UNITED STATES
SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549


FORM 10-Q


(Mark One)


þ
            
            QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For the Quarter ended March 31,
2009


OR


o
            
            TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


0-28252(Commission File
Number)


BROADVISION, INC.





Delaware
              
              94-3184303(State or other jurisdiction of
              
              (I.R.S. Employerincorporation or organization)
              
              Identification Number)1600 Seaport
      Blvd., Suite 550, North Bldg,
              
              94063Redwood
      City, California(Address of principal executive offices)
              
              (Zip code)
 (650) 331-1000
   þ o
 Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such
files.)
  o o
  o þ o  Smaller
reporting company  o
  o þ
 As of
April 30, 2009 there were 4,392,302 shares of the Registrant's Common Stock
issued and outstanding.
  Table of Contents
  
  BROADVISION,
INC. AND SUBSIDIARIES
  FORM
10-Q
  Quarter
Ended March 31, 2009
  TABLE OF CONTENTS
 
 PART I.
                    
                    FINANCIAL
      INFORMATIONItem 1.
                    
                    Financial StatementsCondensed Consolidated Balance Sheets at March 31, 2009
      (unaudited) and December 31, 2008
                    
                    1Condensed Consolidated Statements of Operations and
      Comprehensive (Loss) Income  - three months ended March 31,
      2009 and 2008 (unaudited)
                    
                    2Condensed Consolidated Statements of Cash Flows for the three
      months ended March 31, 2009 and 2008 (unaudited)
                    
                    3Notes to Condensed Consolidated Financial
      Statements (unaudited)
                    
                    4Item 2.
                    
                    Management's Discussion and Analysis of Financial Condition
      and Results of Operations
                    
                    12Item 3.
                    
                    Quantitative and Qualitative Disclosures About Market
      Risk
                    
                    15Item 4.
                    
                    Controls and Procedures
                    
                    15PART
    II.
                    
                    OTHER
      INFORMATIONItem 1.
                    
                    Legal Proceedings
                    
                    15Item 1A.
                    
                    Risk Factors
                    
                    15Item 2.
                    
                    Unregistered Sales of Equity Securities and Use of
      Proceeds
                    
                    21Item 3.
                    
                    Defaults Upon Senior Securities
                    
                    21Item 4.
                    
                    Submission of Matters to a Vote of Security
      Holders
                    
                    21Item 5.
                    
                    Other Information
                    
                    21Item 6.
                    
                    Exhibits
                    
                    22
 
 SIGNATURES
 
 EXHIBIT 31.1EXHIBIT 31.2EXHIBIT
32.1
 
  Table of Contents
  PART I.FINANCIAL INFORMATION
 Item 1. Financial Statements
 BROADVISION, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS
 (In
thousands, except par value amounts)
  March
      31,
                                        
                                        
                                        December
      31,2009
                                        
                                        
                                        2008(unaudited)
                                        
                                        
                                        
                                        *ASSETSCurrent
      assets:Cash
      and cash equivalents
                                        
                                        $
                                        51,347
                                        
                                        
                                        $
                                        52,884Short-term
      investments
                                        
                                        
                                        9,799
                                        
                                        
                                        
                                        9,004Accounts
      receivable, net of reserves of $336 as of March 31, 2009 and
      $366 as of December 31, 2008
                                        
                                        
                                        6,059
                                        
                                        
                                        
                                        8,167Restricted
      cash
                                        
                                        
                                        20
                                        
                                        
                                        
                                        20Prepaids
      and other
                                        
                                        
                                        1,871
                                        
                                        
                                        
                                        2,585Total
      current assets
                                        
                                        
                                        69,096
                                        
                                        
                                        
                                        72,660Property
      and equipment, net
                                        
                                        
                                        468
                                        
                                        
                                        
                                        514Restricted
      cash, net of current portion
                                        
                                        
                                        1,000
                                        
                                        
                                        
                                        1,000Other
      assets
                                        
                                        
                                        476
                                        
                                        
                                        
                                        563Total
      assets
                                        
                                        $
                                        71,040
                                        
                                        
                                        $
                                        74,737LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Accounts
      payable
                                        
                                        $
                                        924
                                        
                                        
                                        $
                                        1,251Accrued
      expenses
                                        
                                        
                                        5,149
                                        
                                        
                                        
                                        5,415Warrant
      liability
                                        
                                        
                                        186
                                        
                                        
                                        
                                        155Unearned
      revenue
                                        
                                        
                                        4,525
                                        
                                        
                                        
                                        5,810Deferred
      maintenance
                                        
                                        
                                        8,161
                                        
                                        
                                        
                                        8,959Total
      current liabilities
                                        
                                        
                                        18,945
                                        
                                        
                                        
                                        21,590Other
      non-current liabilities
                                        
                                        
                                        2,077
                                        
                                        
                                        
                                        2,429Total
      liabilities
                                        
                                        
                                        21,022
                                        
                                        
                                        
                                        24,019Stockholders’
      equity:Convertible
      preferred stock, $0.0001 par value; 1,000 shares authorized; none issued
      and outstanding
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Common
      stock, $0.0001 par value; 11,200 shares authorized; 4,392 and 4,376 shares
      issued and outstanding as of March 31, 2009 and December 31, 2008,
      respectively
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Additional
      paid-in capital
                                        
                                        
                                        1,259,008
                                        
                                        
                                        
                                        1,258,604Accumulated
      other comprehensive loss
                                        
                                        
                                        (961
                                        )
                                        
                                        
                                        (483
                                        )Accumulated
      deficit
                                        
                                        
                                        (1,208,029
                                        )
                                        
                                        
                                        (1,207,403
                                        )Total
      stockholders’ equity
                                        
                                        
                                        50,018
                                        
                                        
                                        
                                        50,718Total
      liabilities and stockholders’ equity
                                        
                                        $
                                        71,040
                                        
                                        
                                        $
                                        74,737*
      Derived from audited consolidated financial statements filed in the
      Company’s 2008 Annual Report on Form 10-K.
 See
Accompanying Notes to Condensed Consolidated Financial
Statements
  ~ 1
~
 Table of Contents
  
 
 
 BROADVISION, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME
 (In
thousands, except per share amounts)
 (Unaudited)
 Three
      Months Ended March 31,2009
                                            
                                            
                                            2008Revenues:Software
      licenses
                                            
                                            $
                                            2,852
                                            
                                            
                                            $
                                            3,977Services
                                            
                                            
                                            5,149
                                            
                                            
                                            
                                            6,053Total
      revenues
                                            
                                            
                                            8,001
                                            
                                            
                                            
                                            10,030Cost
      of revenues:Cost
      of software licenses
                                            
                                            
                                            6
                                            
                                            
                                            
                                            7Cost
      of services
                                            
                                            
                                            1,964
                                            
                                            
                                            
                                            2,253Total
      cost of revenues
                                            
                                            
                                            1,970
                                            
                                            
                                            
                                            2,260Gross
      profit
                                            
                                            
                                            6,031
                                            
                                            
                                            
                                            7,770Operating
      expenses:Research
      and development
                                            
                                            
                                            2,168
                                            
                                            
                                            
                                            2,337Sales
      and marketing
                                            
                                            
                                            2,036
                                            
                                            
                                            
                                            1,885General
      and administrative
                                            
                                            
                                            1,451
                                            
                                            
                                            
                                            1,698Restructuring
      credits
                                            
                                            
                                            (2
                                            )
                                            
                                            
                                            (18
                                            )Total
      operating expenses
                                            
                                            
                                            5,653
                                            
                                            
                                            
                                            5,902Operating
      income
                                            
                                            
                                            378
                                            
                                            
                                            
                                            1,868Interest
      income, net
                                            
                                            
                                            281
                                            
                                            
                                            
                                            464(Loss)
      gain on revaluation of warrants
                                            
                                            
                                            (31
                                            )
                                            
                                            
                                            2,454Other
      (loss) income, net
                                            
                                            
                                            (1,113
                                            )
                                            
                                            
                                            858(Loss)
      income before provision for income taxes
                                            
                                            
                                            (485
                                            )
                                            
                                            
                                            5,644Provision
      for income taxes
                                            
                                            
                                            (141
                                            )
                                            
                                            
                                            (283
                                            )Net
      (loss) income
                                            
                                            $
                                            (626
                                            )
                                            
                                            $
                                            5,361Basic
      (loss) income per share
                                            
                                            $
                                            (0.14
                                            )
                                            
                                            $
                                            1.23Diluted
      (loss) income per share
                                            
                                            $
                                            (0.14
                                            )
                                            
                                            $
                                            1.21Shares
      used in computing:Weighted
      average shares-basic
                                            
                                            
                                            4,381
                                            
                                            
                                            
                                            4,358Weighted
      average shares-diluted
                                            
                                            
                                            4,381
                                            
                                            
                                            
                                            4,413Comprehensive
      (loss) income:Net
      (loss) income
                                            
                                            $
                                            (626
                                            )
                                            
                                            $
                                            5,361Other
      comprehensive (loss) gain , net of tax:Foreign
      currency translation adjustment
                                            
                                            
                                            (478
                                            )
                                            
                                            
                                            5Total
      comprehensive (loss) income
                                            
                                            $
                                            (1,104
                                            )
                                            
                                            $
                                            5,366
 See
Accompanying Notes to Condensed Consolidated Financial Statements
   ~ 2
~
 Table of Contents
  
 BROADVISION, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In
thousands, Unaudited)
  Three
      Months Ended March 31,2009
                                      
                                      
                                      2008Cash
      flows from operating activities:Net
      (loss) income
                                      
                                      $
                                      (626
                                      )
                                      
                                      $
                                      5,361Adjustments
      to reconcile net (loss) income to net cash (used for) provided by
      operating activities:Depreciation
      and amortization
                                      
                                      
                                      67
                                      
                                      
                                      
                                      118Restructuring
      credits
                                      
                                      
                                      (2
                                      )
                                      
                                      
                                      (18
                                      )Provision
      for receivable reserves
                                      
                                      
                                      7
                                      
                                      
                                      
                                      (95
                                      )Stock
      based compensation
                                      
                                      
                                      261
                                      
                                      
                                      
                                      185Loss
      (income) on revaluation of warrants
                                      
                                      
                                      31
                                      
                                      
                                      
                                      (2,454
                                      )Changes
      in operating assets and liabilities:Accounts
      receivable
                                      
                                      
                                      2,101
                                      
                                      
                                      
