Company Quick10K Filing
Quick10K
Broadvision
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$1.12 5 $6
10-Q 2019-03-31 Quarter: 2019-03-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-28 Other Events, Exhibits
8-K 2019-05-15 Earnings, Exhibits
8-K 2019-04-11
8-K 2019-01-03 Enter Agreement, M&A, Exhibits
8-K 2018-12-28 Shareholder Vote
8-K 2018-11-05
8-K 2018-09-30 Earnings, Exhibits
8-K 2018-08-13 Earnings, Exhibits
8-K 2018-03-09
8-K 2017-12-31 Earnings, Exhibits
ALXN Alexion Pharmaceuticals 29,550
UFCS United Fire Group 1,170
NRP Natural Resource Partners 495
SLNO Soleno Therapeutics 64
IZEA IZEA 8
TPIV Tapimmune 0
KRDO Kreido Biofuels 0
VINO Algodon 0
NSPW Northern States Power 0
MEC Mayville Engineering 0
BVSN 2019-03-31
Part I. Financial Information
Item 1. Financial Statements
Note 1. Organization and Summary of Significant Accounting Policies
Note 2. Revenues
Note 3. Selected Condensed Consolidated Balance Sheet Detail
Note 4. Fair Value of Financial Instruments
Note 5. Commitments and Contingencies
Note 6. Geographic, Segment and Significant Customer Information
Note 7. Related Party Transactions
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 bvsn-20190331xex31_1.htm
EX-32.1 bvsn-20190331xex32_1.htm

Broadvision Earnings 2019-03-31

BVSN 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 bvsn-20190331x10q.htm 10-Q BVSN-20190331 Q1

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

 

 

 

 

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

For the quarterly period ended March 31, 2019

OR



 

 

 

 

 

 

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

For the transaction period from _________ to __________

Commission File Number 001-34205

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 No.)

 

 

 

460 Seaport Ct., Suite 102

 

94063

Redwood City, California

 

 

(Address of principal executive offices)

 

(Zip code)

(650) 331-1000

(Registrant's telephone number, including area code)

 

 Securities registered pursuant to Section 12(b) of the Act:





 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

BVSN

Nasdaq Capital Market



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  No 



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No



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





 

Large accelerated filer          

Accelerated filer        



 

Non-accelerated filer

Smaller reporting company



Emerging growth company



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No





As of April 30, 2019, the registrant had 5,058,601 shares of common stock outstanding.


 

 



BROADVISION, INC. AND SUBSIDIARIES

 

FORM 10-Q

 

Quarter Ended March 31, 2019

 

TABLE OF CONTENTS





 



 

PART I. FINANCIAL INFORMATION

 



 

Item 1.   Financial Statements

 

Condensed Consolidated Balance Sheets at March 31, 2019 (unaudited) and December 31, 2018

1

Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2019 and 2018 (unaudited)

2

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and 2018 (unaudited)

3

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018 (unaudited)

4

Notes to Condensed Consolidated Financial Statements (unaudited)

5

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

16

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

21

Item 4.   Controls and Procedures

21



 

PART II.  OTHER INFORMATION

 



 

Item 1.   Legal Proceedings

22

Item 1A.Risk Factors

23

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

35

Item 3.   Defaults Upon Senior Securities

35

Item 4.   Mine Safety Disclosures

35

Item 5.   Other Information

35

Item 6.   Exhibits

36



 

SIGNATURES

37



 

EXHIBIT 31.1

 

EXHIBIT 32.1

 







 

 

 


 

 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)











 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2019

 

2018

ASSETS

 

 

(unaudited)

 

 

(See Note 1)

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,671 

 

$

2,574 

Accounts receivable, net of reserves of $120 and $193 as of March 31, 2019

 

 

 

 

 

 

and December 31, 2018, respectively

 

 

525 

 

 

476 

Prepaids and other

 

 

699 

 

 

692 

Total current assets

 

 

6,895 

 

 

3,742 

Property and equipment, net

 

 

14 

 

 

15 

 Operating lease right-of-use assets

 

 

100 

 

 

 -

 Intangible assets

 

 

745 

 

 

 -

 Other assets

 

 

94 

 

 

96 

Total assets

 

$

7,848 

 

$

3,853 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

537 

 

$

256 

Accrued expenses

 

 

807 

 

 

847 

Operating lease liabilities – current

 

 

