--------------------------------------------------------------------------------

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10 - Q

(Mark One)

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

                  For the quarterly period ended June 30, 1997

                                       or

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

                         Commission File Number 0-28252

                                BROADVISION, INC.
                                -----------------
             (Exact name of registrant as specified in its charter)

                Delaware                                    94-3184303
                --------                                    ----------
     (State or other jurisdiction of                     (I.R.S. Employer
     incorporation or organization)                    Identification Number)

333 Distel Circle, Los Altos, California                    94022-1404
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip code)

                                 (415) 943-3600
                                 --------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.                            YES x NO _

         As of July 31, 1997 there were  20,279,363  shares of the  Registrant's
Common Stock outstanding.

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                           This is page 1 of 14 pages.
                         Index to exhibits is on page 15

<PAGE>




                                BROADVISION, INC.

                          QUARTERLY REPORT ON FORM 10-Q
                           QUARTER ENDED JUNE 30, 1997

                                TABLE OF CONTENTS


                                                                        Page No.
--------------------------------------------------------------------------------

PART I   FINANCIAL INFORMATION

Item 1.       Financial Statements

                  Condensed Consolidated Statements of Operations -
                      Three and six months ended June 30, 1997 and 1996      3

                  Condensed Consolidated Balance Sheets -
                      June 30, 1997 and December 31, 1996                    4

                  Condensed Consolidated Statements of Cash Flows -
                      Six months ended June 30, 1997 and 1996                5

                  Notes to Condensed Consolidated Financial Statements       6


Item 2.       Management's Discussion and Analysis of
                  Financial Condition and Results of Operations              8

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PART II       OTHER INFORMATION

Item 1.       Legal Proceedings                                             13

Item 2.       Changes in Securities                                         13

Item 3.       Defaults upon Senior Securities                               13

Item 4.       Submission of Matters to a Vote of Security Holders           13

Item 5.       Other Information                                             13

Item 6.       Exhibits and Reports on Form 8-K                              13

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SIGNATURES                                                                  14

--------------------------------------------------------------------------------

<PAGE>

<TABLE>
                       BROADVISION, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)

<CAPTION>
                                              Three Months Ended        Six Months Ended
                                                    June 30,               June 30,
                                                1997        1996        1997        1996
                                                  (unaudited)             (unaudited)
<S>                                           <C>         <C>         <C>         <C>     
Revenues:

    Software licenses                         $  4,098    $  1,564    $  7,246    $  2,663
    Services                                     1,929         738       4,072       1,037
                                              --------    --------    --------    --------
       Total revenues                            6,027       2,302      11,318       3,700

Cost of revenues:

    Cost of license revenues                       425          93         639         189
    Cost of service revenues                     1,001         331       2,144         497
                                              --------    --------    --------    --------

       Total cost of revenues                    1,426         424       2,783         686
                                              --------    --------    --------    --------

Gross profit                                     4,601       1,878       8,535       3,014

Operating expenses:

    Research and development                     1,802       1,277       3,482       2,193
    Sales and marketing                          4,257       2,486       8,461       4,093
    General and administrative                     700         320       1,446         638
                                              --------    --------    --------    --------

       Total operating expenses                  6,759       4,083      13,389       6,924
                                              --------    --------    --------    --------

Operating loss                                  (2,158)     (2,205)     (4,854)     (3,910)

    Interest and other income                      187          51         408          94
    Interest and other expense                    (138)        (26)       (150)        (62)
                                              --------    --------    --------    --------

Net loss                                      $ (2,109)   $ (2,180)   $ (4,596)   $ (3,878)
                                              ========    ========    ========    ========

Net loss per share                            $  (0.10)   $  (0.13)   $  (0.23)   $  (0.22)
                                              ========    ========    ========    ========

Shares used in computing net loss per share     20,219      16,822      20,111      17,699

<FN>
        The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>

                                       3
<PAGE>

                       BROADVISION, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)



