Form 424(b)(4) prospectus
Filed
Pursuant to Rule 424(b)(4)
File
No. 333-125640
PROSPECTUS
6,310,218
Shares
BroadVision,
Inc.
Common
Stock
This
prospectus relates to the offer and sale, from time to time, of up to
6,310,218 shares
of BroadVision, Inc. common stock issuable to the selling stockholders
listed on page 15
of this
prospectus. The shares of common stock being offered by the selling stockholders
upon exercise of the warrants, which warrants were issued pursuant to a
Securities Purchase Agreement dated as of November 10, 2004. BroadVision
will not receive any proceeds from the sale of the shares by the selling
stockholders.
For
a
description of the plan of distribution of the shares, see
page 17
of this
prospectus.
Our
common stock is traded on the OTC Bulletin Board under the symbol "BVSN."
On June 6,
2007,
the last reported sale price for our common stock was $2.24.
Investing
in our common stock involves risks. See "Risk Factors" beginning on
page 4.
Neither
the Securities and Exchange Commission nor any state securities regulators
has
approved or disapproved these securities or determined if this prospectus
is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date
of this prospectus is June 7, 2007.
References
in this prospectus to "we," "us" and "our" refer to BroadVision, Inc. and
its
subsidiaries. BroadVision®,
BroadVision One-To-One®,
iGuide®,
Interleaf®
and
Interleaf Xtreme®
are our
U.S. registered trademarks. Our common law trademarks (designated by
tm)
in the
United States and other countries include BroadVision Commerce, BroadVision
Content, BroadVision Deployment, BroadVision eMarketing, BroadVision
Multi-Touchpoint, BroadVision Portal, BroadVision Process, BroadVision
QuickSilver, BroadVision Search, Energizing e-Business, Click-to-Create,
BroadVision Command Center, BroadVision Publishing Center, BroadVision Instant
Publisher, and any of the registered marks that are not registered in the
particular country where the mark is being used. Trademarks, service marks
and
trade names of other companies appearing in this prospectus are the property
of
their respective holders.
You
should rely only on the information and representations provided in this
prospectus. We have not authorized anyone to provide you with any different
information or to make any different representations in connection with any
offering made by this prospectus. This prospectus does not constitute an
offer
to sell, or a solicitation of an offer to buy, in any state where the offer
or
sale is prohibited. Neither the delivery of this prospectus, nor any sale
made
under this prospectus shall, under any circumstances, imply that the information
in this prospectus is correct as of any date after the date of this
prospectus.
PROSPECTUS
SUMMARY
You
should read the following summary together with the entire prospectus, including
the more detailed information in our financial statements and related notes
referred to elsewhere in this prospectus. You should carefully consider,
among
other things, the matters discussed in "Risk Factors."
BROADVISION,
INC.
Our
Business
Since
1993, BroadVision has been a pioneer and consistent innovator of e-business
solutions. We deliver a combination of technologies and services into the
global
market that enable customers of all sizes to power mission-critical web
initiatives that ultimately deliver high-value to their bottom line. Our
offering consists of a robust framework for personalization and self-service,
modular applications and agile toolsets that customers use to create e-commerce
and portal solutions. As of December 31, 2006, we had licensed our products
to
more than 500 customers - including Audible.com, Baker Hughes, Cardinal Health,
Citibank, Hilti, Japan Airlines, Renault, Sears, Sony, Standard Chartered
Bank,
Vodafone, U.S. Air Force, Yomiuri Shinbun and Xerox.
Corporate
Information
We
were
incorporated in Delaware in May 1993 and have been a publicly traded corporation
since 1996. From 2001 to December 31, 2005, our annual revenue has declined
and we have incurred significant losses and had negative cash flows from
operations. As of December 31, 2006, we had an accumulated deficit of
approximately $1.2 billion. The majority of these accumulated losses to
date have resulted from non-cash charges associated with our year 2000
acquisition of Interleaf, Inc. and restructuring charges related to excess
real
estate lease obligations. During 2004, we entered into a series of termination
agreements to buy out of nearly all of our excess lease obligations. In November
2004, we issued $16 million in aggregate principal amount of senior
subordinated secured convertible notes (the "Notes"). In November 2005,
Dr. Pehong Chen, our Chairman, Chief Executive Officer, President, interim
Chief Financial Officer and largest stockholder, acquired all Notes then
outstanding. On December 20, 2005, Dr. Chen agreed to cancel all
amounts owed under the Notes in exchange for 34,500,000 shares of
BroadVision common stock at an effective price per share of $0.45, which
represents a 20% discount to the trading price of our common stock on that
day.
Immediately prior to this agreement, the Notes were convertible by their
terms
into 5,625,000 shares of BroadVision common stock at a conversion price of
$2.76 per share. On March 8, 2006, pursuant to the December 20,
2005 agreement, we cancelled the Notes and issued to Dr. Chen
34,500,000 shares of BroadVision common stock (the "Note Conversion"). On
November 28, 2006, we completed a rights offering pursuant to which the holders
of BroadVision common stock on December 20, 2005 were entitled to purchase
a
number of shares of BroadVision common stock, at $0.45 per share, to enable
the
holders to maintain their proportionate ownership interest they held in
BroadVision immediately prior to the issuance of 34,500,000 shares to Dr.
Chen.
We issued 36,379,704 shares in the rights offering, representing approximately
21% of the shares offered, with net proceeds to us of $15.8
million.
Our
principal executive offices are located at 1600 Seaport Boulevard, 5th
Floor,
North Bldg., Redwood City, California 94063. Our telephone number is
(650) 331-1000. Our website address is www.broadvision.com. The information
on, or that can be accessed through, our website is not part of this prospectus.
THE
OFFERING
|
Common
stock to be offered by the selling stockholders
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6,310,218
Shares
|
|
Common
stock outstanding prior to this offering
|
107,423,743
Shares
|
|
Use
of proceeds
|
We
will not receive any of the proceeds from the sale of the shares
by the
selling stockholders, but we may receive proceeds from the exercise
of
warrants held by the selling stockholders. We will apply such proceeds,
if
any, toward funding our working capital. See "Use of
Proceeds."
|
|
OTC
Bulletin Board symbol
|
BVSN
|
On
November 10, 2004, we entered into the Securities Purchase Agreement, which
provided for the private placement (the "Private Placement") of up to
$20 million of convertible notes to the selling stockholders. We initially
issued the Notes, which were convertible into common stock at a fixed conversion
price of $2.76 per share, or a 15% premium to our common stock's trailing
10-day
volume weighted average price on November 10, 2004. The Notes were canceled
pursuant to the Note Conversion. The selling stockholders also received warrants
to purchase approximately 1.7 million shares of our common stock at a price
of $3.58 per share. The warrants became exercisable on May 10, 2005, and
may be
exercised on or prior to May 10, 2010. Pursuant to the terms of the
warrants, as a result of certain issuances of stock subsequent to the issuance
date of the warrants, as of March
31,
2007
the warrants are exercisable for approximately 4.2 million shares of our
stock
at a price of $1.48 per share. This
prospectus relates to the offer and sale, from time to time, of the shares
of
our common stock issuable to the selling stockholders upon exercise of the
warrants issued in the Private Placement. We are registering, pursuant to
the
terms of a registration rights agreement entered into as part of the Private
Placement (the "Registration Rights Agreement"), 150% of the shares of common
stock that we estimate would be issued to the selling stockholders upon full
exercise of the warrants.
