(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)~~No.)

1600 Seaport Blvd., Suite 550, North ~~Bldg,~~Bldg.		94063
Redwood City, California
(Address of principal executive offices)		(Zip code)

(650) 331-1000

(Registrant's telephone number, including area code)

Indicate by check mark whether the ~~registrant~~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 þR No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such ~~files.)~~files).

Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange ~~Act~~Act.

Large accelerated filer o Accelerated filerþo Non-accelerated filer ~~(do~~(do not check if a smaller reporting company)þo Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act).

Yes o No þR

As of ~~October~~April 30, ~~2009 there were 4,418,925~~2010, the registrant had 4,453,056 shares of ~~the Registrant's Common Stock issued and~~common stock outstanding.

BROADVISION, INC. AND SUBSIDIARIES

FORM 10-Q

Quarter Ended ~~September 30, 2009~~March 31, 2010

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets at ~~September 30, 2009~~March 31, 2010 (unaudited) and December 31, ~~2008~~2009	1
	Condensed Consolidated ~~Income~~ Statements of Operations and Comprehensive ~~Income~~Loss for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ (unaudited)	2
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ (unaudited)	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1615
Item 4.4T.	Controls and Procedures	1615

PART II.	OTHER INFORMATION	1615

Item 1.	Legal Proceedings	1615
Item 1A.	Risk Factors	1716
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	~~Submission of Matters to a Vote of Security Holders~~	22
~~Item~~ 5.	Other Information	22
Item 6.	Exhibits	2322

24 23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

	March 31, 2010			December 31, 2009
	(unaudited)				*
ASSETS
Current assets:
Cash and cash equivalents	$	24,367		$	21,580
Short-term investments		38,424			40,209
Accounts receivable, less allowance for doubtful accounts of $128 as of March 31, 2010 and $274 as of December 31, 2009		4,219			7,099
Restricted cash		20			20
Prepaids and other		1,913			2,190
Total current assets		68,943			71,098
Property and equipment, net		344			384
Restricted cash, net of current portion		1,000			1,000
Other assets		379			385
Total assets	$	70,666		$	72,867
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	907		$	788
Accrued expenses		4,670			4,827
Unearned revenue		2,299			2,010
Deferred maintenance		6,774			7,496
Total current liabilities		14,650			15,121
Other non-current liabilities		2,416			2,353
Total liabilities		17,066			17,474
Stockholders’ equity:
Convertible preferred stock, $0.0001 par value; 1,000 shares authorized; none issued and outstanding		-			-
Common stock, $0.0001 par value; 11,200 shares authorized; 4,445 and 4,433 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively		-			-
Additional paid-in capital		1,260,662			1,260,257
Accumulated other comprehensive loss		(1,124	)		(1,195	)
Accumulated deficit		(1,205,938	)		(1,203,669	)
Total stockholders’ equity		53,600			55,393
Total liabilities and stockholders’ equity	$	70,666		$	72,867

* Derived from audited consolidated financial statements filed in the Company’s 2009 Annual Report on Form 10-K.

September 30, December 31,
2009 2008
(unaudited) *
ASSETS
Current assets:
Cash and cash equivalents $ 36,085 $ 52,884
Short-term investments 27,094 9,004
Accounts receivable, less allowance for doubtful accounts of $275 as of September 30, 2009 and $366 as of December 31, 2008 3,342 8,167
Restricted cash 20 20
Prepaids and other 1,838 2,585
Total current assets 68,379 72,660
Property and equipment, net 421 514
Restricted cash, net of current portion 1,000 1,000
Other assets 489 563
Total assets $ 70,289 $ 74,737
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 1,011 $ 1,251
Accrued expenses 5,072 5,415
Warrant liability 8 155
Unearned revenue 1,765 5,810
Deferred maintenance 5,913 8,959
Total current liabilities 13,769 21,590
Other non-current liabilities 1,858 2,429
Total liabilities 15,627 24,019
Stockholders’ equity:
Convertible preferred stock, $0.0001 par value; 1,000 shares authorized; none issued and outstanding - -
Common stock, $0.0001 par value; 11,200 shares authorized; 4,420 and 4,376 shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively - -
Additional paid-in capital 1,259,895 1,258,604
Accumulated other comprehensive loss (1,112 ) (483 )
Accumulated deficit (1,204,121 ) (1,207,403 )
Total stockholders’ equity 54,662 50,718
Total liabilities and stockholders’ equity $ 70,289 $ 74,737

* Derived from audited consolidated financial statements filed in the Company’s 2008 Annual Report on Form 10-K.

See Accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2009		2008			2009			2008			2010			2009
Revenues:
Software licenses	$	2,663	$	2,096		$	8,676		$	8,521		$	1,887		$	2,852
Services		4,879		6,095			15,039			17,729			3,990			5,149
Total revenues		7,542		8,191			23,715			26,250			5,877			8,001
Cost of revenues:
Cost of software licenses		6		7			26			20			6			6
Cost of services		1,784		2,218			5,707			6,626			1,589			1,964
Total cost of revenues		1,790		2,225			5,733			6,646			1,595			1,970
Gross profit		5,752		5,966			17,982			19,604			4,282			6,031
Operating expenses:
Research and development		2,169		2,217			6,346			6,863			2,141			2,168
Sales and marketing		2,024		1,937			6,002			5,783			1,652			2,036
General and administrative		1,006		1,659			3,603			4,960			1,368			1,451
Restructuring (credit) charge		(4)		6			50			(17	)
Restructuring charges (credits)													526			(2	)
Total operating expenses		5,195		5,819			16,001			17,589			5,687			5,653
Operating income		557		147			1,981			2,015
Operating (loss) income													(1,405	)		378
Interest income, net		117		478			601			1,280			106			281
Gain on revaluation of warrants		154		581			147			3,661
Other income (expense), net		867		(876	)		669			458
Income before provision for income taxes		1,695		330			3,398			7,414
Benefit (provision) for income taxes		104		(41	)		(116	)		(328	)
Net income	$	1,799	$	289		$	3,282		$	7,086
Basic income per share	$	0.41	$	0.07		$	0.75		$	1.62
Diluted income per share	$	0.41	$	0.06		$	0.75		$	1.60
Loss on revaluation of warrants													-			(31	)
Other loss, net													(955	)		(1,113	)
Loss before provision for income taxes													(2,254	)		(485	)
Provision for income taxes													(15	)		(141	)
Net loss												$	(2,269	)	$	(626	)
Basic loss per share												$	(0.51	)	$	(0.14	)
Diluted loss per share												$	(0.51	)	$	(0.14	)
Shares used in computing:
Weighted average shares-basic		4,415		4,431			4,397			4,387			4,441			4,381
Weighted average shares-diluted		4,435		4,466			4,400			4,433			4,441			4,381
Comprehensive income:
Net income	$	1,799	$	289		$	3,282		$	7,086
Comprehensive loss:
Net loss												$	(2,269	)	$	(626	)
Other comprehensive gain (loss), net of tax:
Foreign currency translation adjustment		(256)		22			(629	)		(284	)		71			(478	)
Total comprehensive income	$	1,543	$	311		$	2,653		$	6,802
Total comprehensive loss												$	(2,198	)	$	(1,104	)

See Accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)

