FalconStor Software (FALC) 10-Q 10 May 23 2023 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2023	Apr. 30, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	000-23970
Entity Registrant Name	FALCONSTOR SOFTWARE, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0216135
Entity Address, Address Line One	501 Congress Avenue
Entity Address, Address Line Two	Suite 150
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	631
Local Phone Number	777-5188
Title of 12(b) Security	Common stock, $0.001 Par Value
Trading Symbol	FALC
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Bankruptcy Proceedings, Reporting Current	true
Entity Common Stock, Shares Outstanding		7,122,199
Entity Central Index Key	0000922521
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 1,839,227	$ 2,011,062
Accounts receivable, net	1,790,174	2,278,802
Prepaid expenses and other current assets	1,033,747	897,493
Contract assets, net	247,451	181,933
Total current assets	4,910,599	5,369,290
Property and equipment, net	78,126	86,263
Operating lease right-of-use assets, net	17,370	34,416
Software development costs, net	46,001	53,057
Other assets	37,741	98,747
Goodwill	4,150,339	4,150,339
Other intangible assets, net	13,285	20,086
Long-term contract assets, net	263,768	357,914
Total assets	9,517,229	10,170,112
Current liabilities:
Accounts payable	436,711	387,379
Accrued expenses	1,220,138	1,427,979
Current portion of lease liabilities	17,370	34,416
Short-term note payable	101,227	177,149
Deferred revenue	3,589,822	3,684,742
Total current liabilities	5,365,268	5,711,665
Other long-term liabilities	956,267	956,023
Notes payable, net of debt issuance costs and discounts	2,165,874	2,163,090
Deferred tax liabilities	537,766	537,651
Deferred revenue, net of current portion	1,402,131	1,281,107
Total liabilities	10,427,306	10,649,536
Commitments and contingencies (Note 11)
Series A redeemable convertible preferred stock, $.001 par value, 2,000,000 shares authorized, 900,000 shares issued and outstanding, redemption value of $16,299,546 and $15,984,331, respectively	16,253,084	15,928,018
Stockholders' deficit:
Common stock, $.001 par value, 30,000,000 shares authorized, 7,122,199 shares and 7,118,609 shares issued and outstanding, respectively	7,122	7,119
Additional paid-in capital	110,524,978	110,844,716
Accumulated deficit	(125,954,948)	(125,507,178)
Accumulated other comprehensive loss	(1,740,313)	(1,752,099)
Total stockholders' deficit	(17,163,161)	(16,407,442)
Total liabilities and stockholders' deficit	$ 9,517,229	$ 10,170,112

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Series A Redeemable convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Series A Redeemable convertible preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Series A Redeemable convertible preferred stock, shares issued (in shares)	900,000	900,000
Series A Redeemable convertible preferred stock, shares outstanding (in shares)	900,000	900,000
Series A redeemable convertible preferred stock, redemption value	$ 16,299,546	$ 15,984,331
Common Stock, Shares, Outstanding	7,122,199	7,118,609
Common stock, shares issued (in shares)	7,122,199	7,118,609
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue:
Total revenue	$ 2,268,396	$ 2,049,107
Cost of revenue:
Total cost of revenue	375,317	415,268
Gross profit	1,893,079	1,633,839
Operating expenses:
Research and development costs	618,527	705,981
Selling and marketing	802,566	1,189,846
General and administrative	892,654	849,939
Restructuring costs	0	744
Total operating expenses	2,313,747	2,746,510
Operating income (loss)	(420,668)	(1,112,671)
Interest and other expense	(79,863)	(117,995)
Income (loss) before income taxes	(500,531)	(1,230,666)
Income tax expense (benefit)	(52,761)	(121,260)
Net income (loss)	(447,770)	(1,109,406)
Less: Accrual of Series A redeemable convertible preferred stock dividends	315,215	300,921
Less: Accretion to redemption value of Series A redeemable convertible preferred stock	9,851	14,815
Net income (loss) attributable to common stockholders	$ (772,836)	$ (1,425,142)
Basic net income (loss) per share attributable to common stockholders	$ (0.11)	$ (0.20)
Diluted net income (loss) per share attributable to common stockholders	$ (0.11)	$ (0.20)
Weighted average basic shares outstanding	7,119,735	7,082,276
Weighted average diluted shares outstanding	7,119,735	7,082,276
Product Revenue
Revenue:
Total revenue	$ 1,022,186	$ 594,928
Cost of revenue:
Total cost of revenue	34,129	20,719
Support and Services Revenue
Revenue:
Total revenue	1,246,210	1,454,179
Cost of revenue:
Total cost of revenue	$ 341,188	$ 394,549

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (447,770)	$ (1,109,406)
Other comprehensive income (loss), net of applicable taxes
Foreign currency translation	11,786	33,510
Total other comprehensive income (loss), net of applicable taxes:	11,786	33,510
Total comprehensive income (loss)	(435,984)	(1,075,896)
Less: Accrual of Series A redeemable convertible preferred stock dividends	315,215	300,921
Less: Accretion to redemption value of Series A redeemable convertible preferred stock	9,851	14,815
Total comprehensive income (loss) attributable to common stockholders	$ (761,050)	$ (1,391,632)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss, Net
Beginning balance (shares) at Dec. 31, 2021		7,082,276
Beginning balance at Dec. 31, 2021	$ (12,965,983)	$ 7,082	$ 112,349,613	$ (123,462,638)	$ (1,860,040)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(1,109,406)			(1,109,406)
Share-based compensation to employees	8,184		8,184
Shares issued in connection with vesting of restricted stock	0		0
Accretion of Series A redeemable convertible preferred stock	(14,815)		(14,815)
Dividends on Series A redeemable convertible preferred stock	(300,921)		(300,921)
Foreign currency translation	33,510				33,510
Ending balance (shares) at Mar. 31, 2022		7,082,276
Ending balance at Mar. 31, 2022	(14,349,431)	$ 7,082	112,042,061	(124,572,044)	(1,826,530)
Beginning balance (shares) at Dec. 31, 2022		7,118,609
Beginning balance at Dec. 31, 2022	(16,407,442)	$ 7,119	110,844,716	(125,507,178)	(1,752,099)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(447,770)			(447,770)
Share-based compensation to employees	5,331		5,331
Shares issued in connection with vesting of restricted stock (shares)		3,590
Shares issued in connection with vesting of restricted stock	0	$ 3	(3)
Accretion of Series A redeemable convertible preferred stock	(9,851)		(9,851)
Dividends on Series A redeemable convertible preferred stock	(315,215)		(315,215)
Foreign currency translation	11,786				11,786
Ending balance (shares) at Mar. 31, 2023		7,122,199
Ending balance at Mar. 31, 2023	$ (17,163,161)	$ 7,122	$ 110,524,978	$ (125,954,948)	$ (1,740,313)

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net income (loss)	$ (447,770)	$ (1,109,406)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	25,101	35,519
Amortization of debt discount on notes payable	2,783	2,148
Amortization of right of use assets	17,046	21,512
Share-based payment compensation	5,331	8,184
Recovery of returns and doubtful accounts	33,695	(18,740)
Changes in operating assets and liabilities:
Accounts receivable	452,374	2,044,122
Prepaid expenses and other current assets	(141,566)	(222,019)
Contract assets	28,628	13,120
Inventory	0	7,667
Other assets	63,516	5,437
Accounts payable	65,293	389,847
Accrued expenses and other long-term liabilities	(204,083)	(259,405)
Operating lease liabilities	(17,046)	(21,512)
Deferred revenue	28,348	(682,055)
Net cash provided by (used in) operating activities	(88,350)	214,419
Cash flows from investing activities:
Purchases of property and equipment	(2,898)	0
Net cash provided by (used in) investing activities	(2,898)	0
Cash flows from financing activities:
Cash Paid for Payroll Taxes on Restricted Stock Unit Release	(681)	0
Payments of short-term debt	(75,921)	0
Net cash provided by (used in) financing activities	(76,602)	0
Effect of exchange rate changes on cash and cash equivalents	(3,985)	(13,989)
Net increase (decrease) in cash and cash equivalents	(171,835)	200,430
Cash and cash equivalents, beginning of period	2,011,062	3,181,209
Cash and cash equivalents, end of period	1,839,227	3,381,639
Supplemental disclosures:
Cash paid for interest	46,746	21,554
Non-cash investing and financing activities:
Undistributed Series A redeemable convertible preferred stock dividends	315,215	300,921
Accretion of Series A redeemable convertible preferred stock	$ 9,851	$ 14,815

