8-K

                       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): October 24, 2002
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                            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.
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            On October 24,  2002,  FalconStor  Software,  Inc.  (the  "Company")
issued a press  release  announcing,  among other  things,  that holders  owning
approximately  26.7 million  shares of Common Stock of the Company had agreed to
extend the  lock-up of their  stock from April 30,  2003 to April 30,  2004.  In
return,  the Company has agreed to release from the  lock-up,  on a schedule set
forth in the amended lock-up agreement, up to 80,000 shares of Common Stock held
by each stockholder who agreed to this extension.  The release does not apply to
certain  stockholders who own approximately 22.5 million shares of Common Stock.
The  text  of  the  press  release  is  attached  hereto  as  Exhibit  99.1  and
incorporated herein by reference.  The form of the amended FalconStor  Software,
Inc., Lock-Up Agreement is attached hereto as Exhibit 99.2.

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 October 24, 2002.

    99.2    FalconStor Software, Inc., Lock-Up Agreement as amended.

                                    SIGNATURE

            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: October 24, 2002                     By:/s/ Jacob Ferng
                                               ---------------------------------
                                            Name:  Jacob Ferng
                                            Title: Vice President and Chief
                                                   Financial Officer

EX-99.1

                                                                    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 Q3 QUARTERLY RESULTS

              REVENUES INCREASE 20% COMPARED WITH PREVIOUS QUARTER
                      WHILE OPERATING EXPENSES REMAIN FLAT

             STOCKHOLDER LOCK-UP PERIOD EXTENDED FOR ADDITIONAL YEAR

MELVILLE,  N.Y., October 24,  2002--FalconStor  Software, Inc. (Nasdaq: FALC), a
leading  provider of network storage  infrastructure  software,  today announced
financial results for its third quarter ended September 30, 2002.

Revenues  for the third  quarter  of 2002  increased  by 20%  compared  with the
previous quarter,  from $2.4 million to $2.9 million.  This increase in revenues
occurred while operating  expenses remained flat.  Excluding an asset impairment
charge of $1.6  million,  adjusted net loss for the third  quarter  decreased to
$2.0 million  compared  with $2.5  million in the previous  quarter and adjusted
diluted net loss per share for the third  quarter was $0.04 per share,  compared
with $0.05 per share in the  previous  quarter.  Reported net loss for the third
quarter of 2002 was $3.6  million  and  reported  diluted net loss per share was
$0.08.  Deferred revenue increased 96% compared with the previous quarter,  from
$0.8 million to $1.7 million.  This increase was primarily due to an increase in
the number of maintenance and support  contracts.  This deferred revenue will be
recognized as revenue over the next 12 months.

For the third quarter of 2002,  revenues increased by 13% compared with the same
period  a year  ago.  Excluding  an asset  impairment  charge  of $1.6  million,
adjusted  net loss for the third  quarter was $2.0  million  compared  with $1.4
million in the same  period a year ago and  adjusted  diluted net loss per share
for the third quarter was $0.04 per share,  compared with $0.04 per share in the
same period a year ago.

For the first nine months of fiscal 2002,  FalconStor  recorded revenues of $7.2
million,  compared  with  $2.6  million  for the  same  period  a year  earlier.
Excluding an asset impairment charge of $1.6 million,  adjusted net loss for the
nine month period was $7.0  million  compared  with a net loss of $8.8  million,
excluding  a  beneficial  conversion  charge of $3.9  million,  reported  in the
corresponding  period a year ago. Adjusted diluted net loss per share during the
nine-month period was $0.16, compared with $0.27 per share for the same period a
year ago.  Reported  net loss for the nine months ended  September  30, 2002 was
$8.6  million and  reported  diluted  net loss per share was $0.19.  The Company
closed the quarter financially strong with $47 million in cash, cash equivalents
and marketable  securities,  after  deducting net  liabilities  of  discontinued
operations.






"Due  to  IPStor's  ability  to  reduce  the  Total-Cost-of-Ownership  (TCO)  of
enterprise  storage and to maximize  system  availability,  we are  experiencing
continuing  demand and smooth  deployment  of our  solutions  in the  production
environment.  IPStor has been adopted by major  telecommunications  companies in
North America,  Europe and throughout Asia to consolidate  storage and replicate
mission-critical data to maximize business continuity," said FalconStor Chairman
& CEO ReiJane Huai.  "On the strategic  front,  we are pleased with the progress
and expect several key partners in the U.S. and Japan to announce their business
continuance appliance and data migration initiatives powered by IPStor.  Despite
the continued general economic uncertainties,  we are confident about our growth
prospects  and will  continue  to invest in R&D and  support  infrastructure  to
sustain the business momentum around the world."

