UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  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 Quarter
ended March 31, 2001 OR  ̈TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 0–28252(Commission File Number) BROADVISION, INC.(Exact name of registrant as specified in its
charter) Delaware
  94–3184303(State or other jurisdiction of
  (I.R.S. Employerincorporation or organization)
  Identification Number)585 Broadway,Redwood City, California
  94063(Address of principal executive offices)
  (Zip code)
 (650) 261–5100(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.YesxNo ̈ As
of May 9, 2001, there were 273,565,216 shares of the Registrants Common Stock
issued and outstanding.   BROADVISION, INC. AND
SUBSIDIARIES
FORM 10–Q
Quarter Ended March 31, 2001

TABLE OF CONTENTS

PART I.
  FINANCIAL INFORMATIONItem 1.
  Financial StatementsCondensed Consolidated Balance Sheets  March 31, 2001 and
  December 31, 2000Condensed Consolidated Statements of Operations and Comprehensive Loss
   Three months ended March 31, 2001 and 2000Condensed Consolidated Statements of Cash FlowsThree months ended
  March 31, 2001 and 2000Notes to Condensed Consolidated Financial StatementsItem 2.
  Managements
  Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
  Quantitative and Qualitative Disclosures about Market RiskPART II.
  OTHER INFORMATIONItem 1.
  Legal
  ProceedingsItem 2.
  Changes in Securities and Use of ProceedsItem 3.
  Defaults
  upon Senior SecuritiesItem 4.
  Submission of Matters to a Vote of Security HoldersItem 5.
  Other
  InformationItem 6.
  Exhibits
  and Reports on Form 8-KSIGNATURESPART I.  FINANCIAL INFORMATION

Item 1.              Financial
Statements

BROADVISION,
INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per share data)

March 31, 2001
  (unaudited)
  December 31, 2000ASSETSCash and cash equivalents
  $134,731
  $153,137Short-term investments
  41,597
  69,397Accounts receivable, less reserves of
  $4,717 and $4,015, for 2001 and 2000, respectively
  86,474
  104,811Prepaids and other
  17,721
  17,417Total current assets
  280,523
  344,762Property and equipment, net
  109,746
  76,685Deferred tax asset
  5,579
  5,579Long-term investments
  72,571
  78,769Equity investments
  21,398
  23,786Goodwill and other intangibles
  541,221
  607,501Other assets
  6,123
  5,942Total assets
  $1,037,161
  $1,143,024LIABILITIES AND STOCKHOLDERS
  EQUITYAccounts payable
  $19,706
  $15,711Accrued expenses
  40,736
  53,676Unearned revenue
  20,868
  16,330Deferred maintenance
  38,178
  42,237Current portion of long-term debt
  977
  977Total current liabilities
  120,465
  128,931Long-term debt, net of current portion
  3,653
  3,897Other noncurrent liabilities
  885
  898Total liabilities
  125,003
  133,726CommitmentsStockholders equity:Convertible preferred stock, $0.0001 par value; 10,000 shares
  authorized; none issued and outstanding
  -
  -Common stock, $0.0001 par value; 2,000,000 shares authorized; 272,965
  and 270,066 shares issued and outstanding for 2001 and 2000, respectively
  27
  27Additional paid-in capital
  1,183,393
  1,176,042Accumulated other comprehensive loss, net
  of tax
  (3,694)
  (4,348)Accumulated deficit
  (267,568)
  (162,423)Total stockholders equity
  912,158
  1,009,298Total liabilities and stockholders
  equity
  $1,037,161
  $1,143,024See
Accompanying Notes to Condensed Consolidated Financial Statements

BROADVISION,
INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)

Three Months Ended
  March 31,2001
  2000(unaudited)Revenues:Software licenses
  $43,140
  $40,713Services
  47,979
  20,788Total revenues
  91,119
  61,501Cost of revenues:Cost
  of software licenses
  2,240
  2,064Cost
  of services
  37,368
  15,673Total cost of revenues
  39,608
  17,737Gross profit
  51,511
  43,764Operating expenses:Research and development
  26,971
  5,759Sales and marketing
  52,481
  25,200General and administrative
  10,590
  3,611Goodwill and intangible amortization
  66,280
  -Total operating expenses
  156,322
  34,570Operating (loss) income
  (104,811)
  9,194Other income, net
  497
  7,248(Loss) income before provision for income taxes
  (104,314)
  16,442Provision for income taxes
  831
  6,406Net (loss) income
  $(105,145)
  $10,036Basic (loss) earnings per share
  $(0.39)
  $0.04Diluted (loss) earnings per share
  $(0.39)
  $0.04Shares used in computing:Basic (loss) earnings per share
  271,011
  245,495Diluted (loss) earnings per share
  271,011
  284,688Comprehensive (loss) income:Net (loss) income
  $(105,145)
  $10,036Other comprehensive income, net of tax:Unrealized long-term investment gains
  654
  1,188Total comprehensive (loss) income
  $(104,491)
  $11,224See Accompanying Notes to Condensed
Consolidated Financial Statements

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



Three Months Ended March 31,2001
  2000(unaudited)Cash flows from operating
  activities:Net (loss) income
  $(105,145)
  $10,036Adjustments to reconcile net (loss) income to
  net cash provided by (used for) operating activities:Depreciation and amortization
  5,791
  1,943Amortization of deferred compensation
  -
  79Accounts receivable reserves
  702
  300Amortization of prepaid royalties
  1,136
  296Amortization of prepaid compensation
  192
  511Realized loss on cost method long-term investments
  1,281
  -Equity
  in net loss from unconsolidated subsidiary
  1,107
  -Amortization of goodwill and other intangibles
  66,280
  -Changes in operating assets and liabilities:Accounts receivable
  17,635
  (11,766)Prepaids and other
  (1,267)
  (4,728)Accounts payable and accrued expenses
  (9,364)
  5,400Unearned revenue and deferred maintenance
  479
  22,348Income taxes
  -
  6,036Other noncurrent assets
  (546)
  (1,406)Net cash provided by (used for) operating activities
  (21,719)
  29,049Cash flows from investing
  activities:Purchase of property and equipment
  (38,852)
  (7,174)Purchase of long-term investments
  (24,029)
  (8,794)Sales/maturity of long-term investments
  30,820
  -Purchase of short-term investments
  (17,666)
  (16,915)Sales/maturity of short-term investments
  45,946
  1,072Net cash used for investing activities
  (3,781)
  (31,811)Cash flows from financing
  activities:Proceeds from issuance of common stock, net
  7,351
  7,247Repayments
  of borrowings
  (257)
  (275)Payments on capital lease obligations
  -
  (125)Net cash provided by financing activities
  7,094
  6,847Net (decrease) increase in cash and cash
  equivalents
  (18,406)
  4,085Cash and cash equivalents at beginning of
  period
  153,137
  279,823Cash and cash equivalents at end of period
  $134,731
  $283,908Supplemental disclosures of
  cash flow information:Cash
  paid for interest
  $118
  $125Cash
  paid for income taxes
  $831
  $314See
Accompanying Notes to Condensed Consolidated Financial Statements

BROADVISION,
INC. AND SUBSIDIARIESNOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

Note 1.              Organization
and Summary of Significant Accounting Policies

Nature of Business

BroadVision, Inc.
(collectively with its subsidiaries, the "Company") was incorporated
in the state of Delaware on May 13, 1993. The Company develops and sells
an integrated suite of packaged applications for conducting e-business
interactions, transactions and services. Global enterprises and government
entities use these applications to sell, buy and exchange goods, services and
information over the Web and on wireless devices. The BroadVision e-business
application suite enables an entity to establish and sustain high-yield relationships
with customers, suppliers, partners, distributors, employees and other
constituents in the extended enterprise. BroadVision services, supported by
over 200 partner organizations worldwide, transform these applications into
business value for BroadVision's customers through consulting, education and
support services in more than 34 countries.