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	(1) Basis of Presentation (a) The Company and Nature of Operations FalconStor Software, Inc., a Delaware corporation ("we", the "Company" or "FalconStor"), is a 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. (b) Liquidity As of March 31, 2023, the Company had a working capital deficiency of $ 0.5 million , which is inclusive of current deferred revenue of $ 3.6 million , and a stockholders' deficit of $ 17.2 million . During the three months ended March 31, 2023, the Company had net loss of $ 0.4 million and negative cash flow from operations of $ 0.1 million . The Company's total cash balance as of March 31, 2023 was $ 1.8 million , a decrease of $ 0.2 million compared to $ 2.0 million on December 31, 2022. The Company’s principal sources of liquidity as of March 31, 2023 consisted of cash and future cash anticipated to be generated from operations. The Company generated negative net income and negative cash flows from operations during the three months ended March 31, 2023, and it reported negative working capital as of March 31, 2023. The Company is currently a party to an Amended and Restated Term Loan Credit Agreement, dated as of February 23, 2018, as amended December 27, 2019, by and between the Company and HCP-FVA, LLC (“HCP-FVA”), (the “Amended and Restated Loan Agreement”). In connection with the then-proposed public offering of the Company as described in the Company's Registration Statement on Form S-1, as amended, originally filed on June 3, 2021 (the "June Offering"), we entered into a letter agreement with Hale Capital Partners, LP (“Hale Capital”), dated June 2, 2021 (the “Loan Extension Letter Agreement”), that provided for an extension of the maturity date on Hale Capital’s portion of the outstanding indebtedness owed under the Amended and Restated Loan Agreement to June 30, 2023. The remaining principal amount outstanding, which was owed to other lenders, was repaid in full. On July 19, 2022, we entered into a letter agreement with Hale Capital (the "Second Loan Extension Letter Agreement"), that provided for a subsequent extension of the maturity date on the outstanding indebtedness owed under the Amended and Restated Loan Agreement from June 30, 2023 to December 31, 2023. On February 10, 2023, the Company entered into a letter agreement with Hale Capital to further extend the maturity date of the senior secured debt to June 30, 2024 (the "Third Loan Extension Letter Agreement"). See Note (9) Notes Payable for more information. Also, as described further in Note (12) Series A Redeemable Convertible Preferred Stock , the effective date of the mandatory redemption right of the Company's Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”) held by HCP-FVA and Hale Capital was extended from July 30, 2021 to July 30, 2023 pursuant to that certain Amendment No. 1 to the Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company, dated as of June 24, 2021 (as amended, the “Certificate of Designations”). On July 19, 2022, the Company and Hale Capital entered into a letter agreement pursuant to which Hale Capital agreed not to exercise or permit the exercise of the mandatory redemption right of the Series A Preferred Stock on or prior to December 31, 2023 unless the redemption is in accordance with Section 8(e)(z) of the Certificate of Designations or in accordance with a Breach Event (as defined in the Certificate of Designations). If such Series A Preferred Stock was redeemed on March 31, 2023, the Company would have been required to pay the holders of the Series A Preferred Stock $ 16.3 million . On February 10, 2023, the Company entered into a letter agreement with Hale Capital to further extend the redemption date of the Series A Preferred Stock to June 30, 2024. The Company believes its current cash balances together with anticipated cash flows from operating activities will be sufficient to meet its working capital requirements for at least one year from the date the consolidated financial statements were issued. (c) COVID-19 Pandemic, Geopolitical and Other Macroeconomic Impacts to our Operating Environment We are subject to risks and uncertainties arising from macroeconomic and geopolitical conditions, including, but not limited to, inflation, rising interest rates, foreign currency fluctuations, lower consumer spending, geopolitical conflicts, including the conflict in the Ukraine, and continuing effects of the COVID-19 pandemic. We continuously monitor the direct and indirect impacts of these macroeconomic and geopolitical events and trends on our business and financial results. The full extent to which these macroeconomic and geopolitical conditions impact our business is difficult to predict. Such impacts include, but are not limited to, supply chain and logistical challenges, reduced consumer demand for our products, and an industry-wide slowdown in advertising spending. The impact of COVID-19, for example, is fluid and uncertain, but it has caused and may continue to cause various negative effects, including an inability to meet with actual or potential customers, our end customers deciding to delay or abandon their planned purchases or failing to make payments, and delays or disruptions in our or our partners’ supply chains. As a result, we may experience extended sales cycles, our ability to close transactions with new and existing customers and partners may be negatively impacted, our ability to recognize revenue from software transactions we do close may be negatively impacted, our demand generation activities, and the efficiency and effect of those activities, may be negatively affected, and it has been and, until the COVID-19 outbreak is contained, will continue to be more difficult for us to forecast our operating results. These uncertainties have, and may continue to, put pressure on global economic conditions and overall IT spending and may cause our end customers to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles and potentially lowering prices for our solutions, and may make it difficult for us to forecast our sales and operating results and to make decisions about future investments, any of which could materially harm our business, operating results and financial condition. (d) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. (e) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, valuation of derivatives, valuation of goodwill and income taxes. Actual results could differ from those estimates. The financial market volatility in many countries where the Company operates has impacted and may continue to impact the Company’s business. Such conditions could have a material impact on the Company’s significant accounting estimates discussed above. (f) Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position of the Company at March 31, 2023, and the results of its operations for the three months ended March 31, 2023 and 2022. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K"). (g) Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt” and ASC Topic 815 “Derivatives and Hedging,” which reduces the number of accounting models for convertible instruments and amends the calculation of diluted earnings per share for convertible instruments, among other changes. The guidance is effective for smaller reporting companies as defined by the SEC, for annual reporting periods beginning after December 15, 2023, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (together with all subsequent amendments, ("Topic 326"))", which replaced the previous U.S. GAAP that required an incurred loss methodology for recognizing credit losses and delayed recognition until it was probable a loss had been incurred. Topic 326 replaced the incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of reasonable and supportable information to estimate credit losses. This provision was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. In February 2020, the FASB issued ASU 2020-02, "Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)", which delayed the effective date of Topic 326 for smaller reporting companies until fiscal years beginning after December 15, 2022. The Company adopted Topic 326 effective January 1, 2023 . The impact of adoption of this standard was not material on the Company’s consolidated financial statements.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	(2) Summary of Significant Accounting Policies The Company's significant accounting policies were described in Note (1) Summary of Significant Accounting Policies of the 2022 Form 10-K. There have been no significant changes in the Company's significant accounting policies since December 31, 2022. For a description of the Company's significant accounting policies refer to the 2022 Form 10-K. Revenue from Contracts with Customers and Associated Balances Nature of Products and Services Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer. Revenue allocated to software maintenance and support services is recognized ratably over the contractual support period. Hardware products consist primarily of servers and associated components and function independently of the software products and as such are accounted for as separate performance obligations. Revenue allocated to hardware maintenance and support services is recognized ratably over the contractual support period. Professional services are primarily related to software implementation services and associated revenue is recognized upon customer acceptance. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a contract asset when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year maintenance agreements, the Company invoices the license and generally one year of maintenance with future maintenance generally invoiced annually. For multi-year subscription licenses, the Company generally invoices customers annually at the beginning of each annual coverage period. The Company records a contract asset related to revenue recognized for multi-year on-premises licenses as its right to payment is conditioned upon providing product support and services in future years. As of March 31, 2023 and December 31, 2022, accounts receivable, net of allowance for doubtful accounts, was $ 1.8 million and $ 2.3 million , respectively. A provision for expected credit losses for accounts receivables and contract assets that share similar risk characteristics is recorded based on an evaluation of historical loss experience, current conditions, and reasonable and supportable forecasts. Accounts are written off when it becomes apparent that such amounts will not be collected, generally when amounts are past due by greater than nine months. Our provision for credit loss on accounts receivable was $ 54,869 as of March 31, 2023 and $ 25,720 as of December 31, 2022, respectively. As of March 31, 2023 and December 31, 2022, short and long-term contract assets, net of provision for credit loss, was $ 0.5 million and $ 0.5 million , respectively. Our provision for credit loss on contract assets was $ 5,112 and zero as of March 31, 2023 and December 31, 2022 , respectively. Deferred revenue is comprised mainly of unearned revenue related maintenance and technical support on term and perpetual licenses. Maintenance and technical support revenue is recognized ratably over the coverage period. Deferred revenue also includes contracts for professional services to be performed in the future which are recognized as revenue when the Company delivers the related service pursuant to the terms of the customer arrangement. Changes in deferred revenue were as follows: Three Months Ended March 31, 2023 Balance at January 1, 2023 $ 4,965,849 Deferral of revenue 2,293,933 Recognition of revenue ( 2,268,396 ) Change in reserves 567 Balance at March 31, 2023 $ 4,991,953 During the three months ended March 31, 2023 and 2022, revenue of $ 1.3 million and $ 1.4 million respectively, was recognized from the deferred revenue balance at the beginning of each period. Deferred revenue includes invoiced revenue allocated to remaining performance obligations that has not yet been recognized and will be recognized as revenue in future periods. Deferred revenue was $ 5.0 million as of March 31, 2023, of which the Company expects to recognize approximately 72 % of such amount as revenue over the next 12 months and the remainder thereafter. Approximately $ 1.6 million of revenue is expected to be recognized from remaining performance obligations for unbilled support and services as of March 31, 2023. We expect to recognize revenue on approximately 39 % of these remaining performance obligations over the next twelve months, with the balance recognized thereafter. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services, and not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with maintenance and support revenue recognized ratably over the contract period, and multi-year, on-premises licenses that are invoiced annually with product revenue recognized upon delivery. Significant Judgments The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. For products and services aside from maintenance and support, the Company estimates SSP by adjusting the list price by historical discount percentages. SSP for software and hardware maintenance and support fees is based on the stated percentages of the fees charged for the respective products. The Company’s perpetual and term software licenses have significant standalone functionality and therefore revenue allocated to these performance obligations are recognized at a point in time upon electronic delivery of the download link and the license keys. Product maintenance and support services are satisfied over time as they are stand-ready obligations throughout the support period. As a result, revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with professional services are recognized at a point in time upon customer acceptance. Disaggregation of Revenue Please refer to the condensed consolidated statements of operations and Note (16) Segment Reporting and Concentrations for discussion on revenue disaggregation by product type and by geography. The Company believes this level of disaggregation sufficiently depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that its sales commission program meets the requirements for cost capitalization. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. Leases We have entered into operating leases for our various facilities. We determine if an arrangement is a lease at inception. Operating leases are included in Right-of-Use ("ROU") assets, and lease liability obligations in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liability obligations represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We have lease agreements with lease and non-lease components and account for such components as a single lease component. As most of our leases do not provide an implicit rate, we estimated our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. Our lease terms may include options to extend or terminate the lease. Such extended terms have been considered in determining the ROU assets and lease liability obligations when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Right of Use Assets and Liabilities We have various operating leases for office facilities that are expected to continue through 2023. Below is a summary of our ROU assets and liabilities as of March 31, 2023. Right of use assets $ 17,370 Lease liability obligations, current 17,370 Lease liability obligations, less current portion — Total lease liability obligations $ 17,370 Weighted-average remaining lease term 0.25 Weighted-average discount rate 3.35 % Three Months Ended March 31, 2023 2022 Components of lease expense: Operating lease cost $ 33,118 $ 32,094 Sublease income — — Net lease cost $ 33,118 $ 32,094 During the three months ended March 31, 2023, operating cash flows from operating leases were approximately $ 17,467 . Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2023, are as follows: 2023 (remaining) $ 17,467 2024 — Total minimum lease payments $ 17,467 Less interest 97 Present value of lease liabilities $ 17,370

Earnings Per Share

Earnings Per Share	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Earnings Per Share	(3) Earnings Per Share Basic earnings per share ("EPS") is computed based on the weighted average number of shares of common stock outstanding. Diluted EPS is computed based on the weighted average number of common shares outstanding increased by dilutive common stock equivalents, attributable to stock option awards, restricted stock awards, warrants and the Series A Preferred Stock outstanding. The following represents the common stock equivalents that were excluded from the computation of diluted shares outstanding because their effect would have been anti-dilutive for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Stock options 4,965 5,690 Restricted stock 73,685 86,520 Series A redeemable convertible preferred stock 159,039 144,321 Total anti-dilutive common stock equivalents 237,689 236,531

Property and Equipment

Property and Equipment	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Property and Equipment	(4) Property and Equipment The gross carrying amount and accumulated depreciation of property and equipment as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Gross carrying amount $ 15,511,967 $ 15,505,431 Accumulated depreciation ( 15,433,841 ) ( 15,419,168 ) Property and Equipment, net $ 78,126 $ 86,263 For the three months ended March 31, 2023 and 2022, depreciation expense was $ 11,244 and $ 23,344 , respectively.

Software Development Costs

Software Development Costs	3 Months Ended
	Mar. 31, 2023
Research and Development [Abstract]
Software Development Costs	(5) Software Development Costs The gross carrying amount and accumulated amortization of software development costs as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Gross carrying amount $ 3,015,132 $ 3,015,132 Accumulated amortization ( 2,969,131 ) ( 2,962,075 ) Software development costs, net $ 46,001 $ 53,057 During the three months ended March 31, 2023 and 2022, the Company recorded $ 7,056 and $ 1,639 , respectively, of amortization expense related to capitalized software costs.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and Other Intangible Assets	(6) Goodwill and Other Intangible Assets The gross carrying amount and accumulated amortization of goodwill and other intangible assets as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 4,041,216 $ 4,041,216 Accumulated amortization ( 4,027,931 ) ( 4,021,130 ) Net carrying amount $ 13,285 $ 20,086 For the three months ended March 31, 2023 and 2022, amortization expense was $ 6,801 and $ 10,536 , respectively.

