Edgar Filing: FALCONSTOR SOFTWARE INC

sec document

RULE 424(B)(3)
TO REGISTRATION STATEMENT 333-69830

FALCONSTOR SOFTWARE, INC.
SUPPLEMENT DATED NOVEMBER 23, 2004
TO
PROSPECTUS DATED OCTOBER 19, 2001

The following information amends and restates the "Selling Stockholders"
table contained in the Prospectus dated October 19, 2001, as supplemented on
December 4, 2002 and June 23, 2003 ("Prospectus") relating to the sale of an
aggregate of 28,247,984 shares of common stock, $.001 par value ("Common
Stock"), by certain persons ("Selling Stockholders"). All capitalized terms used
herein which are not otherwise defined have the meaning ascribed to them in the
Prospectus. The "Selling Stockholders" table is being amended primarily to
reflect a charitable gift of 13,500 shares by ReiJane Huai to the Portledge
School. Accordingly, the number of shares held by Mr. Huai and the number of
shares to be sold by Mr. Huai pursuant to the Prospectus shall be reduced by
13,500 and the Portledge School may sell up to 13,500 shares of Common Stock
pursuant to the Prospectus. The Portledge School owns no other shares of Common
Stock and has not been an officer, director or employee of the Company for the
past three years. In addition, certain information in the Selling Stockholders
table has changed since the effective date of the Registration Statement
underlying the Prospectus.

SELLING STOCKHOLDERS

The following list of Selling Stockholders includes, the number of shares
of Common Stock beneficially owned, the maximum number of shares of Common Stock
to be sold in the Offering by the Selling Stockholders and the number of shares
of Common Stock to be beneficially owned by the Selling Stockholders after the
Offering (assuming sale of such maximum number of shares). We have 47,205,945
shares of Common Stock issued and outstanding as of October 26, 2004. The number
of shares to be sold or have been sold in the Offering includes 28,247,984
shares of Common Stock. The shares being offered hereby primarily relate to the
resale of shares of Common Stock, by our affiliates or affiliates of FalconStor,
Inc., which were acquired in the merger between FalconStor, Inc. and us.

A Selling Stockholder may sell all or part of the shares of Common Stock
registered for its account hereunder. To the extent that, pursuant to Rule 13d-3
of the Securities Exchange Act of 1934, as amended, a Selling Stockholder may be
deemed to be the beneficial owner of shares held by one or more other beneficial
owners of Common Stock, we have included all of such shares in the information
presented in the table.

Percent Maximum
Shares Beneficially Number of Shares to be Percent to be
Beneficially Owned Prior Shares to be Beneficially Beneficially
Owned Prior to to this Offered for Owned after Owned after
this Offering(1) Offering(1) Resale this Offering(1) this Offering(1)
---------------- ----------- ------------ ---------------- ----------------

ReiJane Huai (2) 10,810,760(2) 22.9% 10,810,760(2) 0 N/A
c/o FalconStor Software, Inc.
125 Baylis Road
Melville, NY 11747

The 2002 ReiJane Huai Revocable Trust 50,000 * 50,000 0 N/A
3 Carlisle Drive
Old Brookville, NY 11545

The Portledge School 13,500 * 13,500 0 N/A
355 Duck Pond Road
Locust Valley, NY 11560

Barry Rubenstein (3) 6,643,053 14.1% 6,643,053 0 N/A
68 Wheatley Road
Brookville, NY 11545

Brookwood Partners, L.P. (4) 395,217 * 395,217 0 N/A
68 Wheatley Road
Brookville, NY 11545

Seneca Ventures (4) 642,453 1.4% 642,453 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Associates III, L.P. (6) 1,962,836 4.2% 1,962,836 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Foreign Partners III, L.P.(6) 1,962,836 4.2% 1,962,836 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Partners III, L.P. (5) 1,962,836 4.2% 1,962,836 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Foreign Partners, L.P.(6) 525,059 1.1% 525,059 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Partners, L.P. (6) 525,059 1.1% 525,059 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Partners II, L.P. (4) 180,089 * 180,089 0 N/A
68 Wheatley Road
Brookville, NY 11545

Woodland Partners (4) 692,983 1.5% 692,983 0 N/A
68 Wheatley Road
Brookville, NY 11545

Woodland Venture Fund (4) 743,513 1.6% 743,513 0 N/A
68 Wheatley Road
Brookville, NY 11545