On
November 10, 2004, we also issued to the selling stockholders pursuant to
the terms of the Securities Purchase Agreement additional investment rights
that
provided for an additional $4 million of convertible notes to be issued to
the investors at their option or, under certain circumstances, at our option.
Shares of our common stock underlying those additional notes have not been
registered, and this prospectus does not cover the offer or sale of such
shares.
All of the additional rights expired without having been exercised, in whole
or
in part, on July 10, 2005.
Previously,
in December 2004, we filed a registration statement relating to the offer
and
sale of our common shares underlying the securities acquired by the selling
stockholders, including the common shares underlying the notes issuable upon
the
exercise of the additional investment rights. We engaged in discussions with
the
Securities and Exchange Commission (the "SEC") in connection with the SEC's
review of the December 2004 registration statement regarding the character
of
the additional investment rights and the availability of the securities law
exemption on which we relied in offering the additional
investment rights and the common shares underlying the additional investment
rights. As a result of these discussions we amended the December 2004
registration statement to remove the shares of our common stock reserved
for
issuance upon exercise of these additional investment rights, and we
subsequently withdrew the December 2004 registration statement, as amended.
On
June 8, 2005, we filed a new registration statement relating to the offer
and sale of our common shares underlying the securities, other than the
additional investment rights, acquired by the selling stockholders. The new
registration statement was declared effective on August
31, 2005.
It
is
uncertain whether the general solicitation that occurred in connection with
the
December 2004 registration statement, as subsequently amended and
withdrawn, and the June 8, 2005 registration statement, could be held to
have resulted in a violation of Section 5 of the Securities Act of 1933
(the "Securities Act") with regard to the Private Placement. We do not believe
that a Section 5 violation has occurred. However, it is possible that one
might argue that a violation resulted from the public offering of common
shares
underlying the securities issued in the Private Placement while the Private
Placement was deemed to be continuing. Under such a theory, the Private
Placement would be deemed to be continuing while the additional investment
rights were still outstanding and, as a result, the selling stockholders
were
still eligible to make an investment decision with regard to the exercise
of
those rights. Under these circumstances, because the Private Placement could
be
deemed to be continuing, any general solicitation in connection with the
Private
Placement securities could be held to have tainted the private placement
exemption from registration upon which we relied when issuing securities
in the
Private Placement. Although the additional investment rights are now expired
and
any deemed continuation of the private transaction is now terminated, such
expiration in itself might not cure a Section 5 violation.
If
we
were held by a court to have violated Section 5 of the Securities Act in
connection with the November 2004 private placement of securities, such court
could order that we remit the consideration paid by the selling stockholders
to
us for all the securities we sold to them in violation of Section 5 of the
Securities Act, with interest, upon the tender back to us of such securities,
or
for damages, if they no longer own such securities. In connection with the
financing, we have issued and sold the Notes to the selling stockholders,
all of
which have been cancelled, and warrants initially exercisable for approximately
1.7 million shares of our common stock, none of which have been exercised.
Accordingly, our liability for a Section 5 violation is indeterminable. While
we
might contest any claimed Section 5 violation, any related litigation would
be costly to defend and could harm our results of operations, financial
condition and liquidity. In addition, we cannot offer any assurance that
the
extent of our exposure to damages would be limited to the amounts we received
from the selling stockholders, plus interest.
You
should carefully consider the following factors, together with the other
information contained in this prospectus, before purchasing the BroadVision
common stock being registered pursuant to the registration statement, of
which
this prospectus forms a part. An investment in BroadVision common stock involves
a high degree of risk and may not be appropriate for investors who cannot
afford
to lose their entire investment.
Risks
related to our business
We
have a history of losses and our future profitability on a quarterly or annual
basis is uncertain, which could have a harmful effect on our business and
the
value of BroadVision common stock.
While
we
generated positive operating income and cash flow in the twelve months ended
March 31, 2007, we have incurred substantial cumulative net operating losses
and
negative cash flows from operations since 2000. We also generated GAAP loss
in
the first quarter of 2007. As of March 31, 2007, we had an accumulated deficit
of approximately $1.2 billion.
Given
our
planned operating and capital expenditures, for the foreseeable future we
expect
our results of operations to fluctuate, and during this period we may incur
losses and/or negative cash flows. If our revenue does not increase or if
we
fail to maintain our expenses at an amount less than our projected revenue,
we
will not be able to achieve or sustain operating profitability on a consistent
basis. We are continuing our efforts to reduce and control our expense
structure. We believe strict cost containment and expense reductions are
essential to achieving positive cash flow and profitability. A number of
factors
could preclude us from successfully bringing costs and expenses in line with
our
revenues, including unplanned uses of cash, the inability to accurately forecast
business activities and further deterioration of our revenues. If we are
not
able to effectively reduce our costs and achieve an expense structure
commensurate with our business activities and revenues, we may have inadequate
levels of cash for operations or for capital requirements, which could
significantly harm our ability to operate our business.
Our
failure to operate profitably or control negative cash flows on a quarterly
or
annual basis could harm our business and the value of BroadVision common
stock.
If the negative cash flow continues, our liquidity and ability to operate
our
business would be severely and adversely impacted. Additionally, our ability
to
raise financial capital may be hindered due to our operational losses and
negative cash flows, reducing our operating flexibility.
Because
our quarterly operating results are volatile and difficult to predict, our
quarterly operating results in one or future periods are likely to fluctuate
significantly, which could cause our stock price to decline if we fail to
meet
the expectations of securities analysts or investors.
Our
quarterly operating results have varied significantly in the past and are
likely
to continue to vary significantly in the future. For example, in the quarters
ended March 31, 2005, June 30, 2005, September 30, 2005, December
31, 2005, and March 31, 2006, our revenues declined 22%, 23%, 18%, 1%, and
13%
respectively, as compared to the previous quarters. In the quarters ended
June
30, 2006, and September 30, 2006, our revenue increased 1%, and 7% respectively,
as compared to the previous quarters. In the quarters ended December 31,
2006
and March 31, 2007, our revenue declined 4%, and 2% respectively, as compared
to
the previous quarters. If our revenues, operating results, earnings or future
projections are below the levels expected by securities analysts or investors,
our stock price is likely to decline.
