UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2023, the Company issued a press release announcing its results of operations for the fiscal quarter ended March 31, 2023.
The text of a press release issued by the Company is furnished as Exhibit 99.1 and is incorporated herein by reference. The information furnished herein shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) |
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Exhibits |
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Exhibit Number |
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Description |
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99.1 |
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104 |
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Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document). |
SIGNATURES
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.
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Falconstor Software, Inc. |
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Date: |
May 10, 2023 |
By: |
/s/ Vincent Sita |
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Name: Vincent Sita |
Exhibit 99.1
For more information, contact:
FalconStor Software, Inc.
Vincent Sita
Chief Financial Officer
FalconStor Software Announces First Quarter of 2023 Results
Expanding Hybrid Cloud Momentum Fuels ARR Growth
AUSTIN, TEXAS (May 10, 2023) - FalconStor Software, Inc. (OTCQB: FALC), a trusted data protection leader modernizing disaster recovery and backup for the hybrid cloud world, today announced financial results for its first quarter of 2023, which ended on March 31, 2023.
“We are encouraged with the progress we made in Q1, as our joint sales with IBM to deliver hybrid cloud data protection solutions to IBM customers continued to grow,” said Todd Brooks, FalconStor CEO. “IBM’s hybrid cloud focus is a key element of its growth strategy, as detailed in each of their earnings announcements over the last several quarters. Our joint solutions enable IBM customers across the globe to optimize data protection within each of their operating environments, whether those environments run on-premises or in the cloud. In addition, our partnership with IBM is enabling MSPs to expand the backup-as-a-service offerings they provide to IBM and non-IBM customers alike, as more and more enterprises entrust MSPs to manage their IT environments.”
“While total revenue in Q1 increased year over year by 11%, total revenue decreased by 11% compared to the previous quarter, as we continued our shift from perpetual revenue to annual recurring revenue within our legacy business and continued to ramp our hybrid cloud revenue. Our 81% increase in hybrid cloud ARR run-rate in Q1 compared to the previous quarter continues to demonstrate early validation of our expanding partner sales since the formal launch of our IBM relationship at the beginning of the second half of 2022, stated Brooks. “In addition, while we materially improved our net income compared to the first quarter of 2022, we were not profitable in Q1 and must continue to tightly manage operating expenses to produce consistent quarterly profitability as we ramp our hybrid cloud revenue.”
First Quarter 2023 Financial Results
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Conference Call and Webcast Information
WHO: Todd Brooks, Chief Executive Officer, FalconStor and Vincent Sita, Chief Financial Officer, FalconStor
WHEN: Wednesday, May 10, 2023, 4:00 PM Central; 5:00 PM Eastern
To register for our earnings call, please click the following link:
FALCONSTOR FIRST QUARTER 2023 FINANCIAL TELECONFERENCE AND PRESENTATION
As an alternative, you can copy and paste the following link into your web browser to register:
https://register.gotowebinar.com/register/4941630097261054555
Conference Call:
Please dial the following if you would like to interact with and ask questions of FalconStor hosts:
Toll Free: 877-309-2074
Access Code: 349-959-717
Non-GAAP Financial Measures
The non-GAAP financial measures used in this press release are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The Company’s management refers to these non-GAAP financial measures in making operating decisions because they provide meaningful supplemental information regarding the Company’s operating performance. In addition, these non-GAAP financial measures facilitate management’s internal comparisons to the Company’s historical operating results and comparisons to competitors’ operating results. We include these non-GAAP financial measures (which should be viewed as a supplement to, and not a substitute for, their comparable GAAP measures) in this press release because we believe they are useful to investors in allowing for greater transparency into the supplemental information used by management in its financial and operational decision-making. The non-GAAP financial measures exclude (i) depreciation, (ii) amortization, (iii) restructuring expenses, (iv) severance expenses, (v) board expenses, (vi) stock based compensation, (vii) non-operating expenses (income) including income taxes and interest & other expenses (income). For a reconciliation of our GAAP and non-GAAP financial results, please refer to our Reconciliation of Net Income (Loss) to Adjusted EBITDA presented in this release.
About FalconStor Software
FalconStor is the trusted data protection software leader modernizing disaster recovery and backup operations for the hybrid cloud world. The Company enables enterprise customers and managed service providers to secure, migrate, and protect their data while reducing data storage and long-term retention costs by up to 95%. More than 1,000 organizations and managed service providers worldwide standardize on FalconStor as the foundation for their cloud first data protection future. Our products are offered through and supported by a worldwide network of leading managed service providers, systems integrators, resellers, and original equipment manufacturers.
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FalconStor and FalconStor Software are trademarks or registered trademarks of FalconStor Software, Inc., in the U.S. and other countries. All other company and product names contained herein may be trademarks of their respective holders.
Links to websites or pages controlled by parties other than FalconStor are provided for the reader's convenience and information only. FalconStor does not incorporate into this release the information found at those links nor does FalconStor represent or warrant that any information found at those links is complete or accurate. Use of information obtained by following these links is at the reader's own risk.
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CONTACT INFORMATION
For more information, contact:
Vincent Sita
Chief Financial Officer FalconStor Software Inc.