The BroadVision e-business
application suite allows businesses to tailor Web and wireless content to the
needs and interests of individual users by personalizing content and
transactions on a real-time basis. The Company offers enterprise-class
solutions to connect companies to their customers, suppliers, partners and
employees. These solutions enable companies to maintain and expand existing
relationships in an online environment via a single, integrated e-business
platform.

BroadVision Global
Services, or BVGS, provides a broad range of consulting, training and technical
support services to all of the Companys customers and implementation partners.
This organization provides business application and technical expertise, along
with extensive product knowledge, to complement the Companys products and
provide solutions that meet customers' unique business requirements. By using
these services, customers are able to build customized application solutions to
maximize the benefits of one-to-one relationship management and self-service.

A significant element of
the Companys sales strategy is to engage in strategic business alliances to
assist in marketing, selling and developing customer applications.

As of March 31, 2001,
the Company had developed key strategic business alliances with over 200
systems integration, design, consulting and other services organizations
throughout the world, including Accenture, Deloitte Consulting, Hewlett-Packard
Consulting, IBM Global Services, KPMG Consulting, Leapnet,
PricewaterhouseCoopers and Roundarch. The Companys platform alliances are
partnerships formed to integrate technologies to drive business growth.
Additionally, the Company has developed key technology partnerships with
leading Web- and wireless-focused companies in areas complementary to the
Companys solutions, such as data analysis and reporting, enterprise
application integration, enterprise Web management, call center management,
content management, voice recognition, payment processing, auctioning and XML.
These technology partnerships enhance the Companys ability to base products on
industry standards and to take advantage of current and emerging technologies.
These alliances now include companies such as BEA Systems, Broadbase,
Documentum, E.Piphany, Genesys, i2, Interwoven, Nuance, Tibco, WebMethods and
Yantra.

The Companymarkets its
products primarily through a direct sales organization with operations in North
America, South America, Europe, Australia and Asia/Pacific. A component of the
Companys strategy is continued expansion of international activities. The
Company intends to broaden its presence in international markets by expanding
its international sales force and by entering into additional distribution
agreements. The Company also contracts with third-party resellers, distributors
and systems integrators in North America, South America, Europe, Australia and
Asia /Pacific. The Company intends to increase the use of this distribution
channel.

There has been a general downturn
in the economy over the last several months. This downturn may continue in the
future and could have an impact on our future financial results. Comparisons of
financial performance made in this document are not necessarily indicative of
future performance. Based upon the current economic environment, the Company
had adjusted its estimates of expected fiscal 2001 revenue. The Company also
reported a corporate-wide reorganization and reduction in force and will incur
a charge in the second quarter of 2001, estimated to be in the $30.0 million to
$50.0 million range.

Basis of Presentation and Use of Estimates

The accompanying consolidated financial
statements include the accounts of the Company. They have been prepared in
accordance with the established guidelines for interim financial information as
provided by the instructions to Form 10-Q and Article 10 of Regulation S-X. All
significant intercompany transactions have been eliminated in consolidation.
The financial results and related information as of March 31, 2001 and for the
three months ended March, 2001 and 2000 are unaudited. The balance sheet at
December 31, 2000 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 generally accepted
accounting principles. In the Companys opinion, the consolidated financial
statements presented herein include all necessary adjustments, consisting of
normal recurring adjustments, to fairly state the Companys financial position,
results of operations, and cash flows for the periods indicated. The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the
United States 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. Actual results could differ from estimates.

The accompanying consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included with the Companys Form 10-K
and other documents that have been filed with the Securities and Exchange
Commission. The results of the Companys operations for the interim periods
presented are not necessarily indicative of operating results for the full
fiscal year or any future interim periods.

ReclassificationsCertain prior
period balances have been reclassified to conform to the current period
presentation.

Revenue RecognitionThe Company's revenues are derived from
software licensing arrangements and fees charged for services. Software is
generally licensed for development use and for its use in deployment of the
customer's website. Deployment licenses are generally based on the number of
persons who register on a customer's website using the Company's software. The
Company's revenue recognition policies are in accordance with Statement of
Position ("SOP") 97-2, Software
Revenue Recognition, as amended and SOP 98-9, Software Revenue Recognition, With Respect to Certain
Transactions. In general, software license revenues are recognized
when a non-cancelable license agreement has been signed and the customer
acknowledges an unconditional obligation to pay, the software product has been
delivered, there are no uncertainties surrounding product acceptance, the fees
are fixed and determinable and collection is considered probable; professional
services revenues are recognized as such services are performed; and
maintenance revenues, or post-contract customer support, or PCS, including
revenues bundled with software agreements which entitle the customers to
technical support and future unspecified enhancements to our products, are
deferred and recognized ratably over the related contract period, generally
twelve months. Revenues recognized from multiple-element software arrangements
are allocated to each element of the arrangement based on the fair values of
the elements, such as software products, post contract customer support,
installation or training. The determination of fair value is based on objective
evidence which is specific to the Company. If evidence of fair value does not
exist for all elements of a license agreement and PCS is the only undelivered
element, then all revenue for the license arrangement is recognized ratably
over the term of the agreement as license revenue. If evidence of fair value of
all undelivered elements exists but evidence does not exist for one or more
delivered elements, then revenue is recognized using the residual method. Under
the residual method, the fair value of the undelivered elements is deferred and
the remaining portion of the arrangement fee is recognized as revenue. Services
that the Company provides are not essential to the functionality of the
software.

The Company records unearned
revenue for software arrangements when cash has been received from the customer
and the arrangement does not qualify for revenue recognition under the
Company's revenue recognition policy. The Company records accounts receivable
for software arrangements when the arrangement qualifies for revenue
recognition but cash or other consideration has not been received from the
customer.