We
expect
to continue to experience significant fluctuations in our results of operations
due to a variety of factors, some of which are outside of our control,
including:
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introduction
of products and services and enhancements by us and our competitors;
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competitive
factors that affect our pricing;
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market
acceptance of new products;
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•
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the
mix of products sold by us;
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•
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changes
in our pricing policies or our competitors;
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changes
in our sales incentive plans;
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the
budgeting cycles of our customers;
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customer
order deferrals in anticipation of new products or enhancements
by our
competitors or us or because of macro-economic conditions;
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nonrenewal
of our maintenance agreements, which generally automatically renew
for
one-year terms unless earlier terminated by either party upon 90-days
notice;
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the
mix of distribution channels through which our products are sold;
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the
mix of international and domestic sales;
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the
rate at which new sales people become productive;
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changes
in the level of operating expenses to support projected growth;
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increase
in the amount of third party products and services that we use
in our
products or resell with royalties attached;
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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;
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the
timing of receipt and fulfillment of significant orders; and
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costs
associated with litigation, regulatory compliance and other corporate
events such as operational
reorganizations.
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As
a
result of these factors, we believe that quarter-to-quarter comparisons of
our
revenue and operating results are not necessarily meaningful, and that these
comparisons are not accurate indicators of future performance. Because our
staffing and operating expenses are based on anticipated revenue levels,
and
because a high percentage of our costs are fixed, small variations in the
timing
of the recognition of specific revenue could cause significant variations
in
operating results from quarter to quarter. If we were unable to adjust spending
in a timely manner to compensate for any revenue shortfall, any significant
revenue shortfall would likely have an immediate negative effect on our
operating results. If our operating results in one or more future quarters
fail
to meet the expectations of securities analysts or investors, we would expect
to
experience an immediate and significant decline in the trading price of our
stock.
Our
business currently depends on revenue related to BroadVision e-business
solutions, and if the market does not increasingly accept these products
and
related products and services, our revenue may continue to
decline.
We
generate our revenue from licenses of BroadVision e-business solutions,
including process, commerce, portal and content management and related products
and services. We expect that these products, and future upgraded versions,
will
continue to account for a large portion of our revenue in the foreseeable
future. Our future financial performance will depend on increasing acceptance
of
our current product and on the successful development, introduction and customer
acceptance of new and enhanced versions of our products. If new and future
versions and updates of our products and services do not gain market acceptance
when released commercially, or if we fail to deliver the product enhancements
and complementary third party products that customers want, demand for our
products and services, and our revenue, may decline.
We
have recently introduced new products, services and technologies and our
business will be harmed if we are not successful in selling these offerings
to
our existing customers and new customers.
We
have
recently introduced a product roadmap for 2007 that includes new products,
services and technologies, to complement and replace certain of our existing
products, services and technologies. We have spent significant resources
in developing these offerings and training our employees to implement and
support the offerings, and we plan to add sales and marketing resources.
We do not yet know whether any of these new offerings will be appealing to
existing and potential new customers, and if so, whether sales of these new
offerings will be sufficient for us to offset the costs of development,
implementation, support and marketing. Our existing customers may
determine that our products and services they currently use are sufficient
for
their purposes, or that the added benefit from these new offerings is not
sufficient to merit the additional cost. As a result we may need to
decrease our prices or develop modifications. And while we have performed
extensive testing of our new products and technologies, their broad-based
implementation may require more support than we anticipate, which would further
increase our expenses. If sales of our new products, services and
technologies are lower than we expect, or if we must lower our prices or
delay
implementation to fix unforeseen problems and develop modifications, our
operating margins are likely to decrease and we may not be able to operate
profitably. A failure to operate profitably would significantly harm our
business.
Our
management identified a material weakness in the effectiveness of our internal
control over financial reporting as of December 31, 2005 and as of December
31, 2006. The 2005 material weakness caused restatement of our historical
operating results. Additional material weaknesses may be discovered and
additional restatements may be required in the future.
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. generally
accepted accounting principles. 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.
In
2006
we hired several new full-time employees, and we believe that as of December
31,
2006, we have retained a sufficient number of experienced personnel in our
accounting and finance organization to enable us to address the material
weakness that existed as of December 31, 2005. These new hires have augmented
the capabilities of our organization, but in many cases they replaced employees
or part-time contractors who had left us for various reasons. In addition,
two
members of our accounting staff that we hired in the third quarter of 2006
left
in early 2007. This continued turnover has caused a reduction in our
institutional knowledge regarding historical events. While we believe that
the
recent additions to our accounting and finance organization continue to gain
familiarity with the complex issues relating mainly to our historical
operations, as of March 31, 2007 we have been unable to significantly reduce
the
rate of turnover in the organization and the full organization had not yet
been
in place for a sufficient amount of time to allow us to conclude that no
material weakness existed as of March 31, 2007. If we are not successful
in
retaining experienced personnel in our accounting and finance organization
in
order to sufficiently address the reduction in institutional knowledge
referenced above, there is more than a remote likelihood that our quarterly
or
annual financial statements could be materially misstated, which could require
a
restatement.
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) in the region
in which we compete there are many established companies that can offer more
lucrative compensation packages and (2) some professionals are reluctant to
deal with our 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.
Inferior internal control could also cause investors to lose confidence in
our
reported financial information, which could have a negative effect on the
trading price of our common stock.
If
we are unable to keep pace with the rapid technological changes in online
commerce and communication, our products and services may fail to be
competitive.
Our
products and services may fail to be competitive if we do not maintain or
exceed
the pace of technological developments in Internet commerce and communication.
Failure to be competitive could cause our revenue to decline. The information
services, software and communications industries are characterized by rapid
technological change, changes in customer requirements, frequent new product
and
service introductions and enhancements and evolving industry standards and
practices. The introduction of products and services embodying new technologies
and the emergence of new industry standards and practices can render existing
products and services obsolete. Our future success will depend, in part,
on our
ability to:
• develop
leading technologies;
• enhance
our existing products and services;
• develop
new products and services that address the increasingly sophisticated and
varied
needs of our prospective customers; and
• respond
to technological advances and emerging industry standards and practices on
a
timely and cost-effective basis.
Our
sales and product implementation cycles are lengthy and subject to delay,
which
make it difficult to predict our quarterly results.
Our
sales
and product implementation cycles generally span months. Delays in customer
orders or product implementations, which are difficult to predict, can affect
the timing of revenue recognition and adversely affect our quarterly operating
results. Licensing our products is often an enterprise-wide decision by
prospective customers. The importance of this decision requires that we engage
in a lengthy sales cycle with prospective customers. A successful sales cycle
may last up to nine months or longer. Our sales cycle is also affected by
a
number of other factors, some of which we have little or no control over,
including the volatility of the overall software market, the business condition
and purchasing cycle of each prospective customer, and the performance of
our
technology partners, systems integrators and resellers. The implementation
of
our products can also be time and resource intensive, and subject to unexpected
delays. Delays in either product sales or implementations could cause our
operating results to vary significantly from quarter to quarter.
Current
and potential competitors could make it difficult for us to acquire and retain
customers now and in the future.
The
market for our products is intensely competitive. We expect competition in
this
market to persist and increase in the future. If we fail to compete successfully
with current or future competitors, we may be unable to attract and retain
customers. Increased competition could also result in price reductions for
our
products and lower profit margins and reduced market share, any of which
could
harm our business, results of operations and financial condition.
