sec document
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JANUARY 29, 2003
FALCONSTOR SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-23970 77-0216135
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
125 BAYLIS ROAD, MELVILLE, NEW YORK 11747
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Address of principal executive offices
Registrant's telephone number, including area code: 631-777-5188
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(Former name or former address, if changed since last report.)
Item 5. OTHER EVENTS AND REQUIRED FD DISCLOSURES.
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On January 29, 2003, FalconStor Software, Inc. (the "Company")
issued a press release that included information updating an announcement in an
October 24, 2002 press release. The January 29, 2003 press release stated that
as announced on October 24, 2002, substantially all of the holders of the common
stock issued to former shareholders of FalconStor, Inc., in connection with its
reverse merger with Network Peripherals, Inc., have agreed to extend the lock-up
period for their shares of FalconStor's common stock to April 30, 2004. All
together, holders of approximately 26.8 million shares have now agreed to the
newly extended lock-up period.
As detailed in the Company's October 24, 2002 press release, certain
of these stockholders will have a limited number of shares released from the
lock-up on a quarterly basis. A total of approximately 2 million shares will be
released over time between November 1, 2002 and April 30, 2004.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(c) EXHIBITS.
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99.1 Press release of the Company dated January 29, 2003.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FALCONSTOR SOFTWARE, INC.
Dated: January 30, 2003 By: /s/Jacob Ferng
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Name: Jacob Ferng
Title: Vice President and Chief
Financial Officer
Exhibit 99.1
Contacts: Herman Chin Christine Rogers
Public Relations Investor Relations
631-962-1163 631-962-1160
HERMAN.CHIN@FALCONSTOR.COM CHRISTINE.ROGERS@FALCONSTOR.COM
FALCONSTOR SOFTWARE ANNOUNCES Q4 AND FULL YEAR 2002
RESULTS
O THIRD CONSECUTIVE QUARTER WITH SEQUENTIAL 20% REVENUE GROWTH
O OPERATING EXPENSES INCREASED ONLY 4% FROM Q3 TO Q4
O REVENUE INCREASED FROM $5.6 MILLION IN 2001 TO $10.6 MILLION IN 2002
O DEFERRED REVENUE INCREASED 510% FROM $358,000 AT THE END OF 2001 TO
$2,183,000 AT THE END OF 2002.
MELVILLE, N.Y., January 29, 2003--FalconStor Software, Inc. (Nasdaq: FALC), a
leading provider of network storage infrastructure software, today announced
financial results for its fourth quarter and full year ended December 31, 2002.
Q4 2002 VS. Q3 2002
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Revenues for the fourth quarter of 2002 increased by 20% compared with the
previous quarter, from $2,856,000 to $3,416,000. This is the Company's third
consecutive quarter with sequential 20% revenue growth. While revenues rose 20%,
the Company's cost control procedures limited the increase in recurring
operating expenses to only 4%.
Excluding third and fourth quarter asset impairment charges of $1,568,000 and
$1,215,000, respectively, adjusted net loss for the fourth quarter decreased to
$1,720,000 from $1,995,000 in the third quarter. Adjusted diluted net loss per
share was $0.04 in both the third and the fourth quarters.
Reported net loss and diluted net loss per share for the fourth quarter were
$2,935,000 and $0.06, respectively, compared with $3,562,000 and $0.08 in the
third quarter.
Deferred revenue increased 31% compared with the previous quarter, from
$1,660,000 to $2,183,000. This increase was due primarily to an increase in the
number of maintenance and support contracts. This deferred revenue will be
recognized as revenue over the next 12 months.
The impairment charges in the third and fourth quarters of 2002 were related to
the Company's investment in Network-1 Security Solutions. This investment has
been fully written off and there will not be any future impairment charges
related to this investment.
Q4 2002 VS. Q4 2001
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For the fourth quarter of 2002, revenues increased by 13% compared with the same
period a year ago. Adjusted net loss and diluted net loss per share for the
fourth quarter were $1,720,000 and $0.04, respectively, compared with $1,252,000
and $0.03 in the same period a year ago.
FULL YEAR 2002 VS. FULL YEAR 2001
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For the twelve months ended December 31, 2002, the Company recorded revenues of
$10,629,000 compared with $5,592,000 for the previous year.
Excluding an asset impairment charge of $2,783,000, adjusted net loss for the
year was $8,760,000 compared with a net loss of $10,056,000 reported for the
previous year.
