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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 - Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-28252
BROADVISION, INC.
-----------------
(Exact name of registrant as specified in its charter)
Delaware 94-3184303
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
333 Distel Circle, Los Altos, California 94022-1404
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(415) 943-3600
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES x NO _
As of October 31, 1997 there were 20,338,719 shares of the Registrant's
Common Stock outstanding.
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This is page 1 of 14 pages.
Index to exhibits is on page 15
<PAGE>
BROADVISION, INC.
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
Page No.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
Three and nine months ended September 30, 1997
and 1996 3
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996 4
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
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PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
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SIGNATURES 14
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2
<PAGE>
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
(unaudited) (unaudited)
--------------------- ---------------------
<S> <C> <C> <C> <C>
Revenues:
Software licenses $ 5,513 $ 2,074 $ 12,759 $ 4,737
Services 1,641 1,026 5,713 2,063
-------- -------- -------- --------
Total revenues 7,154 3,100 18,472 6,800
Cost of revenues:
Cost of license revenues 460 72 1,099 261
Cost of service revenues 1,010 520 3,154 1,017
-------- -------- -------- --------
Total cost of revenues 1,470 592 4,253 1,278
-------- -------- -------- --------
Gross profit 5,684 2,508 14,219 5,522
Operating expenses:
Research and development 2,113 1,320 5,595 3,513
Sales and marketing 4,630 3,574 13,091 7,667
General and administrative 763 592 2,209 1,230
-------- -------- -------- --------
Total operating expenses 7,506 5,486 20,895 12,410
-------- -------- -------- --------
Operating loss (1,822) (2,978) (6,676) (6,888)
Interest and other income 133 331 541 425
Interest and other expense (2) (27) (152) (89)
-------- -------- -------- --------
Net loss $ (1,691) $ (2,674) $ (6,287) $ (6,552)
======== ======== ======== ========
Net loss per share $ (0.08) $ (0.13) $ (0.31) $ (0.35)
======== ======== ======== ========
Shares used in computing net loss per share 20,284 19,889 20,169 18,720
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
3
<PAGE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
1997 1996
(unaudited)
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 9,001 $ 17,608
Short-term investments - 2,112
Accounts receivable, net 9,287 5,548
Other current assets 545 317
-------- --------
Total current assets 18,833 25,585
Property and equipment, net 4,058 3,024
Other assets 367 321
-------- --------
Total assets $ 23,258 $ 28,930
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,218 $ 3,484
Unearned revenue 1,490 2,625
Deferred maintenance 1,758 924
Current portion of long-term liabilities 365 294
-------- --------
Total current liabilities 6,831 7,327
Long-term liabilities 637 587
Stockholders' equity
Common stock 40,048 39,318
Deferred compensation (1,702) (2,033)
Accumulated deficit (22,556) (16,269)
-------- --------
Total stockholders' equity 15,790 21,016
-------- --------
Total liabilities and stockholders' equity $ 23,258 $ 28,930
======== ========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
<CAPTION>
Nine months ended
--------------------------------
September 30, September 30,
1997 1996
(unaudited) (unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (6,287) $ (6,552)
Adjustments to reconcile net loss to net cash
used for operating activities:
Depreciation and amortization 1,148 476
Amortization of deferred compensation 331 379
Changes in operating assets and liabilities:
Accounts receivable (3,739) (3,904)
Other assets (274) (629)
Accounts payable and accrued expenses (266) 2,244
Unearned revenue and deferred maintenance (301) 3,021
Other liabilities (7) 18
-------- --------
Net cash used in operating activities (9,395) (4,947)
-------- --------
Cash flows from investing activities:
Acquisition of property and equipment (2,004) (1,817)
Purchase of short-term investments (1,532) (22,913)
Maturity of short-term investments 3,644 196
-------- --------
Net cash provided by (used in) investing
activities 108 (24,534)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 730 20,945
Proceeds from issuance of preferred stock, net
of issuance costs -- 5,055
Proceeds from borrowings 238 --
Principal payments on capital lease (288) (177)
-------- --------
Net cash provided by financing activities 680 25,823
-------- --------
Net decrease in cash and cash equivalents (8,607) (3,658)
Cash and cash equivalents,beginning of period/year 17,608 4,311
-------- --------
Cash and cash equivalents,end of period/year 9,001 653
======== ========
Non-cash investing and financing activities
Acquisition of equipment under capital leases $ 178 $ 336
======== ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
5
<PAGE>
BROADVISION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1) Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts
of BroadVision, Inc. (the "Company") and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Business of the Company
The Company provides an integrated software application system,
BroadVision One-To-One TM, that enables the creation of applications allowing
non-technical business managers to tailor Internet marketing and selling
services to the needs and interests of individual World Wide Web site visitors,
personalizing each visit on a real-time basis.