80 

 

 

 -

Unearned revenue

 

 

804 

 

 

449 

Deferred maintenance

 

 

600 

 

 

337 

Total current liabilities

 

 

2,828 

 

 

1,889 

Other non-current liabilities

 

 

622 

 

 

563 

Total liabilities

 

 

3,450 

 

 

2,452 



 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; 1,000 shares authorized; none issued and

 

 

 

 

 

 

outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 11,200 shares authorized; 5,059 and 5,057 shares issued

 

 

 -

 

 

 -

and outstanding as of March 31, 2019 and December 31, 2018, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

1,271,969 

 

 

1,271,949 

Accumulated other comprehensive loss

 

 

(1,339)

 

 

(1,435)

Accumulated deficit

 

 

(1,268,511)

 

 

(1,269,113)

Total stockholders’ equity before noncontrolling interest

 

 

2,119 

 

 

1,401 

Noncontrolling interest

 

 

2,279 

 

 

 -

Total stockholders’ equity

 

 

4,398 

 

 

1,401 

Total liabilities and stockholders’ equity

 

$

7,848 

 

$

3,853 



 

 

 

 

 

 









 

 

 

 

 

 



See Accompanying Notes to Condensed Consolidated Financial Statements.



 

1

 


 

 

 

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)











 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Revenues:

 

 

 

 

 

 

Software licenses

 

$

573 

 

$

925 

Services

 

 

495 

 

 

678 

Total revenues

 

 

1,068 

 

 

1,603 

Cost of revenues:

 

 

 

 

 

 

Cost of software revenues

 

 

 

 

33 

Cost of services

 

 

272 

 

 

550 

Total cost of revenues

 

 

273 

 

 

583 

Gross profit

 

 

795 

 

 

1,020 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

661 

 

 

1,403 

Sales and marketing

 

 

302 

 

 

566 

General and administrative

 

 

610 

 

 

741 

Total operating expenses

 

 

1,573 

 

 

2,710 

Operating loss

 

 

(778)

 

 

(1,690)

Interest income, net

 

 

10 

 

 

16 

Other income, net

 

 

653 

 

 

183 

Loss before income taxes

 

 

(115)

 

 

(1,491)

Income tax expense

 

 

(4)

 

 

(1)

Net loss

 

 

(119)

 

 

(1,492)

Net loss attributable to noncontrolling interest

 

 

(721)

 

 

 -

Net income (loss) attributable to BroadVision

 

$

602 

 

$

(1,492)



 

 

 

 

 

 

Net income (loss) per share, basic and diluted:

 

 

 

 

 

 

Basic and diluted net income (loss) per share attributable to BroadVision

 

$

0.12 

 

$

(0.30)

Shares used in computing:

 

 

 

 

 

 

Weighted average shares, basic

 

 

5,002 

 

 

4,995 

Weighted average shares, diluted

 

 

5,018 

 

 

4,995 



 

 

 

 

 

 

Other comprehensive (loss) gain, net of tax:

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

96 

 

 

(182)

Comprehensive income (loss)

 

 

698 

 

 

(1,674)

Less: comprehensive income attributable to noncontrolling interest

 

 

 -

 

 

 -

Comprehensive income (loss) attributable to BroadVision

 

$

698 

 

$

(1,674)







 

 

 

 

 

 

 

 

 

 

 

 

 






See Accompanying Notes to Condensed Consolidated Financial Statements.



 

2

 


 

 

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, Unaudited)











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

Additional

 

Other

 

 

 

 

 

 

 

 

 

 

 

Total



 

 

 

 

 

 

 

Paid-in

 

Comprehensive

 

Accumulated

 

 

 

 

Noncontrolling

 

 

Stockholders'



 

Shares

 

Amount

 

Capital

 

Loss

 

Deficit

 

Total

 

Interest

 

 

Equity

Balances as of December 31, 2018

 

 

5,057 

 

$

 -

 

$

1,271,949 

 

$

(1,435)

 

$

(1,269,113)

 

$

1,401 

 

$

 -

 

$

1,401 

 

Contribution from noncontrolling interest

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

3,000 

 

 

3,000 

 

Net loss

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

602 

 

 

602 

 

 

(721)

 

 

(119)

 

Other comprehensive income

 

 

 

 

 

 -

 

 

 -

 

 

96 

 

 

 -

 

 

96 

 

 