                                                        June 30,   December 31,
                                                          1997        1996
                                                      (unaudited)

ASSETS

    Current assets:

       Cash and cash equivalents                        $ 11,595    $ 17,608
       Short-term investments                                794       2,112
       Accounts receivable, net                            7,129       5,548
       Other current assets                                  645         317
                                                        --------    --------

          Total current assets                            20,163      25,585

    Property and equipment, net                            3,563       3,024
    Other assets                                             388         321
                                                        --------    --------

       Total assets                                     $ 24,114    $ 28,930
                                                        ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities:

       Accounts payable and accrued expenses            $  3,075    $  3,484
       Unearned revenue                                    1,610       2,625
       Deferred maintenance                                1,439         924
       Current portion of long-term liabilities              365         294
                                                        --------    --------

          Total current liabilities                        6,489       7,327

    Long-term liabilities                                    490         587

    Stockholders' equity
       Common Stock                                       39,806      39,318
       Deferred compensation                              (1,806)     (2,033)
       Accumulated deficit                               (20,865)    (16,269)
                                                        --------    --------

          Total stockholders' equity                      17,135      21,016
                                                        --------    --------

          Total liabilities and stockholders' equity    $ 24,114    $ 28,930
                                                        ========    ========


   The accompanying notes are an integral part of these financial statements.

                                       4


<PAGE>




                       BROADVISION, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


                                                            Six months ended
                                                           June 30,    June 30,
                                                             1997        1996
                                                           --------    --------

Cash flows from operating activities:

    Net loss                                               $ (4,596)   $ (3,878)
    Adjustments to reconcile net loss to net cash
       used for operating activities:
          Depreciation and amortization                         712         252
          Deferred compensation                                 227         245
          Changes in operating assets and liabilities:
          Accounts receivable                                (1,581)     (4,473)
          Other assets                                         (395)       (288)
          Accounts payable and accrued expenses                (409)      1,821
          Unearned revenue and deferred maintenance            (500)      3,475
          Other liabilities                                      (4)         19
                                                           --------    --------

          Net cash used in operating activities              (6,546)     (2,827)
                                                           --------    --------

Cash flows from investing activities:
    Acquisition of property and equipment                    (1,073)     (1,149)
    Purchase of short-term investments                       (1,532)    (19,929)
    Maturity of short-term investments                        2,850         196
                                                           --------    --------
          Net cash provided by (used in) investing
              activities                                        245      20,882)
                                                           --------    --------
Cash flows from financing activities:
    Proceeds from issuance of common stock                      488      19,086
    Proceeds from issuance of preferred stock, net
       of issuance costs                                       --         5,055
    Payments on capital lease                                  (200)        (79)
                                                           --------    --------

          Net cash provided by financing activities             288      24,062
                                                           --------    --------

Net increase (decrease) in cash and cash equivalents         (6,013)        353
Cash and cash equivalents, beginning of period/year          17,608       4,311
                                                           --------    --------

Cash and cash equivalents, end of period/year              $ 11,595    $  4,664
                                                           ========    ========
Non-cash investing and financing activities
    Acquisition of equipment under capital leases          $    178    $   --
                                                           ========    ========


   The accompanying notes are an integral part of these financial statements.

                                       5

<PAGE>

                                BROADVISION, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1)    Summary of Significant Accounting Policies

Basis of Presentation

      The accompanying consolidated financial statements include the accounts of
BroadVision,  Inc.  (the  "Company")  and its  wholly  owned  subsidiaries.  All
significant  intercompany  balances and  transactions  have been  eliminated  in
consolidation.

Business of the Company

      The  Company   provides  an  integrated   software   application   system,
BroadVision  One-To-One TM, that enables the creation of  applications  allowing
non-technical  business  managers  to  tailor  Internet  marketing  and  selling
services to the needs and interests of individual  World Wide Web site visitors,
personalizing each visit on a real-time basis.

