Edgar Filing: FALCONSTOR SOFTWARE INC

sec document

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

FALCONSTOR SOFTWARE, INC.
SUPPLEMENT DATED NOVEMBER 16, 2005
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, June 23, 2003 and November 4, 2004
("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
100,000 shares by Barry Rubenstein to the North Shore - L.I.J. Health System
Foundation. Accordingly, the number of shares held by Mr. Rubenstein and the
number of shares to be sold by Mr. Rubenstein pursuant to the Prospectus shall
be reduced by 100,000 and the North Shore - L.I.J. Health System Foundation may
sell up to 100,000 shares of Common Stock pursuant to the Prospectus. The North
Shore - L.I.J. Health System Foundation owns no other shares of Common Stock and
has not been an officer, director or employee of the Company for the past three
years. The North Shore - L.I.J. Health System Foundation previously sold 300,000
shares of Common Stock pursuant to the Prospectus. 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 47,719,498 shares of Common Stock outstanding as of October 26,
2005. 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)
c/o FalconStor Software, Inc. 10,804,460 (2) 22.6% 10,804,460 (2) 0 N/A
2 Huntington Quadrangle
Melville New York 11747

The 2002 ReiJane Huai 43,700 * 43,700 0 N/A
Revocable Trust
3 Carlisle Drive
Old Brookville, NY 11545

Barry Rubenstein (3) 6,543,053 13.7% 6,543,053 0 N/A
68 Wheatley Road
Brookville, NY 11545

North Shore - L.I.J. Health 100,000 * 100,000 0 N/A
System Foundation
125 Community Drive
Great Neck, New York 11021

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

Seneca Ventures (4) 642,453 1.3% 642,453 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Associates III, LP (6) 1,962,836 4.1% 1,962,836 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Foreign Partners III, 1,962,836 4.1% 1,962,836 0 N/A
L.P. (6)
68 Wheatley Road
Brookville, NY 11545

Wheatley Partners III, L.P. (5) 1,962,836 4.1% 1,962,836 0 N/A
68 Wheatley Road
Brookville, NY 11545

Wheatley Foreign Partners, 525,059 1.1% 525,059 0 N/A
L.P. (6)
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 9.6% 4,602,689 0 N/A
80 Cuttermill Road, Suite 311
Great Neck, NY 11021

Barry Fingerhut (8) 3,157,664 6.6% 3,000,164 157,500 *
767 Fifth Avenue, 45th Floor
New York, NY 10153

Nancy Casey (9) 2,057,580 4.3% 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) 3,014,474 6.3% 3,014,474 0 N/A
200 East 72 Street, PH N
New York, NY 10021

Jonathan Lieber (11) 2,927,852 6.1% 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) 110,311 * 40,000 70,311 *
c/o FalconStor Software, Inc.
2 Huntington Quadrangle
Melville, NY 11747

Steven A. Fischer (14) 74,811 * 2,500 72,311 *
245 Jerome Street
Syosset, NY 11791

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

Wayne Lam (16) 566,346 1.2% 3,537 562,809 1.2%
c/o FalconStor Software, Inc.
2 Huntington Quadrangle
Melville, NY 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 5 and certain other
information. Includes 43,700 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) 1,400,903
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 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 70,311 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 his
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 55,311 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 the Form 4 filed by Mr. Wayne Lam
and certain other information. Includes options to purchase 505,843
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