	Three Months Ended March 31,
	2010			2009
Cash flows from operating activities:
Net loss	$	(2,269	)	$	(626	)
Adjustments to reconcile net loss to net cash provided by (used for) operating activities:
Depreciation and amortization		42			67
Restructuring charge (credit)		526			(2	)
(Credit) provision of receivable reserves		(8	)		7
Stock based compensation		288			261
Loss on revaluation of warrants		-			31
Changes in operating assets and liabilities:
Accounts receivable		2,888			2,101
Prepaids and other		277			714
Other non-current assets		5			93
Accounts payable and accrued expenses		(137	)		(587	)
Restructuring accrual		(130	)		(121	)
Unearned revenue and deferred maintenance		(433	)		(2,083	)
Other noncurrent liabilities		(234	)		(233	)
Net cash provided by (used for) operating activities		815			(378	)
Cash flows from investing activities:
Purchase of property and equipment		(1	)		(28	)
Purchase of short term investment		(17,524	)		(10,795	)
Maturities of short term investment		19,309			10,000
Net cash provided by (used for) investing activities		1,784			(823	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net		117			142
Net cash provided by financing activities		117			142
Effect of exchange rates on cash and cash equivalents		71			(478	)
Net increase (decrease) in cash and cash equivalents		2,787			(1,537	)
Cash and cash equivalents at beginning of period		21,580			52,884
Cash and cash equivalents at end of period	$	24,367		$	51,347

Nine Months Ended September 30,
2009 2008
    Cash flows from operating activities:
    Net income $ 3,282 $ 7,086
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 162 225
    Restructuring charge (credit) 50 (17 )
    Provision for doubtful accounts 27 (93 )
    Stock-based compensation 882 885
    Gain on cost method investments (22 ) (35 )
    Gain on revaluation of warrants (147 ) (3,661 )
    Changes in operating assets and liabilities:
       Accounts receivable 4,798 2,361
       Prepaids and other 747 (1,192 )
       Other non-current assets 68 (64 )
       Accounts payable and accrued expenses (464 ) (833 )
       Restructuring accrual (338 ) (349 )
       Unearned revenue and deferred maintenance (7,091 ) 4,146
       Other noncurrent liabilities (402 ) (142 )
          Net cash provided by operating activities 1,552 8,317
    Cash flows from investing activities:
    Purchase of property and equipment (63 ) (105 )
    Proceeds from cost method investments 22 35
    Purchase of short term investments (18,090 ) -
       Net cash used for investing activities (18,131 ) (70 )
    Cash flows from financing activities:
    Proceeds from issuance of common stock, net 409 594
       Net cash provided by financing activities 409 594
    Effect of exchange rates on cash and cash equivalents (629 ) (284 )
       Net (decrease) increase in cash and cash equivalents (16,799 ) 8,557
    Cash and cash equivalents at beginning of period 52,884 53,973
    Cash and cash equivalents at end of period $ 36,085 $ 62,530

See Accompanying Notes to Condensed Consolidated Financial Statements

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Table of Contents

BROADVISION, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Organization and Summary of Significant Accounting Policies

There have been no material changes in our critical accounting policies, estimates and judgments during the ~~nine~~three month period ended ~~September 30, 2009~~March 31, 2010 compared to the disclosures in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, ~~2008,~~2009, filed with the Securities and Exchange Commission (the “SEC”) on ~~February 26, 2009,~~March 5, 2010, other than those disclosed herein.

Basis of Presentation

The condensed consolidated financial results and related information as of and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2010 and 2009 ~~and 2008~~ are unaudited. The Condensed Consolidated Balance Sheet at December 31, ~~2008~~2009 has been derived from the audited consolidated financial statements as of that date but does not necessarily reflect all of the informational disclosures previously reported in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). The unaudited condensed consolidated financial statements should be reviewed in conjunction with the audited consolidated financial statements and related notes contained in our ~~2008~~2009 Annual Report on Form 10-K filed with the SEC on ~~February 26, 2009.~~March 5, 2010.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions in Form 10-Q and Article 10 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of interim financial information have been included. ~~We have evaluated subsequent events for recognition or disclosure through November 6, 2009, which is the date these financial statements were filed on Form 10-Q with the SEC.~~ Operating results for the three ~~and nine~~ months ended ~~September 30, 2009~~March 31, 2010 are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, ~~2009~~2010 or any future interim period. The condensed consolidated financial statements include our accounts and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain assumptions and estimates that affect reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to ~~allowance for doubtful accounts,~~receivable reserves, stock-based compensation, investments, impairment assessments, income taxes and restructuring, as well as contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates using different assumptions or conditions.

~~Revenue Recognition~~

From time to time, a customer may return to us some or all of the software purchased. While our software and reseller agreements generally do not provide for a specific right of return, we may accept product returns in certain circumstances. To date, sales returns have been infrequent and not significant in relation to our total revenues. We make an estimate of our expected returns and provide an allowance for sales returns in accordance with Accounting Standards Codificationä~~(“ASC”) 605-15 (formerly SFAS No. 48),~~ ~~Revenue Recognition When Right of Return Exists~~. Management specifically analyzes our revenue transactions, customer software installation patterns, historical return patterns, current economic trends and customer payment terms when evaluating the adequacy of the allowance for sales returns.

~~~ 4 ~~~

~~Table of Contents~~

Stock-Based Compensation

The following table sets forth the total stock-based compensation expense recognized in our Condensed Consolidated ~~Income~~ Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2009~~March 31, 2010 and ~~2008:~~2009:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2009		2008		2009		2008		2010		2009
Cost of services	$	36,247	$	60,067	$	92,427	$	133,278	$	30,830	$	28,358
Research and development		136,105		137,565		325,874		257,344		87,358		102,719
Sales and marketing		78,253		95,240		193,243		231,293		84,659		52,486
General and administrative		101,114		118,847		270,013		263,603		85,514		77,589
	$	351,719	$	411,719	$	881,557	$	885,518	$	288,361	$	261,152

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Table of Contents

Earnings Per Share Information

Basic net ~~income~~loss per share is computed using the weighted-average number of shares of common stock outstanding less shares subject to repurchase. Diluted net ~~income~~loss per share is computed using the weighted-average number of shares of common stock outstanding and, when dilutive, common equivalent shares from outstanding stock options and warrants using the treasury stock method, and shares subject to repurchase, if any, using the as-if converted method. There were ~~462,000~~571,000 and ~~433,000~~700,000 potential common shares excluded from the determination of diluted net ~~income~~loss per share for the three months ended ~~September 30,~~March 31, 2010 and 2009, and 2008, respectively, as the effect of each share was anti-dilutive because the per-share strike price of the options under which these shares may be issued is higher than the current market price. There were 622,000 and 300,000 potential common shares excluded from the determination of diluted net income per share for the nine months ended September 30, 2009 and 2008, respectively, as the effect of each share was anti-dilutive because the per-share strike price of the options under which these shares may be issued is higher than the current market price. The following table sets forth the basic and diluted net ~~income~~loss per share computational data for the periods presented (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Net income $ 1,799 $ 289 $ 3,282 $ 7,086
Weighted-average common shares outstanding used to compute basic income per share 4,415 4,431 4,397 4,387
Weighted-average common equivalent shares from outstanding common stock options and warrants 20 35 3 46
Total weighted-average common and common equivalent shares outstanding used to compute diluted income per share 4,435 4,466 4,400 4,433
Basic income per share $ 0.41 $ 0.07 $ 0.75 $ 1.62
Diluted income per share $ 0.41 $ 0.06 $ 0.75 $ 1.60

	Three Months Ended March 31,
	2010			2009
Net loss	$	(2,269	)	$	(626	)
Weighted-average common shares outstanding used to compute basic loss per share		4,441			4,381
Weighted-average common equivalent shares from outstanding common stock options and warrants		-			-
Total weighted-average common and common equivalent shares outstanding used to compute diluted loss per share		4,441			4,381
Basic loss per share	$	(0.51	)	$	(0.14	)
Diluted loss per share	$	(0.51	)	$	(0.14	)

Legal Proceedings

We are subject from time to time to various legal actions and other claims arising in the ordinary course of business. We are not a party to any legal proceedings that we believe would have a material adverse effect on our financial position or our results of operation.