Interim Financial Information

      The  accompanying  unaudited  condensed  financial  statements  have  been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and the  instructions  for Form 10-Q and  Article  10 of
Regulation S-X. In the Company's opinion,  the financial  statements include all
adjustments,  consisting only of normal recurring adjustments, which the Company
considers  necessary to fairly state the  Company's  financial  position and the
results of operations and cash flows. The balance sheet at December 31, 1996 has
been derived  from the audited  financial  statements  at that date but does not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements.  The  accompanying
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Prospectus, Forms 10-K and 10-Q, and
other documents filed with the Securities and Exchange Commission  ("SEC").  The
results of the Company's  operations for any interim period are not  necessarily
indicative  of the results of the  Company's  operations  for any other  interim
period or for a full fiscal year.

Net Loss Per Share

       The net loss per share is computed  using net loss and, for periods prior
to the  Company's  initial  public  offering  ("IPO"),  is based on the weighted
average  number of shares of common  stock  outstanding,  convertible  preferred
stock, on an  "as-if-converted"  basis, using the exchange rate in effect at the
initial public  offering date and dilutive common  equivalent  shares from stock
options and warrants  outstanding using the treasury stock method. In accordance
with  certain SEC Staff  Accounting  Bulletins,  such  computations  include all
common and  common  equivalent  shares  issued  within 12 months of the  initial
filing date as if they were outstanding for all pre-IPO periods  presented using
the treasury stock method and the anticipated initial public offering price. For
periods  subsequent  to the IPO,  loss per  share is based on  weighted  average
shares outstanding, excluding the effects of dilutive securities.

                                       6
<PAGE>

Recent Accounting Pronouncements

       The Financial  Accounting  Standards Board recently  issued  Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  Per Share."  SFAS No. 128
requires the presentation of basic earnings per share ("EPS") and, for companies
with complex  capital  structures or potentially  dilutive  securities,  such as
convertible debt,  options and warrants,  diluted EPS. SFAS No. 128 is effective
for annual and interim  periods  ending after  December  15,  1997.  The Company
expects that basic EPS and diluted EPS will not differ  materially from loss per
share as presented in the accompanying consolidated financial statements.



2)   Balance Sheet Detail

      Property and Equipment

      Property and equipment consisted of the following (in thousands):

                                                        June 30,    December 31,
                                                         1997          1996
                                                         ----          ----
                                                      (unaudited)

        Furniture and fixtures                           $  861        $  539
        Computers and software                            4,046         3,210
        Leasehold improvements                              231           138
                                                         ------        ------
                                                          5,138         3,887
        Less accumulated depreciation and amortization    1,575           863
                                                         ------        ------
                                                         $3,563        $3,024
                                                         ======        ======



         Accrued Expenses

         Accrued expenses consisted of the following (in thousands):

                                                        June 30,    December 31,
                                                         1997          1996
                                                         ----          ----
                                                      (unaudited)
                                                      
          Employee benefits                              $  387        $  254
          Commissions and bonuses                           513           696
          Directors and officers insurance premiums         170           283
          Taxes payable                                     258           129
          Contractors fees                                  165           489
          Other                                             645           675
                                                         ------        ------
                                                         $2,138        $2,526
                                                         ======        ======

                                       7
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS


         EXCEPT FOR  HISTORICAL  INFORMATION  CONTAINED  HEREIN,  THE  FOLLOWING
DISCUSSION   CONTAINS   FORWARD-LOOKING   STATEMENTS  WHICH  INVOLVE  RISKS  AND
UNCERTAINTIES.  THE COMPANY'S  ACTUAL  RESULTS COULD DIFFER  SIGNIFICANTLY  FROM
THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE,  BUT ARE NOT LIMITED TO,  THOSE  DISCUSSED IN THIS FORM 10-Q AND IN THE
COMPANY'S  PROSPECTUS,  FORMS 10-K AND 10-Q, AND OTHER  DOCUMENTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION.  ANY SUCH  FORWARD-LOOKING  STATEMENTS SPEAK
ONLY AS OF THE DATE SUCH STATEMENTS ARE MADE.