The Company's professional services
are delivered through BVGS, presently comprised of the Strategic Services
Group, the Technical Services Group, the Content and Creative Services Group,
the Client Services, Project and Program Management Group, the Partner Services
Group, the Education Services Group and the Technical Support Services Group.
The first three groups provide consulting services, the fourth group manages
projects and client relationships, the fifth group manages the needs of our
partner community, the sixth group provides training-related services to
employees, customers and partners, and the last group provides software
maintenance services, including technical support, to the Company's customers
and partners. Revenue from consulting services is typically recognized as
services are performed. Maintenance fees relating to technical support and
upgrades are recognized ratably over the maintenance period.

Net Earnings (Loss) Per ShareStatement of
Financial Accounting Standard (SFAS) No. 128,Earnings Per Share, requires the
presentation of basic and diluted earnings per share. Earnings per share are
calculated by dividing net income applicable to common stockholders by a
weighted average number of shares outstanding for the period. Basic earnings
per share are determined solely on common shares whereas diluted earnings per
share include common equivalent shares, as determined under the treasury stock
method.

The following table sets forth
basic and diluted earnings per share computational data for the periods
presented (in thousands, except per share amounts):

Three Months Ended
  March 31,2001
  2000Net
  (loss) income
  $(105,145)
  $10,036Weighted-average
  common shares outstanding utilized for basic (loss) earnings per share
  271,011
  245,495Weighted-average
  common equivalent shares outstanding:Employee common stock options
  -
  39,168Common stock warrants
  -
  25Total weighted-average common and
  common equivalent shares outstanding utilized for diluted (loss) earnings per
  share
  271,011
  284,688Basic
  (loss) earnings per share
  $(0.39)
  $0.04Diluted
  (loss) earnings per share
  $(0.39)
  $0.04At March 31, 2001, 17,711,682
potential common shares are excluded from the determination of diluted net loss
per share as the effect of such shares is anti-dilutive. At March 31, 2000,
there were no potential common shares excluded from the determination of
diluted earnings per share.

Fair Value of Financial
Instruments--The
Company's financial instruments consist of cash and cash equivalents,
short-term investments, accounts receivable, long-term investments, equity
investments, accounts payable and debt. The Company does not have any derivative
financial instruments. The Company believes the reported carrying amounts of
its financial instruments approximates fair value, based upon the short
maturity of cash equivalents, short term investments, accounts receivable and
payable, and based on the current rates available to the Company on similar
debt issues. Additionally, the Company periodically evaluates the carrying
value of all of its investments for permanent impairment when events and
circumstances indicate that the book value of an asset may not be recoverable.
If such assets are considered to be impaired, the impairment to be recognized
is measured by the amounts by which the carrying amount exceeds its fair market
value. The Company's equity investments are comprised of investments in public
and non-public technology-related companies. The Company may record future
impairment charges due to continued economic decline and the potential
resulting negative impact on these companies. During the three months ended
March 31, 2001 the Company recorded $1.3 million in impairment charges on its
cost method long-term investments. There was no such charge during the three
months ended March 31, 2000.

New Accounting PronouncementsThe Financial
Accounting Standards Board (FASB) issued SFAS No. 133,Accounting for Derivative Instruments and Hedging
Activities,as amended by SFAS No. 137. SFAS No. 133 addresses
the accounting for derivative instruments, including certain derivative
instruments embedded in other contracts. Under SFAS No. 133, entities are
required to record and carry all derivative instruments at fair value as either
assets or liabilities. The accounting for changes in fair value (i.e., gains or
losses) of a derivative instrument depends on whether it qualifies as part of a
hedging relationship, has been so designated as such and the underlying reason
for holding it. The Company adopted SFAS No. 133, as amended, on January 1,
2001 as required. To date, the Company has not invested in derivative
instruments and has not engaged in hedging activities. Accordingly, the effects
of adopting SFAS No. 133 did not have an impact on the Companys financial
position, results of operations or cash flows. In June 2000, the FASB issued
Statement No. 138,Accounting for Certain
Derivative Instruments and Certain Hedging Activities.FASB No. 138
addresses certain issues related to the implementation of SFAS No. 133, but did
not change the basic model of SFAS No. 133 or further delay the implementation
of SFAS No. 133.

Note 2.              Selective
Balance Sheet Detail

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

March 31,
  2001
  December 31,
  2000Furniture
  and fixtures
  $9,493
  $6,136Computers
  and software
  66,080
  56,654Leasehold
  improvements
  60,533
  34,465136,106
  97,255Less
  accumulated depreciation and amortization
  (26,360)
  (20,570)$109,746
  $76,685Accrued expenses consisted of the
following (in thousands):

March 31,
  2001
  December 31,
  2000Employee
  benefits
  $4,962
  $3,900Commissions
  and bonuses
  14,027
  22,790Sales
  and other taxes
  8,618
  11,439Other
  13,129
  15,547$40,736
  $53,676

Note 3.              Commercial
Credit Facilities

The Company has various credit
facilities with a commercial lender which include term debt in the form of
notes payable and a revolving line of credit that provides for up to
$10,000,000 of additional borrowings based on eligible accounts receivable. As
of March 31, 2001 and December 31, 2000, outstanding term debt borrowings were
approximately $4.6 million and $4.9 million, respectively. Borrowings bear
interest at the banks prime rate (8.0% and 9.5% as of March 31, 2001 and
December 31, 2000, respectively). Principal and interest are due in consecutive
monthly payments through maturity based on the term of the facility. Principal
payments of $977,000 are due annually from 2000 through 2004, $611,000 due in
2005, and a final payment of $357,000 due in 2006. As of March 31, 2001 and
December 31, 2000, the Company had no outstanding borrowings under its
revolving line of credit. However, commitments totaling $2.4 million in the
form of standby letters of credit were issued under its revolving line of
credit facility as of March 31, 2001 and December 31, 2000, respectively.
Commitments totaling $23.0 million in the form of standby letters of credit were
also issued from separate financial institutions as of March 31, 2001. The
commercial credit facilities include covenants which impose certain
restrictions on the payment of dividends and other distributions and requires
the Company to maintain monthly financial covenants, including a minimum quick
ratio, tangible net worth ratio and debt service coverage ratio. Borrowings are
collateralized by a security interest in substantially all of the Companys
owned assets. As of March 31, 2001, the Company was not in compliance with one
of its financial covenants due to its net operating loss for the three months
then ended. In May 2001, the Company signed an amendment to the loan agreement
and is now in compliance with its financial covenants.