~~~ 5 ~~~

~~Table of Contents~~

Foreign Currency Translations

During fiscal 2004, we changed the functional currencies of all foreign subsidiaries from the U.S. dollar to the local currency of the respective countries. Assets and liabilities of these subsidiaries are translated into U.S. dollars at the balance sheet date. Income and expense items are translated at average exchange rates for the period. Foreign exchange gains and losses resulting from the remeasurement of foreign currency assets and liabilities are included as other ~~income (expense),~~loss, net in the Condensed Consolidated ~~Income Statements.~~Statements of Operations. For the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2010, and 2009, ~~and 2008,~~ translation ~~loss~~gain (loss) was ~~($629,000),~~$71,000, and ($~~284,000)~~478,000), respectively. These amounts are included in the accumulated other comprehensive loss account in the Condensed Consolidated Balance Sheets.

Comprehensive ~~income~~Loss

Comprehensive ~~income~~loss includes net ~~income~~loss and other comprehensive gain (loss), which primarily consists of foreign currency translation adjustments. Total comprehensive ~~income~~loss is presented in the accompanying Condensed Consolidated ~~Income Statements.~~Statements of Operations.

Total accumulated other comprehensive loss is displayed as a separate component of stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets. The accumulated balances of other comprehensive loss consist of the following, net of taxes (in thousands):

Accumulated Other
Comprehensive
Loss
Balance, December 31, 2008 $ (483 )
Net change during period (629 )
Balance, September 30, 2009 $ (1,112 )

~~Recent Accounting Pronouncements~~

	Accumulated Other Comprehensive Loss
Balance, December 31, 2009	$	(1,195	)
Net change during period		71
Balance, March 31, 2010	$	(1,124	)

~~In April 2009, the Financial Accounting Standard Board ("FASB") issued ASC 320-10 (formerly FSP FAS 115-2 and FAS 124-2)(“ASC 320-10”),~~ ~~Recognition and Presentation of Other-Than-Temporary Impairments~~. ASC 320-10 requires entities to separate an other-than-temporary impairment of a debt security into two components when there are credit related losses associated with the impaired debt security for which management asserts that it does not have the intent to sell the security, and it is more likely than not that it will not be required to sell the security before recovery of its cost basis. The amount of the other-than-temporary impairment related to a credit loss is recognized in earnings, and the amount of the other-than-temporary impairment related to other factors is recorded in other comprehensive income (loss). ASC 320-10 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of ASC 320-10 did not have a significant impact on our Condensed Consolidated Financial Statements.

~~In April 2009, the FASB issued ASC 820-10 (formerly FSP FAS 157-4) ("ASC 820-10"),~~ ~~Determining Fair Value When Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions that are Not Orderly~~. Under ASC 820-10, if an entity determines that there has been a significant decrease in the volume and level of activity for the asset or the liability in relation to the normal market activity for the asset or liability (or similar assets or liabilities), then transactions or quoted prices may not accurately reflect fair value. In addition, if there is evidence that the transaction for the asset or liability is not orderly, the entity shall place little, if any, weight on that transaction price as an indicator of fair value. ASC 820-10 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of ASC 820-10 did not have a significant impact on our Condensed Consolidated Financial Statements.

~~In April 2009, the FASB issued ASC 825-10 (formerly FSP FAS 107-1 and APB 28-1)("ASC 825-10"),~~ ~~Interim Disclosures about Fair Value of Financial Instruments~~. ASC 825-10 requires disclosures about the fair value of financial instruments in interim and annual financial statements. ASC 825-10 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The adoption of ASC 825-10 did not have a significant impact on our Condensed Consolidated Financial Statements.

~~In May 2009, the FASB issued ASC 855-10 (formerly SFAS No. 165)(“ASC 855-10”),~~ ~~Subsequent Events. ASC 855-10 establishes accounting principles and requirements for~~ subsequent events. Specifically, ASC 855-10 sets forth the following: (a) the period after the balance sheet date during which management of an entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (b) the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements and (c) the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. ASC 855-10 requires entities to recognize in the financial statements, the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including estimates inherent in the process of preparing financial statements. Conversely, entities shall not recognize ~~subsequent~~ events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date but before financial statements are issued or are available to be issued. Entities shall disclose the date through which ~~subsequent~~ events have been evaluated, as well as whether that date is the date the financial statements were issued or the date the financial statements were available to be issued. Entities shall also disclose the nature and financial effect of nonrecognized ~~subsequent~~ events if such disclosure keeps the financial statements from being misleading. We adopted ASC 855-10, effective June 30, 2009. We have evaluated subsequent events for recognition or disclosure through November 6, 2009, which is the date these financial statements were filed on Form 10-Q with the SEC.

~~In June 2009, the FASB issued ASC 105-10 (formerly SFAS No. 168)("ASC 105-10"),~~ ~~The FASB Accounting Standards Codification~~ä ~~and the Hierarchy of Generally Accepted Accounting Principles. ASC 105-10 establishes the~~ ~~FASB Accounting Standards Codification~~ (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. ASC 105-10 is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Codification will supersede all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. Following ASC 105-10, the FASB will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates. The FASB will not consider Accounting Standards Updates as authoritative in their own right. Accounting Standards Updates will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. We adopted ASC 105-10 in our Form 10-Q for the third quarter of 2009. The adoption did not have a significant impact on the reporting of our Condensed Consolidated Financial Statements.

~~In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13, which amends ASC 605-25 (formerly EITF 00-21)("ASU 2009-13"),~~ ~~Revenue Arrangement with Multiple Deliverables~~, to require companies to allocate revenue in multiple-element arrangements based on an element’s estimated selling price if vendor-specific or other third-party evidence of value is not available. ASU 2009-13 is effective beginning January 1, 2011. Earlier application is permitted. We are currently evaluating both the timing and the impact of the pending adoption of the ASU on our Condensed Consolidated Financial Statements.

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Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued new authoritative literature that provides guidance on determining multiple elements in an arrangement and how total consideration should be allocated amongst the elements. It also expands disclosure requirements for multiple-element arrangements. Concurrently, the FASB also issued new authoritative literature for arrangements that include both software and tangible products. This guidance excludes tangible products and certain related elements from the scope of the revenue recognition authoritative guidance specific to software transactions. The standards must both be adopted in the same period and can be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted, or they can be adopted on a retrospective basis. We are currently evaluating whether the standard will have any significant impact on our Condensed Consolidated Financial Statements.

In January 2010, the FASB issued new accounting guidance related to the disclosure requirements for fair value measurements and provides clarification for existing disclosures requirements. More specifically, this update will require (a) an entity to disclose separately the amounts of significant transfers in and out of Levels 1 and 2 fair value measurements and to describe the reasons for the transfers; and (b) information about purchases, sales, issuances and settlements to be presented separately (i.e. present the activity on a gross basis rather than net) in the reconciliation for fair value measurements using significant unobservable inputs (Level 3 inputs). This guidance clarifies existing disclosure requirements for the level of disaggregation used for classes of assets and liabilities measured at fair value and requires disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements using Level 2 and Level 3 inputs. The new disclosures and clarifications of existing disclosure are effective for fiscal years beginning after December 15, 2009, except for the disclosure requirements related to the purchases, sales, issuances and settlements in the rollforward activity of Level 3 fair value measurements. Those disclosure requirements are effective for fiscal years ending after December 31, 2010. We have provided the additional required disclosures effective January 1, 2010.