OVERVIEW

         BroadVision  provides  software  application  solutions for  enterprise
class,  personalized business on the global Internet,  Intranets, and Extranets.
These solutions enable companies to rapidly deploy and cost-effectively  operate
secure,  scalable,  intelligent,  and  flexible  electronic  commerce,  customer
self-service,   and  knowledge   management   applications  over  the  Net.  The
BroadVision  One-To-One(TM) application system and One-To-One WebApps(TM) family
of  applications  support  large user and content  databases,  high  transaction
volumes,  intelligent  agent matching,  and seamless  integration  with existing
business systems.  BroadVision applications also incorporate a suite of powerful
management tools that enable non-technical business people to dynamically manage
content  and  control  application  behavior  from their  desktops.  BroadVision
software products are fully integrated with consulting services,  training,  and
technical  support  to  provide  comprehensive,  end-to-end  solutions  for  the
financial services, high technology, retail/distribution, and telecommunications
industries.  BroadVision is headquartered in Los Altos, California and maintains
an extensive  network of subsidiaries and licensed  resellers in North and South
America, Europe and Asia.

         The Company's  revenues are derived from software license fees and fees
for its  services.  The  Company  generally  recognizes  license  fees  when the
software  has  been  delivered,   the  customer  acknowledges  an  unconditional
obligation  to pay, and the Company has no  significant  obligations  remaining.
Professional   services  revenues  generally  are  recognized  as  services  are
performed.  Maintenance  revenues  are  recognized  ratably over the term of the
support period, which is typically one year.

         Since its  inception,  the Company has  incurred  substantial  costs to
research, develop, and enhance its technology and products, to recruit and train
a marketing and sales group, and to establish an administrative organization. As
a result,  the Company has  incurred  net losses in each  fiscal  quarter  since
inception and, as of June 30, 1997, had an accumulated deficit of $20.9 million.
The  Company  anticipates  that its  operating  expenses  will  increase  in the
foreseeable future as it continues the development of its technology,  increases
its sales and  marketing  activities,  and creates and expands its  distribution
channels.  Accordingly,  the Company expects to incur additional  losses for the
foreseeable  future. In addition,  the Company's limited operating history makes
the prediction of future results of operations difficult and, accordingly, there
can be no assurance  that the Company will achieve or sustain  revenue growth or
profitability.

         To  date,  only  a  limited  number  of  companies  have  licensed  the
BroadVision One-To-One application system.  Accordingly,  the Company has only a
limited operating  history,  and its prospects must be evaluated in light of the
risks and uncertainties  frequently  encountered by a company in its early stage
of  development.  Some of these  risks and  uncertainties  relate to the new and
rapidly  evolving  nature of the  markets in which the  Company  operates.  Such

                                        8
<PAGE>

market risks include,  among other things, the early stage of market development
for online  commerce,  the dependence of online commerce upon the development of
the Internet,  the uncertainty of widespread adoption of online commerce and the
risk of government  regulation of the  Internet.  Other risks and  uncertainties
facing the  Company  relate to the  Company's  ability to,  among other  things,
successfully   implement  its  marketing   strategy,   respond  to   competitive
developments, continue to develop and upgrade its products and technologies more
rapidly  than its  competitors,  and  commercialize  its  products  and services
incorporating  these enhanced  technologies.  There can be no assurance that the
Company will succeed in  addressing  any or all of these risks.  A more complete
description of these and other risks  relating to the Company's  business is set
forth under the caption "Risk Factors" in the Prospectus, Form 10-K and 10Q, and
other documents filed with the SEC.