Interim Financial Information
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions for Form 10-Q and Article 10 of
Regulation S-X. In the Company's opinion, the financial statements include all
adjustments, consisting only of normal recurring adjustments, which the Company
considers necessary to fairly state the Company's financial position and the
results of operations and cash flows. The balance sheet at December 31, 1996 has
been derived from the audited financial statements at that date but does not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The accompanying
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Prospectus, Forms 10-K and 10-Q, and
other documents filed with the Securities and Exchange Commission ("SEC"). The
results of the Company's operations for any interim period are not necessarily
indicative of the results of the Company's operations for any other interim
period or for a full fiscal year.
Net Loss Per Share
The net loss per share is computed using net loss and, for periods
prior to the Company's initial public offering ("IPO"), is based on the weighted
average number of shares of common stock outstanding, convertible preferred
stock, on an "as-if-converted" basis, using the exchange rate in effect at the
initial public offering date and common equivalent shares from stock options and
warrants outstanding using the treasury stock method. In accordance with certain
SEC Staff Accounting Bulletins, such computations include all common and common
equivalent shares issued within 12 months of the initial filing date as if they
were outstanding for all pre-IPO periods presented using the treasury stock
method and the anticipated initial public offering price. For periods subsequent
to the IPO, loss per share is based on weighted average shares outstanding,
excluding the effects of dilutive securities.
6
<PAGE>
Recent Accounting Pronouncements
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share." SFAS No. 128
requires the presentation of basic earnings per share ("EPS") and, for companies
with complex capital structures or potentially dilutive securities, such as
convertible debt, options and warrants, diluted EPS. SFAS No. 128 is effective
for annual and interim periods ending after December 15, 1997. The Company
expects that basic EPS and diluted EPS will not differ materially from loss per
share as presented in the accompanying consolidated financial statements.
2) Balance Sheet Detail
Property and Equipment
Property and equipment consisted of the following (in thousands):
September 30, December 31,
1997 1996
(unaudited)
------------- ------------
Furniture and fixtures $ 892 $ 539
Computers and software 4,521 3,210
Leasehold improvements 656 138
------ ------
6,069 3,887
Less accumulated depreciation and amortization 2,011 863
------ ------
$4,058 $3,024
====== ======
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
September 30, December 31,
1997 1996
(unaudited)
------------- ------------
Employee benefits $ 397 $ 254
Commissions and bonuses 552 696
Directors and officers insurance premiums 113 283
Taxes payable 321 129
Contractor fees 179 489
Other 367 675
------ ------
$1,929 $2,526
====== ======
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
EXCEPT FOR HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM
THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS FORM 10-Q AND IN THE
COMPANY'S PROSPECTUS, FORMS 10-K AND 10-Q, AND OTHER DOCUMENTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. ANY SUCH FORWARD-LOOKING STATEMENTS SPEAK
ONLY AS OF THE DATE SUCH STATEMENTS ARE MADE.
OVERVIEW
BroadVision provides software application solutions for enterprise
class, personalized business on the global Internet, Intranets, and Extranets.
