(2) Share-Based Payment Arrangements (Tables)

6 Months Ended

Jun. 30, 2013

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		1,169,323		8,411,478	May 17, 2016
FalconStor Software, Inc., 2013 Outside Directors Equity
Compensation Plan		400,000		350,000		50,000	May 9, 2016

Schedule of Equity Awards Outstanding

	Shares Available		Shares
Name of Plan	for Grant		Outstanding
FalconStor Software, Inc., 2000 Stock Option Plan		—		1,646,397
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		—		805,200
the Company and James P. McNiel
FalconStor Software, Inc., 2010 Outside Directors Equity		—		50,500
Compensation Plan

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, 2012	11,360,842	$4.66
Granted	70,000	$2.31
Exercised	(310,000)	$2.25
Forfeited	(224,795)	$4.56
Expired	(20,000)	$3.96
Options Outstanding at March 31, 2013	10,876,047	$4.72	6.13	$       1,136,141
Granted	1,812,000	$1.38
Exercised	-	$0.00
Forfeited	(1,334,592)	$4.04
Expired	(152,500)	$5.44
Options Outstanding at June 30, 2013	11,200,955	$4.25	5.93	$            15,505
Options Exercisable at June 30, 2013	7,173,298	$5.46	4.10	$                      -

Schedule Of Share Based Compensation Recognized

	Three months ended June 30,					Six months ended June 30,
	2013		2012			2013		2012
Cost of revenues - Product	$	50	$	49		$	99	$	99
Cost of revenues - Support and Service		53,936		(21,124	)		104,192		49,844
Research and development costs		87,028		125,231			221,938		444,188
Selling and marketing		(11,848)		398,031			272,190		884,656
General and administrative		111,629		587,889			533,111		1,159,591
	$	240,795	$	1,090,076		$	1,131,530	$	2,538,378

Stock Based Compensation Expense - Restricted Stock

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Directors, officers and employees	$	32,551	$	130,164	$	95,748	$	407,580
Non-employee consultants		—		—		—		—
	$	32,551	$	130,164	$	95,748	$	407,580

Schedule of Restricted Stock Units Activity

	Number of
	Restricted Stock
	Awards
Non-Vested at December 31, 2012		171,190
Granted		—
Vested		(48,570	)
Forfeited		(4,590	)
Non-Vested at March 31, 2013		118,030
Granted		50,000
Vested		(45,410	)
Forfeited		—
Non-Vested at June 30, 2013		122,620

Schedule Of Share Based Compensation - Nonemployee

	Three months ended June 30,					Six months ended June 30,
	2013		2012			2013		2012
Non-qualified stock options	$	—	$	(25,262	)	$	—	$	29,930
Restricted stock awards		—		—			—		—
	$	—	$	(25,262	)	$	—	$	29,930