                                      (1,276
                                      )Prepaids
      and other
                                      
                                      
                                      714
                                      
                                      
                                      
                                      (240
                                      )Other
      non-current assets
                                      
                                      
                                      93
                                      
                                      
                                      
                                      3Accounts
      payable and accrued expenses
                                      
                                      
                                      (587
                                      )
                                      
                                      
                                      560Restructuring
      accrual
                                      
                                      
                                      (121
                                      )
                                      
                                      
                                      (104
                                      )Unearned
      revenue and deferred maintenance
                                      
                                      
                                      (2,083
                                      )
                                      
                                      
                                      1,725Other
      noncurrent liabilities
                                      
                                      
                                      (233
                                      )
                                      
                                      
                                      (175
                                      )Net
      cash (used for) provided by operating activities
                                      
                                      
                                      (378
                                      )
                                      
                                      
                                      3,590Cash
      flows from investing activities:Purchase
      of property and equipment
                                      
                                      
                                      (28
                                      )
                                      
                                      
                                      (73
                                      )Purchase
      of short term investments
                                      
                                      
                                      (795
                                      )
                                      
                                      
                                      -Net
      cash used for investing activities
                                      
                                      
                                      (823
                                      )
                                      
                                      
                                      (73
                                      )Cash
      flows from financing activities:Proceeds
      from issuance of common stock, net
                                      
                                      
                                      142
                                      
                                      
                                      
                                      215Net
      cash provided by financing activities
                                      
                                      
                                      142
                                      
                                      
                                      
                                      215Effect
      of exchange rates on cash and cash equivalents
                                      
                                      
                                      (478
                                      )
                                      
                                      
                                      5Net
      increase in cash and cash equivalents
                                      
                                      
                                      (1,537
                                      )
                                      
                                      
                                      3,737Cash
      and cash equivalents at beginning of period
                                      
                                      
                                      52,884
                                      
                                      
                                      
                                      53,973Cash
      and cash equivalents at end of period
                                      
                                      $
                                      51,347
                                      
                                      
                                      $
                                      57,710Supplemental
      information of cash flow disclosures:Cash
      paid for interest
                                      
                                      $
                                      1
                                      
                                      
                                      $
                                      -Supplemental
      information of noncash financing and investing activities:Retirement
      of fully depreciated property and equipment
                                      
                                      $
                                      3
                                      
                                      
                                      
                                      -
 
 See Accompanying Notes to Condensed
Consolidated Financial Statements
   ~ 3
~
 Table of Contents
  
 BROADVISION,
INC. AND SUBSIDIARIES
 NOTES TOCONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
 Note
1. Organization and Summary of Significant Accounting Policies
 
 There
have been no material changes in our critical accounting policies, estimates and
judgments during the three month period ended March 31, 2009 compared to the
disclosures in Part II, Item 8 of our Annual Report on Form 10-K for the year
ended December 31, 2008, filed with the Securities and Exchange Commission on
February 26, 2009, other than those disclosed herein.
 
 
 Basis
of Presentation
 
 The condensed consolidated financial results and
related information as of and for the three months ended March 31, 2009 and 2008
are unaudited. The Condensed Consolidated Balance Sheet at December 31, 2008 has
been derived from the audited consolidated financial statements as of that date
but does not necessarily reflect all of the informational disclosures previously
reported in accordance with U.S. generally accepted accounting principles ("U.S.
GAAP"). The unaudited condensed consolidated financial statements should be
reviewed in conjunction with the audited consolidated financial statements and
related notes contained in our 2008 Annual Report on Form 10-K filed with the
SEC on February 26, 2009.
  The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. GAAP for interim financial information and with
the instructions in Form 10-Q and Article 10 of Regulation S-X. Accordingly,
these statements do not include all of the information and footnotes required by
U.S. GAAP for annual financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of interim financial information have been included. Operating
results for the three months ended March 31, 2009 are not necessarily indicative
of the results that may be expected for the remainder of the year ending
December 31, 2009 or any future interim period. The condensed consolidated
financial statements include our accounts and our subsidiaries. All significant
intercompany accounts and transactions have been eliminated in the
consolidation.
 
 Use
of Estimates
 
 The
preparation of Condensed Consolidated Financial Statements in conformity with
U.S. GAAP requires management to make certain assumptions and estimates that
affect reported amounts of assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. On an ongoing basis, we evaluate our estimates, including
those related to receivable reserves, stock-based compensation, investments,
impairment assessments, income taxes and restructuring, as well as contingencies
and litigation. We base our estimates on historical experience and on various
other assumptions that we believe are reasonable, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates using different assumptions or conditions.
 Revenue Recognition
 From time to time, a customer may return to us some
or all of the software purchased.  While our software and reseller
agreements generally do not provide for a specific right of return, we may
accept product returns in certain circumstances.  To date, sales
returns have been infrequent and not significant in relation to our total
revenues.  We make an estimate of our expected returns and provide an
allowance for sales returns in accordance with SFAS No. 48, Revenue Recognition When Right of Return
Exists.  Management specifically analyzes our revenue
transactions, customer software installation patterns, historical return
patterns, current economic trends and customer payment terms when evaluating the
adequacy of the allowance for sales returns.
  ~ 4
~
 Table of Contents
  Stock-Based
Compensation
 The
following table sets forth the total stock-based compensation expense recognized
in our Condensed Consolidated Statements of Operations for the three months
ended March 31, 2009 and 2008:
 Three
      Months Ended March 31,2009
                                
                                
                                2008Cost
      of services
                                
                                $
                                28,358
                                
                                
                                $
                                36,966Research
      and development
                                
                                
                                102,719
                                
                                
                                
                                38,888Sales
      and marketing
                                
                                
                                52,486
                                
                                
                                
                                53,737General
      and administrative
                                
                                
                                77,589
                                
                                
                                
                                55,568$
                                261,152
                                
                                
                                $
                                185,159
  Earnings
Per Share Information
  Basic net
(loss) income per share is computed using the weighted-average number of shares
of common stock outstanding less shares subject to repurchase. Diluted net
(loss) income per share is computed using the weighted-average number of shares
of common stock outstanding and, when dilutive, common equivalent shares from
outstanding stock options and warrants using the treasury stock method, and
shares subject to repurchase, if any using the as-if converted method. There
were 700,000 and 256,000 potential common shares excluded from the determination
of diluted net income per share for the three months ended March 31, 2009 and
2008, respectively, as the effect of each share was anti-dilutive because
the per-share strike price of the options under which these shares may be issued
is higher than the current market price. The following table sets forth the
basic and diluted net (loss) income per share computational data for the periods
presented (in thousands, except per share amounts):
 Three
      Months Ended March 31,2009
                                
                                
                                2008Net
      (loss) income
                                
                                $
                                (626
                                )
                                
                                $
                                5,361Weighted-average
      common shares outstanding used to compute basic (loss) income per
      share
                                
                                
                                4,381
                                
                                
                                
                                4,358Weighted-average
      common equivalent shares from outstanding common stock options and
      warrants
                                
                                
                                -
                                
                                
                                
                                55Total
      weighted-average common and common equivalent shares outstanding used to
      compute diluted (loss) income per share
                                
                                
                                4,381
                                
                                
                                
                                4,413Basic
      (loss) income per share
                                
                                $
                                (0.14
                                )
                                
                                $
                                1.23Diluted
      (loss) income per share
                                
                                $
                                (0.14
                                )
                                
                                $
                                1.21
 Legal
Proceedings
  We
are subject from time to time to various legal actions and other claims arising
in the ordinary course of business.  In our opinion, the outcomes of
current legal proceedings will not be material to our financial results.
 Foreign
Currency Translations
  During fiscal 2004, we changed
the functional currencies of all foreign subsidiaries from the U.S. dollar to
the local currency of the respective countries. Assets and liabilities of these
subsidiaries are translated into U.S. dollars at the balance sheet date. Income
and expense items are translated at average exchange rates for the period.
Foreign exchange gains and losses resulting from the remeasurement of foreign
currency assets and liabilities are included as other (expense)
income  in the Condensed Consolidated Statements of Operations. For
the three-month periods ended March 31, 2009, and 2008, translation (loss) and
gain  was ($478,000), and $5,000, respectively.  These
amounts are included in the accumulated other comprehensive (loss)
income  account in the Condensed Consolidated Balance
Sheets.
  ~ 5
~
 Table of Contents
  Comprehensive Loss
  Comprehensive
loss includes net income and other comprehensive loss, which primarily consists
of foreign currency translation adjustments. Total comprehensive loss is
presented in the accompanying Condensed Consolidated Statements of Operations.
Total accumulated other comprehensive loss is displayed as a separate component
of stockholders' equity in the accompanying Condensed Consolidated Balance
Sheets. The accumulated balances of other comprehensive loss consist of the
following, net of taxes (in thousands):
 Accumulated
      OtherComprehensiveLossBalance,
      December 31, 2008
                            
                            $
                            (483
                            )Net
      change during period
                            
                            
                            (478
                            )Balance,
      March 31, 2009
                            
                            $
                            (961
                            )
 Recent
Accounting Pronouncements
 In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments” (“FSP FAS
115-2/124-2”).  FSP FAS 115-2/124-2 requires entities to separate an
other-than-temporary impairment of a debt security into two components when
there are credit related losses associated with the impaired debt security for
which management asserts that it does not have the intent to sell the security,
and it is more likely than not that it will not be required to sell the security
before recovery of its cost basis.  The amount of the other-than-temporary
impairment related to a credit loss is recognized in earnings, and the amount of
the other-than-temporary impairment related to other factors is recorded in
other comprehensive loss.  FSP FAS 115-2/124-2 is effective for
periods ending after June 15, 2009, with early adoption permitted for
periods ending after March 15, 2009. We are currently evaluating the
potential impact, if any, of the adoption of FSP FAS 115-2/124-2 on our
Consolidated Financial Statements.
 InApril2009,theFASBissuedFSPFAS157-4,“DeterminingFairValueWhenVolumeandLevelofActivityfortheAssetorLiabilityHaveSignificantlyDecreasedandIdentifyingTransactionsthatareNotOrderly”(“FSPFAS157-4”).Under FSP FAS 157-4, if an entity
determines that there has beenasignificantdecreaseinthevolumeandlevelofactivityfortheassetortheliabilityinrelationtothenormalmarketactivityfortheassetorliability(orsimilarassetsorliabilities),thentransactionsorquotedpricesmaynotaccuratelyreflectfairvalue.In addition, if there is
evidence that the transaction for the asset orliabilityisnotorderly,theentityshallplacelittle,ifanyweightonthattransactionpriceasanindicatoroffairvalue.FSP FAS 157-4 is effective
for periods ending afterJune 15,2009,withearlyadoptionpermittedforperiodsendingafterMarch15,2009.We are currently
evaluating the potential impact, if any, of the adoption of FSPFAS157-4 on our Consolidated
Financial Statements.
 InApril2009,theFASBissuedFSPFAS107-1andAPB28-1,“InterimDisclosuresaboutFairValueofFinancialInstruments”(“FSPFAS107-1andAPB28-1”).FSPFAS107-1andAPB28-1requiredisclosuresaboutfairvalueoffinancialinstrumentsininterimandannualfinancialstatements.FSPFAS107-1andAPB28-1iseffectiveforperiodsendingafterJune15,2009,withearlyadoptionpermittedforperiodsendingafterMarch15,2009.We are currently
evaluating the potential impact, if any, of the adoption of FSPFAS107-1andAPB28-1 on our Consolidated
Financial Statements.
 
