|
|
|
(iii)
|
unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) – Three Months Ended March 31, 2020 and 2019.
|
|
|
|
|
(iv)
|
unaudited Condensed Consolidated Statements of Stockholder's Deficit - Three Months Ended March 31, 2020 and 2019.
|
|
|
|
|
(v)
|
unaudited Condensed Consolidated Statement of Cash Flows – Three Months Ended March 31, 2020 and 2019.
|
|
|
|
|
(vi)
|
Notes to unaudited Condensed Consolidated Financial Statements – March 31, 2020.
|
|
FALCONSTOR SOFTWARE, INC.
|
|
(Registrant)
|
|
|
|
/s/ Brad Wolfe
|
|
Brad Wolfe
|
|
Executive Vice President, Chief Financial Officer and Treasurer
|
|
(principal financial and accounting officer)
|
|
/s/ Todd Brooks
|
|
Todd Brooks
|
|
President & Chief Executive Officer
|
May 7, 2020
|
(principal executive officer)
|
1 Year FalconStor Software (PK) Chart |
1 Month FalconStor Software (PK) Chart |
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