Share-Based Payment Arrangement

Share-Based Payment Arrangements	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Share-Based Payment Arrangements	(7) Share-Based Payment Arrangements On June 22, 2018, the Company's stockholders adopted the FalconStor Software, Inc. 2018 Incentive Stock Plan (the "2018 Plan"). The 2018 Plan is administered by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) and initially provided for the issuance of up to 1,471,997 shares of the Company's common stock upon the grant of shares with such restrictions as determined by the Compensation Committee to the employees and directors of, and consultants providing services to, the Company or its affiliates. In June 2021, the Company's stockholders approved an amendment to increase the number of shares of our common stock authorized and reserved for issuance under the 2018 Plan by 220,800 shares to a total of 1,692,797 shares. Exercise prices of the options are determined by the Compensation Committee, subject to the consent of Hale Capital. The vesting terms are performance based and determined by the Compensation Committee, subject to the consent of Hale Capital, based on various factors, including (i) the return of capital to the holders of the Series A Preferred Stock and the Company’s common stock in the event of a change of control, (ii) the repayment of the Company’s obligations under its senior secured debt, and (iii) the Company’s free cash flow. The following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of March 31, 2023: Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,692,797 241,899 1,312,853 The following table summarizes the Company’s equity plans that have terminated or expired but that still have equity awards outstanding as of March 31, 2023: Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 2,250 FalconStor Software, Inc., 2006 Incentive Stock Plan — 2,715 A summary of the Company’s restricted stock activity for the three months ended March 31, 2023 is below. Such restricted stock did not bestow any voting or dispositive power and is not deemed outstanding until they vest. Number of Non-Vested at January 1, 2023 1,316,933 Granted — Vested ( 4,080 ) Forfeited — Non-Vested at March 31, 2023 1,312,853 The following table summarizes the share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Cost of revenue - Support and Service 125 408 Research and development costs 976 1,879 Selling and marketing 2,334 4,511 General and administrative 1,896 1,386 $ 5,331 $ 8,184

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	(8) Income Taxes The Company’s provision for income taxes consists principally of state and local, and foreign taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year. For the three months ended March 31, 2023, the Company recorded an income tax benefit of $ 52,761 . The effective tax rate for the three months ended March 31, 2023 was 10.5 % . The effective tax rate differs from the statutory rate of 21 % due to the mix of foreign and domestic earnings, foreign withholding taxes and the application of valuation allowances that are applicable with respect to the Company. As of March 31, 2023, the Company’s conclusion did not change with respect to the realizability of its domestic deferred tax assets and therefore, the Company had not recorded any income tax benefit as such amounts are fully offset with a valuation allowance. For the three months ended March 31, 2022, the Company recorded an income tax benefit of $ 121,260 . The effective tax rate for the three months ended March 31, 2022 was 9.9 % . The effective tax rate differed from the statutory rate of 21 % due to the mix of foreign and domestic earnings and the application of valuation allowances. As of March 31, 2022, the Company’s conclusion did not change with respect to the realizability of its domestic deferred tax assets and therefore, the Company had not recorded any income tax benefit as such amounts are fully offset with a valuation allowance. The Company’s total unrecognized tax benefits, excluding interest, as of March 31, 2023 and March 31, 2022 were $ 71,296 and $ 79,518 , respectively. As of March 31, 2023 and March 31, 2022, the Company had $ 42,088 and $ 44,462 , respectively, of accrued interest reflected in accrued expenses.

Notes Payable

Notes Payable	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Notes Payable	(9) Notes Payable The notes payable balance consists of the following: Total notes payable, net at January 1, 2023 $ 2,340,239 Accretion of discount 2,783 Repayment of AFCO financing $ ( 75,921 ) Total notes payable, net at March 31, 2023 $ 2,267,101 Senior Secured Debt The Company is currently a party to the Amended and Restated Loan Agreement. The senior secured debt bears interest at prime plus 0.75 %. In connection with the June Offering, we entered into the Loan Extension Letter Agreement with Hale Capital, which provided for an extension of the maturity date on Hale Capital’s portion of the outstanding indebtedness owed under the Amended and Restated Loan Agreement to June 30, 2023. The remaining principal amount outstanding, which was owed to other lenders, was repaid in full. On July 19, 2022, we entered into the Second Loan Extension Letter Agreement with Hale Capital, which provided for a subsequent extension of the maturity date on the outstanding indebtedness owed under the Amended and Restated Loan Agreement from June 30, 2023 to December 31, 2023. On February 10, 2023, the Company entered into the Third Loan Extension Letter Agreement with Hale Capital to further extend the maturity date of the senior secured debt to June 30, 2024. The Company concluded the extensions under the Second Loan Extension Letter Agreement and Third Loan Extension Letter Agreement resulted in a debt modification under ASC 470-50, Modifications and Extinguishments, and therefore no gain or loss was required to be recognized. The changes were accounted for prospectively using the new effective interest rate of the loan . In the event the term notes issued pursuant to the Amended and Restated Loan Agreement (the “Term Loan”) are prepaid for any reason, such prepayment will be subject to the payment of a premium in an amount equal to 5 % of the principal amount prepaid. The Term Loan is required to be prepaid upon the occurrence of certain events, including but not limited to certain asset dispositions, the incurrence of additional indebtedness, the receipt of insurance proceeds, and a change of control, subject to certain exceptions. The Amended and Restated Loan Agreement has customary representations, warranties and affirmative and negative covenants. The negative covenants include financial covenants relating to in-force annual contract value. The Amended and Restated Loan Agreement also contains customary events of default, including but not limited to payment defaults, cross defaults with certain other indebtedness, breaches of covenants, bankruptcy events and a change of control. In the case of an event of default, as administrative agent under the Amended and Restated Loan Agreement, HCP-FVA, an affiliate of Hale Capital may (and upon the written request of lenders holding in excess of 50% of the term loans, which must include HCP-FVA, is required to) accelerate payment of all obligations under the Amended and Restated Loan Agreement, and seek other available remedies. As of March 31, 2023, the Company was in compliance with the financial covenants contained in the Amended and Restated Loan Agreement. Other Financing Arrangements On September 8, 2022, the Company entered into a financing arrangement with AFCO Premium Credit LLC ("AFCO"), for the renewal of its corporate insurance policies with Watkins Insurance Group in the amount of $ 253,068 . The terms of the arrangement include a $ 25,307 monthly payment to be made over a ten month period at a 4.2 % annual interest rate through July 15, 2023 . As of March 31, 2023, the balance payable to AFCO for this arrangement was $ 101,227 and is reflected as a "short-term note payable" on the Company's consolidated balance sheets.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Fair Value Measurements	(10) Fair Value Measurements The Company measures its cash equivalents and derivative instruments at fair value. Fair value is an exit price, representing the amount that would be received on the sale of an asset or that would be paid to transfer a liability in an orderly transaction between market participants. As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. Fair Value Hierarchy The methodology for measuring fair value specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s own assumptions of market participant valuation (unobservable inputs). As a result, observable and unobservable inputs have created the following fair value hierarchy: • Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities. The Company had no Level 1 securities at March 31, 2023 and December 31, 2022. • Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly. At March 31, 2023 and December 31, 2022, the Company did not have any Level 2 category assets included in the condensed consolidated balance sheets. • Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. At March 31, 2023 and December 31, 2022, the Level 3 category included derivatives. The Company did not hold any cash and cash equivalents categorized as Level 3 as of March 31, 2023 or December 31, 2022. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2023: Fair Value Measurements at Reporting Date Using Total Quoted Prices in Significant Significant Derivative liabilities: Derivative Instruments $ 821,640 $ — $ — $ 821,640 Total derivative liabilities 821,640 — — 821,640 Total assets and liabilities measured at fair value $ 821,640 $ — $ — $ 821,640 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022: Fair Value Measurements at Reporting Date Using Total Quoted Prices in Significant Significant Derivative liabilities: Derivative Instruments $ 821,726 $ — $ — $ 821,726 Total derivative liabilities 821,726 — — 821,726 Total assets and liabilities measured at fair value $ 821,726 $ — $ — $ 821,726 Measurement of Fair Value The fair value of the Company’s derivatives were valued using the Black-Scholes pricing model adjusted for probability assumptions, with all significant inputs, except for the probability and volatility assumptions, derived from or corroborated by observable market data such as stock price and interest rates. The probability and volatility assumptions are both significant to the fair value measurement and unobservable. These embedded derivatives are included in Level 3 of the fair value hierarchy. The derivatives are included in other long-term liabilities on our consolidated balance sheets. The Company’s Series A Preferred Stock and notes payable are measured at amortized cost using an effective interest rate of 10.2 % and 9.2 % yield, respectively. The following table presents a reconciliation of the beginning and ending balances of the Company's liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Beginning Balance $ 821,726 $ 776,623 Total (gain) loss recognized in earnings ( 86 ) 7,702 Ending Balance $ 821,640 $ 784,325 The Company’s derivatives were valued using the Black-Scholes pricing model adjusted for probability assumptions, with all significant inputs, except for the probability and volatility assumptions, derived from or corroborated by observable market data such as stock price and interest rates. The probability and volatility assumptions are as follows: Probability of redemption as part of a fundamental sale transaction 0.5 % Probability of redemption absent a fundamental sale transaction 4.75 % Annual volatility 65 %

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	(11) Commitments and Contingencies The Company typically provides its customers a warranty on its software products for a period of no more than 90 days . Such warranties are accounted for in accordance with the authoritative guidance issued by the FASB on contingencies. For the three months ended March 31, 2023, the Company has not incurred any costs related to warranty obligations. Under the terms of substantially all of its software license agreements, the Company indemnifies its customers for all costs and damages arising from claims against such customers based on, among other things, allegations that the Company’s software infringes on the intellectual property rights of a third party. In most cases, in the event of an infringement claim, the Company retains the right to (i) procure for the customer the right to continue using the software; (ii) replace or modify the software to eliminate the infringement while providing substantially equivalent functionality; or (iii) if neither (i) nor (ii) can be reasonably achieved, the Company may terminate the license agreement and refund to the customer a pro-rata portion of the license fee paid to the Company. Such indemnification provisions are accounted for in accordance with the authoritative guidance issued by the FASB on guarantees. From time to time, in the ordinary course of business, the Company receives claims for indemnification, typically from original equipment manufacturers. The Company is not currently aware of any material claims for indemnification. As described under Note (12) Series A Redeemable Convertible Preferred Stock the holders of the Series A Preferred Stock have redemption rights upon certain triggering events. As of March 31, 2023, the Company did not fail any non-financial covenants related to the Company's Series A Preferred Stock. In connection with the appointment of Todd Brooks as Chief Executive Officer, the Board approved an offer letter to Mr. Brooks (the “Brooks Agreement”), which was executed on August 14, 2017. The Brooks Agreement provides that Mr. Brooks is entitled to receive an annualized base salary of $ 350,000 , payable in regular installments in accordance with the Company’s general payroll practices. Mr. Brooks will also be eligible for a cash bonus of $ 17,500 for any quarter that is free cash flow positive on an operating basis and additional incentive compensation of an annual bonus of up to $ 200,000 , subject to attainment of performance objectives to be mutually agreed upon and established. Mr. Brooks' employment can be terminated at will. Pursuant to the Brooks Agreement and the 2018 Plan, Mr. Brooks received 735,973 shares of restricted stock. If Mr. Brooks’ employment is terminated by the Company other than for cause, he is entitled to receive severance equal to 12 months of his base salary if (i) he has been employed by the Company for at least 12 months at the time of termination or (ii) a change of control has occurred within six months of Mr. Brooks’ employment. Except as set forth in the preceding sentence, Mr. Brooks is entitled to receive severance equal to six months of his base salary if he has been employed by the Company for less than six months and his employment was terminated by the Company without cause. Mr. Brooks is also entitled to vacation and other employee benefits in accordance with the Company’s policies as well as reimbursement for an apartment. In connection with Mr. Sita’s appointment as Chief Financial Officer, the Board approved an Independent Contractor Services Agreement with Alucria Consulting, Inc. (“Alucria”), an entity owned by Mr. Sita (the “Sita Agreement”), which was executed on February 11, 2022. The Sita Agreement provides that Alucria is entitled to receive a fee of $ 20,000 per month. Alucria will also be eligible for an additional payment of up to $ 60,000 annually, based upon the achievement of goals determined by the Company, to be paid quarterly in accordance with standard Company policies. The agreement also provided that Mr. Sita received a grant of shares of the Company’s common stock, to be governed by the Company’s 2018 Stock Incentive Plan and subject to specific vesting conditions. The term of the Sita Agreement expires on July 1, 2023, unless earlier terminated by either party in accordance with the terms therein. As described under Note (17) Restructuring Costs, the Company incurred certain restructuring costs in connection with restructuring plans adopted in 2017 and 2019. In addition, as of March 31, 2023, the Company's liability for uncertain tax positions totaled $ 113,385 . At this time, the settlement period for this liability, including related accrued interest, cannot be determined.