Note 2. Selected Condensed Consolidated Balance Sheet Detail

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

	September 30,			December 31,
	2009			2008			March 31, 2010			December 31, 2009
	(unaudited)						(unaudited)
Furniture and fixtures	$	560		$	522		$	528		$	548
Computers and software		5,079			4,996
Computer and software								3,946			3,956
Leasehold improvements		1,273			1,277			1,269			1,275
		6,912			6,795			5,743			5,779
Less accumulated depreciation and amortization		(6,491	)		(6,281	)		(5,399	)		(5,395	)
Net book value	$	421		$	514
Total property and equipment, net							$	344		$	384

Accrued expenses consisted of the following (in thousands):

	September 30,		December 31,
	2009		2008		March 31, 2010		December 31, 2009
	(unaudited)				(unaudited)
Employee benefits	$	1,018	$	1,041	$	1,096	$	1,033
Commissions and bonuses		804		667		958		975
Sales and other taxes		780		792		625		743
Income tax and tax contingency reserves		374		301		56		75
Restructuring		307		426		343		244
Customer advances		229		283		81		81
Royalties		1,086		1,376		1,086		1,086
Other		474		529		425		590
Total accrued expenses	$	5,072	$	5,415	$	4,670	$	4,827

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Note 3. Fair Value of Financial Instruments

~~ASC 820-10 provides a definition of~~We measure assets and liabilities at fair value ~~establishes a hierarchy for measuring~~based on exit price as defined by the FASB guidance on fair value ~~under generally accepted accounting principles, and requires certain disclosures about fair values used in~~measurements, which represents the ~~financial statements. ASC 820-10 defines fair value as the exchange price~~amount that would be received ~~for~~on the sale of an asset or paid to transfer a liability, ~~(an exit price) in~~as the ~~principal or most advantageous market for the asset or liability~~case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the ~~measurement date. Valuation techniques used~~hierarchical levels of inputs to measure fair value under ASC 820-10 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, as follows:value:

·	Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

·	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We measure the following financial assets at fair value on a recurring basis. The fair value of these financial assets as of ~~September 30, 2009~~March 31, 2010 and December 31,2009 (in thousands) ~~were~~are as follows:

Fair Value Measurements at Reporting Date Using

Balance at September 30, 2009 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Input (Level 3) Total Gains (Losses)
Cash and cash equivalents (1) $ 36,085 $ 36,085 $ - $ - $ -
Short-term investments (2) 27,094 12,880 14,214 - -
Total $ 63,179 $ 48,965 $ 14,214 $ - $ -

			Fair Value at Reporting Date Using
	March 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Input (Level 3)
Cash and cash equivalents:
Cash	$	15,030	$	15,030	$	-	$	-
Money market fund		6,337		6,337		-		-
Commercial paper		3,000		3,000		-		-
Total cash and cash equivalents	$	24,367	$	24,367	$		$
Fixed income securities:
Certificates of deposits	$	11,809	$	11,809	$	-	$	-
Corporate bonds - financial		8,230		-		8,230		-
Corporate bonds - industrial		11,473		-		11,473		-
Corporate bonds - utility		3,274		-		3,274		-
Corporate bonds - international		3,638		-		3,638		-
Total fixed income securities	$	38,424	$	11,809	$	26,615	$	-

			Fair Value at Reporting Date Using
	December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Input (Level 3)
Cash and cash equivalents:
Cash	$	6,817	$	6,817	$	-	$	-
Money market fund		12,763		12,763		-		-
Commercial paper		2,000		2,000		-		-
Total cash and cash equivalents	$	21,580	$	21,580	$		$
Fixed income securities:
Certificates of deposits	$	12,843	$	12,843	$	-	$	-
Corporate bonds - financial		9,580		-		9,580		-
Corporate bonds - industrial		10,721		-		10,721		-
Corporate bonds - utility		2,843		-		2,843		-
Corporate bonds - international		4,222		-		4,222		-
Total fixed income securities	$	40,209	$	12,843	$	27,366	$	-

~~(1) Includes money~~
Level 2 securities are priced using quoted market ~~funds.~~

~~(2) Includes held-to-maturity~~prices for similar instruments, nonbinding market prices that are corroborated by observable market data, or discounted cash flow techniques. There have been $435,000 transfers from Level 2 to Level 1 measurements due to the low corporate coupon rate of corporate bonds ~~and certificates of deposit.~~during the three months ended March 31, 2010.

The fair value of cash and cash equivalents, short-term investments, accounts receivable and accounts payable for all periods presented approximates their respective carrying amounts due to the short-term nature of these balances.

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Note 4. Warrants and Other Non-Current Liabilities

Warrants

As of ~~September 30, 2009,~~March 31, 2010, the following warrants to purchase our common stock were outstanding:

Underlying

Exercise

Underlying

Exercise

Description

Price per Share

Issued to convertible notes investors in November 2004

154,631

37.00

154,631

37.00

Gain (loss) on the revaluation of warrants were recorded as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Warrants related to the convertible notes $ 154 $ 580 $ 146 $ 3,495
Warrants related to real estate buyout (1) - 1 1 166
Gain on revaluation of warrants and change in value of derivatives $ 154 $ 581 $ 147 $ 3,661

	Three Months Ended March 31,
	2010		2009
Warrants related to the Notes	$	-	$	(32	)
Warrants related to real estate buyout (1)		-		1
Loss on revaluation of warrants	$	-	$	(31	)

(1) The shares underlying the warrants issued in connection with a real estate buyout transaction in August 2004 were not exercised and expired in July 2009.

Other Non-Current Liabilities

Other non-current liabilities consist of the following:

	September 30,		December 31,
	2009		2008		March 31, 2010		December 31, 2009
	(in thousands)				(in thousands)
Restructuring	$	251	$	419	$	452	$	155
Deferred maintenance and unearned revenue		863		1,326		1,222		1,444
Other		744		684		742		754
Total other non-current liabilities	$	1,858	$	2,429	$	2,416	$	2,353

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Note 5. Commitments and Contingencies

Warranties and Indemnification

We provide a warranty to our perpetual license customers that our software will perform substantially in accordance with the documentation we provide with the software, typically for a period of 90 days following receipt of the software. Historically, costs related to these warranties have been immaterial. Accordingly, we have not recorded any warranty liabilities as of ~~September 30,~~March 31, 2010 and 2009, ~~and December 31, 2008.~~respectively.

Our perpetual software license agreements typically provide for indemnification of customers for intellectual property infringement claims caused by use of a current release of our software consistent with the terms of the license agreement. The term of these indemnification clauses is generally perpetual. The potential future payments we could be required to make under these indemnification clauses is generally limited to the amount the customer paid for the software. Historically, costs related to these indemnification provisions have been immaterial. We also maintain liability insurance that limits our exposure. As a result, we believe the potential liability of these indemnification clauses is minimal. Accordingly, we have not recorded any liabilities for these agreements as of ~~September 30,~~March 31, 2010 and 2009, ~~and December 31, 2008.~~respectively.

We entered into agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer is, or was, serving in such capacity. The term of the indemnification period is for so long as such officer or director is subject to an indemnifiable event by reason of the fact that such person was serving in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements may be unlimited; however, we have a director and officer insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is insignificant. Accordingly, we have no liabilities recorded for these agreements as of either ~~September 30, 2009~~March 31, 2010 or December 31, ~~2008.~~2009. We assess the need for an indemnification reserve on a quarterly basis and there can be no guarantee that an indemnification reserve will not become necessary in the future.

Leases

We lease our headquarters facility and our other facilities under noncancelable operating lease agreements expiring ~~in or prior to~~through the year ~~2012.~~2014. Under the terms of ~~these~~the agreements, we are required to pay property taxes, insurance and normal maintenance costs.

~~On June 10, 2009,~~

As discussed under Note 7 Restructuring Charges, as of May 7, 2010 we signed a Sublease Termination and Release Agreement (the “Sublease Termination Agreement”) with our subtenant (Dexterra, Inc.) in order to terminate that certain Sublease dated December 21, 2006 (the “Sublease”) consistinghave 22,500 square feet of approximately 22,509 square feet. The sublease term commenced on January 8, 2007 and was to expire on June 30, 2012 unless earlier terminated. On May 22, 2009, we received written notice from our subtenant exercising its right of early termination of the Sublease, effective January 7, 2010. As a result, we received an initial termination fee of $136,000, which is recorded as restructuring charge (credit) in the accompanying Condensed Consolidated Financial Statements.