RESULTS OF OPERATIONS

Revenues

         Total revenues  increased to $6,027,000 in the three-month period ended
June 30,  1997 from  $2,302,000  for the same  quarter in fiscal  1996.  For the
six-month  period ended June 30, 1997,  total revenues  increased to $11,318,000
from $3,700,000 for the same period in fiscal 1996.

         Software  product  license  revenues  increased to  $4,098,000  for the
three-month  period ended June 30, 1997 from  $1,564,000 for the same quarter in
fiscal 1996. For the quarter, the software product license revenues consisted of
North American  software product license  revenues of $1,147,000,  or 28% of the
total software  product license  revenues,  and  international  software product
license  revenues of $2,951,000,  or 72% of the total software  product  license
revenues. For the six-month period ended June 30, 1997, software product license
revenues  increased to $7,246,000  from $2,663,000 for the same period in fiscal
1996. For the six-month period ended June 30, 1997, the software product license
revenues  consisted  of North  American  software  product  license  revenues of
$2,593,000,  or  36%  of  the  total  software  product  license  revenues,  and
international  software  product license  revenues of $4,653,000,  or 64% of the
total  software  product  license  revenues.  The increases in software  product
license  revenues  reflect  the  sale  of  development  licenses  and  web-based
applications of the Company's products, and the recognition of revenues relating
to deployment licenses.  Deployment license revenues increased to $2,085,000 for
the three-month period ended June 30, 1997 from $321,000 for the same quarter of
fiscal 1996. For the six-month period ended June 30, 1997,  deployment  revenues
increased to $3,656,000  from $512,000 for the same period in fiscal 1996. As of
June 30, 1997, the Company had deployed 17 customer sites.

         Services  revenues  increased to $1,929,000 for the three-month  period
ended June 30, 1997 from  $738,000 for the same quarter of fiscal 1996.  For the
quarter,  North  American  services  revenues were  $1,060,000,  or 55% of total
services revenues,  and international services revenues were $869,000, or 45% of
total services revenues.  For the six-month period ended June 30, 1997, services
revenues  increased to $4,072,000  from $1,037,000 for the same period in fiscal
1996. Services revenues increased during these periods from the respective prior
year periods due to the increasing number of licenses of BroadVision  One-To-One
with a service or maintenance component.

Operating Expenses

         The Company's  operating  expenses have increased  substantially  since
inception.  The Company  believes that continued  expansion of its operations is
essential  to  achieving  its  objectives  and,  therefore,  intends to increase
expenditures in all operating areas.

                                       9
<PAGE>

         Cost of Software Licenses. Cost of software licenses includes the costs
of  royalties  to third  parties for  software  that is embedded  in, or bundled
together and sold with, the Company's  products,  product media and duplication,
and  manuals  and  commissions  payable to  distributors.  The amount of product
royalties  payable  is  generally  related  to the  volume of sales  made by the
Company to its customers.  The amount of commissions  payable to distributors is
related to the distributor  agreement which is generally based on the percentage
of revenue.  Cost of software licenses increased to $425,000 for the three-month
period ended June 30, 1997 from $93,000 for the same quarter in fiscal 1996. For
the six-month period ended June 30, 1997, cost of software licenses increased to
$639,000 from $189,000 for the same period in fiscal 1996.  The cost of software
licenses  increased  during these periods due to higher volume of software sales
and  sales  generated  from  the  Company's  Spanish  distributor  for  which  a
commission payable is incurred.

         Cost   of   Services.   Cost  of   services   consists   primarily   of
employee-related  costs  and  fees  for  third-party   consultants  incurred  in
providing  consulting,  post-contract  support,  and training services.  Cost of
services  increased to $1,001,000 for the three-month period ended June 30, 1997
from  $331,000  for the same quarter in fiscal 1996.  For the  six-month  period
ended June 30, 1997, cost of services  increased to $2,144,000 from $497,000 for
the same period in fiscal 1996.  The increase in cost of services was due to the
increasing  number of  licenses  of  BroadVision  One-To-One  with a support  or
maintenance  component  and  the  increasing  fixed  costs  resulting  from  the
Company's  expansion  of its  services  organization.  The Company  expects that
services  costs will  continue to increase  in  absolute  dollar  amounts as the
Company continues to expand its services organization.