Note 4.              Commitments

The Company currently has $4.6 million of
outstanding term debt under its existing credit facility with a commercial
bank. Capital expenditures were $38.9 million and $7.2 million for the three
months ended March 31, 2001 and 2000, respectively. The Company's capital
expenditures consisted of purchases of operating resources to manage its
operations and consisted of computer hardware and software, communications
equipments, office furniture and fixtures and leasehold improvements. In
February and April 2000, the Company entered into new facility lease agreements
for approximately 519,000 square feet currently under construction. The Company
expects possession to occur in phases during the second and third quarters of
2001. Lease payments will be made on an escalating basis with the total future
minimum lease payments amounting to $316.4 million. The Company will also have
to contribute a significant amount towards construction costs of the facility.
As of March 31, 2001, the Company had paid $44.5 million for improvements to
the facility. The total estimated cost of improvements is approximately $56.7
million, but is subject to change. The Company has no other significant capital
commitments. In connection with the restructuring of the Company's operations in
the quarter ending June 30, 2001, the Company is currently assessing its
facilities needs and may incur charges due to closure of facilities as a result
of the restructuring. See Note 7 of Notes to Condensed Consolidated Financial
Statements.

Note 5.                           Geographic, Segment and Significant
Customer Information

The Company adopted the provisions
of SFAS No. 131, Disclosure about Segments
of an Enterprise and Related Information, during 1998. SFAS No. 131
establishes standards for the reporting by public business enterprises of
information about operating segments, products and services, geographic areas
and major customers. The methodology for determining what information to report
is based on the way that management organizes the operating segments within the
Company for making operational decisions and assessments of financial
performance. The Companys chief operating decision maker is considered to be
the Companys Chief Executive Officer, or CEO. The CEO reviews financial
information presented on a consolidated basis accompanied by disaggregated
information about revenues by geographic region and by product for purposes of
making operating decisions and assessing financial performance. The Company
operates in one segment, electronic business commerce solutions.

The Company sells its products and
provides services worldwide through a direct sales force and through a channel
of independent distributors, value-added resellers (VARs) and application
service providers (ASPs). In addition, the sales of the Companys products
are promoted through independent professional consulting organizations known as
systems integrators. The Company provides services worldwide directly through
its BroadVision Global Services Organization and indirectly through distributors,
VARs, ASPs and system integrators. The Company currently operates in three
primary geographical territories: NASA, which includes North and South America;
EMEA, which includes Europe, the Middle East and Africa; and Asia/Pacific/Japan
(APJ), which includes the Pacific Rim, the Far East and India. Disaggregated
financial information regarding the Companys products and services and
geographic revenues is as follows (in thousands):

Three Months Ended
  March 31,2001
  2000Software
  licenses:One-To-One Enterprise
  $2,472
  $5,704One-To-One Packaged Solutions
  40,668
  35,009Services
  31,499
  13,678Maintenance
  16,480
  7,110Total Revenues
  $91,119
  $61,501Revenues:NASA
  $61,513
  $47,285EMEA
  22,571
  11,623APJ
  7,035
  2,593Total Company
  $91,119
  $61,501March 31,
  2001
  December 31,
  2000Identifiable
  assets:NASA
  $993,138
  $1,102,343EMEA
  35,590
  33,254APJ
  8,433
  7,427Total Company
  $1,037,161
  $1,143,024Prior periods have been restated to
reflect changes in software license classifications. During the three months
ended March 31, 2001, one customer accounted for more than 10% of the Company's
total revenues. During the three months ended March 31, 2000, no single
customer accounted for more than 10% of the Company's total revenues.

Note 6.             Acquisition

On April 14, 2000, the Company
completed its acquisition of Interleaf, Inc. and its subsidiaries (Interleaf)
pursuant to a statutory merger involving a stock-for-stock exchange.
Interleafs software products and related services enable automated electronic
business, or e-business, and also enable the extension of e-business to
wireless users. Interleaf provides customers with an integrated, easily
implemented e-business solution based on extensible Markup Language, or XML,
that enables the design, creation and management of XML-based content for
transformation and delivery over the Web and related services. As a result of
the acquisition, the Company will have the ability to combine technological resources
to develop a robust Web-based business solution and reduce time to market for
the combined Companys products. Through the acquisition of all of the equity
securities of Interleaf, BroadVision acquired all of the assets and assumed
liabilities of Interleaf and its existing operations which included in-process
technology. Pursuant to the terms of the Agreement and Plan of Merger and
Reorganization, dated as of January 26, 2000, each outstanding share of
Interleaf common stock was exchanged for 1.0395 shares of Company common stock
and all options to purchase shares of Interleaf common stock outstanding
immediately prior to the consummation of the merger were converted into options
to purchase shares of Company common stock.

The Company issued 14,391,991
shares of Company common stock with a fair market value of $686.9 million and
exchanged options to purchase 2,338,342 shares of Company common stock with a
fair market value of $102.7 million. The fair market value of the exchanged
options to purchase 2,338,342 shares of Company common stock was valued using
the Black-Scholes option-pricing model. In connection with the acquisition, the
Company incurred transaction costs consisting primarily of financial advisor,
legal and accounting professional fees of $14.8 million, severance costs of
$1.0 million and office closure costs of $1.3 million, resulting in a total
purchase price of $806.7 million. The results of operations of Interleaf have
been included with the Companys results of operations since the April 14, 2000
acquisition date.

The acquisition was accounted for
as a purchase business combination. Under this accounting treatment, the
purchase price is allocated to the assets acquired and liabilities assumed
based on the estimated fair values on the date of acquisition.

The total purchase price paid for
the Interleaf acquisition was allocated as follows (in thousands):

Property
  and equipment
  $2,896Net
  liabilities assumed, excluding property and equipment
  (1,041)Identifiable
  intangible assets
  28,910In-process
  technology
  10,100Goodwill
  765,805Total
  $806,670Based upon the Companys estimates
prepared in conjunction with a third-party valuation consultant, $10.1 million
was allocated to acquired in-process technology and $28.9 million was allocated
to intangible assets. The amounts allocated to intangible assets include
completed technologies of $20.4 million and assembled workforces of $8.5
million.

At March 31, 2001, accumulated
amortization related to the goodwill and other intangible assets acquired in
the Interleaf acquisition totaled $253.9 million. Goodwill amortization was
$244.6 million and other intangible asset amortization was $9.3 million. The
goodwill and other intangible assets are being amortized over a three-year
period.

The following summary, prepared on
an unaudited pro forma basis, reflects the condensed consolidated results of
operations for the three month period ended March 31, 2000 assuming Interleaf
had been acquired at the beginning of the period presented (in thousands,
except per share data):

For the three months
  ended March 31, 2000Revenue
  $73,857Net
  loss
  (61,636)Basic
  and diluted net loss per share
  $(0.24)The pro forma results are not
necessarily indicative of what would have occurred if the acquisition had been
in effect for the period presented. In addition, they are not intended to be a
projection of future results and do not reflect any synergies that might be
affected from combined operations. The charges for in-process technology have
not been included in the unaudited pro forma results because they are
nonrecurring. See Managements Discussion and Analysis of Financial Condition
and Results of Operations for more information concerning the acquisition of
Interleaf.