 ~ 6
~
 Table of Contents
  Note
2. Selected Condensed Consolidated Balance Sheet Detail
 Property
and equipment consisted of the following (in thousands):
  March
      31,
                              
                              
                              December
      31,2009
                              
                              
                              2008(unaudited)Furniture
      and fixtures
                              
                              $
                              509
                              
                              
                              $
                              522Computers
      and software
                              
                              
                              5,004
                              
                              
                              
                              4,996Leasehold
      improvements
                              
                              
                              1,265
                              
                              
                              
                              1,2776,778
                              
                              
                              
                              6,795Less
      accumulated depreciation and amortization
                              
                              
                              (6,310
                              )
                              
                              
                              (6,281
                              )Net book value
                              
                              $
                              468
                              
                              
                              $
                              514
  Accrued
expenses consisted of the following (in thousands):
  March
      31,
                                
                                
                                December
      31,2009
                                
                                
                                2008(unaudited)Employee
      benefits
                                
                                $
                                1,105
                                
                                
                                $
                                1,041Commissions
      and bonuses
                                
                                
                                407
                                
                                
                                
                                667Sales
      and other taxes
                                
                                
                                670
                                
                                
                                
                                792Income
      tax and tax contingency reserves
                                
                                
                                408
                                
                                
                                
                                301Restructuring
                                
                                
                                314
                                
                                
                                
                                426Customer
      advances
                                
                                
                                229
                                
                                
                                
                                283Royalties
                                
                                
                                1,376
                                
                                
                                
                                1,376Other
                                
                                
                                640
                                
                                
                                
                                529Total
      accrued expenses
                                
                                $
                                5,149
                                
                                
                                $
                                5,415
  Note
3.  Fair Value of Financial Instruments
  SFAS No.
157, Fair Value
Measurements (“SFAS 157”), provides a definition of fair value,
establishes a hierarchy for measuring fair value under generally accepted
accounting principles, and requires certain disclosures about fair values used
in the financial statements.   SFAS 157 defines fair value as the
exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value under SFAS 157
must maximize the use of observable inputs and minimize the use of unobservable
inputs. The standard describes a fair value hierarchy based on three levels of
inputs, of which the first two are considered observable and the last
unobservable, that may be used to measure fair value, which are the
following:
 
 ·
                        Level
      1 – Quoted prices in active markets for identical assets or
      liabilities.
 ·
                        Level
      2 – Inputs other than Level 1 that are observable, either directly or
      indirectly, such as quoted prices for similar assets or liabilities;
      quoted prices in markets that are not active; or other inputs that are
      observable or can be corroborated by observable market data for
      substantially the full term of the assets or
  liabilities.
 ·
                        Level
      3 — Unobservable inputs that are supported by little or no market activity
      and that are significant to the fair value of the assets or
      liabilities.
 
 We
measurethe following
financial assets at fair value on a recurring basis. The fair value of these
financial assets as of March 31, 2009 (in thousands)wereas
follows:
  Fair
      Value Measurements at Reporting Date UsingBalance
      at March 31, 2009
                                    
                                    
                                    Quoted
      Prices in Active Markets for Identical Assets  (Level
    1)
                                    
                                    
                                    Significant
      Other Observable Inputs (Level 2)
                                    
                                    
                                    Significant
      Unobservable Input  (Level 3)
                                    
                                    
                                    Total
      Gains (Losses)Cash
      and cash equivalents (1)
                                    
                                    $
                                    51,347
                                    
                                    
                                    $
                                    51,347
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Short-term
      investments (2)
                                    
                                    
                                    9,799
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    9,799
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Total
                                    
                                    $
                                    61,146
                                    
                                    
                                    $
                                    51,347
                                    
                                    
                                    $
                                    9,799
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
 (1)
Includes money market funds and commercial paper.
 (2)
Includes held-to-maturity bonds.
 
 The fair
value of cash and cash equivalents, short-term investments, accounts receivable
and accounts payable for all periods presented approximates their respective
carrying amounts due to the short-term nature of these balances.
  ~ 7
~
 Table of Contents
 Note
4. Warrants and Other Non-Current Liabilities
  Warrants
 
 As of
March 31, 2009, the following warrants to purchase our common stock were
outstanding:
 Underlying
                                      
                                      
                                      ExerciseShares
                                      
                                      
                                      Price
      per ShareIssued
      to landlord in real estate buyout transaction in
      August 2004
                                      
                                      
                                      28,000
                                      
                                      
                                      $
                                      125.00Issued
      to convertible notes investors in November 2004
                                      
                                      
                                      154,631
                                      
                                      
                                      
                                      37.00Total
      warrants
                                      
                                      
                                      182,631
  (Loss)
gainon the
revaluation of warrants were recorded as follows (in thousands):
  Three
      Months Ended March 31,2009
                              
                              
                              2008Warrants
      related to the convertible notes
                              
                              $
                              (32
                              )
                              
                              $
                              2,327Warrants
      related to real estate buyout
                              
                              
                              1
                              
                              
                              
                              127(Loss)
      gain on revaluation of warrants
                              
                              $
                              (31
                              )
                              
                              $
                              2,454
  Other
Non-Current Liabilities
  Other
non-current liabilities consist of the following :
 March
      31,
                            
                            
                            December
      31,2009
                            
                            
                            2008(in
      thousands)Restructuring
                            
                            $
                            408
                            
                            
                            $
                            419Deferred
      maintenance and unearned revenue
                            
                            
                            1,005
                            
                            
                            
                            1,326Other
                            
                            
                            664
                            
                            
                            
                            684Total
      other non-current liabilities
                            
                            $
                            2,077
                            
                            
                            $
                            2,429
  ~ 8
~
 Table of Contents
  Note
5. Commitments and Contingencies
 
 Warranties
and Indemnification
  We
provide a warranty to our customers that our software will perform substantially
in accordance with the documentation we provide with the software, typically for
a period of 90 days following receipt of the software. Historically, costs
related to these warranties have been immaterial. Accordingly, we have not
recorded any warranty liabilities as of March 31, 2009 and December 31,
2008.
  Our
software license agreements typically provide for indemnification of customers
for intellectual property infringement claims caused by use of a current release
of our software consistent with the terms of the license agreement. The term of
these indemnification clauses is generally perpetual. The potential future
payments we could be required to make under these indemnification clauses is
generally limited to the amount the customer paid for the software.
Historically, costs related to these indemnification provisions have been
immaterial. We also maintain liability insurance that limits our exposure. As a
result, we believe the potential liability of these indemnification clauses is
minimal. Accordingly, we have not recorded any liabilities for these agreements
as of March 31, 2009 and December 31, 2008.
  We
entered into agreements whereby we indemnify our officers and directors for
certain events or occurrences while the officer is, or was, serving in such
capacity. The term of the indemnification period is for so long as such officer
or director is subject to an indemnifiable event by reason of the fact that such
person was serving in such capacity. The maximum potential amount of future
payments we could be required to make under these indemnification agreements may
be unlimited; however, we have a director and officer insurance policy that
limits our exposure and enables us to recover a portion of any future amounts
paid. As a result of our insurance policy coverage, we believe the estimated
fair value of these indemnification agreements is insignificant. Accordingly, we
have no liabilities recorded for these agreements as of either March 31, 2009 or
December 31, 2008. We assess the need for an indemnification reserve on a
quarterly basis and there can be no guarantee that an indemnification reserve
will not become necessary in the future.
  Leases
  We
lease our headquarters facility and other facilities under noncancelable
operating lease agreements expiring in or prior to the year 2012. Under the
terms of these agreements, we are required to pay property taxes, insurance and
normal maintenance costs.
  A
summary of total future minimum lease payments under noncancelable operating
lease agreements is as follows (in millions) as of March 31,
2009:
 OperatingYears
      Ending December 31,
                            
                            Leases2009
                            
                            $
                            1.62010
                            
                            
                            1.62011
                            
                            
                            1.22012
                            
                            
                            0.62013
      and thereafter
                            
                            
                            -Total
      minimum lease payments
                            
                            $
                            5.0
 These
future minimum lease payments are net of approximately $2.1 million of
sublease income to be received under sublease agreements. As of March 31, 2009,
we have accrued $0.7 million of estimated future facilities costs as a
restructuring accrual.
  Standby
Letter of Credit Commitments
  As of March 31, 2009 and December 31,
2008, we had $1.0 million, of outstanding commitments in the form of a
standby letter of credit, in favor of our landlord to secure obligations under
our facility leases.  This standby letter of credit is collateralized
by the restricted cash listed in the Condensed Consolidated Balance
Sheets.
  ~ 9
~
 Table of Contents
  Note
6. Geographic, Segment and Significant Customer Information
  The
disaggregated revenue information reviewed by the CEO is as follows (in
thousands):
 Three
      Months EndedMarch
      31,2009
                              
                              
                              2008Software
      licenses
                              
                              $
                              2,852
                              
                              
                              $
                              3,977Consulting
      services
                              
                              
                              1,263
                              
                              
                              
                              1,505Maintenance
                              
                              
                              3,886
                              
                              
                              
                              4,548Total
      revenues
                              
                              $
                              8,001
                              
                              
                              $
                              10,030
 We
currently operate in three primary geographical territories. Our reportable
segment includes our facilities in North and South America (Americas), Europe
and Asia Pacific and the Middle East (Asia/Pacific).
 