Reported net loss and diluted net loss per share for the year ended December 31,
2002 were $11,543,000 and $0.26, respectively, compared with $10,056,000 and
$0.40 for the previous year.
Deferred revenue increased 510% from $358,000 at the end of 2001 to $2,183,000
at the end of 2002. In addition, the Company closed the quarter financially
strong with $44,750,000 in cash, cash equivalents and marketable securities,
after deducting net liabilities of discontinued operations.
"The consecutive quarterly sales growth and increase in deferred revenues
demonstrates FalconStor's ability to compete with entrenched players and
IPStor's ability to gain credible presence in the corporate IT environment. In
addition to building sales momentum, we have also established partnerships with
several strategic industry players who will start launching IPStor-powered
network storage solutions in Q1-2003," said ReiJane Huai, CEO of FalconStor.
"The buildup of quality people, products and partnerships will pave the way to
even greater market presence and to profitability in year 2003."
CONTINUED BUSINESS MOMENTUM IN 2002.
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2002 Company highlights include:
Certifications of FalconStor's software interoperability by technology companies
including:
o Sun Microsystems, Inc. -- Solaris Ready Certification
o IBM -- TotalStorage Proven and ServerProven status
o Novell -- "Yes, Tested and Approved" designation
o NEC Corporation -- ESMPRO system compatibility
o Hitachi -- JP1 systems management suite interoperability
o And ATTO, BMC, Bus-Tech, CNT, IBM Mylex, INRANGE, LSI Logic, McDATA,
Oracle, and StorageTek.
Agreements with companies worldwide to deliver IPStor functionality, including:
o Acer, Inc.
o Chaparral
o CNT
o Fujitsu
o Hitachi Data Systems
o HIS (Hyosung Information Systems)
o Luminex
o MCSI
o NETGEAR
o PFU Limited
o Raytheon
o Rhapsody Networks
Implementation of IPStor worldwide in major market sectors including:
o Telecommunications
o Financial Services
o Legal Services
o Healthcare
o Education
o Manufacturing
o Energy
o Government
Continued recognition by leading industry publications and associations,
including:
o The silver award for Storage Magazine's 2002 Product of the Year in
theStorage Management Software Awards Category
o eWeek and PC Magazine's Innovation In Infrastructure (i3) Awards
o Network Storage 2002 "Innovative Product" award
o The Long Island Software Awards for "Network Storage Management" and
overall Best Product Award
UPDATE ON SHARE LOCK-UP
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As announced on October 24, 2002, substantially all of the holders of the common
stock issued to former shareholders of FalconStor, Inc., in connection with its
reverse merger with Network Peripherals, Inc., have agreed to extend the lock-up
period for their shares of FalconStor's common stock to April 30, 2004. All
together, holders of approximately 26.8 million shares have now agreed to the
newly extended lock-up period.
As detailed in the Company's October 24, 2002 press release, certain of these
stockholders will have a limited number of shares released from the lock-up on a
quarterly basis. A total of approximately 2 million shares will be released over
time between November 1, 2002 and April 30, 2004.
The company will host a conference call on Wednesday, January 29 at 5:15 p.m.
Eastern Time, to discuss these results. To participate in the call, dial:
617-786-2902 Access code: 3464955 or "FalconStor."
ABOUT IPSTOR
IPStor Software delivers an intelligent SAN/NAS infrastructure across
heterogeneous environments by providing a comprehensive set of storage services
for enterprise applications - simplifying management, ensuring data availability
and recoverability, and maximizing performance.
ABOUT FALCONSTOR
FalconStor Software, Inc. (Nasdaq: FALC) is a leading developer of network
storage infrastructure software solutions designed to optimize the performance
and availability of today's complex IT infrastructures. Deployed by a wide range
of Fortune 1000 enterprises, FalconStor's flagship product, IPStor, optimizes
storage utilization, accelerates backup and recovery, maximizes I/O performance
and ensures business continuity via sophisticated data replication services. It
is available and supported through major OEMs, system integrators and resellers
worldwide.
Founded in 2000, FalconStor is headquartered in Melville, NY, with offices
throughout Europe and the Asia Pacific regions including Paris, Tokyo and
Taiwan. FalconStor is an active member of the Technical Support Alliance Network
(TSANet), Storage Networking Industry Association (SNIA) and Fibre Channel
Industry Association (FCIA). For more information visit www.falconstor.com or
call 1-631-777-5188.
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.
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FalconStor and IPStor are trademarks of FalconStor Software, Inc. All other
company and product names contained herein are trademarks of the respective
holders.