 -

 

 

96 

 

Stock-based compensation

 

 

 

 

 

 -

 

 

18 

 

 

 -

 

 

 -

 

 

18 

 

 

 -

 

 

18 

 

Issuance of common stock under employee stock purchase plan

 

 

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 

Balances as of March 31, 2019

 

 

5,059 

 

$

 -

 

$

1,271,969 

 

$

(1,339)

 

$

(1,268,511)

 

$

2,119 

 

$

2,279 

 

$

4,398 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of December 31, 2017

 

 

4,995 

 

$

 -

 

$

1,271,585 

 

$

(1,558)

 

$

(1,262,718)

 

$

7,309 

 

$

 -

 

$

7,309 

 

Net loss

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

(1,492)

 

 

(1,492)

 

 

 -

 

 

(1,492)

 

Other comprehensive loss

 

 

 

 

 

 -

 

 

 -

 

 

(182)

 

 

 -

 

 

(182)

 

 

 -

 

 

(182)

 

Stock-based compensation

 

 

 

 

 

 -

 

 

126 

 

 

 -

 

 

 -

 

 

126 

 

 

 -

 

 

126 

 

Issuance of common stock under employee stock purchase plan

 

 

 

 

 -

 

 

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 

Cumulative effect of adoption of ASC 606

 

 

 

 

 

 -

 

 

 -

 

 

 -

 

 

605 

 

 

605 

 

 

 -

 

 

605 

 

Balances as of March 31, 2018

 

 

4,997 

 

$

 -

 

$

1,271,716 

 

$

(1,740)

 

$

(1,263,605)

 

$

6,371 

 

$

 -

 

$

6,371 

 



























See Accompanying Notes to Condensed Consolidated Financial Statements





3

 


 

 

BROADVISION, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)









 

 

 

 

 

 



 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(119)

 

$

(1,492)

Depreciation and amortization

 

 

 

 

Gain on transfer of intellectual property

 

 

(745)

 

 

 

Stock-based compensation

 

 

18 

 

 

126 

Provision of receivable reserves

 

 

(73)

 

 

(70)

Accumulated effect on accounting changes

 

 

 -

 

 

605 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

24 

 

 

545 

Prepaids and other

 

 

(7)

 

 

(166)

Operating lease right-of-use assets

 

 

(100)

 

 

 -

Other non-current assets

 

 

 

 

(14)

Accounts payable and accrued expenses

 

 

243 

 

 

(383)

Operating lease liabilities - current

 

 

80 

 

 

 -

Unearned revenue and deferred maintenance

 

 

618 

 

 

(611)

Other noncurrent liabilities

 

 

59 

 

 

(30)

Net cash provided by (used for) operating activities

 

 

 

 

(1,484)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

 -

 

 

(3)

Net cash used for investing activities

 

 

 -

 

 

(3)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock, net

 

 

3,000 

 

 

Proceeds from exercise of common stock options, net

 

 

 -

 

 

 -

Net cash provided by financing activities

 

 

3,000 

 

 

Effect of exchange rates on cash and cash equivalents

 

 

96 

 

 

(182)

Net increase (decrease) in cash and cash equivalents

 

 

3,097 

 

 

(1,664)

Cash and cash equivalents at beginning of period

 

 

2,574 

 

 

8,560 

Cash and cash equivalents at end of period

 

$

5,671 

 

$

6,896 





 



 

 

 

 

 

 






 See Accompanying Notes to Condensed Consolidated Financial Statements.

 

4

 


 

 

BROADVISION, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)



Note 1. Organization and Summary of Significant Accounting Policies



BroadVision, Inc. was incorporated in the state of Delaware on May 13, 1993, and has been a publicly traded corporation since 1996. We develop, market, and support enterprise portal applications that enable companies to unify their e-business infrastructure and conduct both interactions and transactions with employees, partners, and customers through a personalized self-service model that increases revenues, reduces costs, and improves productivity.



Except where specifically noted or the context otherwise requires, the use of terms such as the “Company”, “BroadVision,” “we” and “our” in these Notes to Condensed Consolidated Financial Statements refers to BroadVision, Inc. and its subsidiaries.