Note 7.              Subsequent
Events

On April 20, 2001, the Company
filed a Form 8-K with the Securities and Exchange Commission reporting that
several purported class action lawsuits had been filed against the Company and
certain of its officers and directors. In each of the lawsuits, the plaintiffs
seek to assert claims on behalf of a class of all persons who purchased
securities of the Company between January 26, 2001 and April 2, 2001. The
complaints allege that the Company and the individual defendants violated
federal securities laws in connection with the Companys reporting of financial
results during such period. The Company expects that all of the lawsuits will
eventually be consolidated into a single action, as is customary in such cases.
The Company believes that the lawsuits are without merit and it will defend
itself vigorously.

On April 24, 2001, the Company
announced a restructuring of its operations, aggressive containment of
discretionary spending and a workforce reduction of approximately 15%. As part
of this reorganization, the Company will incur a charge in the second quarter
of 2001 estimated to be between $30.0 million and $50.0 million.

On April 25, 2001, the Company
announced a voluntary stock option exchange program, or Offer, for its
employees and directors. Under the program, Company employees and directors
have the opportunity, if they so choose, to cancel outstanding underwater
stock options, which are options that have an exercise price that is higher
than the price of the Company's Common Stock on the date that the Offer
expires, previously granted to them in exchange for an equal number of new
options to be granted at a future date. The Offer will remain outstanding until
5:00 p.m., Pacific Daylight Time, on May 25, 2001, or such later date if the
offer is extended (the Expiration Date). The exercise price of these new
options will be equal to the fair market value of the Companys common stock on
the date of grant, which is expected to be November 27, 2001 or a later date if
the Offer is extended. Acceptance of the Offer requires a participant electing
to exchange any underwater options to also exchange any other options granted
to him or her during the six months before or after the Expiration Date. The
exchange program has been designed to comply with FASB Interpretation No. 44
Accounting for Certain Transactions Involving Stock Compensation and is not
expected to result in any additional compensation charges or variable plan
accounting. Employees located in Sweden and options granted on November 2, 1999
under the Company's Employee Stock Purchase Plan in connection with the listing
and sale of the Company's common stock on the Neuer Market segment of the
Frankfurt Stock Exchange are not eligible for this program.

On April 30, 2001 and May 15, 2001,
the Company entered into agreements with third parties to sell certain assets
and liabilities of E-Publication Corporation, a wholly-owned subsidiary of the
Company, and the subsidiaries of E-Publication Corporation, which the Company
acquired as part of the acquisition of Interleaf in April 2000, (see Note 6 of
Notes to Condensed Consolidated Financial Statements). The Company expects to
incur losses on the sales in the range of $1.0 million to $3.0 million. The
Company is currently evaluating the amount of goodwill associated with
E-Publication Corporation, and these and other related charges will be included
in the losses associated with the sale of the business. The losses will be
reflected in the results of operations for the quarter ended June 30, 2001.

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

Except for the historical information contained herein,
the following discussion contains forward-looking statements that involve risks
and uncertainties. The Companys actual results could differ significantly from
those discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed herein and in the
Companys annual report on Form 10-K 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, Inc.
(collectively with its subsidiaries, the "Company", "us" or
"we") was incorporated in the state of Delaware on May 13, 1993.
We develop and sell an integrated suite of packaged applications for conducting
e-business interactions, transactions and services. Global enterprises and
government entities use these applications to sell, buy and exchange goods,
services and information over the Web and on wireless devices. The BroadVision
e-business application suite enables an entity to establish and sustain
high-yield relationships with customers, suppliers, partners, distributors,
employees and other constituents in the extended enterprise. BroadVision
services, supported by over 200 partner organizations worldwide, transform
these applications into business value for BroadVision's customers through
consulting, education and support services in more than 34 countries.

The BroadVision e-business
application suite allows businesses to tailor Web and wireless content to the
needs and interests of individual users by personalizing content and
transactions on a real-time basis. We offer enterprise-class solutions to
connect companies to their customers, suppliers, partners and employees. These
solutions enable companies to maintain and expand existing relationships in an
online environment via a single, integrated e-business platform.

BroadVision Global
Services, or BVGS, provides a broad range of consulting, training and technical
support services to all of our customers and implementation partners. This
organization provides business application and technical expertise, along with
extensive product knowledge, to complement our products and provide solutions
that meet customers' unique business requirements. By using these services,
customers are able to build customized application solutions to maximize the
benefits of one-to-one relationship management and self-service.

A significant element of
our sales strategy is to engage in strategic business alliances to assist in
marketing, selling and developing customer applications.

As of March 31, 2001,
we had developed key strategic business alliances with over 200 systems
integration, design, consulting and other services organizations throughout the
world, including Accenture, Deloitte Consulting, Hewlett-Packard Consulting,
IBM Global Services, KPMG Consulting, Leapnet, PricewaterhouseCoopers and Roundarch.
Our platform alliances are partnerships formed to integrate technologies to
drive business growth. Additionally, we have developed key technology
partnerships with leading Web- and wireless-focused companies in areas
complementary to our solutions, such as data analysis and reporting, enterprise
application integration, enterprise Web management, call center management,
content management, voice recognition, payment processing, auctioning and XML.
These technology partnerships enhance our ability to base products on industry
standards and to take advantage of current and emerging technologies. These
alliances now include companies such as BEA Systems, Broadbase, Documentum,
E.Piphany, Genesys, i2, Interwoven, Nuance, Tibco, WebMethods and Yantra.

Wemarket our products
primarily through a direct sales organization with operations in North America,
South America, Europe, Australia and Asia/Pacific. A component of our strategy
is continued expansion of international activities. We intend to broaden our presence
in international markets by expanding our international sales force and by
entering into additional distribution agreements. We also contract with
third-party resellers, distributors and systems integrators in North America,
South America, Europe, Australia and Asia /Pacific. We intend to increase the
use of this distribution channel.

There has been a
general downturn in the economy over the last several months. This downturn may
continue in the future and could have an impact on our future financial
results. Comparisons of financial performance made in this document are not
necessarily indicative of future performance. Based upon the current economic
environment, we had adjusted our estimates of expected fiscal 2001 revenues. We
also announced a corporate-wide reorganization and reduction in force and will
incur a charge in the second quarter of 2001, estimated to be in the $30.0
million to $50.0 million range.