Many
of
our competitors have significantly greater financial, technical, marketing
and
other resources, greater name recognition, a broader range of products and
a
larger installed customer base, any of which could provide them with a
significant competitive advantage. In addition, new competitors, or alliances
among existing and future competitors, may emerge and rapidly gain significant
market share. Some of our competitors, particularly established software
vendors, may also be able to provide customers with products and services
comparable to ours at lower or at aggressively reduced prices in an effort
to
increase market share or as part of a broader software package they are selling
to a customer. We may be unable to match competitor's prices or price
reductions, and we may fail to win customers that choose to purchase an
information technology solution as part of a broader software and services
package. As a result, we may be unable to compete successfully with current
or
new competitors.
Because
a significant portion of our sales activity occurs at the end of each fiscal
quarter, delays in a relatively small number of license transactions could
adversely affect our quarterly operating results.
A
significant proportion of our sales are concentrated in the last month of
each
fiscal quarter. Gross margins are high for our license transactions. Customers
and prospective customers may use these conditions in an attempt to obtain
more
favorable terms. While we endeavor to avoid making concessions that could
result
in lower margins, the negotiations often result in delays in closing license
transactions. Small delays in a relatively small number of license transactions
could have a significant impact on our reported operating results for that
quarter.
We
have substantially modified our business and operations and will need to
manage
and support these changes effectively in order for our business plan to
succeed.
We
have
substantially expanded and subsequently contracted our business and operations
since our inception in 1993. We grew from 652 employees at the end of 1999
to
2,412 employees at the end of 2000 and then reduced our numbers to 1,102
at the
end of 2001, 449 at the end of 2002, 367 at the end of 2003, 337 at the end
of
2004, 181 at the end of 2005, and 159 at the end of 2006. On March 31, 2007,
we
had approximately 169 employees. As a consequence of our employee base growing
and then contracting so rapidly, we entered into significant contracts for
facilities space for which we ultimately determined we did not have a future
use. We announced during the third and fourth quarters of 2004 that we had
agreed with the landlords of various facilities to renegotiate future lease
commitments, extinguishing a total of approximately $155 million of future
obligations. The management of the expansion and later reduction of our
operations has taken a considerable amount of our management's attention
during
the past several years. As we manage our business to introduce and support
new
products, we will need to continue to monitor our workforce and make appropriate
changes as necessary. If we are unable to support past changes and implement
future changes effectively, we may have to divert additional resources away
from
executing our business plan and toward internal administration. If our expenses
significantly outpace our revenues, we may have to make additional changes
to
our management systems and our business plan may not succeed.
We
may face liquidity challenges and need additional financing in the
future.
We
currently expect to be able to fund our working capital requirements from
our
existing cash and cash equivalents and our anticipated cash flows from
operations and subleases through at least March 31, 2008. 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.
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 take time to achieve 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.
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 twelve months ended December 31, 2006, approximately 40% of our
revenues were derived from international sales. In the three months ended
March
31, 2007, approximately 46% of our revenue was derived from international
sales.
If we are unable to manage or grow our existing international operations,
we may
not generate sufficient revenue required to establish and maintain these
operations, which could slow our overall growth and impair our operating
margins.
As
we
rely materially on our operations outside of North America, we are subject
to
significant risks of doing business internationally, including:
• difficulties
in staffing and managing foreign operations and safeguarding foreign
assets;
• unexpected
changes in regulatory requirements;
• export
controls relating to encryption technology and other export restrictions;
• tariffs
and other trade barriers;
• difficulties
in staffing and managing foreign operations;
• political
and economic instability;
• fluctuations
in currency exchange rates;
• reduced
protection for intellectual property rights in some countries;
• cultural
barriers;
• seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world; and
• potentially
adverse tax consequences.
Management
of international operations presents special challenges, particularly at
our
reduced staffing levels. For example, in December 2005, an inappropriate
transfer of approximately $60,000 was made from our bank account in Japan
to a
consulting services provider affiliated with two officers of our Japan
subsidiary without the approvals required under our internal control policies.
Although this transfer was later detected, the funds were recaptured and
the
services of the Japan subsidiary officers involved were terminated, we face
the
risk that other similar misappropriations of assets may occur in the
future.
In
addition, our international sales growth will be limited if we are unable
to
establish additional foreign operations, expand international sales channel
management and support, hire additional personnel, customize products for
local
markets and develop relationships with international service providers,
distributors and system integrators. Even if we are able to successfully
expand
our international operations, we may not succeed in maintaining or expanding
international market demand for our products.
Our
success and competitive position will depend on our ability to protect our
proprietary technology.
Our
success and ability to compete are dependent to a significant degree on our
proprietary technology. We hold a U.S. patent, issued in January 1998, on
elements of the BroadVision platform, which covers electronic commerce
operations common in today's web business. We also hold a U.S. patent,
issued in November 1996, acquired as part of the Interleaf acquisition on
the
elements of the extensible electronic document processing system for creating
new classes of active documents. Although we hold these patents, they may
not
provide an adequate level of intellectual property protection. In addition,
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets, or to determine the validity and scope
of
the proprietary rights of others. It is also possible that third parties
may
claim we have infringed their patent, trademark, copyright or other proprietary
rights. Claims may be made for indemnification resulting from allegations
of
infringement. Intellectual property infringement claims may be asserted against
us as a result of the use by third parties of our products. Claims or
litigation, with or without merit, could result in substantial costs and
diversions of resources, either of which could harm our business.
We
also
rely on copyright, trademark, service mark, trade secret laws and contractual
restrictions to protect our proprietary rights in products and services.
We have
registered "BroadVision", "iGuide", "BroadVision Self-Service Suite",
"BroadVision Process", "BroadVision Commerce", "BroadVision Portal",
"BroadVision Content" and "Interleaf" 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 company policy, we enter into confidentiality and assignment
agreements with our employees, consultants and vendors. We also control access
to and distribution of our software, documents and other proprietary
information. Notwithstanding these precautions, it may be possible for an
unauthorized third party to copy or otherwise obtain and use our software
or
other proprietary information or to develop similar software independently.
Policing unauthorized use of our products will be difficult, particularly
because the global nature of the Internet makes it difficult to control the
ultimate destination or security of software and other transmitted data.
The
laws of other countries may afford us little or no effective protection of
our
intellectual property.
A
breach of the encryption technology that we use could expose us to liability
and
harm our reputation, causing a loss of customers.
If
any
breach of the security technology embedded in our products were to occur,
we
would be exposed to liability and our reputation could be harmed, which could
cause us to lose customers. A significant barrier to online commerce and
communication is the secure exchange of valuable and confidential information
over public networks. We rely on encryption and authentication technology,
including Open SSL and public key cryptography technology featuring the major
encryption algorithms RC2 and MDS, to provide the security and authentication
necessary to effect the secure exchange of confidential information. Advances
in
computer capabilities, new discoveries in the field of cryptography or other
events or developments could cause a breach of the RSA or other algorithms
that
we use to protect customer transaction data.
The
loss or malfunction of technology licensed from third parties could delay
the
introduction of our products and services.