Under the terms of the Sublease Termination Agreement, our subtenant shall (i) surrender the premises, on an as-is basis, and all of its rights and interest in the premises, (ii) pay an additional termination fee to us and (iii) be entitled to a partial refund of the additional termination fee if any party subleases the aforementionedvacant office space ~~during the period from~~that we are actively seeking to sublease. If we are unable to sublease this space our future expected cash outflows will be approximately $200,000 per quarter until our lease terminates in June 10, 2009 through January 7, 2010. The net additional termination fee of $550,000 (total fee of $678,000 less retained subtenant security deposit in the amount of $128,000) shall be paid in two installments. Pursuant to the terms of the Sublease Termination Agreement, our subtenant paid $472,000 to BroadVision on June 10, 2009. The remaining amount is payable June 10, 2010 and is subject to certain conditions as set forth in the Sublease Termination Agreement. This totalfee of $678,000 is being amortized into restructuring charges over the remaining term of the lease expiring on June 30, 2012.

~~Because of the early termination of our sublease agreement, we recalculated our restructuring liability in accordance with ASC 420-10 (formerly SFAS No. 146)("ASC 420-10"),~~ ~~Accounting for Costs Associated with Exit or Disposal Activities. As a result, we recognized an additional restructuring liability of $137,000 during the second quarter of year 2009 in our Condensed Consolidated Financial Statements.~~

A summary of total future minimum lease payments under noncancelable operating lease agreements is as follows (in millions) as of ~~September 30, 2009:~~March 31, 2010:

Total Future
Minimum
Years ending December 31, Payments
2009 $ 0.6
2010 1.8
2011 1.3
2012 0.6
2013 and thereafter -
Total minimum facilities payments $ 4.3

Years Ending December 31,	Operating Leases
2010	$	1.2
2011		1.5
2012		0.7
2013		0.1
2014		0.1
Total minimum lease payments	$	3.6

~~These future minimum lease payments are net of approximately $149,000 of sublease income to be received under sublease agreements.~~ As of ~~September 30, 2009,~~March 31, 2010, we have accrued ~~$558,000~~$0.8 million of estimated future facilities costs as a restructuring accrual.

Standby Letter of Credit Commitments

As of ~~September 30, 2009~~March 31, 2010 and December 31, ~~2008,~~2009, we had $1.0 million of outstanding commitments in the form of a standby letter of credit, in favor of our landlord to secure obligations under our facility leases. This standby letter of credit is collateralized by the restricted cash listed in the Condensed Consolidated Balance Sheets.

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Note 6. Geographic, Segment and Significant Customer Information

The disaggregated revenue information reviewed by the CEO is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended March 31,
	2009		2008		2009		2008		2010		2009
Software licenses	$	2,663	$	2,096	$	8,676	$	8,521	$	1,887	$	2,852
Consulting services		1,258		1,650		3,843		4,399		721		1,263
Maintenance		3,621		4,445		11,196		13,330		3,269		3,886
Total revenues	$	7,542	$	8,191	$	23,715	$	26,250	$	5,877	$	8,001

We currently operate in three primary geographical territories. Our reportable segment includes our facilities in North and South America (Americas), Europe and Asia Pacific and the Middle East (Asia/Pacific).

Disaggregated financial information regarding our geographic revenues and long-lived assets is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,				Three Months Ended March 31,
	2009		2008		2009		2008		2010		2009
Revenues:
Americas	$	3,787	$	4,097	$	13,090	$	13,132	$	3,154	$	4,360
Europe		2,921		3,124		8,153		9,552		1,709		2,757
Asia/Pacific		834		970		2,472		3,566		1,014		884
Total revenues	$	7,542	$	8,191	$	23,715	$	26,250	$	5,877	$	8,001

	September 30,		December 31,
	2009		2008		March 31, 2010		December 31, 2009
Long-Lived Assets:
Americas	$	293	$	359	$	233	$	265
Europe		14		16		10		12
Asia/Pacific		114		139		101		107
Total long-lived assets	$	421	$	514
Total Company					$	344	$	384

For the three-month period ended ~~September 30, 2009, two~~March 31, 2010, none of our customers accounted for more than 10% of our revenues. For the ~~nine-month~~three-month period ended ~~September 30,~~March 31, 2009, one ~~customer accounted for more than 10% of our revenues. For the three-month and nine-month periods ended September 30, 2008, no single~~ customer accounted for more than 10% of our revenues.

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Note 7. Restructuring Charges

The net restructuring charge of $526,000 consists of mainly two elements: 1) a markdown loss of $702,000 for office space in Redwood City, California; and 2) a gain of $176,000 from office space in New York City.

We have leased approximately 22,500 square feet of office space in Redwood City that we previously subleased to Dexterra Inc. As reported in an 8-K filed in June 2009, Dexterra exercised an early termination option, and we received Dexterra’s last sublease payment in January 2010. During the quarter ended March 31, 2010, we re-evaluated the estimated restructuring charge for this space, which resulted in an additional charge of $702,000. We are actively seeking a subtenant, while continuing to pay rents and operating expenses for this space. If we are unable to rent out the space, we will have a cash outflow of approximately $200,000 per quarter until the lease termination in June 2010. As of ~~September 30, 2009,~~May 7, 2010, the space remains vacant.

Our 10-year office lease in New York City expired in March 2010. This space had been subleased out since 2004. In connection with the expiration of the sublease, we collected $176,000 more from the subtenant than we had expected, and recorded the excess as a restructuring gain.

As of March 31, 2010, the total restructuring accrual of ~~$558 thousand~~$795,000 consisted of the following (in thousands):

We have substantially expanded and subsequently contracted our business and operations since our inception in 1993. We grew from 652 employees at the end of 1999 to 2,412 employees at the end of 2000 and then reduced our numbers to ~~159~~195 at the end of ~~2006, and~~2007, 219 at the end of ~~2008.~~2008, and 214 at the end of 2009. On ~~September 30, 2009,~~March 31, 2010, we had ~~230~~204 employees. As a consequence of our employee base growing and then contracting so rapidly, we entered into significant contracts for facilities space for which we ultimately determined we did not have a future use. We announced during the third and fourth quarters of 2004 that we had agreed with the landlords of various facilities to renegotiate future lease commitments, extinguishing a total of approximately $155 million of future obligations. ~~The management of the expansion and later reduction of our operations has taken a considerable amount of our management's attention during the past several years.~~ As we manage our business to introduce and support new products, we will need to continue to monitor our workforce and make appropriate changes as necessary. If we are unable to support past changes and implement future changes effectively, we may have to divert additional resources away from executing our business plan and toward internal administration. If our expenses significantly outpace our revenues, we may have to make additional changes to our management systems and our business plan may not succeed.

We may face liquidity challenges and need additional financing in the future.

We currently expect to be able to fund our working capital requirements from our existing cash and cash equivalents and our anticipated cash flows from operations and subleases through at least ~~September 30,~~December 31, 2010. However, we could experience unforeseen circumstances, such as an economic downturn, difficulties in retaining customers and/or key employees, or other factors that could increase our use of available cash and require us to seek additional financing. We may find it necessary to obtain additional equity or debt financing due to the factors listed above or in order to support a more rapid expansion, develop new or enhanced products or services, respond to competitive pressures, acquire complementary businesses or technologies or respond to unanticipated requirements.

We may seek to raise additional funds through private or public sales of securities, strategic relationships, bank debt, financing under leasing arrangements or otherwise. If additional funds are raised through the issuance of equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution or any equity securities we sell may have rights, preferences or privileges senior to those of the holders of our common stock. We expect that obtaining additional financing on acceptable terms would be difficult, at best. If adequate funds are not available or are not available on acceptable terms, we may be unable to pay our debts as they become due, develop our products, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could have a material adverse effect on our business, financial condition and future operating results.

