Sec Form 4 Filing - KELLY MICHAEL P @ FALCONSTOR SOFTWARE INC - 2018-03-01

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person KELLY MICHAEL P 2. Issuer Name and Ticker or Trading Symbol FALCONSTOR SOFTWARE INC [ FALC] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X __ Director _____ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) C/O FALCONSTOR SOFTWARE, INC., 701 BRAZOS STREET, SUITE 400 3. Date of Earliest Transaction (MM/DD/YY) 03/01/2018 (Street) AUSTIN, TX78701 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) __ X __ Form filed by One Reporting Person _____ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock 03/01/2018 J 104,217 ( 1 ) D $ 0 109,773 D Common Stock 11/16/2018 S 34,773 D $ 0.05 75,000 D Common Stock 11/16/2018 S 35,000 D $ 0.0505 40,000 D Common Stock 11/19/2018 S 30,000 D $ 0.0485 10,000 D Common Stock 11/20/2018 S 10,000 D $ 0.044 0 D

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Warrants $ 0.001 10/09/2018 A 763,915 ( 2 ) 02/23/2028 Common Stock 763,915 ( 3 ) 763,915 D Series A Convertible Preferred Stock ( 4 ) 10/09/2018 A 1,405 ( 5 ) ( 5 ) Common Stock 13,709 ( 4 ) $ 0.2711 ( 3 ) 1,405 D

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other KELLY MICHAEL P C/O FALCONSTOR SOFTWARE, INC. 701 BRAZOS STREET, SUITE 400 AUSTIN, TX78701 X Signatures /s/ Michael P. Kelly 11/27/2018 Signature of Reporting Person Date

Explanation of Responses:

( 1 )Represents shares of restricted stock that were forfeited by the Reporting Person. ( 2 )The warrants reported herein were issued by the Issuer to the Reporting Person in connection with its purchase of 62,447 units (each, a "Unit") in a private placement ("Financing"). The warrants are exercisable at any time prior to the expiration date. ( 3 )The reported securities are included with 62,447 Units purchased by the Reporting Person for $0.371063 per Unit. Each Unit consists of (a) $0.10 in Issuer's senior secured debt, (b) warrants to purchase 12.233 shares of the Issuer's common stock, and (c) 0.0225 shares of the Issuer's Series A Convertible Preferred Stock (the "Preferred Stock") at a per Unit price of $0.271063 (subject to certain adjustments). ( 4 )Each share of Preferred Stock of the Issuer has a stated value of $10 (the "Stated Value"). Each share of Preferred Stock is initially convertible into such number of shares of common stock determined by dividing the Stated Value by $1.02488, the initial conversion price of the Preferred Stock. The conversion price of the Preferred Stock is subject to adjustment from time to time in accordance with the terms of the Certificate of Designations of the Preferred Stock, including for accrued but unpaid dividends. ( 5 )The Preferred Stock is convertible at any time, at the holder's election, into common stock of the Issuer and has no expiration date. The Preferred Stock accrues dividends which may, under circumstances, be paid in shares of common stock.

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