Series A Redeemable Convertible

Series A Redeemable Convertible Preferred Stock	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Series A Redeemable Convertible Preferred Stock	(12) Series A Redeemable Convertible Preferred Stock The Company has 900,000 shares of Series A Preferred Stock outstanding with a par value $ 0.001 per share and a stated value of $ 10 per share . Pursuant to the Certificate of Designations, each share of Series A Preferred Stock can be converted into shares of the Company’s common stock, at an initial conversion price of $ 102.488 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction, (i) at any time at the option of the holder or (ii) by the Company if, following the first anniversary of the issuance of the Series A Preferred Stock (subject to extension under certain circumstances), the volume weighted average trading price per share of the Company’s common stock for sixty ( 60 ) consecutive trading days exceeds 250 % of the conversion price and continues to exceed 225 % of the conversion price through the conversion date, subject at all times to the satisfaction of, and the limitations imposed by, the equity conditions set forth in the Certificate of Designations (including, without limitation, the volume limitations set forth therein). Pursuant to the Certificate of Designations, the holders of the Series A Preferred Stock are entitled to receive quarterly dividends at the prime rate (provided in the Wall Street Journal Eastern Edition) plus 5 % (up to a maximum dividend rate of 10 %), payable in cash or in kind (i.e., through the issuance of additional shares of Series A Preferred Stock), except that the Company is not permitted to pay such dividends in cash while any indebtedness under the Amended and Restated Loan Agreement remains outstanding without the consent of the holders of the Series A Preferred Stock. In addition, the declaration and payment of dividends is subject to compliance with applicable law and unpaid dividends will accrue. A holder’s right to convert its shares of Series A Preferred Stock and receive dividends in the form of common stock is subject to certain limitations including, among other things, that the shares of common stock issuable upon conversion or as dividends will not, prior to receipt of stockholder approval, result in any holder beneficially owning greater than 9.99 % of the Company’s currently outstanding shares of common stock. The Series A Preferred Stock dividends shall accrue whether or not the declaration or payment of such Series A Preferred Stock dividends are prohibited by applicable law, whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are authorized or declared. Upon certain triggering events, such as bankruptcy, insolvency or a material adverse effect or failure of the Company to issue shares of common stock upon conversion of the Series A Preferred Stock in accordance with its obligations, the holders may require the Company to redeem all or some of the Series A Preferred Stock at a price per share equal to the greater of (i) the sum of 100 % of the stated value of a share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto, and (ii) the product of the number of shares of common stock underlying a share of Series A Preferred Stock (and accrued and unpaid dividends with respect thereto) and the closing price as of the occurrence of the triggering event. On or after December 31, 2023, subject to the approval of HCP-FVA, each holder of Series A Preferred Stock can also require the Company to redeem its Series A Preferred Stock in cash at a per share price equal to 100 % of the stated value of a share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto. Notwithstanding the forgoing, no holder of Series A Preferred Stock is permitted to exercise any rights or remedies upon a Breach Event (as defined in the Certificate of Designations) or to exercise any redemption rights under the Certificate of Designations, unless approved by the holders of a majority of the then-outstanding shares of Series A Preferred Stock. Upon consummation of a fundamental sale transaction, the Series A Preferred Stock will be redeemed at a per share redemption price equal to the greater of (y) 250 % of the per share purchase price of the Series A Preferred Stock and (z) the price payable in respect of such share of Series A Preferred Stock if such share of Series A Preferred Stock had been converted into such number of shares of common stock in accordance with the Certificate of Designations (but without giving effect to any limitations or restrictions contained therein) immediately prior to such fundamental sale transaction; provided however that the 250 % threshold is changed to 100% if the fundamental sale transaction is approved by the two Series A Directors (as defined in the Certificate of Designations). In addition, if the Company consummates an equity or debt financing that results in more than $ 5.0 million of net proceeds to the Company and/or its subsidiaries, the holders of Series A Preferred Stock will have the right, but not the obligation, to require the Company to use the net proceeds in excess of $ 5.0 million to repurchase all or a portion of the Series A Preferred Stock at a per share price equal to the greater of (i) the sum of 100% of the stated value of such share of Series A Preferred Stock plus accrued and unpaid dividends with respect thereto, and (ii) the number of shares of common stock into which such share of Series A Preferred Stock is then convertible multiplied by the greater of (y) the closing price of the common stock on the date of announcement of such financing or (z) the closing price of the common stock on the date of consummation of such financing. Each holder of Series A Preferred Stock has a vote equal to the number of shares of common stock into which its Series A Preferred Stock would be convertible as of the record date. In addition, the holders of a majority of the Series A Preferred Stock must approve certain actions, including approving any amendments to the Company’s Restated Certificate of Incorporation as amended or Amended and Restated Bylaws that adversely affects the voting powers, preferences or other rights of the Series A Preferred Stock; payment of dividends or distributions; any liquidation, capitalization, reorganization or any other fundamental transaction of the Company; issuance of any equity security senior to or on parity with the Series A Preferred Stock as to dividend rights, redemption rights, liquidation preference and other rights; issuances of equity below the conversion price; any liens or borrowings other than non-convertible indebtedness from standard commercial lenders which does not exceed 80 % of the Company’s accounts receivable; and the redemption or purchase of any of the capital stock of the Company. The holders of our outstanding Series A Preferred Stock have a mandatory redemption right that may be exercised only with the approval of Hale Capital and HCP-FVA. In connection with the June Offering, the effective date of such redemption right was extended from July 30, 2021 to July 30, 2023 pursuant to an amendment to the Certificate of Designations, dated as of June 24, 2021. On July 19, 2022, the Company and Hale Capital entered into a letter agreement pursuant to which Hale Capital agreed not to exercise or to permit the exercise of the mandatory redemption right of the Series A Preferred Stock on or prior to December 31, 2023 unless the redemption is in accordance with Section 8(e)(z) of the Certificate of Designations or in accordance with a Breach Event (as defined in the Certificate of Designations). On February 10, 2023, the Company entered into a letter agreement with Hale Capital to further extend the redemption date of the Series A Preferred Stock to June 30, 2024. The Company concluded the extensions resulted in a debt modification under ASC 470-50, Modifications and Extinguishments, and therefore no gain or loss was required to be recognized. The change is accounted for prospectively using the new effective interest rate of the preferred stock. The Company has classified the Series A Preferred Stock as temporary equity in the financial statements as it is subject to redemption at the option of the holder under certain circumstances. As a result of the Company’s analysis of all the embedded conversion and put features within the Series A Preferred Stock, the contingent redemption put options in the Series A Preferred Stock were determined to not be clearly and closely related to the debt-type host and also did not meet any other scope exceptions for derivative accounting. Therefore, the contingent redemption put options are being accounted for as derivative instruments and the fair value of these derivative instruments was bifurcated from the Series A Preferred Stock and recorded as a liability. As of March 31, 2023 and December 31, 2022, the fair value of these derivative instruments were included in "other long-term liabilities" within the consolidated balance sheets. The loss on the change in fair value of these derivative instruments for the three months ended March 31, 2023 and 2022 was included in “interest and other expense” within the consolidated statement of operations. At the time of issuance, the Company recorded transaction costs, a beneficial conversion feature and the fair value allocated to the embedded derivatives as discounts to the Series A Preferred Stock. These costs were being accreted to the Series A Preferred Stock using the effective interest method through the stated redemption date of August 5, 2017, which represents the earliest redemption date of the instrument. This accretion was accelerated as of December 31, 2016 due to the failure of the financial covenants and the redemption right of the holders at that time. In connection with the June Offering, Hale Capital Partners, which was the sole holder of the Series A Preferred Stock, agreed to the extension of the mandatory redemption right and waived prior breaches of the terms of the Series A Preferred Stock. The Company included deductions for accretion, deemed and accrued dividends on the Series A Preferred Stock as adjustments to net loss attributable to common stockholders on the statement of operations and in determining loss per share for the three months ended March 31, 2023 and 2022, respectively. The Series A Preferred Stock consists of the following: Total Series A redeemable convertible preferred stock, net at January 1, 2023 $ 15,928,018 Accrued dividends 315,215 Accretion of preferred stock 9,851 Total Series A redeemable convertible preferred stock, net at March 31, 2023 $ 16,253,084

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Accumulated Other Comprehensive Loss	(13) Accumulated Other Comprehensive Loss The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2023 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at January 1, 2023 $ ( 1,742,217 ) $ ( 9,882 ) $ ( 1,752,099 ) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 11,786 — 11,786 Total other comprehensive income (loss) 11,786 — 11,786 Accumulated other comprehensive income (loss) at March 31, 2023 $ ( 1,730,431 ) $ ( 9,882 ) $ ( 1,740,313 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2022 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at January 1, 2022 $ ( 1,881,005 ) $ 20,965 $ ( 1,860,040 ) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 33,510 — 33,510 Total other comprehensive income (loss) 33,510 — 33,510 Accumulated other comprehensive income (loss) at March 31, 2022 $ ( 1,847,495 ) $ 20,965 $ ( 1,826,530 )

Stockholders' Equity

Stockholders' Equity	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Stockholders' Equity	(14) Stockholders' Equity Stock Repurchase Activity During the three months ended March 31, 2023 and 2022 , the Company did no t repurchase any shares of its common stock. As of March 31, 2023 , the Company had the authorization to repurchase 49,078 shares of its common stock based upon its judgment and market conditions.