If we are unable to maintain our disclosure controls and procedures, including our internal control over financial reporting, our ability to report our financial results on a timely and accurate basis may be adversely affected.

We have evaluated our "disclosure controls and procedures" as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as well as our internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002. Our independent registered public accounting firm has performed a similar evaluation of our internal control over financial reporting.amended. Effective controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.

We previously reported that as of March 31, 2006, we did not have a sufficient number of experienced personnel in our accounting and finance organization to facilitate an efficient financial statement close process and permit the preparation of our financial statements in accordance with U.S. GAAP. For example, there were a significant number of adjustments to our financial statements during the course of the 2005 audit, at least one of which was individually material and required us to restate several prior quarters. Our personnel also lacked certain required skills and competencies to oversee the accounting operations and perform certain important control functions, such as the review, periodic inspection and investigation of transactions of our foreign locations. We consider this to be a deficiency that was also a material weakness in the operation of entity-level controls. Despite taking a variety of remedial measures, we were unable to conclude that no material weakness existed as of December 31, 2006. Accordingly, when our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2006, this assessment identified one material weakness.

~~While we have remedied this material weakness as of December 31, 2007, maintaining~~Maintaining sufficient expertise and historical institutional knowledge in our accounting and finance organization is dependent upon retaining existing employees and filling any open positions with experienced personnel in a timely fashion. The market for skilled accounting and finance personnel is competitive and we may have continued difficulty in retaining our staff because (1) the region in which we compete consists of many established companies that can offer more lucrative compensation packages and (2) some professionals are reluctant to deal with the complex accounting issues relating to our historical operations. Our inability to staff the department with competent personnel with sufficient training will affect our internal controls over financial reporting to the extent that we may not be able to prevent or detect material misstatements.

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We are dependent on direct sales personnel and third-party distribution channels to achieve revenue growth.

To date, we have sold our products primarily through our direct sales force. Our ability to achieve significant revenue growth in the future largely will depend on our success in recruiting, training and retaining sufficient direct sales personnel and establishing and maintaining relationships with distributors, resellers and systems integrators. Our products and services require a sophisticated sales effort targeted at the senior management of our prospective customers. New hires as well as employees of our distributors, resellers and systems integrators require training and may take a significant amount of time before achieving full productivity. Our recent hires may not become as productive as necessary, and we may be unable to hire and retain sufficient numbers of qualified individuals in the future. We have entered into strategic alliance agreements with partners, under which partners have agreed to resell and support our current BroadVision product suite. These contracts are generally terminable by either party upon 30 days' notice of an uncured material breach or for convenience upon 90 days' notice prior to the end of any annual term. Termination of any of these alliances could harm our expected revenues. We may be unable to expand our other distribution channels, and any expansion may not result in revenue increases. If we fail to maintain and expand our direct sales force or other distribution channels, our revenues may not grow or they may decline. Revenue generated from third-party distributors in recent years has not been significant.

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Failure to maintain relationships with third-party systems integrators could harm our ability to achieve our business plan.

Our relationships with third-party systems integrators who deploy our products have been a key factor in our overall business strategy, particularly because many of our current and prospective customers rely on integrators to develop, deploy and manage their online marketplaces. Our efforts to manage our relationships with systems integrators may not succeed, which could harm our ability to achieve our business plan due to a variety of factors, including:

	•	Systems integrators may not view their relationships with us as valuable to their own businesses. The related arrangements typically may be terminated by either party with limited notice and in some cases are not covered by a formal agreement.
	•	Under our business model, we often rely on our system integrators' employees to perform implementations. If we fail to work together effectively, or if these parties perform poorly, our reputation may be harmed and deployment of our products may be delayed or inadequate.
	•	Systems integrators may attempt to market their own products and services rather than ours.
	•	Our competitors may have stronger relationships with our systems integrators than us and, as a result, these integrators may recommend a competitor's products and services over ours.
	•	If we lose our relationships with our systems integrators, we will not have the personnel necessary to deploy our products effectively, and we will need to commit significant additional sales and marketing resources in an effort to reach the markets and customers served by these parties.

We may be unable to manage or grow our international operations and assets, which could impair our overall growth or financial position.

We derive a significant portion of our revenue from our operations outside North America. In the ~~nine~~three months ended ~~September 30, 2009,~~March 31, 2010, approximately ~~44%~~46% of our revenue was derived from international sales. If we are unable to manage or grow our existing international operations, we may not generate sufficient revenue required to establish and maintain these operations, which could slow our overall growth and impair our operating margins.

As we rely materially on our operations outside of North America, we are subject to significant risks of doing business internationally, including:

	•	difficulties in staffing and managing foreign operations and safeguarding foreign assets;
	•	unexpected changes in regulatory requirements;
	•	export controls relating to encryption technology and other export restrictions;
	•	tariffs and other trade barriers;
	•	~~difficulties in staffing and managing foreign operations;~~
	•	political and economic instability;
	•	fluctuations in currency exchange rates;
	•	reduced protection for intellectual property rights in some countries;
	•	cultural barriers;
	•	seasonal reductions in business activity during the summer months in Europe and certain other parts of the world; and
	•	potentially adverse tax consequences.

Management of international operations presents special challenges, particularly at our reduced staffing levels. For example, during 2008 we uncovered through our whistle blower program that an officer of our Japan subsidiary was involved in a scheme to submit fraudulent expense reimbursements totaling approximately $84,000 during the period between 2007 and 2008. We were able to recover the funds from the officer and the officer was terminated. Although this scheme was detected, we face the risk that other similar misappropriations of assets may occur in the future.

Our international sales growth could be limited if we are unable to establish additional foreign operations, expand international sales channel management and support, hire additional personnel, customize products for local markets and develop relationships with international service providers, distributors and system integrators. Even if we are able to successfully expand our international operations, we may not succeed in maintaining or expanding international market demand for our products.

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Our success and competitive position will depend on our ability to protect our proprietary technology.

Our success and ability to compete are dependent to a significant degree on our proprietary technology. We hold a U.S. patent, issued in January 1998, on elements of the BroadVision platform, which covers electronic commerce operations common in today's web business. We also hold a U.S. patent, issued in November 1996, acquired as part of the Interleaf acquisition on the elements of the extensible electronic document processing system for creating new classes of active documents. Although we hold these patents, they may not provide an adequate level of intellectual property protection. In addition, litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, or to determine the validity and scope of the proprietary rights of others. It is also possible that third parties may claim we have infringed their patent, trademark, copyright or other proprietary rights. Claims may be made for indemnification resulting from allegations of infringement. Intellectual property infringement claims may be asserted against us as a result of the use by third parties of our products. Claims or litigation, with or without merit, could result in substantial costs and diversions of resources, either of which could harm our business.

We also rely on copyright, trademark, service mark, trade secret laws and contractual restrictions to protect our proprietary rights in products and services. We have registered "BroadVision", ~~"iGuide",~~ "Interleaf" and "Interleaf Xtreme" as trademarks in the United States and in other countries. It is possible that our competitors or other companies will adopt product names similar to these trademarks, impeding our ability to build brand identity and possibly confusing customers.

As a matter of our company policy, we enter into confidentiality and assignment agreements with our employees, consultants and vendors. We also control access to and distribution of our software, documents and other proprietary information. Notwithstanding these precautions, it may be possible for an unauthorized third party to copy or otherwise obtain and use our software or other proprietary information or to develop similar software independently. Policing unauthorized use of our products will be difficult, particularly because the global nature of the Internet makes it difficult to control the ultimate destination or security of software and other transmitted data. The laws of other countries may afford us little or no effective protection of our intellectual property.

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~~Table of Contents~~

A breach of the encryption technology that we use could expose us to liability and harm our reputation, causing a loss of customers.