Irwin Lieber (7) 4,602,689 9.8% 4,602,689 0 N/A
80 Cuttermill Road, Suite 311
Great Neck, NY 11021

Barry Fingerhut (8) 3,157,664 6.7% 3,000,164 157,500 *
767 Fifth Avenue, 45th Floor
New York, NY 10153

Nancy Casey (9) 2,057,580 4.4% 2,057,580 0 N/A
10836 Pleasant Hill Drive
Potomac, MD 20854

Applegreen Partners (4) 259,868 * 259,868 0 N/A
271 Hamilton Road
Chappaqua, NY 10514

Seth Lieber (10) 3,006,474 6.4% 3,006,474 0 N/A
200 East 72 Street, PH N
New York, NY 10021

Jonathan Lieber (11) 2,927,852 6.2% 2,927,852 0 N/A
271 Hamilton Road
Chappaqua, NY 10514

Marilyn Rubenstein (12) 2,475,424 5.2% 2,475,424 0 N/A
c/o Barry Rubenstein
68 Wheatley Road
Brookville, NY 11545

Lawrence S. Dolin (13) 85,519 * 40,000 45,519 *
c/o FalconStor Software, Inc.
125 Baylis Road
Melville, NY 11747

Steven A. Fischer (14) 50,019 * 2,500 47,519 *
245 Jerome Street
Syosset, NY 11791

Glenn Penisten (15) 612,654 1.3% 225,908 406,925 *
11651 Brooks Road
Windsor, CA 95492

Steven Owings (16) 88,758 * 58,030 30,728 *
ScanSource
6 Logue Court
Greenville, SC 29615

Wayne Lam (17) 438,244 * 3,537 434,707 *
c/o FalconStor Software, Inc.
125 Baylis Road
Melville, New York 11747

----------------------------------
* Less than one percent

(1) A person is deemed to be the beneficial owner of voting securities that can
be acquired by such person within 60 days after the date hereof upon the
exercise of options, warrants or convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by such person (but not
those held by any other person) and that are currently exercisable (i.e.,
that are exercisable within 60 days from the date hereof) have been
exercised. Unless otherwise noted, we believe that all persons named in the

table have sole voting and investment power with respect to all shares
beneficially owned by them.

(2) Based upon information contained in a Form 3 and Schedule 13D filed by Mr.
Huai and certain other information. Includes 50,000 shares held by The
ReiJane Huai Revocable Trust (the "Trust"). Mr. Huai disclaims beneficial
ownership of the shares held by the Trust. Since August 2001, Mr. Huai has
been a Director and our President and Chief Executive Officer. Mr. Huai
joined FalconStor, Inc. in July 2000 as a director, and subsequently became
its president and chief executive officer in December 2000.

(3) Based upon information contained in a report on a Schedule 13D (the
"Wheatley 13D") filed jointly by Barry Rubenstein, Brookwood Partners, L.P.
("Brookwood"), Seneca Ventures ("Seneca"), Wheatley Associates III, L.P.
("Wheatley Associates"), Wheatley Foreign Partners, L.P. ("Wheatley
Foreign"), Wheatley Foreign Partners III, L.P. ("Wheatley Foreign III"),
Wheatley Partners, L.P. ("Wheatley"), Wheatley Partners II, L.P. ("Wheatley
II"), Wheatley Partners III, L.P. ("Wheatley III"), Woodland Partners,
Woodland Venture Fund ("Woodland Fund"), and certain other entities with
the SEC, and a Form 4 filed by Mr. Rubenstein with the SEC as well as
certain other information. Consists of (i) 1,500,903 shares of Common Stock
held by Mr. Rubenstein, (ii) 395,217 shares of common stock held by
Brookwood, (iii) 642,453 shares of common stock held by Seneca, (iv)
299,809 shares of common stock held by Wheatley Associates, (v) 41,008
shares of common stock held by Wheatley Foreign, (vi) 293,012 shares of
common stock held by Wheatley Foreign III, (vii) 484,051 shares of common
stock held by Wheatley, (viii) 180,089 shares of common stock held by
Wheatley II, (ix) 1,370,015 shares of common stock held by Wheatley III,
(x) 692,983 shares of common stock held by Woodland Partners and (xi)
743,513 shares of common stock held by Woodland Fund. Does not include
1,258 shares of common stock held by Mr. Rubenstein's spouse, Marilyn
Rubenstein. Mr. Rubenstein was a director of FalconStor, Inc. from February
2000 to August 2001. Mr. Rubenstein disclaims beneficial ownership of the
securities held by Wheatley, Wheatley Foreign, Wheatley II, Wheatley III,
Wheatley Foreign III, Wheatley Associates, Seneca, Woodland Ventures,
Woodland Partners and Brookwood except to the extent of his respective
equity interest therein.