Litigation

Litigation	3 Months Ended
	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Litigation	(15) Litigation In view of the inherent difficulty of predicting the outcome of litigation, particularly where the claimants seek very large or indeterminate damages, the Company generally cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. In accordance with the authoritative guidance issued by the FASB on contingencies, the Company accrues anticipated costs of settlement, damages and losses for claims to the extent specific losses are probable and estimable. The Company records a receivable for insurance recoveries when such amounts are probable and collectable. In such cases, there may be an exposure to loss in excess of any amounts accrued. If, at the time of evaluation, the loss contingency related to a litigation is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable and, the Company will expense these costs as incurred. If the estimate of a probable loss is a range and no amount within the range is more likely, the Company will accrue the minimum amount of the range. The Company is subject to various legal proceedings and claims, asserted or unasserted, which arise in the ordinary course of business. While the outcome of any such matters cannot be predicted with certainty, such matters are not expected to have a material adverse effect on the Company’s financial condition or operating results. The Company continues to assess certain litigation and claims to determine the amounts, if any, that the Company believes may be paid as a result of such claims and litigation and, therefore, additional losses may be accrued and paid in the future, which could materially adversely impact the Company’s financial results, its cash flows and its cash reserves.

Segment Reporting and Concentra

Segment Reporting and Concentrations	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Segment Reporting and Concentrations	(16) Segment Reporting and Concentrations The Company is organized in a single operating segment for purposes of making operating decisions and assessing performance. Revenue from the United States to customers in the following geographical areas for the three months ended March 31, 2023 and 2022, and the location of long-lived assets as of March 31, 2023 and December 31, 2022, are summarized as follows: Three Months Ended March 31, 2023 2022 Revenue: Americas $ 936,846 $ 848,308 Europe, Middle East, Africa and Other 994,714 804,994 Asia Pacific 336,836 395,805 Total Revenue $ 2,268,396 $ 2,049,107 March 31, 2023 December 31, 2022 Long-lived assets: Americas $ 337,433 $ 504,545 Asia Pacific 91,897 112,301 Europe, Middle East, Africa and Other 13,676 13,551 Total long-lived assets $ 443,006 $ 630,397 For the three months ended March 31, 2023 and 2022, the Company had two custom ers that accounted for 10% or more of total revenue, respectively. As of March 31, 2023, the Company had four customers that accounted for 10% or more of the gross accounts receivable balance. As of December 31, 2022 , the Company had two customers that accounted for 10% or more of the gross accounts receivable balance.

Restructuring Costs

Restructuring Costs	3 Months Ended
	Mar. 31, 2023
Restructuring and Related Activities [Abstract]
Restructuring Costs	(17) Restructuring Costs In June 2017, the Board approved a comprehensive plan to increase operating performance (the “2017 Plan”). The 2017 Plan was substantially completed by the end of the Company’s fiscal year ended December 31, 2017, and when combined with previous workforce reductions in the second quarter of fiscal 2017 reduced the Company’s workforce to approximately 86 employees at December 31, 2018. In making these changes, the Company prioritized customer support and development while consolidating operations and streamlining direct sales resources, allowing the Company to focus on the install base and develop alternate channels to the market. As part of this consolidation effort, the Company vacated a portion of its former Melville, NY office space during the three months ended June 30, 2018. During the fiscal year ended December 31, 2021, the Company incurred lease disposal-related costs for this property of $ 833,313 . The Melville, NY lease which ended on April 30, 2021 with a gross annualized rental cost of $ 1.5 million, will not be replaced. The Company expects the remaining accrued severance-related costs of $ 55,747 as of March 31, 2023 to be paid once final settlement litigation is completed. Such litigation stems from termination of several employees in France and office closure; all expected to be settled by December 31, 2023. The following table summarizes the activity during 2022 through March 31, 2023 related to restructuring liabilities recorded in connection with the 2017, 2019 and 2020 Plans: Severance Related Costs Facility and Other Costs Total Balance at January 1, 2022 $ 134,663 $ — $ 134,663 Provisions/Additions — 744 744 Translation Adjustment ( 2,534 ) — ( 2,534 ) Balance at March 31, 2022 $ 132,129 $ 744 $ 132,873 Provisions/Additions — ( 744 ) ( 744 ) Translation Adjustment ( 8,112 ) — ( 8,112 ) Balance at June 30, 2022 $ 124,017 $ — $ 124,017 Translation Adjustment ( 7,518 ) — ( 7,518 ) Balance at September 30, 2022 $ 116,499 $ — $ 116,499 Provisions/Additions — — — Translation Adjustment 10,976 — 10,976 Balance at December 31, 2022 $ 127,475 $ — $ 127,475 Provisions/Additions — — — Payments ( 72,639 ) — ( 72,639 ) Translation Adjustment 911 — 911 Balance at March 31, 2023 $ 55,747 $ — $ 55,747 The severance and facility related liabilities are included within “accrued expenses” in the accompanying condensed consolidated balance sheets. The expenses under the 2017 Plan are included within “restructuring costs” in the accompanying condensed consolidated statements of operations.

Basis of Presentation (Policies

Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company and Nature of Operations	(a) The Company and Nature of Operations FalconStor Software, Inc., a Delaware corporation ("we", the "Company" or "FalconStor"), is a 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.
Liquidity	(b) Liquidity As of March 31, 2023, the Company had a working capital deficiency of $ 0.5 million , which is inclusive of current deferred revenue of $ 3.6 million , and a stockholders' deficit of $ 17.2 million . During the three months ended March 31, 2023, the Company had net loss of $ 0.4 million and negative cash flow from operations of $ 0.1 million . The Company's total cash balance as of March 31, 2023 was $ 1.8 million , a decrease of $ 0.2 million compared to $ 2.0 million on December 31, 2022. The Company’s principal sources of liquidity as of March 31, 2023 consisted of cash and future cash anticipated to be generated from operations. The Company generated negative net income and negative cash flows from operations during the three months ended March 31, 2023, and it reported negative working capital as of March 31, 2023. The Company is currently a party to an Amended and Restated Term Loan Credit Agreement, dated as of February 23, 2018, as amended December 27, 2019, by and between the Company and HCP-FVA, LLC (“HCP-FVA”), (the “Amended and Restated Loan Agreement”). In connection with the then-proposed public offering of the Company as described in the Company's Registration Statement on Form S-1, as amended, originally filed on June 3, 2021 (the "June Offering"), we entered into a letter agreement with Hale Capital Partners, LP (“Hale Capital”), dated June 2, 2021 (the “Loan Extension Letter Agreement”), that provided for an extension of the maturity date on Hale Capital’s portion of the outstanding indebtedness owed under the Amended and Restated Loan Agreement to June 30, 2023. The remaining principal amount outstanding, which was owed to other lenders, was repaid in full. On July 19, 2022, we entered into a letter agreement with Hale Capital (the "Second Loan Extension Letter Agreement"), that provided for a subsequent extension of the maturity date on the outstanding indebtedness owed under the Amended and Restated Loan Agreement from June 30, 2023 to December 31, 2023. On February 10, 2023, the Company entered into a letter agreement with Hale Capital to further extend the maturity date of the senior secured debt to June 30, 2024 (the "Third Loan Extension Letter Agreement"). See Note (9) Notes Payable for more information. Also, as described further in Note (12) Series A Redeemable Convertible Preferred Stock , the effective date of the mandatory redemption right of the Company's Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”) held by HCP-FVA and Hale Capital was extended from July 30, 2021 to July 30, 2023 pursuant to that certain Amendment No. 1 to the Amended and Restated Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of the Company, dated as of June 24, 2021 (as amended, the “Certificate of Designations”). On July 19, 2022, the Company and Hale Capital entered into a letter agreement pursuant to which Hale Capital agreed not to exercise or permit the exercise of the mandatory redemption right of the Series A Preferred Stock on or prior to December 31, 2023 unless the redemption is in accordance with Section 8(e)(z) of the Certificate of Designations or in accordance with a Breach Event (as defined in the Certificate of Designations). If such Series A Preferred Stock was redeemed on March 31, 2023, the Company would have been required to pay the holders of the Series A Preferred Stock $ 16.3 million . On February 10, 2023, the Company entered into a letter agreement with Hale Capital to further extend the redemption date of the Series A Preferred Stock to June 30, 2024. The Company believes its current cash balances together with anticipated cash flows from operating activities will be sufficient to meet its working capital requirements for at least one year from the date the consolidated financial statements were issued.
COVID-19 Pandemic, Geopolitical and Other Macroeconomic Impacts to our Operating Environment	(c) COVID-19 Pandemic, Geopolitical and Other Macroeconomic Impacts to our Operating Environment We are subject to risks and uncertainties arising from macroeconomic and geopolitical conditions, including, but not limited to, inflation, rising interest rates, foreign currency fluctuations, lower consumer spending, geopolitical conflicts, including the conflict in the Ukraine, and continuing effects of the COVID-19 pandemic. We continuously monitor the direct and indirect impacts of these macroeconomic and geopolitical events and trends on our business and financial results. The full extent to which these macroeconomic and geopolitical conditions impact our business is difficult to predict. Such impacts include, but are not limited to, supply chain and logistical challenges, reduced consumer demand for our products, and an industry-wide slowdown in advertising spending. The impact of COVID-19, for example, is fluid and uncertain, but it has caused and may continue to cause various negative effects, including an inability to meet with actual or potential customers, our end customers deciding to delay or abandon their planned purchases or failing to make payments, and delays or disruptions in our or our partners’ supply chains. As a result, we may experience extended sales cycles, our ability to close transactions with new and existing customers and partners may be negatively impacted, our ability to recognize revenue from software transactions we do close may be negatively impacted, our demand generation activities, and the efficiency and effect of those activities, may be negatively affected, and it has been and, until the COVID-19 outbreak is contained, will continue to be more difficult for us to forecast our operating results. These uncertainties have, and may continue to, put pressure on global economic conditions and overall IT spending and may cause our end customers to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles and potentially lowering prices for our solutions, and may make it difficult for us to forecast our sales and operating results and to make decisions about future investments, any of which could materially harm our business, operating results and financial condition.
Principles of Consolidation	(d) Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates	(e) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates include those related to revenue recognition, accounts receivable allowances, valuation of derivatives, valuation of goodwill and income taxes. Actual results could differ from those estimates. The financial market volatility in many countries where the Company operates has impacted and may continue to impact the Company’s business. Such conditions could have a material impact on the Company’s significant accounting estimates discussed above.
Unaudited Interim Financial Information	(f) Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position of the Company at March 31, 2023, and the results of its operations for the three months ended March 31, 2023 and 2022. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Form 10-K").
Recently Issued Accounting Pronouncements	(g) Recently Issued Accounting Pronouncements In August 2020, the Financial Accounting Standards Board, or FASB, issued ASU 2020-06, regarding ASC Topic 470 “Debt” and ASC Topic 815 “Derivatives and Hedging,” which reduces the number of accounting models for convertible instruments and amends the calculation of diluted earnings per share for convertible instruments, among other changes. The guidance is effective for smaller reporting companies as defined by the SEC, for annual reporting periods beginning after December 15, 2023, including interim periods within that reporting period. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (together with all subsequent amendments, ("Topic 326"))", which replaced the previous U.S. GAAP that required an incurred loss methodology for recognizing credit losses and delayed recognition until it was probable a loss had been incurred. Topic 326 replaced the incurred loss methodology with a methodology that reflects expected credit losses and requires consideration of reasonable and supportable information to estimate credit losses. This provision was effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. In February 2020, the FASB issued ASU 2020-02, "Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)", which delayed the effective date of Topic 326 for smaller reporting companies until fiscal years beginning after December 15, 2022. The Company adopted Topic 326 effective January 1, 2023 . The impact of adoption of this standard was not material on the Company’s consolidated financial statements.
Revenue from Contracts with Customers and Associated Balances	Revenue from Contracts with Customers and Associated Balances Nature of Products and Services Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer. Revenue allocated to software maintenance and support services is recognized ratably over the contractual support period. Hardware products consist primarily of servers and associated components and function independently of the software products and as such are accounted for as separate performance obligations. Revenue allocated to hardware maintenance and support services is recognized ratably over the contractual support period. Professional services are primarily related to software implementation services and associated revenue is recognized upon customer acceptance. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a contract asset when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. For perpetual licenses with multi-year maintenance agreements, the Company invoices the license and generally one year of maintenance with future maintenance generally invoiced annually. For multi-year subscription licenses, the Company generally invoices customers annually at the beginning of each annual coverage period. The Company records a contract asset related to revenue recognized for multi-year on-premises licenses as its right to payment is conditioned upon providing product support and services in future years. As of March 31, 2023 and December 31, 2022, accounts receivable, net of allowance for doubtful accounts, was $ 1.8 million and $ 2.3 million , respectively. A provision for expected credit losses for accounts receivables and contract assets that share similar risk characteristics is recorded based on an evaluation of historical loss experience, current conditions, and reasonable and supportable forecasts. Accounts are written off when it becomes apparent that such amounts will not be collected, generally when amounts are past due by greater than nine months. Our provision for credit loss on accounts receivable was $ 54,869 as of March 31, 2023 and $ 25,720 as of December 31, 2022, respectively. As of March 31, 2023 and December 31, 2022, short and long-term contract assets, net of provision for credit loss, was $ 0.5 million and $ 0.5 million , respectively. Our provision for credit loss on contract assets was $ 5,112 and zero as of March 31, 2023 and December 31, 2022 , respectively. Deferred revenue is comprised mainly of unearned revenue related maintenance and technical support on term and perpetual licenses. Maintenance and technical support revenue is recognized ratably over the coverage period. Deferred revenue also includes contracts for professional services to be performed in the future which are recognized as revenue when the Company delivers the related service pursuant to the terms of the customer arrangement. Changes in deferred revenue were as follows: Three Months Ended March 31, 2023 Balance at January 1, 2023 $ 4,965,849 Deferral of revenue 2,293,933 Recognition of revenue ( 2,268,396 ) Change in reserves 567 Balance at March 31, 2023 $ 4,991,953 During the three months ended March 31, 2023 and 2022, revenue of $ 1.3 million and $ 1.4 million respectively, was recognized from the deferred revenue balance at the beginning of each period. Deferred revenue includes invoiced revenue allocated to remaining performance obligations that has not yet been recognized and will be recognized as revenue in future periods. Deferred revenue was $ 5.0 million as of March 31, 2023, of which the Company expects to recognize approximately 72 % of such amount as revenue over the next 12 months and the remainder thereafter. Approximately $ 1.6 million of revenue is expected to be recognized from remaining performance obligations for unbilled support and services as of March 31, 2023. We expect to recognize revenue on approximately 39 % of these remaining performance obligations over the next twelve months, with the balance recognized thereafter. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 90 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing its products and services, and not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with maintenance and support revenue recognized ratably over the contract period, and multi-year, on-premises licenses that are invoiced annually with product revenue recognized upon delivery. Significant Judgments The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Judgment is required to determine the standalone selling price (“SSP”) for each distinct performance obligation. For products and services aside from maintenance and support, the Company estimates SSP by adjusting the list price by historical discount percentages. SSP for software and hardware maintenance and support fees is based on the stated percentages of the fees charged for the respective products. The Company’s perpetual and term software licenses have significant standalone functionality and therefore revenue allocated to these performance obligations are recognized at a point in time upon electronic delivery of the download link and the license keys. Product maintenance and support services are satisfied over time as they are stand-ready obligations throughout the support period. As a result, revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract. Revenues associated with professional services are recognized at a point in time upon customer acceptance. Disaggregation of Revenue Please refer to the condensed consolidated statements of operations and Note (16) Segment Reporting and Concentrations for discussion on revenue disaggregation by product type and by geography. The Company believes this level of disaggregation sufficiently depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has determined that its sales commission program meets the requirements for cost capitalization. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets on our consolidated balance sheets. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less.
Leases	Leases We have entered into operating leases for our various facilities. We determine if an arrangement is a lease at inception. Operating leases are included in Right-of-Use ("ROU") assets, and lease liability obligations in our condensed consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liability obligations represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We have lease agreements with lease and non-lease components and account for such components as a single lease component. As most of our leases do not provide an implicit rate, we estimated our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. Our lease terms may include options to extend or terminate the lease. Such extended terms have been considered in determining the ROU assets and lease liability obligations when it is reasonably certain that we will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Right of Use Assets and Liabilities We have various operating leases for office facilities that are expected to continue through 2023. Below is a summary of our ROU assets and liabilities as of March 31, 2023. Right of use assets $ 17,370 Lease liability obligations, current 17,370 Lease liability obligations, less current portion — Total lease liability obligations $ 17,370 Weighted-average remaining lease term 0.25 Weighted-average discount rate 3.35 % Three Months Ended March 31, 2023 2022 Components of lease expense: Operating lease cost $ 33,118 $ 32,094 Sublease income — — Net lease cost $ 33,118 $ 32,094 During the three months ended March 31, 2023, operating cash flows from operating leases were approximately $ 17,467 . Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2023, are as follows: 2023 (remaining) $ 17,467 2024 — Total minimum lease payments $ 17,467 Less interest 97 Present value of lease liabilities $ 17,370