We
rely
in part on technology that we license from third parties, including relational
database management systems from Oracle and Sybase, Informix object request
broker software from IONA Technologies PLC, and database access technology
from
Rogue Wave Software. The loss or malfunction of any of these technology licenses
could harm our business. We integrate or sublicense this technology with
internally developed software to perform key functions. For example, our
products and services incorporate data encryption and authentication technology
licensed from Open SSL. Third-party technology licenses might not continue
to be
available to us on commercially reasonable terms, or at all. Moreover, the
licensed technology may contain defects that we cannot control. Problems
with
our technology licenses could cause delays in introducing our products or
services until equivalent technology, if available, is identified, licensed
and
integrated. Delays in introducing our products and services could adversely
affect our results of operations.
Our
officers, key employees and highly skilled technical and managerial personnel
are critical to our business, and they may not remain with us in the
future.
Our
performance substantially depends on the performance of our officers and
key
employees. We also rely on our ability to retain and motivate qualified
personnel, especially our management and highly skilled development teams.
The
loss of the services of any of our officers or key employees, particularly
our
founder, Chief Executive Officer and interim Chief Financial 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
and the uncertainty created by the execution and subsequent termination of
our
merger agreement with an affiliate of Vector Capital Corporation has had
and may
continue to have a negative impact on our operations. We have restructured
our
operations by reducing our workforce and implementing other cost containment
activities. These actions could lead to disruptions in our business, reduced
employee morale and productivity, increased attrition, and problems with
retaining existing and recruiting future employees.
Limitations
on the online collection of profile information could impair the effectiveness
of our products.
Online
users' resistance to providing personal data, and laws and regulations
prohibiting use of personal data gathered online without express consent
or
requiring businesses to notify their web site visitors of the possible
dissemination of their personal data, could limit the effectiveness of our
products. This in turn could adversely affect our sales and results of
operations.
One
of
the principal features of our products is the ability to develop and maintain
profiles of online users to assist business managers in determining the nature
of the content to be provided to these online users. Typically, profile
information is captured when consumers, business customers and employees
visit a
web site and volunteer information in response to survey questions concerning
their backgrounds, interests and preferences. Profiles can be augmented over
time through the subsequent collection of usage data. Although our products
are
designed to enable the development of applications that permit web site visitors
to prevent the distribution of any of their personal data beyond that specific
web site, privacy concerns may nevertheless cause visitors to resist providing
the personal data necessary to support this profiling capability. The mere
perception by prospective customers that substantial security and privacy
concerns exist among online users, whether or not valid, may indirectly inhibit
market acceptance of our products.
In
addition, new laws and regulations could heighten privacy concerns by requiring
businesses to notify web site users that the data captured from them while
online may be used by marketing entities to direct product messages to them.
We
are subject to increasing regulation at the federal and state levels relating
to
online privacy and the use of personal user information. Several states have
proposed legislation that would limit the uses of personal user information
gathered online or require online services to establish privacy policies.
In
addition, the U.S. Federal Trade Commission, or FTC, has urged Congress to
adopt legislation regarding the collection and use of personal identifying
information obtained from individuals when accessing web sites. The FTC has
settled several proceedings resulting in consent decrees in which Internet
companies have been required to establish programs regarding the manner in
which
personal information is collected from users and provided to third parties.
We
could become a party to a similar enforcement proceeding. These regulatory
and
enforcement efforts could also harm our customers' ability to collect
demographic and personal information from users, which could impair the
effectiveness of our products.
We
may not have adequate back-up systems, and natural or manmade disasters could
damage our operations, reduce our revenue and lead to a loss of
customers.
We
do not
have fully redundant systems for service at an alternate site. A disaster
could
severely harm our business because our service could be interrupted for an
indeterminate length of time. Our operations depend upon our ability to maintain
and protect our computer systems at our facility in Redwood City, California,
which reside on or near known earthquake fault zones. Although these systems
are
designed to be fault tolerant, they are vulnerable to damage from fire, floods,
earthquakes, power loss, acts of terrorism, telecommunications failures and
similar events. In addition, our facilities in California could be subject
to
electrical blackouts if California faces another power shortage similar to
that
of 2001. Although we do have a backup generator that would maintain critical
operations, this generator could fail. We also have significantly reduced
our
workforce in a short period of time, which has placed different requirements
on
our systems and has caused us to lose personnel knowledgeable about our systems,
both of which could make it more difficult to quickly resolve system
disruptions. Disruptions in our internal business operations could harm our
business by resulting in delays, disruption of our customers' business, loss
of
data, and loss of customer confidence.
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
the
company.
As
of
April 30, 2007, Dr. Pehong Chen, our Chairman, CEO and interim CFO, beneficially
owned approximately 42.0 million shares of our common stock, which represents
approximately 39% of the outstanding common stock as of such date. As a result,
Dr. Chen exerts substantial control over all matters coming to a vote of
our
stockholders, including with respect to:
• the composition of our board of directors and, through it, any
determination with respect to our business direction and policies, including
the
appointment and removal of officers;
• any determinations with respect to mergers and other business
combinations;
• our acquisition or disposition of assets;
• our financing activities; and
• the payment of dividends on our capital stock.
This
control by Dr. Chen could depress the market price of our common stock or
delay
or prevent a change in control of BroadVision.
Our
stock price has been highly volatile.
The
trading price of BroadVision common stock has been highly volatile. For example,
the trading price of BroadVision common stock has ranged from $0.32 per
share to $9.05 per share between January 1, 2004 and April 26, 2007.
On June 6, 2007 the closing price of BroadVision common stock was $2.24 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;
• general
economic conditions; or
• other
events or factors that are beyond our control.
In
addition, the stock market has experienced significant price and volume
fluctuations that have particularly affected the trading prices of equity
securities of many technology companies. These fluctuations have often been
unrelated or disproportionate to the operating performance of these companies.
Any negative change in the public's perception of the prospects of Internet
or
electronic commerce companies could further depress our stock price regardless
of our results. Other broad market fluctuations may decrease the trading
price
of BroadVision common stock. In the past, following declines in the market
price
of a company's securities, securities class action litigation, such as the
class
action lawsuits filed against us and certain of our officers and directors
in
early 2001, has often been instituted against that company. Litigation could
result in substantial costs and a diversion of management's attention and
resources.
This
prospectus and the documents incorporated by reference contain forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expects," "intends," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or similar
terms. These statements relate to future events or our future financial
performance and involve known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance or
achievements to differ materially from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements. These risks and other factors include those listed under "Risk
Factors" and elsewhere in this prospectus and the documents incorporated by
reference. These statements are only predictions based on our current
expectations and projections about future events, and we cannot guarantee future
results, levels of activity, performance or achievements.
We
will
not receive any of the proceeds from the sale of the shares by the selling
stockholders. All proceeds from the sale of the shares will be for the accounts
of the selling stockholders. We may receive proceeds from the exercise of
warrants held by the selling stockholders. We will apply such proceeds, if
any,
toward funding our working capital.
The
shares of common stock being offered by the selling stockholders are issuable
upon exercise of the warrants issued in connection with the Private Placement.