 Disaggregated financial information regarding our geographic revenues and
long-lived assets is as follows (in thousands):
 Three
      Months EndedMarch
      31,2009
                              
                              
                              2008Revenues:Americas
                              
                              $
                              4,360
                              
                              
                              $
                              4,925Europe
                              
                              
                              2,757
                              
                              
                              
                              3,669Asia/Pacific
                              
                              
                              884
                              
                              
                              
                              1,436Total
      revenues
                              
                              $
                              8,001
                              
                              
                              $
                              10,030
  March
      31,
                            
                            
                            December
      31,2009
                            
                            
                            2008Long-Lived
      Assets:Americas
                            
                            $
                            327
                            
                            
                            $
                            359Europe
                            
                            
                            17
                            
                            
                            
                            16Asia/Pacific
                            
                            
                            124
                            
                            
                            
                            139Total
      long-lived assets
                            
                            $
                            468
                            
                            
                            $
                            514
  For the three-month period ended March 31, 2009, one customer accounted for more
than 10% of our revenues. For the three-month period ended March 31, 2008,
no single customer accounted for more than 10% of our
revenues.
  Note
7. Restructuring Charges
  As of March 31, 2009, the total restructuring accrual of $722 thousand consisted
of the following (in thousands):
 Current
                          
                          
                          Non-Current
                          
                          
                          TotalExcess
      Facilities
                          
                          $
                          314
                          
                          
                          $
                          408
                          
                          
                          $
                          722
 ~ 10
~
 Table of Contents
 
 We
expect to pay the excess facilities amounts related to restructured or abandoned
leased space as follows (in thousands):
 Total
      FutureMinimumYears
      ending December 31,
                            
                            Payments2009
                            
                            $
                            2472010
                            
                            
                            2622011
                            
                            
                            562012
                            
                            
                            1572013
      and thereafter
                            
                            
                            -Total
      minimum facilities payments
                            
                            $
                            722
  The
following table summarizes the activity related to the restructuring plans
initiated subsequent to December 31, 2002, and accounted for in accordance
with SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities (in
thousands):
 AmountsAccrued
                              
                              
                              Charged
      toRestructuring
                              
                              
                              Restructuring
                              
                              
                              
                              
                              
                              AccruedCosts
                              
                              
                              Costs
                              
                              
                              Amounts
      Paid
                              
                              
                              RestructuringBeginning
                              
                              
                              and
      Other
                              
                              
                              or
      Written Off
                              
                              
                              Costs,
      EndingThree
      Months Ended March 31, 2009Lease
      cancellations and commitments
                              
                              $
                              65
                              
                              
                              $
                              (15
                              )
                              
                              $
                              16
                              
                              
                              $
                              66Three
      Months Ended March 31, 2008Lease
      cancellations and commitments
                              
                              $
                              8
                              
                              
                              $
                              (27
                              )
                              
                              $
                              14
                              
                              
                              $
                              (5
                              )
 The
following table summarizes the activity related to the restructuring plans
initiated on or prior to December 31, 2002, and accounted for in accordance
with Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring) (in
thousands):
 AmountsAccrued
                          
                          
                          Charged
      toRestructuring
                          
                          
                          Restructuring
                          
                          
                          
                          
                          
                          AccruedCosts,
                          
                          
                          Costs
                          
                          
                          Amounts
      Paid
                          
                          
                          RestructuringBeginning
                          
                          
                          and
      Other
                          
                          
                          or
      Written Off
                          
                          
                          Costs,
      EndingThree
      Months Ended March 31, 2009Lease
      cancellations and commitments
                          
                          $
                          780
                          
                          
                          $
                          13
                          
                          
                          $
                          (137
                          )
                          
                          $
                          656Three
      Months Ended March 31, 2008Lease
      cancellations and commitments
                          
                          $
                          1,325
                          
                          
                          $
                          9
                          
                          
                          $
                          (118
                          )
                          
                          $
                          1,216
  Note
8. Related Party Transactions
  In 2008,
we executed a renewal contract with a third party in which Dr. Pehong Chen, our
CEO and largest stockholder, is a board member.   For the three
months ended March 31,2009, we recognized $20,000 license
revenue.    We incurred $11,000 in direct costs and expenses
relating to this contract.
  ~ 11
~
 Table of Contents
  Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations





This
report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, which are
subject to the "safe harbor" created by those sections. These forward-looking
statements are generally identified by words such as "expect," "anticipate,"
"intend," "believe," "hope," "assume," "estimate," "plan," "will" and other
similar words and expressions. These forward-looking statements involve risks
and uncertainties that could cause our actual results to differ materially from
those expressed or implied in the forward-looking statements as a result of
certain factors, including those described herein and in the Company's most
recently filed Annual Report on Form 10-K and other documents filed with the
SEC. We undertake no obligation to publicly release any revisions to the
forward-looking statements or to reflect events and circumstances after the date
of this document.


Critical
Accounting Policies, Estimates and Judgments


There
have been no material changes in our critical accounting policies, estimates and
judgments during the three month period ended March 31, 2009 compared to the
disclosures in Part II, Item 8 of our Annual Report on Form 10-K for the year
ended December 31, 2008, other than as disclosed herein.


Revenue
Recognition
 
 From time
to time, a customer may return to us some or all of the software
purchased.  While our software and reseller agreements generally do
not provide for a specific right of return, we may accept product returns in
certain circumstances.  To date, sales returns have been infrequent
and not significant in relation to our total revenues.  We make an
estimate of our expected returns and provide an allowance for sales returns in
accordance with SFAS No. 48, Revenue
Recognition When Right of Return Exists.  Management
specifically analyzes our revenue transactions, customer software installation
patterns, historical return patterns, current economic trends and customer
payment terms when evaluating the adequacy of the allowance for sales
returns.
  Results
of Operations
  Revenues
  Total
revenuesdecreased 20% during the three months ended March 31, 2009, to
$8.0 million, as compared to $10.0 million for the three months ended March
31, 2008. A summary of our revenues by geographic region is as follows (dollars
in thousands, unaudited):


SoftwareLicenses
                        
                        
                        %
                        
                        
                        Services
                        
                        
                        %
                        
                        
                        Total
                        
                        
                        %Three
      Months Ended:March
      31, 2009Americas
                        
                        $
                        2,097
                        
                        
                        
                        73
                        %
                        
                        $
                        2,263
                        
                        
                        
                        44
                        %
                        
                        $
                        4,360
                        
                        
                        
                        55
                        %Europe
                        
                        
                        597
                        
                        
                        
                        21
                        
                        
                        
                        2,160
                        
                        
                        
                        42
                        
                        
                        
                        2,757
                        
                        
                        
                        34Asia
      Pacific
                        
                        
                        158
                        
                        
                        
                        6
                        
                        
                        
                        726
                        
                        
                        
                        14
                        
                        
                        
                        884
                        
                        
                        
                        11Total
                        
                        $
                        2,852
                        
                        
                        
                        100
                        %
                        
                        $
                        5,149
                        
                        
                        
                        100
                        %
                        
                        $
                        8,001
                        
                        
                        
                        100
                        %March 31,
      2008Americas
                        
                        $
                        2,157
                        
                        
                        
                        55
                        %
                        
                        $
                        2,768
                        
                        
                        
                        45
                        %
                        
                        $
                        4,925
                        
                        
                        
                        49
                        %Europe
                        
                        
                        1,211
                        
                        
                        
                        30
                        
                        
                        
                        2,458
                        
                        
                        
                        41
                        
                        
                        
                        3,669
                        
                        
                        
                        37Asia
      Pacific
                        
                        
                        609
                        
                        
                        
                        15
                        
                        
                        
                        827
                        
                        
                        
                        14
                        
                        
                        
                        1,436
                        
                        
                        
                        14Total
                        
                        $
                        3,977
                        
                        
                        
                        100
                        %
                        
                        $
                        6,053
                        
                        
                        
                        100
                        %
                        
                        $
                        10,030
                        
                        
                        
                        100
                        %


We experienced declines in revenues as a result of a decline in general
global economic conditions and the fact that we operate in a very competitive
industry.  Financial comparisons discussed herein may not be
indicative of future performance.  We believe a significant challenge we face is to persuade
prospective customers with limited budgets to purchase our products and services
instead of investing in competing IT
projects.
 Software
license revenuesdecreased 28% during the three months ended March 31,
2009, to $2.9 million, as compared to $4.0 million for the three months ended
March 31, 2008.  The decreases came from all regions due to decreased
demand for our products and services.
 
 ~ 12
~
 Table of Contents
 
 Services revenuesconsisting of consulting revenues, customer training revenues and
maintenance revenues decreased 15% during the three months ended March 31, 2009,
to $5.1 million, as compared to $6.0 million for the three months ended
March 31, 2008. Maintenance revenues decreased 13% for the three months ended
March 31, 2009, to $3.9 million, as compared to $4.5 million for the
three months ended March 31, 2008.   This decrease in maintenance
revenues was due to a decline in demand for additional licenses by
customers.  Consulting and training revenues decreased 20% for the
three months ended March 31, 2009, to $1.2 million, as compared to
$1.5 million for the three months ended March 31, 2008.  This
decrease in consulting revenues was attributable to a decline in demand for new
licenses from our existing customers.
  Cost
of Revenues
  Cost
of software license revenues includes the costs of product media, duplication,
packaging and other manufacturing costs, as well as royalties payable to third
parties for software that is either embedded in, or bundled and licensed with
our products. Cost of services consists primarily of employee-related costs,
third-party consultant fees incurred on consulting projects, post-contract
customer support and instructional training services. A summary of our cost of
revenues is as follows (dollars in thousands, unaudited):


Three
      Months Ended March 31,2009
                          
                          
                          %
      (1)
                          
                          
                          2008
                          
                          
                          %
      (1)Cost
      of software licenses
                          
                          $
                          6
                          
                          
                          
                          -
                          %
                          
                          $
                          7
                          
                          
                          
                          -
                          %Cost
      of services
                          
                          
                          1,964
                          
                          
                          
                          25
                          %
                          
                          
                          2,253
                          
                          
                          
                          23
                          %Total
      cost of revenues
                          
                          $
                          1,970
                          
                          
                          
                          25
                          %
                          
                          $
                          2,260
                          
                          
                          
                          23
                          %


(1)
            Expressed
      as a percent of total revenues for the period
  indicated.