Basis of Presentation and Principles of Consolidation



The condensed consolidated financial results and related information as of and for the three months ended March 31, 2019 and 2018 are unaudited. The Condensed Consolidated Balance Sheet at December 31, 2018 has been derived from the audited consolidated financial statements as of that date but does not necessarily reflect all of the disclosures previously reported in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The unaudited Condensed Consolidated Financial Statements should be reviewed in conjunction with the audited consolidated financial statements and related notes contained in our 2018 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 1, 2019, as amended.  



The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions in Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of interim financial information have been included. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2019 or any future interim period. The condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation.



On January 2, 2019, we entered into a Series A Preferred Stock Purchase Agreement with Vmoso, Inc., a Delaware corporation (“VMSO”), for the purchase of 745,000 shares of VMSO’s Series A Preferred Stock for a purchase price comprising the contribution of our intellectual property and other assets valued by our Board of Directors at $745,000. The contributed assets represent substantially all of the intellectual property and other assets relating to our Clearvale and Vmoso platforms, including our current Clearvale and Vmoso products and our My Vmoso Network (“MVN”) development project. VMSO will continue the commercialization of the Clearvale and Vmoso products and the development of MVN.    



Following the completion of VMSO’s sale of Class 1 Common Stock described below, the shares of Series A Preferred Stock owned by our company represent approximately 19.9% of the total number of shares of VMSO’s capital stock outstanding. The rights, preferences and privileges of VMSO’s Series A Preferred Stock include a liquidation preference of $1.00 per share.



On January 2, 2019,  Dr. Pehong Chen, our and VMSO’s President and Chief Executive Officer and our largest stockholder, purchased 3,000,000 shares of VSMO’s Class 1 Common Stock, representing approximately 80.1% of the total number of shares of VMSO’s capital stock outstanding after such purchase, for a purchase price of $3,000,000 in cash pursuant to a Class 1 Common Stock Purchase Agreement between Dr. Chen and VMSO.



On January 2, 2019, we entered into a Services and Facilities Agreement, with VMSO, the terms of which provide for the payment of certain fees to us by VMSO, in exchange for the contribution of our expertise, resources, services, as well as the limited use of our facilities in VMSO’s business and operations.  The Services and Facilities Agreement is effective as of January 1, 2019 and shall continue for a period of one year, unless earlier terminated, and shall be renewable upon written consent from both parties.



We and VMSO anticipate that, pursuant to the Services and Facilities Agreement, we will provide substantially all of the personnel, facilities and equipment required for VMSO’s operations for the foreseeable future. The fees contemplated by the Services and Facilities Agreement are generally intended to permit us to recover the cost to us of providing these personnel, facilities, and equipment.



The Company consolidates variable interest entities (VIEs) in which it holds a variable interest and it is the primary beneficiary.

5

 


 

 

The Company controls the management of VMSO and has the obligation to absorb the losses of, and receive benefits from VMSO. Accordingly, the Company has identified itself as the primary beneficiary of VMSO and began consolidating VMSO in the first quarter of 2019, resulting in a noncontrolling interest related to Dr. Chen, the holder of Class 1 common stock in VMSO.

Use of Estimates



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



Liquidity



The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. During the three months ended March 31, 2019, the Company had a net loss of $0.1 million and net cash provided by operations of $0.02 million, and at March 31, 2019 the Company had working capital of $4.1 million. At March 31, 2019, the Company had cash and cash equivalents of $5.7 million. The Company has implemented cost reduction plans since the second half of 2017 to reduce the Company’s cash needs and reduced the cost of its operations by approximately $5 million in 2018. In January 2019, the Company completed the VMSO financing, pursuant to which VMSO raised $3 million in cash from our and VMSO’s President and Chief Executive Officer and our largest stockholder and VMSO now holds all of the intellectual property and other assets related to our Clearvale and Vmoso platforms, reducing our exposure to future development and commercialization costs of Clearvale, Vmoso and MVN. The Company believes its cash and cash equivalents as of March 31, 2019, which include the proceeds of its VMSO financing, will be sufficient to fund operations for at least twelve months from the date of issuance of these condensed consolidated financial statements.



However, further cost reduction may result in voluntary departures of highly skilled technical and managerial personnel, which would have a material adverse effect on our business, internal controls, financial condition and results of operations. We expect to opportunistically 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 current 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. The outcome of these matters cannot be predicted at this time. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and secure sources of financing and/or reduce costs and ultimately attain profitable operations.