For additional information regarding the issuance of those warrants, see
"Description of Warrants." We are registering the shares of common stock in
order to permit the selling stockholders to offer the shares for resale from
time to time. Except for the ownership of the warrants issued pursuant to the
Securities Purchase Agreement, the selling stockholders have not had any
material relationship with us within the past three years.
The
table
below lists the selling stockholders and information regarding the beneficial
ownership of the shares of common stock by each of the selling stockholders.
The
second column lists 150% of the number of shares of common stock beneficially
owned by each selling stockholder, based on its ownership of the warrants as
of
March 31, 2007, assuming exercise of the warrants held by the selling
stockholders on that date, without regard to any limitations on exercise. The
third column lists the shares of common stock being offered pursuant
to this prospectus by each selling stockholder. See footnote 1 to the table
for additional information.
In
accordance with the terms of a registration rights agreement between us and
the
selling stockholders, this prospectus covers the resale of at least 150% of
the
number of shares of common stock issuable upon exercise of the warrants. Because
the exercise price of the warrants may be adjusted as detailed in "Description
of Warrants", the number of shares that will actually be issued may be more
or
less than the number of shares being offered by this prospectus. The fourth
column assumes the sale of all of the shares offered by the selling stockholders
pursuant to this prospectus.
Under
the
terms of the warrants, a selling stockholder may not exercise the warrants
to
the extent such exercise would cause such selling stockholder, together with
its
affiliates, to beneficially own a number of shares of common stock which would
exceed 4.99% of our then outstanding shares of common stock following such
exercise, excluding for purposes of such determination shares of common stock
issuable upon exercise of the warrants that have not been exercised. A selling
stockholder may increase this limit up to 9.99% upon written notice to us.
The
number of shares in the second column does not reflect this limitation. The
selling stockholders may sell all, some or none of their shares in this
offering. See "Plan of Distribution."
|
Name
of Selling Stockholder
|
|
Number
of Shares
Owned
Prior to
Offering(1)
|
|
Maximum
Number of
Shares
to be Sold
Pursuant
to this
Prospectus(1)
|
|
Number
of Shares
Owned
After
Offering
|
|
Portside
Growth & Opportunity Fund(2)
|
|
1,971,942
|
|
1,971,942
|
|
0
|
|
SF
Capital Partners Ltd.(3)
|
|
1,577,556
|
|
1,577,556
|
|
0
|
|
Manchester
Securities Corp.(4)
|
|
788,777
|
|
788,777
|
|
0
|
|
Kings
Road Investments Ltd.(5)
|
|
1,380,362
|
|
1,380,362
|
|
0
|
|
Gemini
Master Fund, Ltd.(6)
|
|
591,581
|
|
591,581
|
|
0
|
| |
|
|
|
|
|
|
(1)
The
number of shares listed as beneficially owned and to be sold by the selling
stockholders is based on 150% of the estimated number of shares of our common
stock issuable to the selling stockholders upon exercise of the warrants. In
order to estimate the number of shares of common stock issuable to the selling
stockholders, we have assumed that all warrants are exercised at an exercise
price of $1.48 per share. It is possible that more than the 150% of the shares
of common stock we estimate to be issued will be issued. To the extent the
number of shares we issue to the selling stockholders exceeds the number of
shares registered pursuant to the registration statement, of which this
prospectus forms a part, we will need to amend the registration statement,
or
file an additional registration statement, to increase the number of shares
registered.
(2)
Ramius
Capital Group, LLC ("Ramius Capital") is the investment adviser of Portside
Growth and Opportunity Fund ("Portside") and consequently has voting control
and
investment discretion over securities held by Portside. Ramius Capital disclaims
beneficial ownership of the shares held by Portside. Peter A. Cohen,
Morgan B. Stark, Thomas W. Strauss and Jeffrey M. Solomon are the
sole managing members of C4S & Co., LLC, the sole managing member
of Ramius Capital. As a result, Messrs. Cohen, Stark, Strauss and Solomon
may be considered beneficial owners of any shares deemed to be beneficially
owned by Ramius Capital. Messrs. Cohen, Stark, Strauss and Solomon disclaim
beneficial ownership of these shares. Ramius Capital is an affiliate of one
broker dealer, which will not sell any shares of common stock that Portside
may
sell under the registration statement and will receive no compensation in
connection with sales of such shares registered pursuant to this registration
statement.
(3)
Michael
A. Roth and Brian J. Stark possess voting and dispositive power over
all of the shares owned by SF Capital Partners Ltd. ("SF Capital"). SF
Capital is an affiliate of two broker-dealers, with which SF Capital is under
common control. SF Capital acquired the shares for investment purposes in the
ordinary course of business and had no plans to distribute the shares at the
time of acquisition.
(4)
Manchester
Securities Corp. ("Manchester") is a wholly-owned subsidiary of Elliott
Associates, L.P. Paul E. Singer and Elliott Capital
Advisors, L.P., which is controlled by Mr. Singer, are the general
partners of Elliott Associates, L.P. Mr. Singer has sole voting and
dispositive power over the securities held by Manchester.
(5)
Kings
Road Investments Ltd. ("Kings Road") is a wholly-owned subsidiary of
Polygon Global Opportunities Master Fund ("Polygon"). Polygon Investment
Partners LLP and Polygon Investment Partners LP (the "Investment
Managers"), Polygon, Alexander Jackson, Reade Griffith and Paddy Dear share
voting and dispositive power of the securities held by Kings Road. Alexander
Jackson, Reade Griffith and Paddy Dear control the Investment Managers. The
Investment Managers, Alexander Jackson, Reade Griffith and Paddy Dear disclaim
beneficial ownership of the securities held by Kings Road.
(6)
The
Investment Manager of Gemini Master Fund, Ltd. is Gemini Strategies, LLC. The
Managing Member of Gemini Strategies, LLC is Mr. Steven W. Winters. As such,
Mr.
Winters may be deemed beneficial owner of the shares; however, Mr. Winters
disclaims beneficial ownership of such shares.
We
are
registering the shares of common stock issuable upon exercise of the warrants
to
permit the resale of these shares of common stock by the holders of the warrants
from time to time after the date of this prospectus. We will not receive any
of
the proceeds from the sale by the selling stockholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register
the shares of common stock.
The
selling stockholders may sell all or a portion of the shares of common stock
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the shares of
common stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or commissions
or
agent's commissions. The shares of common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions, which may involve crosses or block
transactions,
• on
any
national securities exchange or quotation service on which the securities may
be
listed or quoted at the time of sale;
• in
the
over-the-counter market;
• in
transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
• through
the writing of options, whether such options are listed on an options exchange
or otherwise;
• ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;
• block
trades in which the broker-dealer will attempt to sell the shares as agent
but
may position and resell a portion of the block as principal to facilitate the
transaction;
• purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
• an
exchange distribution in accordance with the rules of the applicable exchange;
• privately
negotiated transactions;
• short
sales;
• sales
pursuant to Rule 144;
• broker-dealers
may agree with the selling stockholders to sell a specified number of such
shares at a stipulated price per share;
• a
combination of any such methods of sale; and
• any
other
method permitted pursuant to applicable law.