Cost of software licensesdecreased 14% during the three months
ended March 31, 2009, to $6,000, as compared to $7,000 for the three months
ended March 31, 2008.   This decrease is primarily the result of a
decrease in the portion of license revenues generated from royalty-bearing
products.
  Cost of
servicesdecreased 13% during the three
months ended March 31, 2009, to $2.0 million, as compared to
$2.3 million for the three months ended March 31,
2008.   This decrease is the result of a reduction in consulting
expenses and a decrease in services revenue.
  Gross margindecreased to 75% during the three months ended March
31, 2009 as compared to 77% for the three months ended March 31, 2008. This
decrease is the result of a decline in total revenues, offset only in part by a
reduction in cost of revenue.
 A summary of
operating expenses, including as a percentage of total revenues, is set forth in
the following table (dollars in thousands, unaudited):


Three
      Months EndedMarch
      31,2009
                        
                        
                        %
      (1)
                        
                        
                        2008
                        
                        
                        %
      (1)Research
      and development
                        
                        $
                        2,168
                        
                        
                        
                        27
                        %
                        
                        $
                        2,337
                        
                        
                        
                        23
                        %Sales
      and marketing
                        
                        
                        2,036
                        
                        
                        
                        25
                        
                        
                        
                        1,885
                        
                        
                        
                        19General
      and administrative
                        
                        
                        1,451
                        
                        
                        
                        18
                        
                        
                        
                        1,698
                        
                        
                        
                        17Restructuring
      charge
                        
                        
                        (2
                        )
                        
                        
                        -
                        
                        
                        
                        (18
                        )
                        
                        
                        -Total
      operating expenses
                        
                        $
                        5,653
                        
                        
                        
                        70
                        %
                        
                        $
                        5,902
                        
                        
                        
                        59
                        %


(1)
              Expressed
      as a percent of total revenues for the period
  indicated.
  Research and
development expensesdecreased 4% during the three months ended March 31,
2009, to $2.2 million, as compared to $2.3 million for the three
months ended March 31, 2008.   This decrease was the result of
reductions in contractor expenses.
  Sales and
marketing expenses increased 5% during the three months ended March 31,
2009, to $2.0 million, as compared to $1.9 million for the three months ended
March 31, 2008.This increase was the result of marketing expansions during the
three months ended March 31, 2009.
  General and
administrative expensesdecreased 11% during the three months ended March
31, 2009, to $1.5 million, as compared to $1.7 million for the three months
ended March 31, 2008.This decrease is primarily as a result of a reduction in
headcount for the three months ended March 31, 2009 as compared to the three
months ended March 31, 2008.
  Interest income, net
decreased 39% for the three months ended March 31, 2009, to $281,000, as
compared to $464,000 for the three months ended March 30,
2008.   The decrease is due to a decline in interest
rates.
  (Loss) gain on
revaluation of warrants for the three months ended March 31, 2009 was a
total loss of $31,000, as compared to a gain of $2,454,000 for the three months
ended March 31, 2008.  These changes are primarily due to fluctuations
in our stock price during the relevant periods.
  Other (loss)
income, net during
the three months ended March 31, 2009, was a loss of  $1,113,000, as
compared to a gain of $858,000 for the three months ended March 31,
2008.   The changes in both years were primarily due to realized and
unrealized gains (for 2008) and loss (in 2009) on foreign exchange
transactions.
 Provision for income
taxes expense during the three months ended March 31, 2009,
was  $141,000, as compared to a provision for income tax expenses of
$283,000 for the three months ended March 31, 2008.  The provision for
year 2009 was primarily related to a FIN No.
48, Accounting for Uncertainty
in Income Taxes – an interpretation of FASB Statement
No.109, accrual related to an ongoing income tax audit of a
foreign subsidiary for the tax year ended December 31,
2006.   The provision for year 2008 primarily relates to
Alternative Minimum Taxes (AMT) calculated for Federal purposes after
application of net operating loss (NOL) carryforwards and state income tax in
various jurisdictions.
 
 ~ 13
~
 Table of Contents
  Liquidity
and Capital Resources
  Overview
 
 We
continue to maintain a strong cash position on our Consolidated Balance Sheet.
As of March 31, 2009, we had $61.1 million of cash and cash equivalents and
short-term investments with no long-term debt borrowings, as compared to a
balance of $61.8 million at December 31, 2008. The decrease was due primarily to
the $0.4 million cash used for our operations in the three months ended March
31, 2009.
 
 Revenues
for the first three months of 2009 were $8.0 million, as compared to revenues of
$10.0 million for the first three months of 2008. License revenue for the first
three months of 2009 was $2.9 million compared to $4.0 million for the first
three months of 2008. The majority of our license revenue for the first three
months of 2009 was generated by our core BroadVisionÒBusiness Agility SuiteTM,
Commerce Agility SuiteTM and eMerchandisingTM solutions from customers
includingTechtree IT System, ClubMed, SPX, Siemens Medical Solutions USA Inc.
and We@Service and several other brand name global customers. License revenues
decreased in all regions as compared to the first three months of 2008, due
to decreased demand for our products and weak macroeconomic
conditions.
 
 We
continued to focus on expense control in the first quarter of 2009. Operating
expenses for the first quarter of 2009 were $5.7 million, as compared to $5.9
million for the first quarter of 2008. For the three months ended March 31, 2009
and 2008, we had a loss of $31,000 and a gain of $2,454,000, respectively, on
the revaluation of warrants. For the three months ended March 31, 2009, net
loss was $626,000, or $0.14 per diluted share. This compares to net income of
$5.4 million, or $1.21 per diluted share, for the three months ended March 31,
2008.
 
 The
following table represents our liquidity at March 31, 2009 and December 31, 2008
(dollars in thousands):


March
      31,
                  
                  
                  December
      31,2009
                  
                  
                  2008(unaudited)Cash
      and cash equivalents
                  
                  $
                  51,347
                  
                  
                  $
                  52,884Short-term
      investments
                  
                  $
                  9,799
                  
                  
                  $
                  9,004Restricted
      cash, current portion
                  
                  $
                  20
                  
                  
                  $
                  20Restricted
      cash, net of current portion
                  
                  $
                  1,000
                  
                  
                  $
                  1,000Working
      capital
                  
                  $
                  50,151
                  
                  
                  $
                  51,070Working
      capital ratio
                  
                  
                  3.65
                  
                  
                  
                  3.37
  Cash
(Used For) Provided By Operating Activities
  Cash used for operating activities was $378,000 for the three months ended March
31, 2009. Net cash
used for operating activities was due to operating expenses in excess of
the cash collections from our customers during this
quarter.


Cash
provided by operating activities was $3.6 million for the three months ended
March 31, 2008. Net cash provided operating activities in this period consisted
primarily of $2.8 million in operating profit (excluding restructuring charges
and revaluation of warrants) generated from sales margin improvement and
company-wide cost reduction efforts, plus the increase of $0.8 million in
accounts payable and accrued expenses and unearned revenue
accounts.
 
 Cash
Used For Investing Activities
  Cash used
for investing activities was $823,000 for the three months ended March 31, 2009.
This figure reflects the purchase of short-term investments for
$795,000 and the purchase of property and equipment for
$28,000.  Cash used for investing activities was $73,000 for the three
months ended March 31, 2008. This figure reflects the purchase of property and
equipment and leasehold improvements.
 
 Cash
Provided By Financing Activities
  Cash
provided by financing activities was $142,000 for the three months ended March
31, 2009, primarily consisting of cash received in employees’ purchases of
common stock under the Employee Stock Purchase Plan (“Purchase Plan”). Cash
provided by financing activities was $215,000 for the three months ended March
31, 2008, primarily consisting of cash received in connection with the exercise
of stock options and employees purchases of common stock under the Purchase
Plan.
  Leases
and Other Contractual Obligations
  We lease
our headquarters facility and other facilities under non-cancelable operating
lease agreements expiring through the year 2012. A total of $1.0 million of
restricted cash as shown on our Condensed Consolidated Balance Sheets represents
collateral for the letter of credit.  This letter of credit has been
issued in connection with our facility lease obligation.
  ~ 14
~
 Table of Contents
  Item 3. Quantitativeand Qualitative Disclosures About Market
Risk
  Our
exposure to market risk for changes in interest rates relates primarily to our
investment portfolio. We had no derivative financial instruments as of March 31,
2009 and 2008. We place our investments in instruments that meet high credit
quality standards and the amount of credit exposure to any one issue, issuer and
type of instrument is limited.
  Item 4. Controls andProcedures
  Evaluation of
Disclosure Controls and Procedures
 
 Our Chief Executive Officer and our Chief Financial Officer have concluded,
based on an evaluation of the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended) by our management, with the participation of
our Chief Executive Officer and our Chief Financial Officer, that our disclosure
controls and procedures were effective at the reasonable assurance level as of
the end of the period covered by this report.
 
 Changes
in Internal Control over Financial Reporting
  There has
been no change in our internal control over financial reporting during the
quarter ended March 31, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
 
 Limitations
on the Effectiveness of Controls
  Our
disclosure controls and procedures are designed to provide reasonable assurance
of achieving their objectives and our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures are
effective at that reasonable assurance level.  However, our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within our Company have been detected.
  PART II.OTHER INFORMATION
  Item 1.Legal Proceedings
 We
are subject from time to time to various legal actions and other claims arising
in the ordinary course of business. In our opinion, the outcomes of current
legal proceedings will not be material to our financial
results.
 Item 1A. RiskFactors
  The
risks and uncertainties described below are not the only ones facing us.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. If any of the
following risks actually occur, our business could be harmed. In that event, the
trading price of our common stock could decline.
 
 Our business
currently depends on revenue related to BroadVision e-business solutions, and if
the market does not increasingly accept these products and related products and
services, our revenue may continue to decline.
  We
generate our revenue from licenses of BroadVision e-business solutions,
including process, commerce, portal and content management and related products
and services. We expect that these products, and future upgraded versions, will
continue to account for a large portion of our revenue in the foreseeable
future. Our future financial performance will depend on increasing acceptance of
our current products and on the successful development, introduction and
customer acceptance of new and enhanced versions of our products. If new and
future versions and updates of our products and services do not gain market
acceptance when released commercially, or if we fail to deliver the product
enhancements and complementary third party products that customers want, demand
for our products and services, and our revenue, may decline.
 
 ~ 15
~
 Table of Contents
  We
have recently introduced new products, services and technologies and our
business will be harmed if we are not successful in selling these offerings to
our existing customers and new customers.
 