These solutions enable companies to rapidly deploy and cost-effectively operate
secure, scalable, intelligent, and flexible electronic commerce, customer
self-service, and knowledge management applications over the Net. The
BroadVision One-To-One(TM) application system and One-To-One WebApps(TM) family
of applications support large user and content databases, high transaction
volumes, intelligent agent matching, and seamless integration with existing
business systems. BroadVision applications also incorporate a suite of powerful
management tools that enable non-technical business people to dynamically manage
content and control application behavior from their desktops. BroadVision
software products are fully integrated with consulting services, training, and
technical support to provide comprehensive, end-to-end solutions for the
financial services, high technology, retail/distribution, and telecommunications
industries. BroadVision is headquartered in Los Altos, California and maintains
an extensive network of subsidiaries and licensed resellers in North and South
America, Europe and Asia.
The Company's revenues are derived from software license fees and fees
for its services. The Company generally recognizes license fees when the
software has been delivered, the customer acknowledges an unconditional
obligation to pay, and the Company has no significant obligations remaining.
Professional services revenues generally are recognized as services are
performed. Maintenance revenues are recognized ratably over the term of the
support period, which is typically one year.
Since its inception, the Company has incurred substantial costs to
research, develop, and enhance its technology and products, to recruit and train
a marketing and sales group, and to establish an administrative organization. As
a result, the Company has incurred net losses in each fiscal quarter since
inception and, as of September 30, 1997, had an accumulated deficit of $22.6
million. The Company anticipates that its operating expenses will increase in
the foreseeable future as it continues the development of its technology,
increases its sales and marketing activities, and creates and expands its
distribution channels. Accordingly, the Company expects to incur additional
losses for the foreseeable future. In addition, the Company's limited operating
history makes the prediction of future results of operations difficult and,
accordingly, there can be no assurance that the Company will achieve or sustain
revenue growth or profitability.
To date, only a limited number of companies have licensed the
BroadVision One-To-One application system. Accordingly, the Company has only a
limited operating history, and its prospects must be evaluated in light of the
risks and uncertainties frequently encountered by a company in its early stage
of development. Some of these risks and uncertainties relate to the
8
<PAGE>
new and rapidly evolving nature of the markets in which the Company operates.
Such market risks include, among other things, the early stage of market
development for online commerce, the dependence of online commerce upon the
development of the Internet, the uncertainty of widespread adoption of online
commerce and the risk of government regulation of the Internet. Other risks and
uncertainties facing the Company relate to the Company's ability to, among other
things, successfully implement its marketing strategy, respond to competitive
developments, continue to develop and upgrade its products and technologies more
rapidly than its competitors, and commercialize its products and services
incorporating these enhanced technologies. There can be no assurance that the
Company will succeed in addressing any or all of these risks. A more complete
description of these and other risks relating to the Company's business is set
forth under the caption "Risk Factors" and elsewhere in the Company's Form 10-K
filed with the Securities and Exchange Commission (the "SEC").
RESULTS OF OPERATIONS
Revenues
Total revenues increased to $7,154,000 in the three-month period ended
September 30, 1997 from $3,100,000 for the same quarter in fiscal 1996. For the
nine-month period ended September 30, 1997, total revenues increased to
$18,472,000 from $6,800,000 for the same period in fiscal 1996.