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Schedule of Changes in Deferred Revenue	Changes in deferred revenue were as follows: Three Months Ended March 31, 2023 Balance at January 1, 2023 $ 4,965,849 Deferral of revenue 2,293,933 Recognition of revenue ( 2,268,396 ) Change in reserves 567 Balance at March 31, 2023 $ 4,991,953
Summary of ROU Assets and Liabilities	We have various operating leases for office facilities that are expected to continue through 2023. Below is a summary of our ROU assets and liabilities as of March 31, 2023. Right of use assets $ 17,370 Lease liability obligations, current 17,370 Lease liability obligations, less current portion — Total lease liability obligations $ 17,370 Weighted-average remaining lease term 0.25 Weighted-average discount rate 3.35 %
Components of Lease Expense	Three Months Ended March 31, 2023 2022 Components of lease expense: Operating lease cost $ 33,118 $ 32,094 Sublease income — — Net lease cost $ 33,118 $ 32,094
Summary of Future Minimum Lease Payments of ROU Assets over Remaining Lease	Approximate future minimum lease payments for our ROU assets over the remaining lease periods as of March 31, 2023, are as follows: 2023 (remaining) $ 17,467 2024 — Total minimum lease payments $ 17,467 Less interest 97 Present value of lease liabilities $ 17,370

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Schedule of Anti-dilutive Common Stock Equivalents that were Excluded from Computation of Diluted Shares Outstanding	The following represents the common stock equivalents that were excluded from the computation of diluted shares outstanding because their effect would have been anti-dilutive for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Stock options 4,965 5,690 Restricted stock 73,685 86,520 Series A redeemable convertible preferred stock 159,039 144,321 Total anti-dilutive common stock equivalents 237,689 236,531

Property and Equipment (Tables)

Property and Equipment (Tables)	3 Months Ended
	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Schedule of Gross Carrying Amount and Accumulated Depreciation of Property and Equipment	The gross carrying amount and accumulated depreciation of property and equipment as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Gross carrying amount $ 15,511,967 $ 15,505,431 Accumulated depreciation ( 15,433,841 ) ( 15,419,168 ) Property and Equipment, net $ 78,126 $ 86,263

Software Development Costs (Tab

Software Development Costs (Tables)	3 Months Ended
	Mar. 31, 2023
Research and Development [Abstract]
Summary of Gross Carrying Amount and Accumulated Amortization of Software Development Costs	The gross carrying amount and accumulated amortization of software development costs as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Gross carrying amount $ 3,015,132 $ 3,015,132 Accumulated amortization ( 2,969,131 ) ( 2,962,075 ) Software development costs, net $ 46,001 $ 53,057

Goodwill and Other Intangible_2

Goodwill and Other Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Gross Carrying Amount and Accumulated Amortization of Goodwill and Other Intangible Assets	The gross carrying amount and accumulated amortization of goodwill and other intangible assets as of March 31, 2023 and December 31, 2022 are as follows: March 31, 2023 December 31, 2022 Goodwill $ 4,150,339 $ 4,150,339 Other intangible assets: Gross carrying amount $ 4,041,216 $ 4,041,216 Accumulated amortization ( 4,027,931 ) ( 4,021,130 ) Net carrying amount $ 13,285 $ 20,086

Share-Based Payment Arrangeme_2

Share-Based Payment Arrangements (Tables)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Summary of Stock Option Plan	The following table summarizes the 2018 Plan, which was the only plan under which the Company was able to grant equity compensation as of March 31, 2023: Shares Shares Available Shares Name of Plan Authorized for Grant Outstanding FalconStor Software, Inc. 2018 Incentive Stock Plan 1,692,797 241,899 1,312,853
Schedule of Equity Awards Outstanding	The following table summarizes the Company’s equity plans that have terminated or expired but that still have equity awards outstanding as of March 31, 2023: Name of Plan Shares Available for Grant Shares Outstanding FalconStor Software, Inc., 2016 Incentive Stock Plan — 2,250 FalconStor Software, Inc., 2006 Incentive Stock Plan — 2,715
Summary of Restricted Stock Activity	A summary of the Company’s restricted stock activity for the three months ended March 31, 2023 is below. Such restricted stock did not bestow any voting or dispositive power and is not deemed outstanding until they vest. Number of Non-Vested at January 1, 2023 1,316,933 Granted — Vested ( 4,080 ) Forfeited — Non-Vested at March 31, 2023 1,312,853
Summary of Share-Based Compensation Expense	The following table summarizes the share-based compensation expense for all awards issued under the Company’s stock equity plans in the following line items in the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Cost of revenue - Support and Service 125 408 Research and development costs 976 1,879 Selling and marketing 2,334 4,511 General and administrative 1,896 1,386 $ 5,331 $ 8,184

Notes Payable (Tables)

Notes Payable (Tables)	3 Months Ended
	Mar. 31, 2023
Payables and Accruals [Abstract]
Schedule of Notes Payable	The notes payable balance consists of the following: Total notes payable, net at January 1, 2023 $ 2,340,239 Accretion of discount 2,783 Repayment of AFCO financing $ ( 75,921 ) Total notes payable, net at March 31, 2023 $ 2,267,101

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Schedule of Fair Value Assets and Liabilities Measured On Recurring Basis	The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2023: Fair Value Measurements at Reporting Date Using Total Quoted Prices in Significant Significant Derivative liabilities: Derivative Instruments $ 821,640 $ — $ — $ 821,640 Total derivative liabilities 821,640 — — 821,640 Total assets and liabilities measured at fair value $ 821,640 $ — $ — $ 821,640 The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2022: Fair Value Measurements at Reporting Date Using Total Quoted Prices in Significant Significant Derivative liabilities: Derivative Instruments $ 821,726 $ — $ — $ 821,726 Total derivative liabilities 821,726 — — 821,726 Total assets and liabilities measured at fair value $ 821,726 $ — $ — $ 821,726
Summary of Fair Value Measurements using Significant Unobservable Inputs	The following table presents a reconciliation of the beginning and ending balances of the Company's liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Beginning Balance $ 821,726 $ 776,623 Total (gain) loss recognized in earnings ( 86 ) 7,702 Ending Balance $ 821,640 $ 784,325
Summary of Derivative Probability and Volatility Assumptions	The probability and volatility assumptions are as follows: Probability of redemption as part of a fundamental sale transaction 0.5 % Probability of redemption absent a fundamental sale transaction 4.75 % Annual volatility 65 %