Results of Operations

Revenues

Our revenues are
derived from software licensing arrangements and fees charged for services.
Software is generally licensed for development use and for its use in
deployment of the customer's website. Deployment licenses are generally based
on the number of persons who register on a customer's website using our software.
Our revenue recognition policies are in accordance with Statement of Position
("SOP") 97-2, Software Revenue Recognition, as amended
and SOP 98-9, Software Revenue Recognition, With Respect to Certain Transactions.
In general, software license revenues are recognized when a non-cancelable
license agreement has been signed and the customer acknowledges an
unconditional obligation to pay, the software product has been delivered, there
are no uncertainties surrounding product acceptance, the fees are fixed and
determinable and collection is considered probable; professional services
revenues are recognized as such services are performed; and maintenance
revenues, or post-contract customer support, or PCS, including revenues bundled
with software agreements which entitle the customers to technical support and
future unspecified enhancements to our products, are deferred and recognized
ratably over the related contract period, generally twelve months. Revenues
recognized from multiple-element software arrangements are allocated to each
element of the arrangement based on the fair values of the elements, such as
software products, post contract customer support, installation or training.
The determination of fair value is based on objective evidence which is
specific to us. If evidence of fair value does not exist for all elements of a
license agreement and PCS is the only undelivered element, then all revenue for
the license arrangement is recognized ratably over the term of the agreement as
license revenue. If evidence of fair value of all undelivered elements exists
but evidence does not exist for one or more delivered elements, then revenue is
recognized using the residual method. Under the residual method, the fair value
of the undelivered elements is deferred and the remaining portion of the
arrangement fee is recognized as revenue. Services that we provide are not
essential to the functionality of the software.

We record unearned
revenue for software arrangements when cash has been received from the customer
and the arrangement does not qualify for revenue recognition under our revenue
recognition policy. We record accounts receivable for software arrangements
when the arrangement qualifies for revenue recognition but cash or other
consideration has not been received from the customer.

Our professional services are
delivered through BVGS, presently comprised of the Strategic Services Group,
the Technical Services Group, the Content and Creative Services Group, the
Client Services, Project and Program Management Group, the Partner Services
Group, the Education Services Group and the Technical Support Services Group.
The first three groups provide consulting services, the fourth group manages
projects and client relationships, the fifth group manages the needs of our
partner community, the sixth group provides training-related services to
employees, customers and partners, and the last group provides software
maintenance services, including technical support, to our customers and
partners. Revenue from consulting services is typically recognized as services
are performed. Maintenance fees relating to technical support and upgrades are
recognized ratably over the maintenance period.

Total revenuesincreased 48%
during the quarter ended March 31, 2001 to $91.1 million as compared to $61.5
million for the quarter ended March 31, 2000. A summary of our revenues by
geographic region is as follows:

Software
  %
  Services
  %
  Total
  %(dollars in thousands)Three Months Ended:March 31, 2001NASA
  $28,186
  65%
  $33,327
  69%
  $61,513
  67%EMEA
  11,606
  27
  10,965
  23
  22,571
  25APJ
  3,348
  8
  3,687
  8
  7,035
  8Total
  $43,140
  100%
  $47,979
  100%
  $91,119
  100%March 31, 2000NASA
  $31,760
  78%
  $15,525
  75%
  $47,285
  77%EMEA
  7,259
  18
  4,364
  21
  11,623
  19APJ
  1,694
  4
  899
  4
  2,593
  4Total
  $40,713
  100%
  $20,788
  100%
  $61,501
  100%



There
has been a general economic decline during the past several months that may
continue. Therefore, financial comparisons discussed herein may not be
indicative of future performance.

Software license revenuesincreased 6%
during the current quarter ended March 31, 2001 to $43.1 million as compared to
$40.7 million for the quarter ended March 31, 2000. The increase is primarily
attributable to continued market acceptance of and demand for our products, an
increase in our customer base, expansion of our business in EMEA and APJ,
expansion of our product offerings, additional sales for products acquired in
the Interleaf acquisition, and the establishment of strategic relationships.

Software license revenues for our
Enterprise applications decreased to $2.5 million for the quarter ended March
31, 2001 as compared to $5.7 million for the quarter ended March 31, 2000. This
is a result of a greater number of customers who are utilizing our packaged
solutions, which include our Enterprise applications along with web
applications and various tools, as opposed to utilizing only our Enterprise
application. Software license revenues for our packaged solutions increased to
$40.7 million for the quarter ended March 31, 2001 as compared to $35.0 million
for the quarter ended March 31, 2000. This is a result of continued demand by
existing and new customers for our product line and a one-time fee from a
significant customer that accounted for greater than 10% of our total revenues
for the three months ended March 31, 2001.

During the quarter ended March 31,
2001, we signed license agreements with 46 new customers (37 end-user customers
and 9 partner organizations) as compared to 110 new customers (102 end users
and 8 partner organizations) for the quarter ended March 31, 2000. As of March
31, 2001, we had a total installed base of 1,009 end-user customers and 206
partners as compared to 972 end-user customers and 197 partners as of December
31, 2000 and 517 end-user customers and 131 partners as of March 31, 2000.

Total services revenuesincreased
131% during the current quarter ended March 31, 2001 to $48.0 million as
compared to $20.8 million for the quarter ended March 31, 2000.

The increase in professional
services revenue is a result of higher levels of consulting related services
associated with increased business volumes and higher customer support revenues
derived from a larger installed customer base. Maintenance related fees for
technical support and product upgrades were $16.5 million for the quarter ended
March 31, 2001 as compared to $7.1 million for the quarter ended March 31,
2000. The increase in maintenance revenues is a result of increased license
revenues as noted above and renewals of recurring maintenance.

Cost of Revenues

Cost of license revenues include
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 sold 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 the cost of revenues
for the periods presented is as follows:

Three Months Ended
  March 31,2001
  %
  2000
  %(in thousands)Cost
  of software licenses (1)
  $2,240
  5%
  $2,064
  5%Cost
  of services (2)
  37,368
  78
  15,673
  75Total
  cost of revenues (3)
  $39,608
  43%
  $17,737
  29%(1)         Percentage is calculated based on total
software license revenues for the period indicated
             (2)         Percentage is calculated based on total services revenues
for the period indicated
             (3)         Percentage is calculated based on total revenues for the
period indicated

Cost
of software licensesincreased 9% in absolute dollar terms during the
current quarter ended March 31, 2001 to $2.2 million as compared to $2.1
million for the quarter ended March 31, 2000.

In absolute dollar terms, the
increase in cost of software licenses was principally a result of increased
sales of our products and of royalty-bearing third party products.

Cost
of servicesincreased 138% during the current quarter ended
March 31, 2001 to $37.4 million as compared to $15.7 million for the quarter
ended March 31, 2000. In absolute dollar terms, the increases in cost of
services was a result of higher business volumes as evidenced by increased
services revenues. Overall costs increased as a result of opening new training
and customer support facilities as well as additions to our professional
services staff and the employment of outside consultants to meet short-term
consulting demands. As a percentage of services revenue, the increase in cost
of services is a result of hiring new employees within BVGS who do not generate
revenue during their internal training period and higher use of outside
consultants as compared to the prior year period.

Operating Expenses and Other Income, net

Research and development expenses
consist primarily of salaries, employee-related benefit costs and consulting
fees incurred in association with the development of our products. Costs
incurred for the research and development of new software products are expensed
as incurred until such time that technological feasibility, in the form of a
working model, is established at which time such costs are capitalized and
recorded at the lower of unamortized cost or net realizable value. The costs
incurred subsequent to the establishment of a working model but prior to
general release of the product have not been significant. To date, we have not
capitalized any costs related to the development of software for external use.