Software product license revenues increased to $5,513,000 for the
three-month period ended September 30, 1997 from $2,074,000 for the same quarter
in fiscal 1996. For the quarter, the software product license revenues consisted
of North American software product license revenues of $2,628,000, or 48% of the
total software product license revenues, and international software product
license revenues of $2,885,000, or 52% of the total software product license
revenues. For the nine-month period ended September 30, 1997, software product
license revenues increased to $12,759,000 from $4,737,000 for the same period in
fiscal 1996. For the nine-month period ended September 30, 1997, the software
product license revenues consisted of North American software product license
revenues of $5,221,000, or 41% of the total software product license revenues,
and international software product license revenues of $7,538,000, or 59% of the
total software product license revenues. The increases in software product
license revenues reflect the sale of development licenses and web-based
applications of the Company's products, and the recognition of revenues relating
to deployment licenses. Deployment license revenues increased to $2,802,000 for
the three-month period ended September 30, 1997 from $1,443,000 for the same
quarter of fiscal 1996. For the nine-month period ended September 30, 1997,
deployment revenues increased to $6,458,000 from $1,955,000 for the same period
in fiscal 1996. As of September 30, 1997, the Company had deployed 27 customer
sites.
Services revenues increased to $1,641,000 for the three-month period
ended September 30, 1997 from $1,026,000 for the same quarter of fiscal 1996.
For the quarter, North American services revenues were $721,000, or 44% of total
services revenues, and international services revenues were $920,000, or 56% of
total services revenues. For the nine-month period ended September 30, 1997,
services revenues increased to $5,713,000 from $2,063,000 for the same period in
fiscal 1996. For the nine-month period ended September 30, 1997, the services
revenues consisted of North American services revenues of $2,709,000, or 47% of
the total services revenues, and international services revenues of $3,004,000,
or 53% of the total services revenues. Services revenues increased during these
periods from the respective prior year periods due to the increasing number of
licenses of BroadVision One-To-One with a service or maintenance component.
9
<PAGE>
Operating Expenses
The Company's operating expenses have increased substantially since
inception. The Company believes that continued expansion of its operations is
essential to achieving its objectives and, therefore, intends to increase
expenditures in all operating areas.
Cost of Software Licenses. Cost of software licenses includes the costs
of royalties to third parties for software that is embedded in, or bundled
together and sold with, the Company's products, product media and duplication,
and manuals and commissions payable to distributors. The amount of product
royalties payable is generally related to the volume of sales made by the
Company to its customers. The amount of commissions payable to distributors is
related to the distributor agreement which is generally based on the percentage
of revenue. Cost of software licenses increased to $460,000 for the three-month
period ended September 30, 1997 from $72,000 for the same quarter in fiscal
1996. For the nine-month period ended September 30, 1997, cost of software
licenses increased to $1,098,000 from $261,000 for the same period in fiscal
1996. The cost of software licenses increased during these periods due to higher
volume of software sales and sales generated from the Company's distributors for
which a commission payable is incurred.
Cost of Services. Cost of services consists primarily of
employee-related costs and fees for third-party consultants incurred in
providing consulting, post-contract support, and training services. Cost of
services increased to $1,010,000 for the three-month period ended September 30,
1997 from $520,000 for the same quarter in fiscal 1996. For the nine-month
period ended September 30, 1997, cost of services increased to $3,154,000 from
$1,017,000 for the same period in fiscal 1996. The increase in cost of services
was due to the increasing number of licenses of BroadVision One-To-One with a
support or maintenance component and the increasing fixed costs resulting from
the Company's expansion of its services organization. The Company expects that
services costs will continue to increase in absolute dollar amounts as the
Company continues to expand its services organization.
Research and Development. Research and development expenses consist
primarily of salaries, other employee-related costs, and consulting fees related
to the development of the Company's products. Research and development expenses
increased by 60% to $2,113,000, for the three-month period ended September 30,
1997 from $1,320,000 for the same quarter in fiscal 1996. For the nine-month
period ended September 30, 1997, research and development expenses increased by
59% to $5,595,000 from $3,513,000 for the same period in fiscal 1996. These
increases in the dollar amount of research and development expenses are
primarily attributable to costs of additional personnel in the Company's
research and development operations. The Company continues to direct product
development expenditures toward developing new products and enhancing existing
products. The Company anticipates that research and development expenses will
continue to increase in absolute dollars for the remainder of 1997. All
expenditures related to research and development have been expensed as incurred
and, therefore, no amortization of capitalized software development costs is
included.