Series A Redeemable Convertib_2

Series A Redeemable Convertible Preferred Stock (Tables)	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Schedule of Conversions of Stock	The Series A Preferred Stock consists of the following: Total Series A redeemable convertible preferred stock, net at January 1, 2023 $ 15,928,018 Accrued dividends 315,215 Accretion of preferred stock 9,851 Total Series A redeemable convertible preferred stock, net at March 31, 2023 $ 16,253,084

Accumulated Other Comprehensi_2

Accumulated Other Comprehensive Loss (Tables)	3 Months Ended
	Mar. 31, 2023
Equity [Abstract]
Schedule of Changes in Accumulated Other Comprehensive Loss, Net of Tax	The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2023 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at January 1, 2023 $ ( 1,742,217 ) $ ( 9,882 ) $ ( 1,752,099 ) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 11,786 — 11,786 Total other comprehensive income (loss) 11,786 — 11,786 Accumulated other comprehensive income (loss) at March 31, 2023 $ ( 1,730,431 ) $ ( 9,882 ) $ ( 1,740,313 ) The changes in Accumulated Other Comprehensive Loss, net of tax, for the three months ended March 31, 2022 are as follows: Foreign Currency Net Minimum Total Accumulated other comprehensive income (loss) at January 1, 2022 $ ( 1,881,005 ) $ 20,965 $ ( 1,860,040 ) Other comprehensive income (loss) Other comprehensive income (loss) before reclassifications 33,510 — 33,510 Total other comprehensive income (loss) 33,510 — 33,510 Accumulated other comprehensive income (loss) at March 31, 2022 $ ( 1,847,495 ) $ 20,965 $ ( 1,826,530 )

Segment Reporting and Concent_2

Segment Reporting and Concentrations (Tables)	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Schedule of Revenues and Long Lived Assets by Geographical Areas	Revenue from the United States to customers in the following geographical areas for the three months ended March 31, 2023 and 2022, and the location of long-lived assets as of March 31, 2023 and December 31, 2022, are summarized as follows: Three Months Ended March 31, 2023 2022 Revenue: Americas $ 936,846 $ 848,308 Europe, Middle East, Africa and Other 994,714 804,994 Asia Pacific 336,836 395,805 Total Revenue $ 2,268,396 $ 2,049,107 March 31, 2023 December 31, 2022 Long-lived assets: Americas $ 337,433 $ 504,545 Asia Pacific 91,897 112,301 Europe, Middle East, Africa and Other 13,676 13,551 Total long-lived assets $ 443,006 $ 630,397

Restructuring Costs (Tables)

Restructuring Costs (Tables)	9 Months Ended
	Sep. 30, 2022
Restructuring and Related Activities [Abstract]
Summary of Restructuring Liabilities Recorded in Connection with 2017, 2019 and 2020 Plans	The following table summarizes the activity during 2022 through March 31, 2023 related to restructuring liabilities recorded in connection with the 2017, 2019 and 2020 Plans: Severance Related Costs Facility and Other Costs Total Balance at January 1, 2022 $ 134,663 $ — $ 134,663 Provisions/Additions — 744 744 Translation Adjustment ( 2,534 ) — ( 2,534 ) Balance at March 31, 2022 $ 132,129 $ 744 $ 132,873 Provisions/Additions — ( 744 ) ( 744 ) Translation Adjustment ( 8,112 ) — ( 8,112 ) Balance at June 30, 2022 $ 124,017 $ — $ 124,017 Translation Adjustment ( 7,518 ) — ( 7,518 ) Balance at September 30, 2022 $ 116,499 $ — $ 116,499 Provisions/Additions — — — Translation Adjustment 10,976 — 10,976 Balance at December 31, 2022 $ 127,475 $ — $ 127,475 Provisions/Additions — — — Payments ( 72,639 ) — ( 72,639 ) Translation Adjustment 911 — 911 Balance at March 31, 2023 $ 55,747 $ — $ 55,747

Basis of Presentation - Additio

Basis of Presentation - Additional Information (Details)	3 Months Ended
	Mar. 31, 2023 USD ($) Customer	Mar. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Number of organizations and MSP customers | Customer	1,000
Working capital deficiency	$ (500,000)
Deferred revenue	3,600,000
Stockholders' deficit	(17,163,161)	$ (14,349,431)	$ (16,407,442)	$ (12,965,983)
Net income (loss)	(447,770)	(1,109,406)
Net cash used in operating activities	(88,350)	$ 214,419
Cash balance	1,839,227		2,011,062
Decrease in cash	(200,000)
Series A redeemable convertible preferred stock, redemption value	$ 16,299,546		$ 15,984,331
Change in accounting principle, ASU, Adopted [true false]	true
Change in accounting principle, ASU, Adoption date	Jan. 01, 2023
Change in accounting principle, ASU, Immaterial effect [true false]	true
Accounting Standards Update [Extensible Enumeration]	us-gaap:AccountingStandardsUpdate201613Member
Maximum
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Percentage of reducing data storage and long term retention cost	95%

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Accounting Policies [Abstract]
Accounts receivable, net of allowances	$ 1,790,174		$ 2,278,802
Short and long-term contract assets, net of allowance for doubtful accounts	500,000		500,000
Provision for credit loss on accounts receivable	54,869		25,720
Provision for credit loss on contract assets	5,112		0
Deferred revenue recognized	1,300,000	$ 1,400,000
Deferred revenue	$ 4,991,953		$ 4,965,849
Revenue expected to be recognized during next 12 months (percent)	72%
Remaining performance obligation	$ 1,600,000
Remaining performance obligation expected to be recognized over next 12 months (percent)	39%
Operating leases, payments	$ 17,467

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Schedule of Changes in Deferred Revenue (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Movement in Deferred Revenue [Roll Forward]
Beginning balance	$ 4,965,849
Deferral of revenue	2,293,933
Recognition of revenue	(2,268,396)
Change in reserves	567
Ending balance	$ 4,991,953

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Summary of ROU Assets and Liabilities (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Right of use assets	$ 17,370	$ 34,416
Lease liability obligations, current	17,370	$ 34,416
Lease liability obligations, less current portion	0
Total lease liability obligations	$ 17,370
Weighted-average remaining lease term	3 months
Weighted-average discount rate	3.35%

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Components of Lease Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Operating lease cost	$ 33,118	$ 32,094
Sublease income	0	0
Net lease cost	$ 33,118	$ 32,094

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Summary of Future Minimum Lease Payments of ROU Assets over Remaining Lease (Details)	Mar. 31, 2023 USD ($)
Leases [Abstract]
2023 (remaining)	$ 17,467
2024	0
Total minimum lease payments	17,467
Less interest	97
Present value of lease liabilities	$ 17,370

Earnings Per Share - Schedule o

Earnings Per Share - Schedule of Anti-dilutive Common Stock Equivalents that were Excluded from Computation of Diluted Shares Outstanding (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive common stock equivalents	237,689	236,531
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive common stock equivalents	4,965	5,690
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive common stock equivalents	73,685	86,520
Series A redeemable convertible preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total anti-dilutive common stock equivalents	159,039	144,321

Property and Equipment - Schedu

Property and Equipment - Schedule of Gross Carrying Amount and Accumulated Depreciation of Property and Equipment (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Gross carrying amount	$ 15,511,967	$ 15,505,431
Accumulated depreciation	(15,433,841)	(15,419,168)
Property and Equipment, net	$ 78,126	$ 86,263

Property and Equipment - Additi

Property and Equipment - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 11,244	$ 23,344

Software Development Costs - Su

Software Development Costs - Summary of Gross Carrying Amount and Accumulated Amortization of Software Development Costs (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Research and Development [Abstract]
Gross carrying amount	$ 3,015,132	$ 3,015,132
Accumulated amortization	(2,969,131)	(2,962,075)
Software development costs, net	$ 46,001	$ 53,057

Software Development Costs - Ad

Software Development Costs - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Research and Development [Abstract]
Amortization expense related to Capitalized software costs	$ 7,056	$ 1,639

Goodwill and Other Intangible_3

Goodwill and Other Intangible Assets - Schedule of Gross Carrying Amount and Accumulated Amortization of Goodwill and Other Intangible Assets (Details) - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 4,150,339	$ 4,150,339
Other intangible assets:
Gross carrying amount	4,041,216	4,041,216
Accumulated amortization	(4,027,931)	(4,021,130)
Net carrying amount	$ 13,285	$ 20,086

Goodwill and Other Intangible_4

Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 6,801	$ 10,536

Share-Based Payment Arrangeme_3

Share-Based Payment Arrangements - Additional Information (Details) - FalconStor Software, Inc., 2018 Incentive Stock Plan - shares	3 Months Ended
	Jun. 30, 2021	Mar. 31, 2023	Jun. 22, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Authorized (in shares)		1,692,797	1,471,997
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	220,800

Share-Based Payment Arrangeme_4

Share-Based Payment Arrangements - Summary of Stock Option plan (Details) - FalconStor Software, Inc., 2018 Incentive Stock Plan - shares	Mar. 31, 2023	Jun. 22, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Authorized (in shares)	1,692,797	1,471,997
Shares Available for Grant (in shares)	241,899
Shares Outstanding (in shares)	1,312,853

Share-Based Payment Arrangeme_5

Share-Based Payment Arrangements - Schedule of Equity Awards Outstanding (Details)	Mar. 31, 2023 shares
FalconStor Software, Inc., 2016 Incentive Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Available for Grant (in shares)	0
Shares Outstanding (in shares)	2,250
FalconStor Software, Inc., 2006 Incentive Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Available for Grant (in shares)	0
Shares Outstanding (in shares)	2,715

Share-Based Payment Arrangeme_6

Share-Based Payment Arrangements - Summary of Restricted Stock Activity (Details)	3 Months Ended
	Mar. 31, 2023 shares
Restricted Stock Activity [Roll Forward]
Nonvested, beginning (in shares)	1,316,933
Granted (in shares)	0
Vested (in shares)	(4,080)
Forfeited (in shares)	0
Nonvested, ending (in shares)	1,312,853

Share-Based Payment Arrangeme_7

Share-Based Payment Arrangements - Summary of Share-Based Compensation Expense (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 5,331	$ 8,184
Cost of revenue - Support and Service
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	125	408
Research and development costs
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	976	1,879
Selling and marketing
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	2,334	4,511
General and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based compensation expense	$ 1,896	$ 1,386

Income Taxes - Additional Infor

Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income tax benefit	$ 52,761	$ 121,260
Effective income tax rate	10.50%	9.90%
Statutory rate	21%	21%
Unrecognized tax benefits	$ 71,296	$ 79,518
Unrecognized tax benefits, interest on income taxes accrued	$ 42,088	$ 44,462