Stock-Based Compensation



The following table sets forth the components of the total stock-based compensation expense recognized in our Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2019 and 2018 (in thousands):











 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Cost of services

 

$

 -

 

$

13 

Research and development

 

 

 -

 

 

42 

Sales and marketing

 

 

 

 

35 

General and administrative

 

 

14 

 

 

36 



 

$

18 

 

$

126 



Leases 



The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the condensed consolidated balance sheets. As of March 31, 2019 and December 31, 2018, the Company did not have finance leases.

6

 


 

 

 

ROU assets and operating lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate the lease when it is reasonably certain to be exercised. Operating leases are recognized on a straight-line basis over the lease term.



Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed using the weighted-average number of shares of common stock outstanding, excluding the effects of any potentially dilutive securities. Diluted net income (loss) per share is computed using the weighted-average number of shares of common stock outstanding and, when dilutive, common equivalent shares from outstanding stock options and awards using the treasury stock method. The following table sets forth the basic and diluted net income (loss) per share computational data for the periods presented (in thousands, except per share amounts):  











 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Net income (loss) attributable to BroadVision

 

$

602 

 

$

(1,492)

Weighted-average common shares outstanding used to compute basic net income (loss) per share

 

 

5,002 

 

 

4,995 

Basic net income (loss) per share attributable to BroadVision

 

$

0.12 

 

$

(0.30)



 

 

 

 

 

 



 

 

 

 

 

 

Weighted-average common shares outstanding used to compute diluted net income (loss) per share

 

 

5,018 

 

 

4,995 

Diluted net income (loss) per share attributable to BroadVision

 

$

0.12 

 

$

(0.30)







Legal Proceedings



We are subject from time to time to various legal actions and other claims arising in the ordinary course of business.  We are not presently a party to any material legal proceedings.



Foreign Currency Translations



The functional currencies of all foreign subsidiaries are the local currencies of their respective countries.  Assets and liabilities of these subsidiaries are translated into U.S. dollars at the balance sheet date. Income and expense items are translated at average exchange rates for the periods presented. Foreign exchange gains and losses resulting from the remeasurement of foreign currency assets and liabilities are included as other income (expense), net in the Condensed Consolidated Statements of Comprehensive Income (Loss). The translation adjustment was $96,000 of gain and $182,000 loss for the three months ended March 31, 2019 and 2018, respectively.  These amounts are included in the accumulated other comprehensive loss account in the Condensed Consolidated Balance Sheets.



Comprehensive Income (Loss) 

 

Comprehensive Income (loss) includes net loss and other comprehensive gains and losses, which primarily consists of foreign currency translation adjustments. Total comprehensive income (loss) is presented in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss). Total accumulated other comprehensive loss is displayed as a separate component of stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets. The accumulated balances of other comprehensive income (loss) consist of the following, net of taxes (in thousands):  





 

 

 



 

 

 



 

Accumulated



 

Other



 

Comprehensive



 

Loss

Balance, December 31, 2018

 

$

(1,435)

Net change during period

 

 

96 

Balance, March 31, 2019

 

$

(1,339)







7

 


 

 

Recent Accounting Pronouncements



Recently Adopted Accounting Pronouncement



In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), which requires the recognition of an asset and liability for lease arrangements longer than twelve months. The Company adopted the new accounting standard on January 1, 2019, using the modified retrospective method and elected the package of practical expedients for expired or existing contracts, which allowed the Company not to reassess (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The Company recorded right-of-use assets of $120,000 in “Operating lease right-of-use assets” on the Company's condensed consolidated balance sheet, and lease liabilities of $120,000 in aggregate in “Operating lease liabilities – current” and “other non-current liabilities” on the Company’s condensed consolidated balance sheet on the adoption date. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.



Recently Issued Accounting Pronouncements Not Yet Adopted



In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326). This ASU requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. ASU 2016-13 is effective for the Company in the first quarter of fiscal 2020. Entities may early adopt the ASU in their fiscal years beginning after December 15, 2018. The Company does not believe this ASU will have a material impact on its Consolidated Financial Statements.



 In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for the Company in the first quarter of fiscal 2020. Early adoption is permitted. The Company does not believe this ASU will have a material impact on its Consolidated Financial Statements.



In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement  That is a Service Contract. ASU 2018-15 clarifies the accounting for implementation costs in cloud computing arrangements. ASU 2018-15 is effective for the Company in the first quarter of fiscal 2020. Early adoption is permitted. The Company is currently assessing the potential impact of adopting this new guidance on its Consolidated Financial Statements.