 In early
2007, we introduced a product roadmap that included new products, services and
technologies, to complement and replace certain of our existing products,
services and technologies.  We formally released BroadVision 8.1TM at the
end of the third quarter of 2007. We have spent significant resources in
developing these offerings and training our employees to implement and support
the offerings, and we plan to add additional sales and marketing resources to
support these new products, services and technologies.  We do not yet know
whether any of these new offerings will appeal to existing and potential new
customers, and if so, whether sales of these new offerings will be sufficient
for us to offset the costs of development, implementation, support and
marketing. Particularly in difficult economic times when companies are more
likely to be managing spending, potential new customers may delay spending
decisions and our existing customers may determine that the BroadVision products
and services they currently use are sufficient for their purposes, or that the
added benefit from these new offerings is not sufficient to merit the additional
cost.  As a result we may need to decrease our prices or develop
modifications.  Although we have performed extensive testing of our new
products and technologies, their broad-based implementation may require more
support than we anticipate, which would further increase our expenses. If sales
of our new products, services and technologies are lower than we expect, or if
we must lower our prices or delay implementation to fix unforeseen problems and
develop modifications, our operating margins are likely to decrease and we may
not be able to operate profitably.  A failure to operate profitably would
significantly harm our business.
 
 Current and
potential competitors could make it difficult for us to acquire and retain
customers now and in the future.
 
 The
market for our products is intensely competitive. We expect competition in this
market to persist and increase in the future. If we fail to compete successfully
with current or future competitors, we may be unable to attract and retain
customers. Increased competition could also result in price reductions for our
products and lower profit margins and reduced market share, any of which could
harm our business, results of operations and financial condition.
  Many of
our competitors have significantly greater financial, technical, marketing and
other resources, greater name recognition, a broader range of products and a
larger installed customer base, any of which could provide them with a
significant competitive advantage. In addition, new competitors, or alliances
among existing and future competitors, may emerge and rapidly gain significant
market share. Some of our competitors, particularly established software
vendors, may also be able to provide customers with products and services
comparable to ours at lower or at aggressively reduced prices in an effort to
increase market share or as part of a broader software package they are selling
to a customer. We may be unable to match competitor's prices or price
reductions, and we may fail to win customers that choose to purchase an
information technology solution as part of a broader software and services
package. As a result, we may be unable to compete successfully with current or
new competitors.
 
 If
we are unable to keep pace with the rapid technological changes in online
commerce and communication, our products and services may fail to be
competitive.
 
 Our
products and services may fail to be competitive if we do not maintain or exceed
the pace of technological developments in Internet commerce and communication.
Failure to be competitive could cause our revenue to decline. The information
services, software and communications industries are characterized by rapid
technological change, changes in customer requirements, frequent new product and
service introductions and enhancements and evolving industry standards and
practices. The introduction of products and services embodying new technologies
and the emergence of new industry standards and practices can render existing
products and services obsolete. Our future success will depend, in part, on our
ability to:
  •
                  develop
      leading technologies;•
                  enhance
      our existing products and services;•
                  develop
      new products and services that address the increasingly sophisticated and
      varied needs of our prospective customers; and•
                  respond
      to technological advances and emerging industry standards and practices on
      a timely and cost-effective basis.
 
 We have a history
of losses and our future profitability on a quarterly or annual basis is
uncertain, which could have a harmful effect on our business and the value of
BroadVision common stock.
  Our
quarterly operating results have fluctuated in the past and may fluctuate
significantly in the future as a result of a variety of factors, many of which
are outside of our control.   As of March 31, 2009, we had an
accumulated deficit of approximately $1.2 billion.
  Given our
planned operating and capital expenditures, for the foreseeable future we expect
our results of operations to fluctuate, and during this period we may incur
losses and/or negative cash flows. If our revenue does not increase or if we
fail to maintain our expenses at an amount less than our projected revenue, we
will not be able to achieve or sustain operating profitability on a consistent
basis. We are continuing our efforts to reduce and control our expense
structure. We believe strict cost containment and expense reductions are
essential to achieving positive cash flow and profitability. A number of factors
could preclude us from successfully bringing costs and expenses in line with our
revenues, including unplanned uses of cash, the inability to accurately forecast
business activities and further deterioration of our revenues. If we are not
able to effectively reduce our costs and achieve an expense structure
commensurate with our business activities and revenues, we may have inadequate
levels of cash for operations or for capital requirements, which could
significantly harm our ability to operate our business.
  Our
failure to operate profitably or control negative cash flows on a quarterly or
annual basis could harm our business and the value of BroadVision common stock.
If the negative cash flow continues, our liquidity and ability to operate our
business would be severely and adversely impacted. Additionally, our ability to
raise financial capital may be hindered due to our operational losses and
negative cash flows, reducing our operating flexibility.
 
 ~ 16
~
 Table of Contents
  Our
sales and product implementation cycles are lengthy and subject to delay, which
make it difficult to predict our quarterly results.
  Our sales
and product implementation cycles generally span months. Delays in customer
orders or product implementations, which are difficult to predict, can affect
the timing of revenue recognition and adversely affect our quarterly operating
results. Licensing our products is often an enterprise-wide decision by
prospective customers. The importance of this decision requires that we engage
in a lengthy sales cycle with prospective customers. A successful sales cycle
may last up to nine months or longer. Our sales cycle is also affected by a
number of other factors, some of which we have little or no control over,
including the volatility of the overall software market, the business condition
and purchasing cycle of each prospective customer, and the performance of our
technology partners, systems integrators and resellers. The implementation of
our products can also be time and resource intensive, and subject to unexpected
delays. Delays in either product sales or implementations could cause our
operating results to vary significantly from quarter to quarter.
 
 Because a
significant portion of our sales activity occurs at the end of each fiscal
quarter, delays in a relatively small number of license transactions could
adversely affect our quarterly operating results.
  A
significant proportion of our sales are concentrated in the last month of each
fiscal quarter. Gross margins are high for our license transactions. Customers
and prospective customers may use these conditions in an attempt to obtain more
favorable terms. While we endeavor to avoid making concessions that could result
in lower margins, the negotiations often result in delays in closing license
transactions. Small delays in a relatively small number of license transactions
could have a significant impact on our reported operating results for that
quarter.
 
 Because our
quarterly operating results are volatile and difficult to predict, our quarterly
operating results in one or future periods are likely to fluctuate
significantly, which could cause our stock price to decline if we fail to meet
the expectations of securities analysts or investors.
   Historically
our quarterly operating results have varied significantly from quarter to
quarter and are likely to continue to vary significantly in the future. If our
revenues, operating results, earnings or future projections are below the levels
expected by securities analysts or investors, our stock price is likely to
decline.
  We may
continue to experience significant fluctuations in our future results of
operations due to a variety of factors, some of which are outside of our
control, including:
  •
                  introduction
      of products and services and enhancements by us and our
      competitors;•
                  competitive
      factors that affect our pricing;•
                  market
      acceptance of new products;•
                  the
      mix of products sold by us;•
                  changes
      in our pricing policies or our competitors;•
                  changes
      in our sales incentive plans;•
                  the
      budgeting cycles of our customers;•
                  customer
      order deferrals in anticipation of new products or enhancements by our
      competitors or us or because of macro-economic
  conditions;•
                  nonrenewal
      of our maintenance agreements, which generally automatically renew for
      one-year terms unless earlier terminated by either party upon 90-days
      notice;•
                  product
      life cycles;•
                  changes
      in strategy;•
                  seasonal
      trends;•
                  the
      mix of distribution channels through which our products are
      sold;•
                  the
      mix of international and domestic sales;•
                  the
      rate at which new sales people become productive;•
                  changes
      in the level of operating expenses to support projected
      growth;•
                  increase
      in the amount of third party products and services that we use in our
      products or resell with royalties attached;•
                  fluctuations
      in the recorded value of outstanding common stock warrants that will be
      based upon changes to the underlying market value of BroadVision common
      stock;•
                  the
      timing of receipt and fulfillment of significant orders;
    and•
                  costs
      associated with litigation, regulatory compliance and other corporate
      events such as operational
reorganizations.
 
 As a
result of these factors, we believe that quarter-to-quarter comparisons of our
revenue and operating results are not necessarily meaningful, and that these
comparisons are not accurate indicators of future performance. Because our
staffing and operating expenses are based on anticipated revenue levels, and
because a high percentage of our costs are fixed, small variations in the timing
of the recognition of specific revenue could cause significant variations in
operating results from quarter to quarter. If we were unable to adjust spending
in a timely manner to compensate for any revenue shortfall, any significant
revenue shortfall would likely have an immediate negative effect on our
operating results. If our operating results in one or more future quarters fail
to meet the expectations of securities analysts or investors, we would expect to
experience an immediate and significant decline in the trading price of our
stock.
  ~ 17
~
 Table of Contents
  We have
substantially modified our business and operations and will need to manage and
support these changes effectively in order for our business plan to
succeed.
  We have
substantially expanded and subsequently contracted our business and operations
since our inception in 1993. We grew from 652 employees at the end of 1999 to
2,412 employees at the end of 2000 and then reduced our numbers to 159 at the
end of 2006, and 219 at the end of 2008. On March 31, 2009, we had 218
employees. As a consequence of our employee base growing and then contracting so
rapidly, we entered into significant contracts for facilities space for which we
ultimately determined we did not have a future use. We announced during the
third and fourth quarters of 2004 that we had agreed with the landlords of
various facilities to renegotiate future lease commitments, extinguishing a
total of approximately $155 million of future obligations. The management
of the expansion and later reduction of our operations has taken a considerable
amount of our management's attention during the past several years. As we manage
our business to introduce and support new products, we will need to continue to
monitor our workforce and make appropriate changes as necessary. If we are
unable to support past changes and implement future changes effectively, we may
have to divert additional resources away from executing our business plan and
toward internal administration. If our expenses significantly outpace our
revenues, we may have to make additional changes to our management systems and
our business plan may not succeed.
 
 We may face
liquidity challenges and need additional financing in the
future.
  We
currently expect to be able to fund our working capital requirements from our
existing cash and cash equivalents and our anticipated cash flows from
operations and subleases through at least March 31, 2010. However, we could
experience unforeseen circumstances, such as an economic downturn, difficulties
in retaining customers and/or key employees, or other factors that could
increase our use of available cash and require us to seek additional financing.
We may find it necessary to obtain additional equity or debt financing due to
the factors listed above or in order to support a more rapid expansion, develop
new or enhanced products or services, respond to competitive pressures, acquire
complementary businesses or technologies or respond to unanticipated
requirements.
 