Sales and marketing expenses consist
primarily of salaries, employee-related benefit costs, commissions and other
incentive compensation, travel and entertainment and marketing program-related
expenditures such as collateral materials, trade shows, public relations,
advertising and creative services.

General and administrative
expenses consist primarily of salaries, employee-related benefit costs and
professional service fees.

Three Months Ended
  March 31,2001
  % (1)
  2000
  % (1)(in thousands)Research
  and development
  $26,971
  30%
  $5,759
  9%Sales
  and marketing
  52,481
  57
  25,200
  41General
  and administrative
  10,590
  12
  3,611
  6Goodwill
  and intangible amortization
  66,280
  73
  -
  -Total
  Operating Expenses
  $156,322
  172%
  $34,570
  56%(1)         Expressed
as a percent of total revenues for the period indicated

Research
and development expensesincreased 368% during the current quarter ended
March 31, 2001 to $27.0 million as compared to $5.8 million for the quarter
ended March 31, 2000. The increase in research and development expenses is
primarily attributable to increased personnel involved in the enhancement of
existing applications and the development of our next generation of products.
In addition, research and development expenses increased as a result of an
increase in use of third party consultants.

Sales
and marketing expensesincreased 108% during the current quarter ended
March 31, 2001 to $52.5 million as compared to $25.2 million for the quarter
ended March 31, 2000. The increases in sales and marketing expenses reflect the
cost of increased sales and marketing personnel from additional hires,
increased sales commissions paid on the greater sales levels, expenditures made
to develop and expand sales distribution channels, and costs incurred for
increased training activities.

General
and administrative expensesincreased 193% during the current quarter ended
March 31, 2001 to $10.6 million as compared to $3.6 million for the quarter
ended March 31, 2000. The increase in general and administrative expenses is
attributable to additional administrative and management personnel, higher
professional fees, additional infrastructure to support the expansion of our
operations and increases in the general reserves of our increased accounts
receivable balance due to the increase in revenue.

We are
attempting to reduce expenses in an effort to return to profitability during a
period when revenues have been less than originally expected and therefore
operating costs may decline in the near future but there can be no assurance that
such decline will be enough to return the Company to profitability. Should
revenues increase significantly, we would expect our expenses to increase
commensurate with increases in revenues once we have reached an appropriate
level of spending as a percentage of total revenues.

Amortization
of goodwill and other intangibles.As described in Note
6 in the Notes to the Condensed Consolidated Financial Statements above, we
acquired Interleaf in the quarter ended June 30, 2000. We have accounted for
the acquisition as a purchase business combination. As a result of this
transaction, we had recorded goodwill and other intangible assets on the
balance sheet of $794.7 million. Amortization of goodwill and other intangibles
assets related to the Interleaf acquisition was $66.3 million in the quarter
ended March 31, 2001. The remaining $540.9 million of goodwill and other
intangible assets will be amortized on a straight-line basis through the
quarter ended June 30, 2003.

Other Income, net

Other income, net
consists of interest income, interest expense and other non-operating expenses.
Other income, net decreased to $497,000 for the three months ended March 31,
2001 as compared to $7.2 million during the three months ended March 31, 2000.
The decrease of $6.8 million is primarily attributable to a decrease in the
gain on sale of investments of $3.4 million, an increase in realized losses on
cost-method investments of $1.3 million, an increase in equity in net loss from
an unconsolidated subsidiary of $1.1 million and an increase in foreign
currency loss of $1.0 million.

Income Taxes

During the quarter ended March 31,
2001, we recognized tax expense of $831,000. The tax expense mainly related to
the Companys international operations.

Litigation Settlement

On February 22, 2000, we reached a
settlement agreement and entered into a license agreement with Art Technology
Group (ATG) in connection with the lawsuit filed by us on December 11, 1998
against ATG alleging infringement of our U.S. Patent No. 5,710,887. In accordance
with the terms of the agreement, we granted ATG a nonexclusive,
nontransferable, worldwide, perpetual license and we were paid $8.0 million by
ATG at the effective date of the settlement and have begun to receive a total
of $7.0 million payable in quarterly installments commencing February 24, 2000
(four consecutive quarterly payments of $750,000 during 2000 and eight
consecutive quarterly payments of $500,000 during 2001 and 2002).

LIQUIDITY AND CAPITAL RESOURCES

March 31,
  2001
  December 31,
  2000(in thousands)Cash,
  cash equivalents and liquid short-term investments
  $176,328
  $222,534Long-term
  liquid investments
  72,571
  78,769Working
  capital
  $160,058
  $215,831Working
  capital ratio
  2.3 : 1
  2.7 : 1At March 31, 2001, we had $176.3
million of cash, cash equivalents and liquid short-term investments, which
represents a decrease of $46.2 million as compared to December 31, 2000. We
currently have $4.6 million of outstanding term debt under our existing credit
facility with a commercial bank.

Cash used for operating activities
was $21.7 million for the three months ended March 31, 2001 and cash provided
by operating activities was $29.0 million for the three months ended March 31,
2000. Net cash used for operating activities for the three months ended March
31, 2001 was primarily attributed to a decrease in accounts payable and accrued
expenses, a decrease in prepaid expenses, the net loss for the three months
(less non-cash expenses) all partially offset by a decrease in accounts receivable.
Cash used for investing activities was $3.8 million and $31.8 million for the
three months ended March 31, 2001 and 2000, respectively, and was primarily for
capital expenditures for our new facilities and purchase of short-term and
long-term investments. In the three months ended March 31, 2001, the cash used
for investing activities was offset by sales and maturities of our short-term
and long-term investments. Cash provided by financing activities was $7.1
million and $6.8 million for the three months ended March 31, 2001 and 2000,
respectively, and consists primarily of proceeds from the issuance of common
stock.

Capital expenditures were $38.9 million
and $7.2 million for the three months ended March 31, 2001 and 2000,
respectively. Our capital expenditures consisted of purchases of operating
resources to manage our operations and consisted of computer hardware and
software, communications equipment, office furniture and fixtures and leasehold
improvements. In February and April 2000, we entered into new facility lease
agreements for approximately 519,000 square feet currently under construction.
The Company expects possession to occur in phases during the second and third
quarters of 2001. Lease payments will be made on an escalating basis with the
total future minimum lease payments amounting to $316.4 million. We will also
have to contribute a significant amount towards construction costs of the
facility. As of March 31, 2001, we have paid $44.5 million for improvements to
the facility. The total estimated cost of improvements is approximately $56.7
million, but is subject to change.

We believe that our available cash
and short-term investment resources, cash generated from operations and amounts
available under our commercial credit facilities will be sufficient to meet our
expected 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 Factors Affecting Quarterly Operating
Results below and elsewhere herein. We 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. 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 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 our 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, we may be unable to 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 operating results.