8

 


 

 



Note 2. Revenues



Revenue Accounting Policies

Our revenue consists of fees for licenses of our software products, maintenance, consulting services and training.  Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The transaction price is generally in the form of a fixed fee at contract inception without variable considerations. We allocate the transaction price to each distinct performance obligation based on the relative estimated standalone selling prices for each performance obligation. We then look to how control transfers to the customer in order to determine the timing of revenue recognition.



The following is a description of principal activities from which we generate revenue:



Software License RevenuesProducts with Non-Ratably Recognized Revenue



Licenses for software products with non-ratably recognized revenue (such as QuickSilver) provide the customer with a right to use the software as it exists when made available to the customer. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Revenues from such software licenses are recognized upfront at the point in time when the software is made available to the customer, which is consistent with the timing of the payments received from the customer.  We do not grant a right of return for these software products. 



Software License Revenues – Products with Ratably-Recognized Revenue



These cloud offerings (such as Vmoso, Clearvale and Clear) allow customers to use software over the subscription period without taking possession of the software. Revenue related to these licenses is recognized ratably over the contract period. We receive payments from our customers in advance based on billing schedules established in each contract.  Upfront payments are recorded as deferred revenue and are recognized as revenue as we perform our obligations under these contracts.



Maintenance Revenues



Maintenance revenues, which include revenues that are allocated from software license agreements that entitle the customers to technical support and future unspecified enhancements to our products, are recognized ratably over the related agreement period, which time period is generally twelve months.  Customer payments are usually received annually in advance, which are recorded as deferred revenue and are recognized as revenue as we perform our obligations under these agreements.



Consulting Services Revenues



Consulting services revenues and training revenues are recognized as such services are performed based on time and cost incurred. These services are not essential to the functionality of the software. We record reimbursements from our customers for out-of-pocket expenses as an increase to services revenues.



Significant Judgments



Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.  Judgment is also required to determine the timing of the recognition, as well as the standalone selling price for each distinct performance obligation. In instances where the standalone selling price is not directly observable, such as when we do not sell the product or service separately, we determine such standalone selling price using information that may include market conditions and other observable inputs.



Practical Expedients and Exemptions



We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.





9

 


 

 

Disaggregation of Revenues

The following table provides information about disaggregated revenue by geographical region, major product line and timing of revenue recognition (in thousands):











 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended March 31, 2019

Geographic region:

 

Software Licenses - Non-hosted

 

Software Licenses - Hosted

 

Maintenance

 

Professional Services

 

Total

Americas

 

$

379 

 

$

61 

 

$

262 

 

$

 -

 

$

702 

Europe

 

 

17 

 

 

 

 

160 

 

 

 

 

185 

Asia/Pacific

 

 

 -

 

 

111 

 

 

59 

 

 

11 

 

 

181 

Total revenues

 

$

396 

 

$

177 

 

$

481 

 

$

14 

 

$

1,068 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended March 31, 2019

Timing of revenue recognition:

 

Software Licenses - Non-hosted

 

Software Licenses - Hosted

 

Maintenance

 

Professional Services

 

Total

Transferred at a point in time

 

$

396 

 

$

 -

 

$

 -

 

$

 -

 

$

396 

Transferred over time

 

 

 -

 

 

177 

 

 

481 

 

 

14 

 

 

672 

Total revenues

 

$

396 

 

$

177 

 

$

481 

 

$

14 

 

$

1,068 





Contract Balances

The following table provides information about receivables, contract assets and deferred revenues from contracts with customers.  Deferred revenues include unearned revenue and deferred maintenance (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended March 31, 2019



 

Balance at beginning of period

 

Increases

 

Decreases

 

Balance at end of period

Receivables

 

$

476 

 

$

941 

 

$

892 

 

$

525 

Contract assets - current

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Deferred revenues including current and non-current

 

 

928 

 

 

1,715 

 

 

1,053 

 

 

1,590 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

We receive payments from customers based upon contractual billing schedules; accounts receivables are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to our contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenues include payments received in advance of performance under the contract and are realized with the associated revenue recognized under the contract, which is generally within a year. Increases to deferred revenues were mainly a result of additional upfront payments received during the period, whereas decreases to deferred revenues were due to performance obligations satisfied.    