         Research and  Development.  Research and development  expenses  consist
primarily of salaries, other employee-related costs, and consulting fees related
to the development of the Company's products.  Research and development expenses
increased by 41% to $1,802,000,  for the three-month  period ended June 30, 1997
from  $1,277,000 for the same quarter in fiscal 1996.  For the six-month  period
ended June 30,  1997,  research  and  development  expenses  increased by 59% to
$3,482,000 from  $2,193,000 for the same period in fiscal 1996.  These increases
in the  dollar  amount  of  research  and  development  expenses  are  primarily
attributable  to costs of  additional  personnel in the  Company's  research and
development  operations.  The Company  continues to direct  product  development
expenditures toward developing new products and enhancing existing products. The
Company  anticipates  that  research and  development  expenses will continue to
increase in absolute dollars for the remainder of 1997. All expenditures related
to research and development  have been expensed as incurred and,  therefore,  no
amortization of capitalized software development costs is included.

         Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries  and other  employee-related  costs,  commissions  and other  incentive
compensation,  travel and entertainment, and expenditures for marketing programs
such as  collateral  materials,  trade  shows,  public  relations  and  creative
services.   Sales  and  marketing  expenses  increased  to  $4,257,000  for  the
three-month  period ended June 30, 1997 from  $2,486,000 for the same quarter in
fiscal 1996. For the six-month  period ended June 30, 1997,  sales and marketing
expenses  increased to $8,461,000  from $4,093,000 for the same period in fiscal
1996.  These  increases in sales and marketing  expenses  reflect  primarily the
hiring of additional sales and marketing personnel, developing and expanding its
sales distribution channels, and expanding promotional  activities.  The Company
expects to continue to expand its direct sales and marketing efforts and expects
sales and marketing  expenses to continue to increase  significantly in absolute
dollars.

         General and Administrative. General and administrative expenses consist
primarily of salaries,  other employee-related  costs, and fees for professional
services.  General and  administrative  expenses  increased  to $700,000 for the
three-month  period  ended June 30, 1997 from  $320,000  for the same quarter in
fiscal  1996.  For the  six-month  period  ended  June  30,  1997,  general  and
administrative  expenses  increased  to  $1,446,000  from  $638,000 for the same
period in fiscal 1996. These increases for general and  administrative  expenses

                                       10
<PAGE>
reflect  primarily  the  hiring  of  additional  administrative  and  management
personnel,   increases  in  the  provision  for  doubtful  accounts,   increased
professional  fees,  and the  addition  of other  infrastructure  to support the
expansion of the Company's  operations.  The Company  expects to continue to add
administrative staff to support broadened operations,  expand North American and
international  office  facilities,  and incur  costs  related  to being a public
company and, therefore,  expects general and administrative expenses to increase
significantly in absolute dollars.

         Prior to its IPO, the Company  recorded  deferred  compensation for the
difference between the exercise price and the deemed fair value of the Company's
Common Stock with respect to 1,794,000  shares issuable upon exercise of options
granted. These amounts were initially recorded as deferred compensation and will
be  amortized  to  cost of  services,  research  and  development,  selling  and
marketing,  and general and  administrative  expense over the vesting periods of
the  options,   generally  60  months.   Deferred   compensation   amortized  to
compensation expense decreased to $117,000 from $135,000 for the same quarter in
1996.  For the  six-month  period  ended June 30,  1997,  deferred  compensation
amortized to  compensation  expense  decreased to $227,000 from $245,000 for the
same  period in fiscal  1996.  The  decrease  in the  amortization  of  deferred
compensation  is  due  to the  cancellation  of  stock  options  for  terminated
employees. The amortization of deferred compensation will have an adverse effect
on the Company's  reported results of operations through the year 2003, but such
effect will be significantly reduced beginning in the third quarter of 2001.