Sales and Marketing. Sales and marketing expenses consist primarily of
salaries and other employee-related costs, commissions and other incentive
compensation, travel and entertainment, and expenditures for marketing programs
such as collateral materials, trade shows, public relations and creative
services. Sales and marketing expenses increased to $4,630,000 for the
three-month period ended September 30, 1997 from $3,574,000 for the same quarter
in fiscal 1996. For the nine-month period ended September 30, 1997, sales and
marketing expenses increased to $13,091,000 from $7,667,000 for the same period
in fiscal 1996. These increases in sales and marketing expenses reflect
primarily the hiring of additional sales and marketing personnel, developing and
expanding its sales distribution channels, and expanding promotional activities.
The Company expects to continue to expand its direct sales and marketing efforts
and expects sales and marketing expenses to continue to increase significantly
in absolute dollars.
10
<PAGE>
General and Administrative. General and administrative expenses consist
primarily of salaries, other employee-related costs, and fees for professional
services. General and administrative expenses increased to $763,000 for the
three-month period ended September 30, 1997 from $592,000 for the same quarter
in fiscal 1996. For the nine-month period ended September 30, 1997, general and
administrative expenses increased to $2,210,000 from $1,230,000 for the same
period in fiscal 1996. These increases for general and administrative expenses
reflect primarily the hiring of additional administrative and management
personnel, increases in the provision for doubtful accounts, increased
professional fees, and the addition of other infrastructure to support the
expansion of the Company's operations. The Company expects to continue to add
administrative staff to support broadened operations, expand North American and
international office facilities, and incur costs related to being a public
company and, therefore, expects general and administrative expenses to increase
significantly in absolute dollars.
Prior to its initial public offering ("IPO"), the Company recorded
deferred compensation for the difference between the exercise price and the
deemed fair value of the Company's Common Stock with respect to 1,794,000 shares
issuable upon exercise of options granted. These amounts were initially recorded
as deferred compensation and will be amortized to cost of services, research and
development, selling and marketing, and general and administrative expense over
the vesting periods of the options, generally 60 months. Deferred compensation
amortized to compensation expense decreased to $104,000 from $134,000 for the
same quarter in 1996. For the nine-month period ended September 30, 1997,
deferred compensation amortized to compensation expense decreased to $331,000
from $379,000 for the same period in fiscal 1996. The decrease in the
amortization of deferred compensation is due to the cancellation of stock
options for terminated employees. The amortization of deferred compensation will
have an adverse effect on the Company's reported results of operations through
the year 2003, but such effect will be significantly reduced beginning in the
third quarter of 2001.
FACTORS AFFECTING QUARTERLY OPERATING RESULTS
The Company expects to experience significant fluctuations in quarterly
operating results that may be caused by many factors including, but not limited
to, those discussed under the caption "Risk Factors" and elsewhere in the
Company's Form 10-K filed with the SEC.
The Company expects that a significant portion of its revenues will be
derived from a limited number of orders, and the timing of receipt, fulfillment
and deployment of such orders is likely to cause material fluctuations in the
Company's operating results, particularly on a quarterly basis, as with many
software companies. Specifically, the Company is taking steps to accelerate the
pace of deployment which could result in acceleration of revenue recognition
and, consequently, the potential for greater fluctuation in quarterly operating
results. The Company anticipates that it will make the major portion of each
quarter's deliveries near the end of each quarter and, as a result, short delays
in delivery of products at the end of a quarter could adversely affect operating
results for that quarter. Due to these factors, quarterly revenues and operating
results are difficult to forecast, and the Company believes that
period-to-period comparisons of its operating results will not necessarily be
meaningful and should not be relied upon as any indication of future
performance.