(4) Based upon information contained in the Wheatley 13D and certain other
information.

(5) Based upon information contained in the Wheatley 13D. Consists of (i)
299,809 shares of common stock held by Wheatley Associates, (ii) 293,012
shares of common stock held by Wheatley Foreign III and (iii) 1,370,015
shares of common stock held by Wheatley III. Wheatley Associates disclaims
beneficial ownership of the securities held by Wheatley Foreign III and
Wheatley III. Wheatley Foreign III disclaims beneficial ownership of the
securities held by Wheatley Associates and Wheatley III. Wheatley III
disclaims beneficial ownership of the securities held by Wheatley
Associates and Wheatley Foreign III.

(6) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 41,008 held by Wheatley Foreign, and (ii)
484,051 held by Wheatley.

Wheatley Foreign disclaims beneficial ownership of the securities held by
Wheatley and Wheatley disclaims beneficial ownership of the shares held by
Wheatley Foreign.

(7) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 1,934,705 shares of Common Stock held by Irwin
Lieber, (ii) 484,051 shares of Common Stock held by Wheatley, (iii) 41,008
shares of Common Stock held by Wheatley Foreign, (iv) 180,089 shares of
Common Stock held by Wheatley II, (v) 1,370,015 shares of Common Stock held
by Wheatley III, (vi) 293,012 shares of Common Stock held by Wheatley
Foreign III, and (vii) 299,809 shares of Common Stock held by Wheatley
Associates. Mr. Lieber disclaims beneficial ownership of the securities
held by Wheatley, Wheatley Foreign, Wheatley II, Wheatley III, Wheatley
Foreign III and Wheatley Associates, except to the extent of his respective
equity interests therein.

(8) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 469,680 shares of Common Stock held by Barry
Fingerhut, (ii) 484,051 shares of Common Stock held by Wheatley, (iii)
41,008 shares of Common Stock held by Wheatley Foreign, (iv) 180,089 shares
of Common Stock held by Wheatley II, (v) 1,370,015 shares of Common Stock
held by Wheatley III, (vi) 293,012 shares of Common Stock held by Wheatley
Foreign III, (vii) 299,809 shares of Common Stock held by Wheatley
Associates, and (viii) 20,000 shares held by a partnership in which Mr.
Fingerhut is a general partner. Mr. Fingerhut disclaims beneficial
ownership of the securities held by Wheatley, Wheatley Foreign, Wheatley
II, Wheatley III, Wheatley Foreign III, Wheatley Associates and the
partnership, except to the extent of his respective equity interests
therein. Does not include 5,000 shares held by the spouse of Mr. Fingerhut.

(9) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 94,744 shares of Common Stock held by Nancy
Casey and her husband, as joint tenants, (ii) 1,370,015 shares of Common
Stock held by Wheatley III, (iii) 293,012 shares of Common Stock held by
Wheatley Foreign III, and (iv) 299,809 shares of Common Stock held by
Wheatley Associates. Ms. Casey disclaims beneficial ownership of the
securities held by Wheatley III, Wheatley Foreign III and Wheatley
Associates, except to the extent of her respective equity interests
therein.

(10) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 86,622 shares of Common Stock held by Seth
Lieber, (ii) 484,051 shares of Common Stock held by Wheatley, (iii) 41,008
shares of Common Stock held by Wheatley Foreign, (iv) 180,089 shares of
Common Stock held by Wheatley II, (v) 1,370,015 shares of Common Stock held
by Wheatley III, (vi) 293,012 shares of Common Stock held by Wheatley
Foreign III, and (vii) 299,809 shares of Common Stock held by Wheatley
Associates and (viii) 259,868 shares of Common Stock held by Applegreen.
Mr. Lieber disclaims beneficial ownership of the securities held by
Wheatley, Wheatley Foreign, Wheatley II, Wheatley III, Wheatley Foreign
III, Wheatley Associates and Applegreen, except to the extent of his
respective equity interests therein.

