(8) Share-Based Payment Arrangements (Tables)

12 Months Ended

Dec. 31, 2012

Notes to Financial Statements

Details of Stock Option Plan

	Shares	Shares Available	Shares	Last Date for Grant
Name of Plan	Authorized	for Grant	Outstanding	of Shares
FalconStor Software, Inc., 2006 Incentive Stock Plan	12,224,133	2,246,036	7,388,945	May 17, 2016
FalconStor Software, Inc., 2010 Outside Directors Equity	400,000	280,000	90,300	March 25, 2013
Compensation Plan

Schedule of Equity Awards Outstanding

	Shares Available	Shares
Name of Plan	for Grant	Outstanding
FalconStor Software, Inc., 2000 Stock Option Plan	--	2,432,787
1994 Outside Directors Stock Option Plan	--	40,000
2004 Outside Directors Stock Option Plan	--	190,000
FalconStor Software, Inc., 2007 Outside Directors Equity	--	170,000
Compensation Plan
Stand-Alone Stock Option Agreement between	--	1,220,000
the Company and James P. McNiel

Schedule of Stock Option Activity

			Weighted
		Weighted	Average
		Average	Remaining	Aggregate
	Number of	Exercise	Contractual	Intrinsic
	Options	Price	Life  (Years)	Value
Options Outstanding at December 31, 2011	14,456,722	$4.95
Granted	2,042,700	$2.45
Exercised	(321,260)	$2.30
Forfeited	(3,550,825)	$4.79
Expired	(1,266,495)	$4.62
Options Outstanding at December 31, 2012	11,360,842	$4.66	6.46	$          497,695
Options Exercisable at December 31, 2012	7,299,451	$5.60	5.21	$            88,120
Options Expected to Vest after December 31, 2012 (1)	3,338,779	$3.00	8.67	$          311,277
(1) Options expected to vest after December 31, 2012 reflect an estimated forfeiture rate

Schedule Of Share Based Compensation Recognized

	Years ended December 31,
	2012	2011	2010
Cost of revenues - Product	$           262	$        2,960	$      31,779
Cost of revenues - Support and Service	172,707	461,735	1,117,550
Research and development costs	727,826	1,302,129	2,987,146
Selling and marketing	1,677,469	2,023,370	3,379,518
General and administrative	2,036,505	1,727,864	1,169,576
	$ 4,614,769	$ 5,518,058	$ 8,685,569

Stock Based Compensation Expense - Restricted Stock

	Years ended December 31,
	2012	2011	2010
Directors, officers and employees	$    584,959	$ 1,358,107	$ 2,524,914
Non-employee consultants	13,488	21,882	760,661
	$    598,447	$ 1,379,989	$ 3,285,575

Schedule of Restricted Stock Units Activity

	Number of
	Restricted Stock
	Awards / Units
Non-Vested at December 31, 2011	525,889
Granted	55,014
Vested	(383,315)
Forfeited	(26,398)
Non-Vested at December 31, 2012	171,190

Schedule Of Share Based Compensation - Nonemployee

	Years ended December 31,
	2012	2011	2010
Non-qualified stock options	$      13,999	$        2,487	$      58,524
Restricted stock awards	13,488	21,882	760,661
	$      27,487	$      24,369	$    819,185

Schedule of assumptions used to value share-based compensation

	Years ended December 31,
	2012	2011	2010
Expected dividend yield	0%	0%	0%
Expected volatility	60 - 61%	56 - 61%	54 - 60%
Risk-free interest rate	0.7 - 1.2%	1.0 - 2.5%	1.6 - 3.0%
Expected term (years)	5.5	5.5	5.5
Discount for post-vesting restrictions	N/A	N/A	N/A