The
selling stockholders may pledge or grant a security interest in some or all
of
the warrants or shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the shares of common stock from time to time pursuant to
this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended, amending,
if necessary, the list of selling stockholders to include the pledgee,
transferee or other successors in interest as selling stockholders under this
prospectus. The selling stockholders also may transfer and donate the shares
of
common stock in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling beneficial owners
for purposes of this prospectus.
The
selling stockholders and any broker-dealer participating in the distribution
of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions
allowed, to any such broker-dealer may be deemed to be underwriting commissions
or discounts under the Securities Act. At the time a particular offering of
the
shares of common stock is made, a prospectus supplement, if required, will
be
distributed which will set forth the aggregate amount of shares of common stock
being offered and the terms of the offering, including the name or names of
any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
Under
the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There
can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which
this
prospectus forms a part.
The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of
1934,
as amended, and the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit the timing of
purchases and sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may also
restrict the ability of any person engaged in the distribution of the shares
of
common stock to engage in market-making activities with respect to the shares
of
common stock. All of the foregoing may affect the marketability of the shares
of
common stock and the ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.
We
will
pay all expenses of the registration of the shares of common stock pursuant
to
the registration rights agreement; provided, however, that a selling stockholder
will pay all underwriting discounts and selling commissions, if any. We will
indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act, in accordance with the registration rights
agreements, or the selling stockholders will be entitled to contribution. We
may
be indemnified by the selling stockholders against liabilities, including
liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling stockholder specifically for use
in
this prospectus, in accordance with the related registration rights agreement,
or we may be entitled to contribution.
Once
sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.
The
following description of our capital stock does not purport to be complete
and
is subject to, and qualified in its entirety by, our certificate of
incorporation and bylaws, which are exhibits to the registration statement
of
which this prospectus forms a part.
Common
Stock
We
have
280,000,000 shares of common stock authorized. As of April
30,
2007 107,382,250
shares
of BroadVision common stock were outstanding and held of record by 1,958
stockholders.
In addition, as of April
30,
2007,
6,714,764
shares
of
BroadVision common stock were subject to outstanding options.
Each
share of BroadVision common stock entitles its holder to one vote on all matters
to be voted upon by our stockholders. Subject to preferences that may apply
to
any of our outstanding convertible preferred stock, holders of BroadVision
common stock will receive ratably any dividends our board of directors declares
out of funds legally available for that purpose. If we liquidate, dissolve
or
wind up, the holders of common stock are entitled to share ratably in all assets
remaining after payment of liabilities and any liquidation preference of any
of
our outstanding convertible preferred stock. BroadVision common stock has no
preemptive rights, conversion rights, or other subscription rights or redemption
or sinking fund provisions. The shares of BroadVision common stock to be issued
upon completion of this offering will be fully paid and non-assessable.
Preferred
Stock
We
have
1,000,000 shares of preferred stock authorized. As of March
31,
2007,
no shares of our preferred stock were outstanding. Our board of directors has
the authority, without further action by our stockholders, to issue up to
1,000,000 shares of preferred stock in one or more series. Our board of
directors may designate the rights, preferences, privileges and restrictions
of
the preferred stock, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preference, sinking fund terms, and
number of shares constituting any series or the designation of any series.
Anti-Takeover
Provisions
Some
provisions of Delaware law, our certificate of incorporation and our bylaws
may
have the effect of delaying, deferring or discouraging another party from
acquiring control of us.
Delaware
Law
We
are
subject to Section 203 of the Delaware General Corporation Law, which
regulates, subject to some exceptions, acquisitions of publicly held Delaware
corporations. In general, Section 203 prohibits us from engaging in a
"business combination" with an "interested stockholder" for a period of three
years following the date the person becomes an interested stockholder, unless:
• our
board
of directors approved the business combination or the transaction in which
the
person became an interested stockholder prior to the date the person attained
this status;
• upon
consummation of the transaction that resulted in the person becoming an
interested stockholder, the person owned at least 85% of our voting stock
outstanding at the time the transaction commenced, excluding shares owned by
persons who are directors and also officers and issued under employee stock
plans under which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in
a
tender or exchange offer; or
• on
or
subsequent to the date the person became an interested stockholder, our board
of
directors approved the business combination and the stockholders other than
the
interested stockholder authorized the transaction at an annual or special
meeting of stockholders by the affirmative vote of at least two-thirds of the
outstanding stock not owned by the interested stockholder.
Section 203
defines a "business combination" to include:
• any
merger or consolidation involving us and the interested stockholder;
• any
sale,
transfer, pledge or other disposition involving the interested stockholder
of
10% or more of our assets;
• in
general, any transaction that results in the issuance or transfer by us of
any
of our stock to the interested stockholder;
• any
transaction involving us that has the effect of increasing the proportionate
share of our stock owned by the interested stockholders; and
• the
receipt by the interested stockholder of the benefit of any loans, advances,
guarantees, pledges, or other financial benefits provided by or through
us.
In
general, Section 203 defines an "interested stockholder" as any person who,
together with the person's affiliates and associates, owns, or within three
years prior to the time of determination of interested stockholder status did
own, 15% or more of a corporation's voting stock.
Certificate
of Incorporation and Bylaw Provisions
Our
certificate of incorporation and bylaws provide that:
• the
approval of holders of a majority of the shares entitled to vote at an election
of directors will be required to adopt, amend or repeal our bylaws;
• our
board
of directors is expressly authorized to make, alter or repeal our bylaws;
• in
general, stockholders may not call special meetings of the stockholders or
fill
vacancies on the board of directors; however, stockholders may act by written
consent;
• our
board
of directors is authorized to issue preferred stock without stockholder
approval;
• directors
may only be removed for cause by the holders of a majority of the shares
entitled to vote at an election of directors or without cause by the holders
of
at least two-thirds shares entitled to vote at an election of directors; and
• we
will
indemnify officers and directors against losses that may incur investigations
and legal proceedings resulting from their services to us, which may include
services in connection with takeover defense measures.
Transfer
Agent and Registrar
Computershare
Trust Company has been appointed as the transfer agent and registrar for
BroadVision common stock.
OTC
Bulletin Board®
On
March 8, 2006, BroadVision common stock was delisted from the NASDAQ
National Market and began trading only on the Pink Sheets®. On May
25, 2007, BroadVision common stock began trading on the OTC Bulletin Board.
On
June 6, 2007, the last reported sale price of BroadVision common stock was
$2.24
per share.
The
warrants were issued on November 10, 2004. The following description
summarizes the material provisions of the warrants. The following description
does not purport to be complete and is subject to, and qualified in its entirety
by, the provisions of the warrants, including the definitions of certain
capitalized terms used in this section, but that are not defined in this
section. A copy of the form of warrant is attached as Exhibit B to the
Securities Purchase Agreement, which is an exhibit to the registration statement
of which this prospectus forms a part.