Substantially  all of the holders of shares of common stock issued to the former
shareholders  of  FalconStor,  Inc., in connection  with its reverse merger with
Network  Peripherals,  Inc.,  in August  2001 have  agreed to extend the lock-up
period for their  shares of  FalconStor's  common  stock from April 30,  2003 to
April 30, 2004. The total number of shares subject to the newly extended lock-up
is approximately 26.7 million,  including approximately 22.5 million shares held
by  ReiJane  Huai,  the  Chairman,  President  and Chief  Executive  Officer  of
FalconStor,  Irwin Lieber, Barry Rubenstein, and certain investment partnerships
affiliated  with them,  and certain  other large  stockholders  (the  "Principal
Stockholders").

In return for the extension of the lock-up period, the Board of Directors of the
Company  has agreed to release a limited  number of shares from the lock-up on a
quarterly  basis for each  stockholder  who has agreed to the  extension  of the
lock-up period, other than the Principal Stockholders.  A total of approximately
1.5 million shares will be released over time between November 1, 2002 and April
30, 2004,  under a set plan that starts at 5,000 shares per  stockholder  during
the fourth  quarter of 2002 and  escalates to 20,000  shares in first quarter of
2004.  The holders of the shares that will be released may sell the shares after
they are  released,  but,  unlike the release of locked-up  shares in January of
this year,  there is no set time frame for  shareholders to sell the shares that
will be released.

The lock-up  agreement  continues  to provide that the Board of Directors of the
Company may, in its sole discretion,  release any and all of the shares from the
lock-up restrictions.  Any such release will be based on the fundamentals of the
Company,  including the Company's  revenue and earnings  growth,  and on overall
market conditions.  The Principal Stockholders have further agreed, in the event
that the Board  releases  shares of common stock from the lock-up prior to April
30, 2004,  that none of their shares will be released from the lock-up until all
other  stockholders  subject  to  the  extended  lock-up  have  been  given  the
opportunity  to have all their shares  subject to the lock-up freed up for sale.
Certain  charitable  donations of locked-up shares of the Company's common stock
from  stockholders  will be allowed in the discretion of the Company's  Board of
Directors.

"The Board of Directors  believes that the foregoing actions address concerns in
the market  related to the  overhang  of the April 30, 2003  lock-up  expiration
date.  The Board of  Directors  will  continue to evaluate the release of shares
subject to the lock-up  based on various  factors  including  market  condition,
advice of its investment bankers and market makers, and the Company's  operating
performance,"  stated ReiJane Huai. "The Board was particularly  appreciative to






these stockholders for agreeing to extend their lock-up until April 30, 2004 and
for  reconfirming  their belief in the  potential  growth and the success of the
Company,  and for  their  commitment  to being  long  term  stockholders  of the
Company."

The company  will host a conference  call on  Thursday,  October 24 at 5:15 p.m.
Eastern Time, to discuss the results.  To participate in the call,  dial:  (706)
679-4456. To listen on the web, visit: http://www.viavid.com/registration.asp?sid=1671
or http://www.viavid.com.  Registration will be required from both links.


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), offers network storage infrastructure
software that  dramatically  reduces storage  operating costs by aggregating and
provisioning  storage  capacity and  management  services over Fibre Channel and
IP-based  storage  networks.   With  unprecedented   reliability,   performance,
manageability,  and availability,  FalconStor's  flagship  product,  IPStor(TM),
enables  leading  IT  organizations  and  Service  Providers  to deploy a highly
available network storage infrastructure to ensure business continuity.

Founded in 2000,  FalconStor is  headquartered  in Melville,  NY.  International
offices include Paris, Tokyo and Taichung, Taiwan. FalconStor is a voting member
of the 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.

                                       ###

FalconStor  and IPStor are  trademarks  of FalconStor  Software,  Inc. All other
company and product names  contained  herein are  trademarks  of the  respective
holders.