The Company anticipates that its operating expenses will increase
substantially in the foreseeable future as it continues the development of its
technology, increases its sales and marketing activities, and creates and
expands its distribution channels. Accordingly, the Company expects to incur
additional losses for the foreseeable future. In addition, the Company's limited
operating history makes the prediction of future results of operations difficult
and, accordingly, there can be no assurance that the Company will achieve or
sustain revenue
11
<PAGE>
growth or profitability. The Company's limited operating history also requires
that its prospects be evaluated in light of the risks and uncertainties
frequently encountered by a company in its early stage of development. Some of
these risks and uncertainties relate to the new and rapidly evolving nature of
the markets in which the Company operates. Such market risks include, among
other things, the early stage of market development for online commerce, the
dependence of online commerce upon the development of the Internet, the
uncertainty of widespread adoption of online commerce, and the risk of
government regulation of the Internet. Other risks and uncertainties facing the
Company relate to the Company's ability to, among other things, successfully
implement its marketing strategy, respond to competitive developments, continue
to develop and upgrade its products and technologies more rapidly than its
competitors, and commercialize its products and services incorporating these
enhanced technologies. There can be no assurance that the Company will succeed
in addressing any or all of these risks. A more complete description of these
and other risks relating to the Company's business is set forth under the
caption "Risk Factors" and elsewhere in the Company's Form 10-K filed with the
SEC. It is also likely that the Company's future quarterly operating results
from time to time will not meet the expectations of market analysts or
investors, which may have an adverse effect on the price of the Company's Common
Stock.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the IPO, the Company financed its operations primarily through
private placements of Common and Preferred Stock, which provided net proceeds
totaling $15.5 million through May 1996. The IPO yielded net proceeds of
approximately $20.7 million. At September 30, 1997, the Company had
approximately $9.0 million in cash and cash equivalents. The Company currently
has no significant capital commitments other than commitments under equipment
and operating leases disclosed in its Form 10-K filed with the SEC. The Company
has entered into a loan and security agreement with a bank for $3.0 million for
leasehold improvements on the anticipated move to new facilities in late 1997 as
disclosed in Form 10-K. The Company does not believe that it will require
additional credit facilities for at least the next 12 months however, there can
be no assurance that the Company will not require additional financing. If such
financing is required, there can be no assurance that it will be available or
that the Company will obtain favorable terms.
The Company anticipates that its available cash resources will be
sufficient to meet its presently anticipated working capital and capital
expenditure requirements for at least the next 12 months. This estimate is a
forward-looking statement that involves risks and uncertainties, and actual
results may vary as a result of a number of factors, including those discussed
under the caption "Risk Factors" and elsewhere in the Company's Form 10-K filed
with the SEC and those discussed under the caption "Factors Affecting Operating
Results" above and elsewhere herein. The Company may need to raise additional
funds in order to support more rapid expansion, develop new or enhanced
services, respond to competitive pressures, acquire complementary businesses or
technologies, or respond to unanticipated requirements. The Company may seek to
raise additional funds through private or public sales of securities, strategic
relationships, bank or lease financings, or otherwise. If additional funds are
raised through the issuance of equity securities, the percentage ownership of
the stockholders of the Company will be reduced, stockholders may experience
additional dilution, or such equity securities may have rights, preferences, or
privileges senior to those of the holders of the Company's Common Stock. There
can be no assurance that additional financing will be available on acceptable
terms, if at all. If adequate funds are not available or are not available on
acceptable terms, the Company may be unable to develop or enhance its products,
take advantage of future opportunities, or respond to competitive pressures or
unanticipated requirements, which could have a material adverse effect on the
Company's business, financial condition, and operating results.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of Proceeds
(1) The effective date of the Company's registration statement filed
on Form S-1 (SEC file number 0-28252) (the "Registration
Statement") for which the following information is being disclosed
is June 21, 1996.
(2) The Company's initial public offering pursuant to the
above-referenced registation statement commenced on June 21, 1996
(the "Offering").
(3) The Offering did not terminate before any securities were sold.
(4) (i) The Offering has not terminated.
(ii) The managing underwriters were Robertson, Stephens &
Company, Hambrecht & Quist and Wessels, Arnold & Henderson.