 We may
seek to raise additional funds through private or public sales of securities,
strategic relationships, bank debt, financing under leasing arrangements or
otherwise. If additional funds are raised through the issuance of equity
securities, the percentage ownership of our stockholders will be reduced,
stockholders may experience additional dilution or any equity securities we sell
may have rights, preferences or privileges senior to those of the holders of our
common stock. We expect that obtaining additional financing on acceptable terms
would be difficult, at best. If adequate funds are not available or are not
available on acceptable terms, we may be unable to pay our debts as they become
due, develop our products, take advantage of future opportunities or respond to
competitive pressures or unanticipated requirements, which could have a material
adverse effect on our business, financial condition and future operating
results.
 
 If
we are unable to maintain our disclosure controls and procedures, including our
internal control over financial reporting, our ability to report our financial
results on a timely and accurate basis may be adversely affected.
  We have
evaluated our "disclosure controls and procedures" as such term is defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934, as well as our
internal control over financial reporting as required by Section 404 of the
Sarbanes-Oxley Act of 2002. Our independent registered public accounting firm
has performed a similar evaluation of our internal control over financial
reporting. Effective controls are necessary for us to provide reliable financial
reports and effectively prevent fraud. If we cannot provide reliable financial
reports or prevent fraud, our operating results could be harmed.
  We
previously reported that as of March 31, 2006, we did not have a sufficient
number of experienced personnel in our accounting and finance organization to
facilitate an efficient financial statement close process and permit the
preparation of our financial statements in accordance with U.S. GAAP. For
example, there were a significant number of adjustments to our financial
statements during the course of the 2005 audit, at least one of which was
individually material and required us to restate several prior quarters. Our
personnel also lacked certain required skills and competencies to oversee the
accounting operations and perform certain important control functions, such as
the review, periodic inspection and investigation of transactions of our foreign
locations. We consider this to be a deficiency that was also a material weakness
in the operation of entity-level controls. Despite taking a variety of remedial
measures, we were unable to conclude that no material weakness existed as of
December 31, 2006. Accordingly, when our management assessed the effectiveness
of our internal control over financial reporting as of December 31, 2006,
this assessment identified one material weakness.
  While we
have remedied this material weakness as of December 31, 2007, maintaining
sufficient expertise and historical institutional knowledge in our accounting
and finance organization is dependent upon retaining existing employees and
filling any open positions with experienced personnel in a timely fashion. The
market for skilled accounting and finance personnel is competitive and we may
have continued difficulty in retaining our staff because (1) the region in which
we compete consists of many established companies that can offer more
lucrative compensation packages and (2) some professionals are reluctant to
deal with the complex accounting issues relating to our historical operations.
Our inability to staff the department with competent personnel with sufficient
training will affect our internal controls over financial reporting to the
extent that we may not be able to prevent or detect material
misstatements.
 
 We are dependent
on direct sales personnel and third-party distribution channels to achieve
revenue growth.
  To date,
we have sold our products primarily through our direct sales force. Our ability
to achieve significant revenue growth in the future largely will depend on our
success in recruiting, training and retaining sufficient direct sales personnel
and establishing and maintaining relationships with distributors, resellers and
systems integrators. Our products and services require a sophisticated sales
effort targeted at the senior management of our prospective customers. New hires
as well as employees of our distributors, resellers and systems integrators
require training and may take a significant amount of time before achieving
full productivity. Our recent hires may not become as productive as necessary,
and we may be unable to hire and retain sufficient numbers of qualified
individuals in the future. We have entered into strategic alliance agreements
with partners, under which partners have agreed to resell and support our
current BroadVision product suite. These contracts are generally terminable by
either party upon 30 days' notice of an uncured material breach or for
convenience upon 90 days' notice prior to the end of any annual term.
Termination of any of these alliances could harm our expected revenues. We may
be unable to expand our other distribution channels, and any expansion may not
result in revenue increases. If we fail to maintain and expand our direct sales
force or other distribution channels, our revenues may not grow or they may
decline. Revenue generated from third-party distributors in recent years has not
been significant.
  ~ 18
~
 Table of Contents
  Failure to
maintain relationships with third-party systems integrators could harm our
ability to achieve our business plan.
  Our
relationships with third-party systems integrators who deploy our products have
been a key factor in our overall business strategy, particularly because many of
our current and prospective customers rely on integrators to develop, deploy and
manage their online marketplaces. Our efforts to manage our relationships with
systems integrators may not succeed, which could harm our ability to achieve our
business plan due to a variety of factors, including:
  •
                  Systems
      integrators may not view their relationships with us as valuable to their
      own businesses. The related arrangements typically may be terminated by
      either party with limited notice and in some cases are not covered by a
      formal agreement.•
                  Under
      our business model, we often rely on our system integrators' employees to
      perform implementations. If we fail to work together effectively, or if
      these parties perform poorly, our reputation may be harmed and deployment
      of our products may be delayed or inadequate.•
                  Systems
      integrators may attempt to market their own products and services rather
      than ours.•
                  Our
      competitors may have stronger relationships with our systems integrators
      than us and, as a result, these integrators may recommend a competitor's
      products and services over ours.•
                  If
      we lose our relationships with our systems integrators, we will not have
      the personnel necessary to deploy our products effectively, and we will
      need to commit significant additional sales and marketing resources in an
      effort to reach the markets and customers served by these
      parties.
 
 We may be unable
to manage or grow our international operations and assets, which could impair
our overall growth or financial position.
  We derive
a significant portion of our revenue from our operations outside North America.
In the three months ended March 31, 2009, approximately 46% of our revenue was
derived from international sales. If we are unable to manage or grow our
existing international operations, we may not generate sufficient revenue
required to establish and maintain these operations, which could slow our
overall growth and impair our operating margins.
  As we
rely materially on our operations outside of North America, we are subject to
significant risks of doing business internationally, including:
 
 •
                  difficulties
      in staffing and managing foreign operations and safeguarding foreign
      assets;•
                  unexpected
      changes in regulatory requirements;•
                  export
      controls relating to encryption technology and other export
      restrictions;•
                  tariffs
      and other trade barriers;•
                  difficulties
      in staffing and managing foreign operations;•
                  political
      and economic instability;•
                  fluctuations
      in currency exchange rates;•
                  reduced
      protection for intellectual property rights in some
    countries;•
                  cultural
      barriers;•
                  seasonal
      reductions in business activity during the summer months in Europe and
      certain other parts of the world; and•
                  potentially
      adverse tax consequences.
 
 Management
of international operations presents special challenges, particularly at our
reduced staffing levels.  For example, during 2008 we uncovered through our
whistle blower program that an officer of our Japan subsidiary was involved in a
scheme to submit fraudulent expense reimbursements totaling approximately
$84,000 during the period between 2007 and 2008.  We were able to recover
the funds from the officer and the officer was terminated.  Although this
scheme was detected, we face the risk that other similar misappropriations of
assets may occur in the future.
 
 Our
international sales growth could be limited if we are unable to establish
additional foreign operations, expand international sales channel management and
support, hire additional personnel, customize products for local markets and
develop relationships with international service providers, distributors and
system integrators. Even if we are able to successfully expand our international
operations, we may not succeed in maintaining or expanding international market
demand for our products.
  Our success and
competitive position will depend on our ability to protect our proprietary
technology.
  Our
success and ability to compete are dependent to a significant degree on our
proprietary technology. We hold a U.S. patent, issued in January 1998, on
elements of the BroadVision platform, which covers electronic commerce
operations common in today's web business. We also hold a U.S. patent,
issued in November 1996, acquired as part of the Interleaf acquisition on the
elements of the extensible electronic document processing system for creating
new classes of active documents. Although we hold these patents, they may not
provide an adequate level of intellectual property protection. In addition,
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets, or to determine the validity and scope of
the proprietary rights of others. It is also possible that third parties may
claim we have infringed their patent, trademark, copyright or other proprietary
rights. Claims may be made for indemnification resulting from allegations of
infringement. Intellectual property infringement claims may be asserted against
us as a result of the use by third parties of our products. Claims or
litigation, with or without merit, could result in substantial costs and
diversions of resources, either of which could harm our business.
  We also
rely on copyright, trademark, service mark, trade secret laws and contractual
restrictions to protect our proprietary rights in products and services. We have
registered "BroadVision", "iGuide", "Interleaf" and "Interleaf Xtreme" as
trademarks in the United States and in other countries. It is possible that our
competitors or other companies will adopt product names similar to these
trademarks, impeding our ability to build brand identity and possibly confusing
customers.
  ~ 19
~
 Table of Contents
  As a
matter of our company policy, we enter into confidentiality and assignment
agreements with our employees, consultants and vendors. We also control access
to and distribution of our software, documents and other proprietary
information. Notwithstanding these precautions, it may be possible for an
unauthorized third party to copy or otherwise obtain and use our software or
other proprietary information or to develop similar software independently.
Policing unauthorized use of our products will be difficult, particularly
because the global nature of the Internet makes it difficult to control the
ultimate destination or security of software and other transmitted data. The
laws of other countries may afford us little or no effective protection of our
intellectual property.
  A breach of the
encryption technology that we use could expose us to liability and harm our
reputation, causing a loss of customers.
  If any
breach of the security technology embedded in our products were to occur, we
would be exposed to liability and our reputation could be harmed, which could
cause us to lose customers. A significant barrier to online commerce and
communication is the secure exchange of valuable and confidential information
over public networks. We rely on encryption and authentication technology,
including Open SSL and public key cryptography technology featuring the major
encryption algorithms RC2 and MD5, to provide the security and authentication
necessary to affect the secure exchange of confidential information. Advances in
computer capabilities, new discoveries in the field of cryptography or other
events or developments could cause a breach of the RSA or other algorithms that
we use to protect customer transaction data.
  The loss or
malfunction of technology licensed from third parties could delay the
introduction of our products and services.
  We rely
in part on technology that we license from third parties, including relational
database management systems from Oracle and Sybase, Informix object request
broker software from IONA Technologies PLC, and database access technology from
Rogue Wave Software. The loss or malfunction of any of these technology licenses
could harm our business. We integrate or sublicense this technology with
internally developed software to perform key functions. For example, our
products and services incorporate data encryption and authentication technology
licensed from Open SSL. Third-party technology licenses might not continue to be
available to us on commercially reasonable terms, or at all. Moreover, the
licensed technology may contain defects that we cannot control. Problems with
our technology licenses could cause delays in introducing our products or
services until equivalent technology, if available, is identified, licensed and
integrated. Delays in introducing our products and services could adversely
affect our results of operations.
  Our officers, key
employees and highly skilled technical and managerial personnel are critical to
our business, and they may not remain with us in the
future.
  Our
performance substantially depends on the performance of our officers and key
employees. We also rely on our ability to retain and motivate qualified
personnel, especially our management and highly skilled development teams. The
loss of the services of any of our officers or key employees, particularly our
founder and Chief Executive Officer, Dr. Pehong Chen, could cause us to
incur increased operating expenses and divert senior management resources in
searching for replacements. The loss of their services also could harm our
reputation if our customers were to become concerned about our future
operations. We do not carry "key person" life insurance policies on any of our
employees. Our future success also depends on our continuing ability to
identify, hire, train and retain other highly qualified technical and managerial
personnel. Competition for these personnel is intense, especially in the
Internet industry. We have in the past experienced, and may continue to
experience, difficulty in hiring and retaining sufficient numbers of highly
skilled employees. The significant downturn in our business over the past
several years has had and may continue to have a negative impact on our
operations. We have restructured our operations by reducing our workforce and
implementing other cost containment activities. These actions could lead to
disruptions in our business, reduced employee morale and productivity, increased
attrition, and problems with retaining existing and recruiting future
employees.
 
