SEC Form 4 · accession 0001144204-18-053468
FALCONSTOR SOFTWARE INC · FALC
Statement of changes in beneficial ownership, as filed. Original on EDGAR ↗
Reporting owner
Martin M Hale Jr.
Director · 10% Owner
Period of report
Oct 9, 2018
Accepted (ET)
Oct 11, 2018 · 4:02 pm EDT
Rule 10b5-1 plan
unknown — predates the checkbox
Issuer CIK
0000922521
Table I — non-derivative securities
No Table I lines on this filing.
Table II — derivative securities
| Security | Conv. / exercise price | Date | Code | Shares | A/D | Exercisable | Expires | Underlying | Underlying shares | Owned after | D/I |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Series A Convertible Preferred StockF3,F7,F8,F1,F2 | — | Oct 9, 2018 | S | 342,000 | D | — | — | Common Stock | 3,336,976 | 558,000 | I |
| WarrantsF5,F6,F7,F8,F4 | $0.001 | Oct 9, 2018 | D | 63,610,935 | D | — | — | Common Stock | 63,610,935 | 304,922,695 | I |
Explanation of responses
- F1Each share of Series A Convertible Preferred Stock ("Preferred Stock") of Falconstor Software Inc. (the "Issuer") has a stated value of $10 (the "Stated Value"). Each share of Preferred Stock is initially convertible into such number of shares of common stock of Issuer ("Common Stock") determined by dividing the Stated Value by $1.02488, the initial conversion price of the Preferred Stock. The conversion price of the Preferred Stock is subject to adjustment from time to time in accordance with the terms of the Amended and Restated Certificate of Designations of the Preferred Stock.
- F2The Preferred Stock is convertible at any time, at the holder's election, into Common Stock and has no expiration date.
- F3In connection with the closing of the private placement of units (the "Financing") to certain stockholders of the Issuer as contemplated by that certain commitment letter, dated as of November 17, 2017, by and between Hale Capital Partners, LP ("HCP") and the Issuer (the "Commitment"), HCP-FVA, LLC ("HCP-FVA") sold 342,000 shares of Preferred Stock to such participating stockholders for an aggregate purchase price of $4,120,152.23, which equates to a per share purchase price of $12.05.
- F4The warrants to purchase Common Stock reported herein are presently exercisable and expire on February 23, 2028.
- F5In connection with the closing of the Financing, 63,610,935 of the warrants previously issued by the Issuer to HCP-FVA in connection with HCP-FVA's purchase of $3,000,000 of units upon the closing of the Commitment were cancelled for no consideration.
- F6Includes the backstop warrants held by HCP-FVA to purchase 1,543,630 shares of Common Stock as set forth in the previous filings of HCP-FVA and Martin Hale, Jr. ("MH").
- F7The derivative securities reported herein are held by HCP-FVA.
- F8MH is the Chief Executive Officer of HCP, the sole member of HCP-FVA. MH is also (i) the sole owner and managing member of Hale Fund Partners, LLC, a Delaware limited liability company ("HFP"), the general partner of HCP and (ii) the sole owner and Chief Executive Officer of Hale Fund Management, LLC, a Delaware limited liability company ("HFM"). HFM is (i) the general partner of Hale Capital Management, LP ("HCM"), the manager of HCP and (ii) the manager of HCP-FVA. Each of MH, HFP, HFM and HCM disclaims beneficial ownership of the securities reported herein, except to the extent of his or its pecuniary interest.
Remarks
MH serves as a director on the board of directors of the Issuer as a representative of HCP-FVA. Accordingly, HCP, HFP, HFM, HCM and HCP-FVA are directors by deputization by virtue of the fact that MH currently serves on the board of directors of the Issuer.