(iii) The Offering was for Common Stock of the Company.
(iv) Pursuant to the Offering, the Company registered and sold
3,360,000 shares of Common Stock with an aggregate offering
price of the amount registered and sold of $23,520,000.
(v) Following are the amount of expenses incurred (a) from the
effective date of the Registration Statement to the ending
period of the reporting period and (b) for the Registrant's
account in connection with the issuance and distribution of
the Common Stock pursuant to the Offering (estimates are so
indicated):
Underwriting discounts and commissions $1,646,000 (estimate)
Finders' Fees None
Expenses paid to or for underwriters None
Other expenses 1,119,000 (estimate)
----------
Total expenses $2,765,000
The above expenses constituted direct or indirect payments
to others.
(vi) The net offering proceeds to the Company, after deducting
the total expenses above, were $20,755,000.
(vii) Following are the uses, including amounts, of the net
offering proceeds from the effective date of the
Registration Statement to the ending period of the reporting
period (estimates are so indicated):
Construction of plant, building
and facilities None
Purchase and installation of machinery
and equipment $4,046,000 (estimate)
Purchase of real estate None
Acquisition of other business(es) None
Repayment of indebtedness None
Working capital 12,233,000 (estimate)
Temporary investments:
Money market 1,628,000 (estimate)
Certificates of Deposit 2,993,000 (estimate)
Other purposes None
All of the foregoing uses were direct or indirect payment to
others.
(viii) The use of proceeds described in (vii) above does not
represent a material change in the use of proceeds described
in the prospectus.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
<PAGE>
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Item Description
---- -----------
11.1 Statement re: Computation of Net Loss Per Share
27.1 Financial Data Schedule
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BROADVISION, INC
Date: ________________ _____________________________________
Pehong Chen
President and Chief Executive Officer
(Principal Executive Officer)
Date: ________________ _____________________________________
Randall C. Bolten
Vice President, Operations and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
14
<PAGE>
BROADVISION, INC.
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
11.1 Statement regarding Computation of Per Share Earnings . . . .
27.1 Financial Data Schedule . . . . . . . . . . . . . . . . . . .
- --------------------------------------------------------------------------------
15
Exhibit 11.1
<TABLE>
BROADVISION, INC. AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE LOSS
(In thousands, except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Statement of operations data:
Net Loss $ (1,691) $ (2,674) $ (6,287) $ (6,552)
Weighted average number of common
and dilutive equivalent shares
used in computations:
Common Stock 20,284 19,889 20,169 14,664
Preferred stock (as if converted) -- -- -- 1,867
-------- -------- -------- --------
Subtotal 20,284 19,889 20,169 16,531
-------- -------- -------- --------
Pursuant to Staff Accounting Bulletin No.83
Preferred stock on as-if converted
basis -- -- -- 1,311
Stock options -- -- -- 878
-------- -------- -------- --------
Shares used in computing net loss
per share 20,284 19,889 20,169 18,720
-------- -------- -------- --------
Net loss per share $ (0.08) $ (0.13) $ (0.31) $ (0.35)
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
YEAR ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10-Q FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,001
<SECURITIES> 0
<RECEIVABLES> 9,787
<ALLOWANCES> (500)
<INVENTORY> 0
<CURRENT-ASSETS> 18,833
<PP&E> 6,069
<DEPRECIATION> (2,011)
<TOTAL-ASSETS> 23,258
<CURRENT-LIABILITIES> 6,831
<BONDS> 0
0
0
<COMMON> 40,048
<OTHER-SE> (24,258)
<TOTAL-LIABILITY-AND-EQUITY> 23,258
<SALES> 5,513
<TOTAL-REVENUES> 7,154
<CGS> 460
<TOTAL-COSTS> 1,470
<OTHER-EXPENSES> 7,506
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (2)
<INCOME-PRETAX> (1,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,691)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,691)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