General
On
November 10, 2004, we issued warrants to purchase an aggregate of 1,739,130
shares of our common stock at an exercise price of $3.58, subject to certain
adjustments. As of March
31,
2007,
the warrants are exercisable for 4,206,811 shares of our common stock at an
exercise price of $1.48. The warrants were first exercisable on May 10,
2005 and may be exercised on or prior to May 10, 2010. Any warrants not
exercised prior to such time will expire.
Exercise
of Warrants
In
the
event that a warrant is not exercised in full, the number of common shares
to be
available for purchase thereunder shall be reduced by the number of such common
shares for which that warrant is exercised. If we do not deliver the stock
certificates or credit the holder's balance account within three business days
after we receive the exercise delivery documents, we must pay the holder cash
in
an amount equal to 1.0% of the product of the closing sales price of our common
stock on the day prior to last day we were allowed to deliver the shares without
penalty times the number of shares of our common stock that we did not timely
deliver. In addition, if we fail to deliver the certificate or credit the
holder's balance account within three business days after we receive the
exercise delivery documents, we will also be required to make certain payments
to the holder to make them whole for certain trading losses the holder may
incur
because of the late delivery.
If
a
registration statement covering the shares issuable upon exercise of the warrant
is not available for the resale of those shares, upon exercise of the warrant
by
the holder and in lieu of making the cash payment, the holder may elect to
receive the net number of shares of our common stock according to the formula
in
the warrant.
Issuance
Limitations
Other
than in connection with a Fundamental Transaction (as defined in the warrants),
any exercise of a warrant for shares of our common stock will be limited to
the
extent that, after giving effect to such exercise, the holder, together with
its
affiliates, would beneficially own in excess of 4.99% of the number of shares
of
our common stock outstanding immediately after the exercise. By written notice
to us, the holder may increase the limitation percentage above to any percentage
not in excess of 9.99%.
Exercise
Price Adjustments
In
the
event we declare or make any dividend or other distribution of our assets to
holders of our shares of common stock, the exercise price will be reduced by
multiplying the exercise price by a fraction of which (i) the numerator is
the closing bid price of our common stock on the trading day prior to the record
date of the distribution minus the value of the distribution applicable to
one
share of our common stock and (ii) the denominator is the closing bid price
on the trading day prior to the record date of the distribution. The number
of
warrant shares into which a warrant can be exercised will be increased
proportionately.
Purchase
Right
In
addition to other adjustments, if we grant, issue or sell options, convertible
securities, or other rights to purchase stock, warrants, securities or other
property pro rata to the holders of our common stock, then the holder of a
warrant will be entitled to acquire on the same terms the same rights or
securities as if the holder had held the number of shares of our common stock
for which their warrant is exercisable.
Fundamental
Transactions
We
will
not enter into any Fundamental Transaction unless the successor entity assumes
our obligations under the warrant, pursuant to written agreements satisfactory
to the holders of warrants representing at least a majority of the shares of
common stock underlying the outstanding warrants, including the issuance of
appropriate replacement warrants. In addition, in the event of a Fundamental
Transaction in which the holders of our common stock are to receive securities
or assets in respect to or in exchange for their shares, we will insure that
the
holder of a warrant will have the right to receive upon exercise of the warrant
after the Fundamental Transaction such securities or assets that the holder
would have received in the Fundamental Transaction if the warrant had been
exercised prior to the Fundamental Transaction.
Warrant
Holder not a Stockholder
Except
as
otherwise provided in the warrant, the holders of the warrants, solely in their
capacities as holders of warrants, shall not be deemed to be stockholders of
the
Company nor have the rights of stockholders of the Company.
Cooley
Godward Kronish LLP,
San Francisco, California will pass upon the validity of the common stock
offered by this prospectus.
Odenberg,
Ullakko, Muranishi & Co. LLP, an independent registered public
accounting firm, has audited our consolidated financial statements and financial
statement schedule as of December 31, 2006 and for the year then ended, included
in our Annual Report on Form 10-K for the year ended December 31, 2006,
which are incorporated by reference in this prospectus and elsewhere in the
registration statement. Our consolidated financial statements are incorporated
by reference in this prospectus in reliance on Odenberg, Ullakko,
Muranishi & Co. LLP's reports, given on their authority as experts in
accounting and auditing.
The
financial statements and financial statement schedule of BroadVision, Inc.
as of
December 31, 2005 and for the year ended December 31, 2005 incorporated by
reference in this Registration Statement by reference to the Annual Report
on
Form 10-K for the year ended December 31, 2005 have been so included in reliance
on the audit report of Stonefield Josephson, Inc., independent registered public
accounting firm, given on the authority of said firm as experts in auditing
and
accounting.
The
consolidated financial statements and schedule incorporated by reference in
this
prospectus have been audited by BDO Seidman, LLP, an independent registered
public accounting firm, to the extent and for the periods as set forth in their
report incorporated herein by reference, and are incorporated herein in reliance
upon such report given upon the authority of said firm as experts
in
auditing and accounting.
We
are a
reporting company and file annual, quarterly and current reports, proxy
statements and other information with the SEC. We have filed with the SEC a
registration statement on Form S-1 under the Securities Act with respect to
the securities we are offering under this prospectus. This prospectus does
not
contain all of the information set forth in the registration statement and
the
exhibits to the registration statement. For further information with respect
to
us and the securities we are offering under this prospectus, we refer you to
the
registration statement and the exhibits and schedules filed as a part of the
registration statement. You may read and copy the registration statement, as
well as our reports, proxy statements and other information, at the SEC's public
reference room at 100 F Street, N.E., Washington, D.C. 20549. You can
request copies of these documents by writing to the SEC and paying a fee for
the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference rooms. Our SEC filings are also available
at the SEC's web site at "http://www.sec.gov." In addition, you can read and
copy our SEC filings at the office of the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The
SEC
allows us to "incorporate by reference" the information contained in documents
that we file with them, which means that we can disclose important information
to you by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus. Information in this
prospectus supersedes information incorporated by reference that we filed with
the SEC prior to the date of this prospectus. We incorporate by reference the
following documents filed with the SEC under Section 13, or 14 of the
Securities Exchange Act of 1934, which documents contain important information
about us and our business and financial results:
1. our
Annual Report on Form 10-K for the year ended December 31, 2006, filed
on March
27,
2007
and our amendment to Form 10-K filed on May 15, 2007;
2. our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed
on May
14, 2007;
3. our
Current Reports on Form 8-K filed with the SEC on January 10, 2007 and
March 30,
2007;
and
4.
our
Definitive Proxy Statement filed with the SEC on April 25, 2007.
We
will
provide without charge to each person, including any beneficial owner, to
whom
this prospectus is delivered, upon written or oral request of such person,
a
copy of any or all of the documents incorporated by reference, in this
prospectus (not including exhibits to such documents, unless such exhibits
are
specifically incorporated by reference in this prospectus or into such
documents). You should direct any requests for documents to Corporate Secretary,
BroadVision, Inc., 1600 Seaport Boulevard, 5th
Floor,
North Building, Redwood City, California 94063, Telephone (650) 331-1000.
Alternatively, documents incorporated by reference in this prospectus may
be
accessed through our web site at
"http://www.broadvision.com."