10

 


 

 





Note 3. Selected Condensed Consolidated Balance Sheet Detail



Other current assets at March 31, 2019 and December 31, 2018 consisted of the following (in thousands):









 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2019

 

2018



 

(unaudited)

 

 

 

VAT receivable

 

$

480 

 

$

480 

Other

 

 

219 

 

 

212 

Total Prepaids and other

 

$

699 

 

$

692 



Accrued expenses at March 31, 2019 and December 31, 2018 consisted of the following (in thousands):









 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2019

 

2018



 

(unaudited)

 

 

 

Employee benefits

 

$

429 

 

$

409 

Income tax

 

 

 

 

24 

Sales and other taxes

 

 

294 

 

 

287 

Commissions and bonuses

 

 

14 

 

 

18 

Other

 

 

65 

 

 

109 

Total accrued expenses

 

$

807 

 

$

847 









 Other non-current liabilities at March 31, 2019 and December 31, 2018 consisted of the following (in thousands):  



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,



 

2019

 

2018



 

(unaudited)

 

 

 

Deferred maintenance and unearned revenue

 

$

186 

 

$

141 

Other

 

 

436 

 

 

422 

Total other non-current liabilities

 

$

622 

 

$

563 





















11

 


 

 













Note 4.  Fair Value of Financial Instruments

 

We measure assets and liabilities at fair value based on an exit price as defined by the FASB guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:



 

 

Level 1 - Quoted prices in active markets for identical assets or liabilities;

 

 

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

 

 

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



We measure the following financial assets at fair value on a recurring basis.  The fair value of these financial assets as of March 31, 2019 and December 31, 2018 (in thousands) were as follows:



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

Fair Value at  Reporting Date Using



 

 

 

 

Quoted

 

 

 

 

 

 



 

 

 

 

Prices in

 

 

 

 

 

 



 

 

 

 

Active

 

 

Significant

 

 

 



 

 

 

 

Markets for

 

 

Other

 

 

Significant



 

 

 

 

Identical

 

 

Observable

 

 

Unobservable



 

March 31,

 

Assets

 

 

Inputs

 

 

Inputs



 

2019

 

(Level 1)

 

(Level 2)

 

(Level 3)

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

2,115 

 

$

2,115 

 

$

 -

 

$

 -

Money market funds

 

 

3,556 

 

 

3,556 

 

 

 -

 

 

 -

Total cash and cash equivalents

 

$

5,671 

 

$

5,671 

 

$

 -

 

$

 -



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

Fair Value at  Reporting Date Using



 

 

 

 

Quoted

 

 

 

 

 

 



 

 

 

 

Prices in

 

 

 

 

 

 



 

 

 

 

Active

 

 

Significant

 

 

 



 

 

 

 

Markets for

 

 

Other

 

 

Significant



 

 

 

 

Identical

 

 

Observable

 

 

Unobservable



 

December 30,

 

Assets

 

 

Inputs

 

 

Inputs



 

2018

 

(Level 1)

 

(Level 2)

 

(Level 3)

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

1,628 

 

$

1,628 

 

$

 -

 

$

 -

Money market funds

 

 

946 

 

 

946 

 

 

 -

 

 

 -

Total cash and cash equivalents

 

$

2,574 

 

$

2,574 

 

$

 -

 

$

 -







Level 2 securities are priced using quoted market prices for similar instruments, nonbinding market prices that are corroborated by observable market data, or discounted cash flow techniques. 



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

 

12

 


 

 

Note 5. Commitments and Contingencies



Warranties and Indemnification

 

We provide a warranty to our perpetual license customers that our software will perform substantially in accordance with the documentation we provide with the software, typically for a period of 90 days following receipt of the software. Historically, costs related to these warranties have been immaterial. Accordingly, we have not recorded any warranty liabilities as of March 31, 2019 and December 31, 2018, respectively.



Our perpetual software license agreements typically provide for indemnification of customers for intellectual property infringement claims caused by use of a current release of our software consistent with the terms of the license agreement. The term of these indemnification clauses is generally perpetual. The potential future payments we could be required to make under these indemnification clauses are generally limited to the amount the customer paid for the software. Historically, costs related to these indemnification provisions have been immaterial. We also maintain liability insurance that limits our exposure to any indemnification claims that may arise. As a result, we believe the potential liability of these indemnification clauses is minimal. Accordingly, we did not record any liabilities for these agreements as of March 31, 2019 and December 31, 2018, respectively.