CONTACT US AROUND THE GLOBE
Corporate Headquarters |
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Europe Headquarters |
501 Congress Avenue |
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GERMANY |
Suite 150 |
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Landsberger Straße 302 |
Austin, Texas 78701 |
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80687 München, Germany |
Tel: +1.631.777.5188 |
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FalconStor Software, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31, 2023 |
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December 31, 2022 |
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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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$ |
1,839,227 |
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$ |
2,011,062 |
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Accounts receivable, net |
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1,790,174 |
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2,278,802 |
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Prepaid expenses and other current assets |
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1,033,747 |
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897,493 |
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Contract assets, net |
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247,451 |
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181,933 |
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Total current assets |
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4,910,599 |
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5,369,290 |
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Property and equipment, net |
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78,126 |
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86,263 |
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Operating lease right-of-use assets |
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17,370 |
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34,416 |
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Software development costs, net |
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46,001 |
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53,057 |
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Other assets, net |
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37,741 |
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98,747 |
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Goodwill |
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4,150,339 |
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4,150,339 |
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Other intangible assets, net |
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13,285 |
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20,086 |
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Contract assets, net |
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263,768 |
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357,914 |
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Total assets |
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$ |
9,517,229 |
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$ |
10,170,112 |
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Liabilities and Stockholders' Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
436,711 |
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$ |
387,379 |
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Accrued expenses |
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1,220,138 |
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1,427,979 |
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Operating lease liabilities |
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17,370 |
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34,416 |
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Short-term note payable |
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101,227 |
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177,149 |
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Deferred revenue, net |
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3,589,822 |
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3,684,742 |
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Total current liabilities |
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5,365,268 |
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5,711,665 |
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Other long-term liabilities |
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956,267 |
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956,023 |
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Notes payable, net |
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2,165,874 |
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2,163,090 |
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Deferred tax liabilities, net |
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537,766 |
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537,651 |
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Deferred revenue, net |
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1,402,131 |
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1,281,107 |
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Total liabilities |
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10,427,306 |
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10,649,536 |
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Commitments and contingencies |
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Series A redeemable convertible preferred stock |
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16,253,084 |
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15,928,018 |
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Total stockholders' deficit |
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(17,163,161 |
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(16,407,442 |
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Total liabilities and stockholders' deficit |
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$ |
9,517,229 |
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$ |
10,170,112 |
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4
FalconStor Software, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Revenue: |
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Product revenue |
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$ |
1,022,186 |
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$ |
594,928 |
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Support and services revenue |
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1,246,210 |
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1,454,179 |
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Total revenue |
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2,268,396 |
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2,049,107 |
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Cost of revenue: |
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Product |
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34,129 |
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20,719 |
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Support and service |
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341,188 |
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394,549 |
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Total cost of revenue |
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375,317 |
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415,268 |
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Gross profit |
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1,893,079 |
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1,633,839 |
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Operating expenses: |
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Research and development costs |
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618,527 |
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705,981 |
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Selling and marketing |
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802,566 |
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1,189,846 |
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General and administrative |
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892,654 |
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849,939 |
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Restructuring costs |
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— |
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744 |
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Total operating expenses |
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2,313,747 |
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2,746,510 |
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Operating income (loss) |
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(420,668 |
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(1,112,671 |
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Interest and other expense |
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(79,863 |
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(117,995 |
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Income (loss) before income taxes |
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(500,531 |
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(1,230,666 |
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Income tax expense (benefit) |
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(52,761 |
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(121,260 |
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Net income (loss) |
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$ |
(447,770 |
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$ |
(1,109,406 |
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Less: Accrual of Series A redeemable convertible preferred stock dividends |
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315,215 |
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300,921 |
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Less: Accretion to redemption value of Series A redeemable convertible preferred stock |
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9,851 |
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14,815 |
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Net income (loss) attributable to common stockholders |
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$ |
(772,836 |
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$ |
(1,425,142 |
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Basic net income (loss) per share attributable to common stockholders |
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$ |
(0.11 |
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$ |
(0.20 |
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Diluted net income (loss) per share attributable to common stockholders |
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$ |
(0.11 |
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$ |
(0.20 |
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Weighted average basic shares outstanding |
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7,119,735 |
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7,082,276 |
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Weighted average diluted shares outstanding |
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7,119,735 |
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7,082,276 |
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5
FalconStor Software, Inc. and Subsidiaries
Supplemental Information
Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA
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Three Months Ended March 31, |
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2023 |
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2022 |
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Net income (loss) |
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$ |
(447,770 |
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$ |
(1,109,406 |
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Income tax expense |
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(52,761 |
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(121,260 |
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Interest and other expense |
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(79,863 |
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(117,995 |
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Depreciation and amortization |
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25,101 |
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35,519 |
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Restructuring costs |
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- |
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744 |
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Other restructuring costs |
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66 |
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4,302 |
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Board costs |
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117,973 |
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184,435 |
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Stock based compensation |
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5,331 |
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8,184 |
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Adjusted EBITDA |
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$ |
(431,923 |
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$ |
(1,115,477 |
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6