 Limitations on
the online collection of profile information could impair the effectiveness of
our products.
  Online
users' resistance to providing personal data, and laws and regulations
prohibiting use of personal data gathered online without express consent or
requiring businesses to notify their web site visitors of the possible
dissemination of their personal data, could limit the effectiveness of our
products. This in turn could adversely affect our sales and results of
operations.
  One of
the principal features of our products is the ability to develop and maintain
profiles of online users to assist business managers in determining the nature
of the content to be provided to these online users. Typically, profile
information is captured when consumers, business customers and employees visit a
web site and volunteer information in response to survey questions concerning
their backgrounds, interests and preferences. Profiles can be augmented over
time through the subsequent collection of usage data. Although our products are
designed to enable the development of applications that permit web site visitors
to prevent the distribution of any of their personal data beyond that specific
web site, privacy concerns may nevertheless cause visitors to resist providing
the personal data necessary to support this profiling capability. The mere
perception by prospective customers that substantial security and privacy
concerns exist among online users, whether or not valid, may indirectly inhibit
market acceptance of our products.
 
 In
addition, new laws and regulations could heighten privacy concerns by requiring
businesses to notify web site users that the data captured from them while
online may be used by marketing entities to direct product messages to them. We
are subject to increasing regulation at the federal and state levels relating to
online privacy and the use of personal user information. Several states have
proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies. In
addition, the U.S. Federal Trade Commission, or FTC, has urged Congress to
adopt legislation regarding the collection and use of personal identifying
information obtained from individuals when accessing web sites. The FTC has
settled several proceedings resulting in consent decrees in which Internet
companies have been required to establish programs regarding the manner in which
personal information is collected from users and provided to third parties. We
could become a party to a similar enforcement proceeding. These regulatory and
enforcement efforts could also harm our customers' ability to collect
demographic and personal information from users, which could impair the
effectiveness of our products.
 
 We may not have
adequate back-up systems, and natural or manmade disasters could damage our
operations, reduce our revenue and lead to a loss of
customers.
  We do not
have fully redundant systems for service at an alternate site. A disaster could
severely harm our business because our service could be interrupted for an
indeterminate length of time. Our operations depend upon our ability to maintain
and protect our computer systems at our facility in Redwood City, California,
which reside on or near known earthquake fault zones. Although these systems are
designed to be fault tolerant, they are vulnerable to damage from fire, floods,
earthquakes, power loss, acts of terrorism, telecommunications failures and
similar events. In addition, our facilities in California could be subject to
electrical blackouts if California faces another power shortage similar to that
of 2001. Although we do have a backup generator that would maintain critical
operations, this generator could fail. We also have significantly reduced our
workforce in a short period of time, which has placed different requirements on
our systems and has caused us to lose personnel knowledgeable about our systems,
both of which could make it more difficult to quickly resolve system
disruptions. Disruptions in our internal business operations could harm our
business by resulting in delays, disruption of our customers' business, loss of
data, and loss of customer confidence.
  ~ 20
~
 Table of Contents
  Risks
related to BroadVision common stock
 
 One
stockholder beneficially owns a substantial portion of the outstanding
BroadVision common stock, and as a result exerts substantial control over
us.
 
 As of
March 31, 2009, Dr. Pehong Chen, our Chairman and CEO, beneficially owned
approximately 1.6 million shares of our common stock, which represents
approximately 36% of the outstanding common stock as of such date. As a result,
Dr. Chen exerts substantial control over all matters coming to a vote of our
stockholders, including with respect to:
 
 •
                  the
      composition of our board of directors and, through it, any determination
      with respect to our business direction and policies, including the
      appointment and removal of officers;•
                  any
      determinations with respect to mergers and other business
      combinations;•
                  our
      acquisition or disposition of assets;•
                  our
      financing activities; and•
                  the
      payment of dividends on our capital
stock.
 
 This
control by Dr. Chen could depress the market price of our common stock or delay
or prevent a change in control of BroadVision.
  Our stock price
has been highly volatile.
  The trading price of
BroadVision common stock has been highly volatile. For example, the trading
price of BroadVision common stock has ranged from $9.52 per share to
$70.75 per share between March 31, 2007 and March 31, 2009. On May 7,
2009 the closing price of BroadVision common stock was $13.73 per
share. Our stock
price is subject to wide fluctuations in response to a variety of factors,
including:
  •
                  quarterly
      variations in operating results;•
                  announcements
      of technological innovations;•
                  announcements
      of new software or services by us or our competitors;•
                  changes
      in financial estimates by securities analysts;•
                  low
      trading volume on the NASDAQ Global Market;•
                  general
      economic conditions; or•
                  other
      events or factors that are beyond our
control.
  In
addition, the stock market has experienced significant price and volume
fluctuations that have particularly affected the trading prices of equity
securities of many technology companies. These fluctuations have often been
unrelated or disproportionate to the operating performance of these companies.
Any negative change in the public's perception of the prospects of Internet or
electronic commerce companies could further depress our stock price regardless
of our results. Other broad market fluctuations may decrease the trading price
of BroadVision common stock. In the past, following declines in the market price
of a company's securities, securities class action litigation, such as the class
action lawsuits filed against us and certain of our officers and directors in
early 2001, has often been instituted against that company. Litigation could
result in substantial costs and a diversion of management's attention and
resources.
  Item 2.Unregistered Sales of Equity Securities and Use of
Proceeds
  Not
applicable.
  Item 3.Defaults Upon Senior Securities
  Not
applicable.
  Item 4. Submissionof Matters to a Vote of Security
Holders
 
 Not
applicable.
 
 Item 5.Other Information
  Not
applicable


~ 21
~
 Table of Contents
  Item 6. Exhibits




Exhibits


Exhibits
            
            Description3.1
      (1)
            
            Amended
      and Restated Certificate of Incorporation.3.2
      (2)
            
            Certificate
      of Amendment of Certificate of Incorporation.3.3
      (4)
            
            Certificate
      of Amendment of Certificate of Incorporation.3.4
      (3)
            
            Amended
      and Restated Bylaws.4.1
      (1)
            
            References
      are hereby made to Exhibits 3.1 to 3.331.1
            
            Certification
      of the Chief Executive Officer of BroadVision.31.2
            
            Certification
      of the Chief Financial Officer of BroadVision.32.1
            
            Certification
      of the Chief Executive Officer and Chief Financial Officer of BroadVision
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





(1)
              
              Incorporated
      by reference to the Company's Registration Statement on Form S-1 filed on
      April 19, 1996 as amended by Amendment No. 1 filed on May 9,
      1996, Amendment No. 2 filed on May 29, 1996 and Amendment
      No. 3 filed on June 17, 1996.(2)
              
              Incorporated
      by reference to the Company's Form 10-K for the fiscal year ended December
      31, 2006 filed on March 27, 2007.(3)
              
              Incorporated
      by reference to the Company's Current Report on Form 8-K filed on October
      16, 2008.(4)
              
              Incorporated
      by reference to the Company's Form 10-Q for the fiscal quarter ended
      September 30, 2008 filed on November 6,
    2008.




~ 22
~
 Table of Contents


SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.




BROADVISION,
      INC.Date:
      May 8, 2009
            
            By:
            
            /s/
      Pehong ChenPehong
      ChenChairman
      of the Board, President and Chief Executive
  Officer




BROADVISION,
      INC.Date:
      May 8, 2009
            
            By:
            
            /s/
      Shin-Yuan TzouShin-Yuan
      TzouChief
      Financial Officer





~ 23
~
 Table of Contents


EXHIBIT INDEX





Exhibits
              
              Description3.1
      (1)
              
              Amended
      and Restated Certificate of Incorporation.3.2
      (2)
              
              Certificate
      of Amendment of Certificate of Incorporation.3.3
      (4)
              
              Certificate
      of Amendment of Certificate of Incorporation.3.4
      (3)
              
              Amended
      and Restated Bylaws.4.1
      (1)
              
              References
      are hereby made to Exhibits 3.1 to 3.331.1
              
              Certification
      of the Chief Executive Officer of BroadVision.31.2
              
              Certification
      of the Chief Financial Officer of BroadVision.32.1
              
              Certification
      of the Chief Executive Officer and Chief Financial Officer of BroadVision
      pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.(1)
              
              Incorporated
      by reference to the Company's Registration Statement on Form S-1 filed on
      April 19, 1996 as amended by Amendment No. 1 filed on May 9,
      1996, Amendment No. 2 filed on May 29, 1996 and Amendment
      No. 3 filed on June 17, 1996.(2)
              
              Incorporated
      by reference to the Company's Form 10-K for the fiscal year ended December
      31, 2006 filed on March 27, 2007.(3)
              
              Incorporated
      by reference to the Company's Current Report on Form 8-K filed on October
      16, 2008.(4)
              
              Incorporated
      by reference to the Company's Form 10-Q for the fiscal quarter ended
      September 30, 2008 filed on November 6,
  2008.