If any breach of the security technology embedded in our products or hosted Cloud operation were to occur, we would be exposed to liability and our reputation could be harmed, which could cause us to lose customers. A significant barrier to online commerce, portal, social networking and ~~communication is~~enterprise software the secure exchange of valuable and confidential information over public networks. We rely on encryption and authentication technology, ~~including~~such as Open SSL, ~~and~~ public key cryptography, ~~technology featuring the major~~ encryption algorithms RC2 and MD5, digital certificates and HTTPS, to provide the security and authentication necessary to affect the secure exchange of confidential information. Advances in computer capabilities, new discoveries in the field of cryptography, new hacking methods, security holes in third-party components (such as operating system bugs) or other events or developments could cause a breach of the ~~RSA or other algorithms~~above measures that we use to protect customer ~~transaction data.~~data and identity.

The loss or malfunction of technology ~~licensed~~ from third parties could delay the introduction of our products and services.

We rely in part on technology that we license from third parties or we obtain from open sources, including relational database management systems from Oracle, Microsoft and ~~Sybase, Informix~~MySQL object request broker software from IONA Technologies PLC, J2EE from Sun Microsystems, JBoss application server from open source, and ~~database access technology from Rogue Wave Software.~~others. The loss or malfunction of any ~~of these~~third-party technology ~~licenses~~ could harm our business. We integrate or sublicense ~~this~~third-party technology with internally developed software to perform key functions. For example, our products and services incorporate data encryption and authentication technology ~~licensed~~ from Open SSL. Third-party technology ~~licenses~~ might not continue to be available to us on commercially reasonable terms, or at all. Moreover, ~~the licensed~~third-party technology may contain defects that we cannot control. Problems with ~~our~~third-party technology ~~licenses~~ could cause delays in introducing our products or services until equivalent technology, if available, is identified, licensed or obtained, and integrated. Delays in introducing our products and services could adversely affect our results of operations.

Our officers, key employees and highly skilled technical and managerial personnel are critical to our business, and they may not remain with us in the future.

Our performance substantially depends on the performance of our officers and key employees. We also rely on our ability to retain and motivate qualified personnel, especially our management and highly skilled development teams. The loss of the services of any of our officers or key employees, particularly our founder and Chief Executive Officer, Dr. Pehong Chen, could cause us to incur increased operating expenses and divert senior management resources in searching for replacements. The loss of their services also could harm our reputation if our customers were to become concerned about our future operations. We do not carry "key person" life insurance policies on any of our employees. Our future success also depends on our continuing ability to identify, hire, train and retain other highly qualified technical and managerial personnel. Competition for these personnel is intense, especially in the Internet industry. We have in the past experienced, and may continue to experience, difficulty in hiring and retaining sufficient numbers of highly skilled employees. The significant downturn in our business over the past several years has had and may continue to have a negative impact on our operations. We have restructured our operations by reducing our workforce and implementing other cost containment activities. These actions could lead to disruptions in our business, reduced employee morale and productivity, increased attrition, and problems with retaining existing and recruiting future employees.

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Limitations on the online collection of profile information could impair the effectiveness of our products.

Online users' resistance to providing personal data, and laws and regulations prohibiting use of personal data gathered online without express consent or requiring businesses to notify their web site visitors of the possible dissemination of their personal data, could limit the effectiveness of our products. This in turn could adversely affect our sales and results of operations.

One of the principal features of our products is the ability to develop and maintain profiles of online users to assist business managers in determining the nature of the content to be provided to these online users. Typically, profile information is captured when consumers, business customers and employees visit a web site and volunteer information in response to survey questions concerning their backgrounds, interests and preferences. Profiles can be augmented over time through the subsequent collection of usage data. Although our products are designed to enable the development of applications that permit web site visitors to prevent the distribution of any of their personal data beyond that specific web site, privacy concerns may nevertheless cause visitors to resist providing the personal data necessary to support this profiling capability. The mere perception by prospective customers that substantial security and privacy concerns exist among online users, whether or not valid, may indirectly inhibit market acceptance of our products.

In addition, new laws and regulations could heighten privacy concerns by requiring businesses to notify web site users that the data captured from them while online may be used by marketing entities to direct product messages to them. We are subject to increasing regulation at the federal and state levels relating to online privacy and the use of personal user information. Several states have proposed legislation that would limit the uses of personal user information gathered online or require online services to establish privacy policies. In addition, the U.S. Federal Trade Commission, or FTC, has urged Congress to adopt legislation regarding the collection and use of personal identifying information obtained from individuals when accessing web sites. The FTC has settled several proceedings resulting in consent decrees in which Internet companies have been required to establish programs regarding the manner in which personal information is collected from users and provided to third parties. We could become a party to a similar enforcement proceeding. These regulatory and enforcement efforts could also harm our customers' ability to collect demographic and personal information from users, which could impair the effectiveness of our products.

We may not have adequate back-up systems, and natural or manmade disasters could damage our operations, reduce our revenue and lead to a loss of customers.

We do not have fully redundant systems for service at an alternate site. A disaster could severely harm our business because our service could be interrupted for an indeterminate length of time. Our operations depend upon our ability to maintain and protect our computer systems at our facility in Redwood City, California, which reside on or near known earthquake fault zones. Although these systems are designed to be fault tolerant, they are vulnerable to damage from fire, floods, earthquakes, power loss, acts of terrorism, telecommunications failures and similar events. In addition, our facilities in California could be subject to electrical blackouts if California faces another power shortage similar to that of 2001. Although we do have a backup generator that would maintain critical operations, this generator could fail. We also have significantly reduced our workforce in a short period of time, which has placed different requirements on our systems and has caused us to lose personnel knowledgeable about our systems, both of which could make it more difficult to quickly resolve system disruptions. Disruptions in our internal business operations could harm our business by resulting in delays, disruption of our customers' business, loss of data, and loss of customer confidence.

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Risks related to BroadVision common stock

One stockholder beneficially owns a substantial portion of the outstanding BroadVision common stock, and as a result exerts substantial control over us.

As of ~~September 30, 2009,~~March 31, 2010, Dr. Pehong Chen, our Chairman and CEO, beneficially owned approximately 1.6 million shares of our common stock, which represents approximately ~~36%~~37% of the outstanding common stock as of such date. As a result, Dr. Chen exerts substantial control over all matters coming to a vote of our stockholders, including with respect to:

	•	the composition of our board of directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers;
	•	any determinations with respect to mergers and other business combinations;
	•	our acquisition or disposition of assets;
	•	our financing activities; and
	•	the payment of dividends on our capital stock.

This control by Dr. Chen could depress the market price of our common stock or delay or prevent a change in control of BroadVision.

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Our stock price has been highly volatile.

The trading price of BroadVision common stock has been highly volatile. For example, the trading price of BroadVision common stock has ranged from ~~$9.52~~$9.00 per share to ~~$70.75~~$32.00 per share between ~~September 30, 2007~~March 31, 2008 and ~~September 30, 2009.~~March 31, 2010. On ~~November 5, 2009~~May 6, 2010 the closing price of BroadVision common stock was ~~$14.64~~$12.27 per share. Our stock price is subject to wide fluctuations in response to a variety of factors, including:

	•	quarterly variations in operating results;
	•	announcements of technological innovations;
	•	announcements of new software or services by us or our competitors;
	•	changes in financial estimates by securities analysts;
	•	low trading volume on the NASDAQ Global Market;
	•	general economic conditions; or
	•	other events or factors that are beyond our control.

In addition, the stock market has experienced significant price and volume fluctuations that have particularly affected the trading prices of equity securities of many technology companies. These fluctuations have often been unrelated or disproportionate to the operating performance of these companies. Any negative change in the public's perception of the prospects of Internet or electronic commerce companies could further depress our stock price regardless of our results. Other broad market fluctuations may decrease the trading price of BroadVision common stock. In the past, following ~~a significant decline~~declines in the market price of a company's securities, securities class action litigation, such as the class action lawsuits filed against us and certain of our officers and directors in early 2001, ~~is frequently~~has often been instituted against ~~the~~that company. Litigation could result in substantial costs and a diversion of management's attention and resources.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

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

~~Not applicable.~~

Item 5. Other Information

Not applicable.