(11) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 484,051 shares of Common Stock held by
Wheatley, (ii) 41,008 shares of Common Stock held by Wheatley Foreign,

(iii) 180,089 shares of Common Stock held by Wheatley II, (iv) 1,370,015
shares of Common Stock held by Wheatley III, (v) 293,012 shares of Common
Stock held by Wheatley Foreign III, and (vi) 299,809 shares of Common Stock
held by Wheatley Associates and (vii) 259,868 shares of Common Stock held
by Applegreen. Mr. Lieber disclaims beneficial ownership of the securities
held by Wheatley, Wheatley Foreign, Wheatley II, Wheatley III, Wheatley
Foreign III, Wheatley Associates and Applegreen, except to the extent of
his respective equity interests therein.

(12) Based upon information contained in the Wheatley 13D and certain other
information. Consists of (i) 1,258 shares of Common Stock held by Marilyn
Rubenstein, (ii) 642,453 shares of Common Stock held by Seneca, (iii)
743,513 shares of Common Stock held by Woodland Venture, (iv) 692,983
shares of Common Stock held by Woodland Partners and (v) 395,217 of Common
Stock held by Brookwood. Mrs. Rubenstein disclaims beneficial ownership of
the securities held by Seneca, Woodland Venture, Woodland Partners and
Brookwood, except to the extent of her respective equity interests therein.
Does not include 1,800,903 shares of Common Stock held by Mrs. Rubenstein's
spouse, Barry Rubenstein.

(13) Based on information contained in Forms 4 filed by Mr. Dolin and certain
other information. Consists of (i) 40,000 shares held by Northern Union
Club and (ii) presently exercisable options or options exercisable within
60 days hereof to purchase 45,519 shares. Mr. Dolin is a general partner of
Mordo Partners, which is a general partner of Northern Union Club. Mr.
Dolin disclaims beneficial ownership of the securities held by Northern
Union Club, except to the extent of her respective equity interests
therein. Mr. Dolin joined the Company in August 2001 as a director.

(14) Based upon information contained in Forms 4 filed by Mr. Fischer and
certain other information. Includes presently exercisable options or
options exercisable within 60 days hereof to purchase 30,519 shares.
Excludes 1,000 shares of common stock held by Mr. Fischer as custodian for
his daughter. Mr. Fischer joined the Company in August 2001 as a director.

(15) Based upon information contained in the Form 4 filed by Mr. Penisten and
certain other information. Includes 180,464 shares of common stock held by
Lazy P Investors, L.P. and an option to purchase 386,667 shares of common
stock within 60 days. Mr. Penisten is a general partner of Lazy P
Investors, L.P.

(16) Based upon information contained in Forms 4 filed by Mr. Owings and certain
other information. Includes presently exercisable options or options
exercisable within 60 days hereof to purchase 26,563 shares. Mr. Owings
served as a director of the Company from August 2001 to August 2004.

(17) Based upon information contained in the Form 4 filed by Mr. Wayne Lam and
certain other information. Includes an option to purchase 390,241 shares of
common stock. Mr. Wayne Lam joined FalconStor, Inc. in April 2000 as Vice
President, Marketing and is currently a Vice President of the Company.

The following table names the ultimate beneficial owners of the shares of
our Common Stock for those Selling Stockholders that are not individuals.

NAME OF THE ENTITY INFORMATION
------------------ -----------

Brookwood Partners, L.P. Mr. Barry Rubenstein
Mrs. Marilyn Rubenstein

Seneca Ventures Mr. Barry Rubenstein

Wheatley Associates III, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber
Ms. Nancy Casey

Wheatley Foreign Partners, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber

Wheatley Foreign Partners III, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber
Ms. Nancy Casey

Wheatley Partners, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber

Wheatley Partners II, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber

Wheatley Partners III, L.P. Mr. Barry Rubenstein
Mr. Irwin Lieber
Mr. Barry Fingerhut
Mr. Jonathan Lieber
Mr. Seth Lieber
Ms. Nancy Casey

Woodland Partners Mr. Barry Rubenstein
Mrs. Marilyn Rubenstein

Woodland Venture Fund Mr. Barry Rubenstein

Applegreen Partners Mr. Seth Lieber
Mr. Jonathan Lieber