FACTORS AFFECTING QUARTERLY OPERATING RESULTS

         The Company expects to experience significant fluctuations in quarterly
operating results that may be caused by many factors including,  but not limited
to, those discussed  under the caption "Risk Factors" in the  Prospectus,  Forms
10-K and 10-Q, and other filed documents with the SEC.

         The Company expects that a significant  portion of its revenues will be
derived from a limited number of orders, and the timing of receipt,  fulfillment
and  deployment of such orders is likely to cause material  fluctuations  in the
Company's  operating  results,  particularly on a quarterly  basis, as with many
software companies.  Specifically, the Company is taking steps to accelerate the
pace of deployment  which could result in  acceleration  of revenue  recognition
and, consequently,  the potential for greater fluctuation in quarterly operating
results.  The Company  anticipates  that it will make the major  portion of each
quarter's deliveries near the end of each quarter and, as a result, short delays
in delivery of products at the end of a quarter could adversely affect operating
results for that quarter. Due to these factors, quarterly revenues and operating
results   are   difficult   to   forecast,   and  the  Company   believes   that
period-to-period  comparisons of its operating  results will not  necessarily be
meaningful   and  should  not  be  relied  upon  as  any  indication  of  future
performance.

         The Company  anticipates  that its  operating  expenses  will  increase
substantially  in the foreseeable  future as it continues the development of its
technology,  increases  its sales and  marketing  activities,  and  creates  and
expands its  distribution  channels.  Accordingly,  the Company expects to incur
additional losses for the foreseeable future. In addition, the Company's limited
operating history makes the prediction of future results of operations difficult
and,  accordingly,  there can be no  assurance  that the Company will achieve or
sustain revenue growth or profitability. The Company's limited operating history
also  requires  that its  prospects  be  evaluated  in light  of the  risks  and
uncertainties  frequently  encountered  by a  company  in  its  early  stage  of
development. Some of these risks and uncertainties relate to the new and rapidly
evolving nature of the markets in which the Company operates.  Such market risks
include,  among other things,  the early stage of market  development for online
commerce,  the  dependence  of  online  commerce  upon  the  development  of the
Internet,  the uncertainty of widespread  adoption of online  commerce,  and the
risk of government  regulation of the  Internet.  Other risks and  uncertainties
facing the  Company  relate to the  Company's  ability to,  among other  things,

                                       11
<PAGE>
successfully   implement  its  marketing   strategy,   respond  to   competitive
developments, continue to develop and upgrade its products and technologies more
rapidly  than its  competitors,  and  commercialize  its  products  and services
incorporating  these enhanced  technologies.  There can be no assurance that the
Company will succeed in  addressing  any or all of these risks.  A more complete
description of these and other risks  relating to the Company's  business is set
forth under the caption "Risk  Factors" in the  Prospectus  and Form 10-K filing
with the SEC. It is also likely that the Company's  future  quarterly  operating
results from time to time will not meet the  expectations  of market analysts or
investors, which may have an adverse effect on the price of the Company's Common
Stock.


LIQUIDITY AND CAPITAL RESOURCES

       Prior to the IPO, the Company financed its operations  primarily  through
private  placements of Common and Preferred  Stock,  which provided net proceeds
totaling  $15.5  million  through  May 1996.  The IPO  yielded  net  proceeds of
approximately  $20.7 million.  At June 30, 1997,  the Company had  approximately
$12.4 million in cash, cash equivalents, and short-term investments. The Company
currently has no significant  capital  commitments  other than commitments under
equipment  and operating  leases  disclosed in its Form 10-K filed with the SEC.
The Company  has  entered  into a loan and  security  agreement  with a bank for
leasehold  improvements  at  the  Company's  new  facility,  which  the  Company
anticipates occupying in late 1997, as disclosed in Form 10-K.  The Company does
not believe that it will require  additional  credit facilities for at least the
next 12 months.