EX-99.2

                                                                    EXHIBIT 99.2

                   FALCONSTOR SOFTWARE, INC. LOCK-UP AGREEMENT


As of October 18, 2002




To Whom It May Concern:


            Pursuant  to an  Agreement  and Plan of Merger  and  Reorganization,
dated as of May 4, 2001 (the  "Agreement"),  Empire  Acquisition Corp., a wholly
owned  subsidiary  of Network  Peripherals  Inc.  ("NPI"),  merged with and into
FalconStor,  Inc. (the "Merger"),  with the surviving  entity called  FalconStor
Software, Inc. (the "Company").  To induce NPI to enter into the Agreement,  the
undersigned,  during the period  that  commenced  on August 22, 2001 and ends on
August 22, 2002 (the "Lock-Up Period"):

            (i)      agreed not to, directly or indirectly  sell, offer to sell,
                     contract to sell (including,  without limitation, any short
                     sale),  grant any option to purchase or otherwise  transfer
                     or  dispose  of  (other  than to  donees  who  agree  to be
                     similarly bound) any securities received by the undersigned
                     in connection with the Merger; and

            (ii)     acknowledged  that following August 22, 2001, the Company's
                     Board of Directors may, in its sole discretion, release any
                     or all of the  shares  held  by the  undersigned  from  the
                     obligations  of this letter prior to the  expiration of the
                     Lock-Up Period.


            Effective  January  7, 2002,  certain  shareholders,  including  the
undersigned,  agreed to extend the Lock-Up Period until and including  April 30,
2003 (the "Lock-Up Extension").

            As set forth in the attached letter, the Board of Directors believes
it would be beneficial for all  stockholders  who have shares that are currently
subject to the Lock-Up to extend the Lock-Up  Extension until April 30, 2004. In
consideration  for your  agreement,  the Board of Directors of the Company will,
each  calendar  quarter  through  April 30,  2004,  release  a  portion  of your
remaining stock subject to the lock-up on the following schedule:

                     Quarter                 Number of Shares Released
                     -------                 -------------------------
                Fourth Quarter 2002                 5,000
                First Quarter 2003                 10,000
                Second Quarter 2003                10,000
                Third Quarter 2003                 10,000
                Fourth Quarter 2003                10,000
                First Quarter 2004                 15,000
                Second Quarter 2004                20,000

The Board of  Directors  will send a written  notice of each  release.  Once the
shares are  released  from the  lock-up,  such  shares will remain free from the
terms of the  lock-up  whether or not you agree to sell such  shares  during the
quarter.






            By executing this letter,  you agree to extend the Lock-Up Extension
(the "Second  Lock-Up  Extension")  until and including  April 30, 2004, and you
acknowledge  the beneficial  benefits to you of this extension and the quarterly
releases of your locked-up stock.

            The Second Lock-Up  Extension  will not be effective  unless certain
stockholders  identified by the Company's Board of Directors agree to the Second
Lock-Up  Extension.  We will send you written notice of the effectiveness of the
Second Lock-Up Extension.

            In order to  facilitate  an  orderly  sale of stock  subject  to the
lock-up,  if the Board of  Directors  decided to release  any shares  before the
expiration  of the Lock-Up  Extension,  you agreed to use either HD Brous & Co.,
Inc., Ladenberg, Thalman & Co., Inc., Wien Securities Corp. or Janney Montgomery
Scott LLC.  Through  April 30, 2004,  shares  released,  including the quarterly
releases set forth above, must be made through one of these  broker-dealers.  If
you wish to continue to use the  broker-dealer  you selected  when you agreed to
the Lock-Up Extension, you do not have to re-select a broker-dealer.

            If you wish to  change  to one of the  other  broker-dealers  listed
above,  or if any of the other  information  you provided when you agreed to the
Lock-Up Extension has changed, please note the change in the annexed form.

            PLEASE  RETURN THIS SIGNED  LETTER BY FAX TO THE  ATTENTION  OF SETH
HOROWITZ,  THE COMPANY'S GENERAL COUNSEL,  AT (631) 777-2551 BY 11 A.M., E.D.T.,
ON TUESDAY, OCTOBER 22, 2002. PLEASE ALSO MAIL THE SIGNED LETTER TO:

            FALCONSTOR SOFTWARE, INC.
            125 BAYLIS ROAD
            MELVILLE, NY 11747
            ATTN: SETH HOROWITZ

            The undersigned  hereby represents and warrants that the undersigned
has full power and authority to execute this letter and enter the agreements set
forth  herein,  and  that,  upon  request,  the  undersigned  will  execute  any
additional  documents  necessary or desirable in connection with the enforcement
hereof.

            All  authority  herein  conferred  or agreed to be  conferred  shall
survive the death or incapacity of the  undersigned  and any  obligations of the
undersigned  shall  be  binding  upon  the  heirs,   personal   representatives,
successors, and assigns of the undersigned.


                               Very truly yours,



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                               Stockholder's Signature

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                               Print Name







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Name and Address


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Social Security or Taxpayer Identification No.

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Broker choice (if you are already a registered broker-
dealer, please provide the name of your brokerage firm):
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E-mail address:

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Facsimile number:

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Telephone No. (Day):

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Telephone No. (Night):

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Cellular Telephone No.

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