Notes Payable - Schedule of Not

Notes Payable - Schedule of Notes Payable (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
AFCO Premium Credit LLC
Movement In Notes Payable [Roll Forward]
Repayment of AFCO financing	$ (75,921)
Total notes payable, ending	101,227
Amended and Restated Loan Agreement | HCP-FVA, LLC
Movement In Notes Payable [Roll Forward]
Total notes payable, beginning	2,340,239
Accretion of discount	2,783
Total notes payable, ending	$ 2,267,101

Notes Payable - Additional Info

Notes Payable - Additional Information (Details) - USD ($)	Sep. 08, 2022	Feb. 23, 2018	Mar. 31, 2023	Dec. 31, 2022
AFCO Premium Credit LLC
Debt Instrument [Line Items]
Proceeds from issuance of AFCO financing	$ 253,068
Monthly prinicipal payment	$ 25,307
Frequency periodic payment	monthly
Term period	10 months
Annual interest rate	4.20%
Maturity date	Jul. 15, 2023
Balance payable to AFCO			$ 101,227
Amended and Restated Loan Agreement | HCP-FVA, LLC
Debt Instrument [Line Items]
Balance payable to AFCO			$ 2,267,101	$ 2,340,239
Secured Debt
Debt Instrument [Line Items]
Debt rate basis spread		0.75%
Line of Credit | Amended and Restated Loan Agreement | HCP-FVA, LLC
Debt Instrument [Line Items]
Prepayment premium percentage		5%

Fair Value Measurements - Sched

Fair Value Measurements - Schedule of Fair Value Assets and Liabilities Measured On Recurring Basis (Details) - Recurring - USD ($)	Mar. 31, 2023	Dec. 31, 2022
Derivative liabilities:
Derivative Instruments	$ 821,640	$ 821,726
Total derivative liabilities	821,640	821,726
Total assets and liabilities measured at fair value	821,640	821,726
Fair Value, Inputs, Level 1
Derivative liabilities:
Derivative Instruments	0	0
Total derivative liabilities	0	0
Total assets and liabilities measured at fair value	0	0
Fair Value, Inputs, Level 2
Derivative liabilities:
Derivative Instruments	0	0
Total derivative liabilities	0	0
Total assets and liabilities measured at fair value	0	0
Fair Value, Inputs, Level 3
Derivative liabilities:
Derivative Instruments	821,640	821,726
Total derivative liabilities	821,640	821,726
Total assets and liabilities measured at fair value	$ 821,640	$ 821,726

Fair Value Measurements - Addit

Fair Value Measurements - Additional Information (Details) - Discount Rate	Mar. 31, 2023
Preferred Stock
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Discount yield of preferred equity	0.102
Notes Payable
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value discount yield of note payable	0.092

Fair Value Measurements - Summa

Fair Value Measurements - Summary of Fair Value Measurements using Significant Unobservable Inputs (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning Balance	$ 821,726	$ 776,623
Total (gain) loss recognized in earnings	$ (86)	$ 7,702
Fair Value, Net Derivative Asset (Liability), Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Other Nonoperating Income (Expense)	Other Nonoperating Income (Expense)
Ending Balance	$ 821,640	$ 784,325

Fair Value Measurements - Sum_2

Fair Value Measurements - Summary of Derivative Probability and Volatility Assumptions (Details)	3 Months Ended
	Mar. 31, 2023
Fair Value Disclosures [Abstract]
Probability of redemption as part of a fundamental sale transaction	0.50%
Probability of redemption absent a fundamental sale transaction	4.75%
Annual volatility	65%

Commitments and Contingencies -

Commitments and Contingencies - Additional Information (Details) - USD ($)		3 Months Ended
	Aug. 14, 2017	Mar. 31, 2023	Feb. 11, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Maximum length of warranty on software products		90 days
Uncertainty in income tax liability		$ 113,385
Affiliated Entity | Alucria | Independent Contractor Services Agreement
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Due To Related Parties, Monthly Fee			$ 20,000
Due To Related Parties, Contingent Annual Payment			$ 60,000
Chief Executive Officer
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Salary and Wage, NonOfficer, Excluding Cost of Good and Service Sold	$ 350,000
Accrued bonuses	$ 17,500
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number	735,973
Severance payment period	6 months
Award requisite period	6 months
Deferred Bonus | Chief Executive Officer
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Accrued bonuses	$ 200,000
Upon Termination | Chief Executive Officer
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Severance payment period	12 months
Award requisite period	12 months
Change of control period	6 months

Series A Redeemable Convertib_3

Series A Redeemable Convertible Preferred Stock - Additional Information (Details) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) Integer $ / shares shares	Dec. 31, 2022 shares	Sep. 16, 2013 $ / shares shares
Class of Stock [Line Items]
Series A Redeemable convertible preferred stock, shares issued (in shares) | shares	900,000	900,000
Series A Redeemable convertible preferred stock, shares outstanding (in shares) | shares	900,000	900,000
Series A redeemable convertible preferred stock
Class of Stock [Line Items]
Series A Redeemable convertible preferred stock, shares issued (in shares) | shares			900,000
Series A redeemable convertible preferred stock, conversion price | $ / shares			$ 102.488
Consecutive trading days, convertible debt threshold | Integer	60
Series A redeemable convertible preferred stock redemption price upon fundamental sale, percentage of per share purchase price	250%
Threshold of stock price trigger, percentage	225%
Upon certain triggering events holders can redeem	100%
Series A redeemable convertible preferred stock, financing proceeds threshold | $	$ 5
Percentage of accounts receivable	80%
Series A redeemable convertible preferred stock | Maximum
Class of Stock [Line Items]
Potential ownership percentage by controlling owners (greater than)	9.99%
Series A redeemable convertible preferred stock | Prime rate
Class of Stock [Line Items]
Basis spread on Series A redeemable convertible preferred stock dividend, percentage	5%
Series A redeemable convertible preferred stock, basis spread of dividend	10%
Series A redeemable convertible preferred stock | Series A Preferred Stock Par Value
Class of Stock [Line Items]
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0.001
Series A redeemable convertible preferred stock | Series A Preferred Stock Stated Value
Class of Stock [Line Items]
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 10

Series A Redeemable Convertib_4

Series A Redeemable Convertible Preferred Stock - Schedule of Components of Series A Preferred Stock (Details)	3 Months Ended
	Mar. 31, 2023 USD ($)
Increase (Decrease) in Temporary Equity [Roll Forward]
Beginning balance	$ 15,928,018
Ending balance	16,253,084
Redeemable Preferred Stock
Increase (Decrease) in Temporary Equity [Roll Forward]
Beginning balance	15,928,018
Accrued dividends	315,215
Accretion of preferred stock	9,851
Ending balance	$ 16,253,084

Accumulated Other Comprehensi_3

Accumulated Other Comprehensive Loss - Schedule of Changes in Accumulated Other Comprehensive Loss, Net of Tax (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	$ (16,407,442)	$ (12,965,983)
Total other comprehensive income (loss), net of applicable taxes:	11,786	33,510
Ending balance	(17,163,161)	(14,349,431)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(1,742,217)	(1,881,005)
Other comprehensive income (loss) before reclassifications	11,786	33,510
Total other comprehensive income (loss), net of applicable taxes:	11,786	33,510
Ending balance	(1,730,431)	(1,847,495)
Net Minimum Pension Liability
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(9,882)	20,965
Other comprehensive income (loss) before reclassifications	0	0
Total other comprehensive income (loss), net of applicable taxes:	0	0
Ending balance	(9,882)	20,965
Accumulated Other Comprehensive Loss, Net
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Beginning balance	(1,752,099)	(1,860,040)
Other comprehensive income (loss) before reclassifications	11,786	33,510
Total other comprehensive income (loss), net of applicable taxes:	11,786	33,510
Ending balance	$ (1,740,313)	$ (1,826,530)

Stockholders' Equity - Addition

Stockholders' Equity - Additional Information (Details) - shares	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Class of Stock [Line Items]
Stock repurchased during period (shares)	0	0
Remaining number of shares authorized for repurchased	49,078

Segment Reporting and Concent_3

Segment Reporting and Concentrations - Schedule of Revenues and Long Lived Assets by Geographical Areas (Details) - USD ($)	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Revenue:
Total revenue	$ 2,268,396	$ 2,049,107
Long-lived assets:
Total long-lived assets	443,006		$ 630,397
Americas
Revenue:
Total revenue	936,846	848,308
Long-lived assets:
Total long-lived assets	337,433		504,545
Europe, Middle East, Africa and Other
Revenue:
Total revenue	994,714	804,994
Long-lived assets:
Total long-lived assets	13,676		13,551
Asia Pacific
Revenue:
Total revenue	336,836	$ 395,805
Long-lived assets:
Total long-lived assets	$ 91,897		$ 112,301

Segment Reporting and Concent_4

Segment Reporting and Concentrations - Additional Information (Details) - Customer	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Segment Reporting [Abstract]
Number of Customers Accounting for More than 10 Percent of Revenue	2	2
Number of customers with accounts receivable balance more than 10%	4		2

Restructuring Costs - Additiona

Restructuring Costs - Additional Information (Details)	3 Months Ended				12 Months Ended
	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Sep. 30, 2022 USD ($)	Apr. 30, 2021 USD ($)	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring costs	$ 0			$ 744
Restructuring Costs under 2017 Plan
Restructuring Cost and Reserve [Line Items]
Entity number of employees								86
Restructuring costs	0	$ 0	$ (744)	744
Gross annualized rental cost							$ 1,500,000
Restructuring Reserve	55,747	127,475	124,017	132,873	$ 134,663	$ 116,499
Lease-Disposal Related Costs | Restructuring Costs under 2017 Plan
Restructuring Cost and Reserve [Line Items]
Restructuring costs	0	0	(744)	744	833,313
Restructuring Reserve	$ 0	$ 0	$ 0	$ 744	$ 0	$ 0

Restructuring Costs - Summary o

Restructuring Costs - Summary of Restructuring Liabilities Recorded in Connection with 2017, 2019 and 2020 Plans (Details) - USD ($)	3 Months Ended					12 Months Ended
	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Restructuring Reserve [Roll Forward]
Provisions/Additions	$ 0				$ 744
Restructuring Costs under 2017 Plan
Restructuring Reserve [Roll Forward]
Beginning Balance	127,475	$ 116,499	$ 124,017	$ 132,873	134,663
Provisions/Additions	0	0		(744)	744
Payments	(72,639)
Translation Adjustment	911	10,976	(7,518)	(8,112)	(2,534)
Ending Balance	55,747	127,475	116,499	124,017	132,873	$ 134,663
Employee Severance | Restructuring Costs under 2017 Plan
Restructuring Reserve [Roll Forward]
Beginning Balance	127,475	116,499	124,017	132,129	134,663
Provisions/Additions	0	0		0	0
Payments	(72,639)
Translation Adjustment	911	10,976	(7,518)	(8,112)	(2,534)
Ending Balance	55,747	127,475	116,499	124,017	132,129	134,663
Facility and Other Costs | Restructuring Costs under 2017 Plan
Restructuring Reserve [Roll Forward]
Beginning Balance	0	0	0	744	0
Provisions/Additions	0	0		(744)	744	833,313
Payments	0
Translation Adjustment	0	0	0	0	0
Ending Balance	$ 0	$ 0	$ 0	$ 0	$ 744	$ 0