         The Company  anticipates  that its  available  cash  resources  will be
sufficient  to meet  its  presently  anticipated  working  capital  and  capital
expenditure  requirements  for at least the next 12 months.  This  estimate is a
forward-looking  statement  that involves  risks and  uncertainties,  and actual
results may vary as a result of a number of factors,  including  those discussed
under "Risk Factors" in the Prospectus, Forms 10-K and 10-Q, and other documents
filed with the SEC and those  discussed  under the  caption  "Factors  Affecting
Operating  Results"  above and elsewhere  herein.  The Company may need to raise
additional  funds in order to  support  more  rapid  expansion,  develop  new or
enhanced  services,  respond to  competitive  pressures,  acquire  complementary
businesses  or  technologies,  or respond  to  unanticipated  requirements.  The
Company may seek to raise  additional  funds through  private or public sales of
securities, strategic relationships,  bank or lease financings, or otherwise. If
additional  funds are raised  through  the  issuance of equity  securities,  the
percentage  ownership  of the  stockholders  of the  Company  will  be  reduced,
stockholders may experience  additional dilution,  or such equity securities may
have rights,  preferences,  or privileges  senior to those of the holders of the
Company's Common Stock. There can be no assurance that additional financing will
be available on acceptable terms, if at all. If adequate funds are not available
or are not available on acceptable  terms,  the Company may be unable to develop
or enhance its products,  take advantage of future opportunities,  or respond to
competitive pressures or unanticipated requirements, which could have a material
adverse effect on the Company's  business,  financial  condition,  and operating
results.

                                       12

<PAGE>


PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         Not applicable

ITEM 2.  CHANGES IN SECURITIES

         Not applicable


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         On May 28, 1997, the Company held its annual  meeting of  stockholders,
         at which meeting the stockholders took the following actions:

         (i) elected Pehong Chen, David Anderson,  Yogan Dalal and Koh Boon Hwee
         to serve as  directors  of the Company  for the ensuing  year and until
         their successors are duly elected;

         (ii)  ratified the  selection  of KPMG Peat Marwick LLP as  independent
         auditors of the Company for its fiscal year ending December 31, 1997.

         Such actions were taken by the following votes:

                                        Votes For         Votes Withheld
                                        ---------         --------------
         Election of Directors:

         Pehong Chen                   11,922,036             100
         David Anderson                11,922,036             100
         Yogan Dalal                   11,922,036             100
         Koh Boon Hwee                 11,922,036             100

                                                                      
                             Votes For   Votes Against   Abstentions  
                             ---------   -------------   -----------  
         Ratification of
         Auditors           11,922,036        100           200

ITEM 5.  OTHER INFORMATION

         Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

                  Item         Description
                  ----         -----------
                  10.1         Loan and Security Agreement,  dated July 2, 1997,
                               between Silicon Valley Bank and the Company.
                  11.1         Statement re: Computation of Net Loss Per Share
                  27.1         Financial Data Schedule


                                       13
<PAGE>

                                   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: ________________            ----------------------------------------------
                                  Pehong Chen
                                  President and Chief Executive Officer
                                  (Principal Executive Officer)



Date: ________________            ----------------------------------------------
                                  Randall C. Bolten
                                  Vice President, Operations and Chief Financial
                                  Officer
                                  (Principal Financial and Accounting Officer)



                                       14
<PAGE>


                                BROADVISION, INC.

                                INDEX TO EXHIBITS


Exhibit
  No.                                  Description
--------                               -----------

10.1     Loan and Security Agreement, dated July 2, 1997, between Silicon Valley
         Bank and the Company

11.1     Statement regarding Computation of Per Share Earnings . . . . . . .

27.1     Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . .

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