Factors Affecting Quarterly Operating Results

We may experience significant
fluctuations in quarterly operating results that may be caused by many factors
including, but not limited to, those discussed below and herein, as set out in
Items 7 and 7A in our annual report on Form 10-K for the year ended December
31, 2000 and elsewhere therein and as disclosed in other documents filed with
the Securities and Exchange Commission.

Significant fluctuations in future
quarterly operating results may be caused by many factors including, among
others, the timing of introductions or enhancements of products and services by
us or our competitors, market acceptance of new products, the mix of our
products sold, changes in pricing policies by us or our competitors, our
ability to retain customers, changes in our sales incentive plans, budgeting
cycles of our customers, customer order deferrals in anticipation of new
products or enhancements by us or our competitors, nonrenewal of service
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 and general economic conditions.
We anticipate that a significant portion of our revenues will be derived from a
limited number of orders, and the timing of receipt and fulfillment of any such
orders is expected to cause material fluctuations in our operating results,
particularly on a quarterly basis. Due to the foregoing factors, quarterly
revenues and operating results are difficult to forecast, and we believe that
period-to-period comparisons of our operating results will not necessarily be
meaningful and should not be relied upon as any indication of future
performance.

It is likely that our 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
our common stock. We anticipate that our operating expenses will continue to be
substantial in relation to total revenues as we continue the development of our
technology, increase our sales and marketing activities, create and expand our
distribution channels, grow our professional services organization and
implement the administrative infrastructure to support those operations.

Some of these risks and uncertainties relate to
the new and rapidly evolving nature of the markets in which we operate. These
related market risks include, among other things, the early stage of the
developing online commerce market, the dependence of online commerce on the
development of the Internet and its related infrastructure, the uncertainty
pertaining to widespread adoption of online commerce and the risk of government
regulation of the Internet. Other risks and uncertainties relate to our ability
to, among other things, successfully implement our marketing strategies,
respond to competitive developments, continue to develop and upgrade our
products and technologies more rapidly than our competitors, and commercialize
our products and services by incorporating these enhanced technologies. There
can be no assurance that we will succeed in addressing any or all of these
risks.

There has been a general downturn
in the economy. We had missed our originally estimated results for the three
months ended March 31, 2001 and as a result revised our projected estimate of
revenue range for fiscal 2001. If the economic environment continues to
decline, our future results may be significantly impacted.

Item 3.     Quantitative and Qualitative
Disclosures about Market Risk

We develop products in the United
States and market our products throughout the world. As a result, our financial
results could be affected by factors such as changes in currency exchange rates
or weak economic conditions in foreign markets. The majority of our sales are
made in United States dollars. 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, 2001 or December 31, 2000. We
invest 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. We
do not expect any material loss with respect to the investment portfolio. Investments
are carried at market value. The following represents our investment portfolio
as of March 31, 2001 by maturity:

(in thousands)
  Year Ended
  December 31,
  2001
  Year Ended
  December 31,
  2002
  Year Ended
  December 31,
  2003
  Year Ended
  December 31,
  2004
  Year Ended
  December 31,
  2005
  Thereafter
  TotalCash
  equivalents
  $ 61,476
  $ -
  $ -
  $ -
  $ -
  $ -
  $ 61,476Short-term
  investments
  $ 26,669
  $ 10,683
  $ -
  $ -
  $ -
  $ -
  $ 37,352Long-term
  investments
  $ -
  $ 43,296
  $ 18,421
  $ 10,854
  $ -
  $ -
  $ 72,571Total investment securities
  $ 88,145
  $ 53,979
  $ 18,421
  $ 10,854
  $ -
  $ -
  $ 171,399Not included in the above are
checking and money market accounts of $73.3 million of cash and cash
equivalents, $4.2 million of short term marketable securities in common stock
and $21.4 million in equity investments.

Equity Investments

Equity investments consist of
investments in non-public and publicly traded companies that are accounted for
under either the cost method of accounting or the equity method of accounting.

Equity investments are accounted
for under the cost method of accounting when we have a minority interest and do
not have the ability to exercise significent influence. These investments are
classified as available for sale and are carried at fair value when readily
determinable market values exist or cost when such market values do not exist.
Adjustments to fair value are recorded as a component of other comprehensive
(loss) income unless the investments are considered permanently impaired in
which case the adjustment is recorded as a component of other income (expense),
net in the condensed consolidated statements of operations. During the three
months ended March 31, 2001, we recorded an impairment charge related to equity
investments of $1.3 million. There was no such charge during the three months
ended March 31, 2000.

Equity investments are accounted
for under the equity method of accounting when we have a minority interest and
have the ability to exercise significant influence. These investments are classified
as available for sale and are carried at cost with periodic adjustments to
carrying value for our equity in net income (loss) of the equity investee. Such
adjustments are recorded as a component of other income, net. Any decline in
value of our investments, which is other than a temporary decline, is charged
to earnings during the period in which the impairment occurs. During the three
months ended March 31, 2001 we recorded our share of our equity investees net
loss of $1.1 million. There was no such charge during the three months ended
March 31, 2000.


PART II. OTHER INFORMATION Item 1.    Legal
Proceedings On April 20, 2001, the Company filed a Form 8-K
with the Securities and Exchange Commission reporting that several purported
class action lawsuits had been filed against the Company and certain of its
officers and directors. In each of the lawsuits, the plaintiffs seek to assert
claims on behalf of a class of all persons who purchased securities of the
Company between January 26, 2001 and April 2, 2001. The complaints allege that
the Company and the individual defendants violated federal securities laws in
connection with the Company's reporting of financial results during such
period. The Company expects that all of the lawsuits will eventually be
consolidated into a single action, as is customary in such cases. The Company
believes that the lawsuits are without merit and it will defend itself
vigorously. Item 2.    Changes in Securities and Use
of Proceeds Not applicable. Item 3.    Defaults Upon Senior Securities Not applicable. Item 4.    Submission of Matters to a Vote
of Security Holders Not applicable. Item 5.    Other
Information Not applicable. Item 6.    Exhibits and Reports on Form 8-K (a)         Exhibits Exhibit
  Description3.1
  Amended and Restated Certificate of
  Incorporation.(1)3.2
  Certificate of Amendment of Certificate of
  Incorporation, dated June 28, 2000.(2)3.3
  Amended and restated Bylaws.(1)4.1
  References are hereby made to Exhibits 3.1 to
  3.2.(1) (1) Incorporated by reference to
the Company's Proxy Statement filed on September 13, 1999. (2) Incorporated by reference to
the Company's 10-Q for the quarter ended June 30, 2000 filed on August 14,
2000. (b)        Reports
on Form 8-K Not applicable.


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 15, 2001
  By: /s/ Pehong ChenPehong ChenChairman of the Board, President and Chief
  Executive Officer (Principal Executive Officer)Date: May 15, 2001
  By: /s/ Randall C. BoltenRandall C. BoltenExecutive Vice President, Operations
  and Chief Financial Officer
  (Principal Financial and Accounting Officer)