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Item 6. Exhibits

Exhibits Number		Description
3.1 (1)		Amended and Restated Certificate of Incorporation.
3.2 (2)		Certificate of Amendment of Certificate of Incorporation.
3.3 (4)		Certificate of Amendment of Certificate of Incorporation.
3.4 (3)		Amended and Restated Bylaws.
4.1 (1)		References are hereby made to Exhibits 3.1 to 3.3
~~10.1(5)(a)~~		~~2009 Employee Profit Sharing Plan Framework Document~~
~~10.2(6)(a)~~		~~BroadVision, Inc. Severance Benefit Plan, as amended~~
31.1		Certification of the Chief Executive Officer of BroadVision.
31.2		Certification of the Chief Financial Officer of BroadVision.
32.1		Certification of the Chief Executive Officer and Chief Financial Officer of BroadVision pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1)		Incorporated by reference to the Company's Registration Statement on Form S-1 filed on April 19, 1996 as amended by Amendment No. 1 filed on May 9, 1996, Amendment No. 2 filed on May 29, 1996 and Amendment No. 3 filed on June 17, 1996.
(2)		Incorporated by reference to the Company's Form 10-K for the fiscal year ended December 31, 2006 filed on March 27, 2007.
(3)		Incorporated by reference to the Company's Current Report on Form 8-K filed on October 16, 2008.
(4)		Incorporated by reference to the Company’s Form 10-Q for the fiscal quarter ended September 30, 2008 filed on November 6, 2008.
~~(5)~~		~~Incorporated by reference to the Company's Current Report on Form 8-K filed on July 24, 2009.~~
~~(6)~~		~~Incorporated by reference to the Company's Current Report on Form 8-K filed on October 27, 2009.~~
~~(a)~~		~~Represents a management contract or Compensatory plan or arrangement.~~

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	Accrued restructuring costs, beginning		Amounts charged to restructuring costs and other			Amounts paid or written off			Accrued restructuring costs, ending
Three Months Ended March 31, 2010
Lease cancellations and commitments	$	399	$	742		$	(346	)	$	795

Three Months Ended March 31, 2009
Lease cancellations and commitments	$	845	$	(2	)	$	(121	)	$	722

			Amounts
	Accrued		Charged to
	Restructuring		Restructuring						Accrued
	Costs,		Costs			Amounts Paid			Restructuring
	Beginning		and Other			or Written Off			Costs, Ending
Three Months Ended September 30, 2009
Lease cancellations and commitments	$	321	$	9		$	(126	)	$	204

Three Months Ended September 30, 2008
Lease cancellations and commitments	$	1,043	$	(46	)	$	(127	)	$	870

Nine Months Ended September 30, 2009
Lease cancellations and commitments	$	780	$	(59	)	$	(517	)	$	204

Nine Months Ended September 30, 2008
Lease cancellations and commitments	$	1,326	$	(88	)	$	(368	)	$	870



		BROADVISION, INC.

Date: ~~November 6, 2009~~May 7, 2010	By:	/s/ Pehong Chen
		Pehong Chen
		Chairman of the Board, President and Chief Executive Officer



		BROADVISION, INC.

Date: ~~November 6, 2009~~May 7, 2010	By:	/s/ Shin-Yuan Tzou
		Shin-Yuan Tzou
		Chief Financial Officer


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


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

	Accumulated Other
	Comprehensive
	Loss
Balance, December 31, 2008	$	(483	)
Net change during period		(629	)
Balance, September 30, 2009	$	(1,112	)

			Fair Value Measurements at Reporting Date Using

	Balance at September 30, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Input (Level 3)		Total Gains (Losses)
Cash and cash equivalents (1)	$	36,085	$	36,085	$	-	$	-	$	-
Short-term investments (2)		27,094		12,880		14,214		-		-
Total	$	63,179	$	48,965	$	14,214	$	-	$	-

	Total Future
	Minimum
Years ending December 31,	Payments
2009	$	0.6
2010		1.8
2011		1.3
2012		0.6
2013 and thereafter		-
Total minimum facilities payments	$	4.3

	Operating
Years ending December 31,	Leases		Total future minimum payments
2009	$	92
2010		242	$	255
2011		138		354
2012		86		186
2013 and thereafter		-		-
Total minimum facilities payments	$	558	$	795

	Software Licenses		%			Services		%			Total		%
Three Months Ended:
March 31, 2010
Americas	$	1,253		66	%	$	1,901		48	%	$	3,154		54	%
Europe		305		16	%		1,404		35	%		1,709		29	%
Asia Pacific		329		18	%		685		17	%		1,014		17	%
Total	$	1,887		100	%	$	3,990		100	%	$	5,877		100	%
March 31, 2009
Americas	$	2,097		73	%	$	2,263		44	%	$	4,360		55	%
Europe		597		21	%		2,160		42	%		2,757		34	%
Asia Pacific		158		6	%		726		14	%		884		11	%
Total	$	2,852		100	%	$	5,149		100	%	$	8,001		100	%

	Software
	Licenses		%			Services		%			Total		%
Three Months Ended:
September 30, 2009
Americas	$	1,608		60	%	$	2,179		45	%	$	3,787		50	%
Europe		969		36			1,952		41			2,921		39
Asia Pacific		86		4			748		14			834		11
Total	$	2,663		100	%	$	4,879		100	%	$	7,542		100	%
September 30, 2008
Americas	$	1,669		80	%	$	2,428		40	%	$	4,097		50	%
Europe		384		18			2,740		45			3,124		38
Asia Pacific		43		2			927		15			970		12
Total	$	2,096		100	%	$	6,095		100	%	$	8,191		100	%

Nine Months Ended:
September 30, 2009
Americas	$	6,413		74	%	$	6,677		44	%	$	13,090		56	%
Europe		1,960		23			6,193		41			8,153		34
Asia Pacific		303		3			2,169		15			2,472		10
Total	$	8,676		100	%	$	15,039		100	%	$	23,715		100	%
September 30, 2008
Americas	$	5,237		61	%	$	7,895		45	%	$	13,132		50	%
Europe		2,347		28			7,205		41			9,552		36
Asia Pacific		937		11			2,629		14			3,566		14
Total	$	8,521		100	%	$	17,729		100	%	$	26,250		100	%

	•	develop leading technologies;
	•	enhance our existing products and services;
	•	develop new products and services that address the increasingly sophisticated and varied needs of our prospective customers; and
	•	respond to technological advances and emerging industry standards and practices on a timely and cost-effective basis.

	•	introduction of products and services and enhancements by us and our competitors;
	•	competitive factors that affect our pricing;
	•	market acceptance of new products;
	•	the mix of products sold by us;
	•	the timing of receipt, fulfillment and recognition as revenue of significant orders;
	•	changes in our pricing policies or our competitors;
	•	changes in our sales incentive plans;
	•	the budgeting cycles of our customers;
	•	customer order deferrals in anticipation of new products or enhancements by our competitors or us or because of macro-economic conditions;
	•	nonrenewal of our maintenance agreements, which generally automatically renew for one-year terms unless earlier terminated by either party upon 90-days notice;
	•	product life cycles;
	•	changes in strategy;
	•	seasonal trends;
	•	the mix of distribution channels through which our products are sold;
	•	the mix of international and domestic sales;
	•	the rate at which new sales people become productive;
	•	changes in the level of operating expenses to support projected growth;
	•	increase in the amount of third party products and services that we use in our products or resell with royalties attached;
	•	fluctuations in the recorded value of outstanding common stock warrants that will be based upon changes to the underlying market value of BroadVision common stock; and
	•	costs associated with litigation, regulatory compliance and other corporate events such as operational reorganizations.