We entered into agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer is, or was, serving in such capacity. The term of the indemnification period is for so long as such officer or director is subject to an indemnifiable event by reason of the fact that such person was serving in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements may be unlimited; however, we have a director and officer insurance policy that limits our exposure to such claims and enables us to recover a portion of any future amounts paid. As a result of our insurance policy coverage, we believe the estimated fair value of these indemnification agreements is insignificant. Accordingly, we have no liabilities recorded for these agreements as of either March 31, 2019 or December 31, 2018. We assess the need for an indemnification reserve on a quarterly basis and there can be no guarantee that an indemnification reserve will not become necessary in the future.



Leases



We lease our headquarters facility and our other facilities under noncancelable operating lease agreements each of which will expire at various dates during or before June 2020. We recognize the rent expense on a straight line basis over the lease period. Under the terms of our lease agreements, we are required to pay property taxes, insurance and normal maintenance costs.



On January 1, 2019, we recorded right-of-use assets of $120,000 in “Operating lease right-of-use assets” on the Company's condensed consolidated balance sheet, and as of March 31, 2019 we had related lease liabilities of $80,000 in aggregate in “Operating lease liabilities – current” and $19,000 in “Other non-current liabilities” on the Company’s condensed consolidated balance sheet.  



Supplemental cash flow information related to operating leases is as follows (dollars in thousands):







 

 

 



 

Three Months Ended



 

March 31, 2019

Cash payments for operating leases

 

$

22 





 

 

 



 

 

March 31, 2019

Weighted-average remaining lease term

 

 

1.25 years

Weighted-average discount rate

 

 

12% 





13

 


 

 

Future minimum non-cancelable payments under operating leases as of March 31, 2019, were as follows (in thousands):





 

 

 



 

Operating Leases

Remainder of 2019

 

$

66 

2020

 

 

45 

Total future lease payments

 

$

111 

Less imputed interest

 

 

12 

Present value of lease liabilities

 

$

99 



During the three months ended March 31, 2019 and 2018, the Company recorded operating lease cost of $55,000 and $295,000, respectively. As of March 31, 2019, the Company had no leases that have not yet commenced.









Note 6. Geographic, Segment and Significant Customer Information



We operate in one segment: electronic business solutions. The disaggregated revenue information regarding types of revenues is as follows (in thousands): 







 

 

 

 

 

 



 

Three Months Ended



 

March 31,



 

2019

 

2018

Software licenses

 

 

 

 

 

 

   Non-hosted licenses

 

$

396 

 

$

556 

   Hosted licenses

 

 

177 

 

 

369 

Services

 

 

 

 

 

 

   Consulting services

 

 

14 

 

 

239 

   Maintenance

 

 

481 

 

 

439 

Total revenues

 

$

1,068 

 

$

1,603 





We currently operate in three primary geographical territories: North and South America (Americas); Europe, Middle East and Africa (Europe); and Asia, Pacific and Japan (Asia/Pacific).



Disaggregated financial information regarding our geographic revenues is as follows (in thousands):







 

 

 

 

 

 



 

Three Months Ended



 

March 31,

Revenues:

 

2019

 

2018

Americas

 

$

702 

 

$

749 

Europe

 

 

185 

 

 

336 

Asia/Pacific

 

 

181 

 

 

518 

Total revenues

 

$

1,068 

 

$

1,603 







For the three months ended March 31, 2019, no customer accounted for more than 10% of our revenues. For the three months ended March 31, 2018, Indian Railways Catering and Tourism Corporation Limited (IRCTC) accounted for 10% of our revenues.



Note 7. Related Party Transactions



BVD and BVOD



On November 14, 2008, BroadVision (Delaware) LLC, a Delaware limited liability company (“BVD”), which was then our wholly owned subsidiary, entered into a Share Purchase Agreement with CHRM LLC, a Delaware limited liability company, that is controlled by Dr. Pehong Chen, our Chairman, President, Chief Executive Officer, Interim Chief Financial Officer and largest stockholder and in which our former Chief Financial Officer, Peter Chu, holds a minority interest. We and CHRM LLC then entered into an Amended and Restated Operating Agreement of BroadVision (Delaware) LLC dated as of November 14, 2008 (the “BVD Operating Agreement”). Under these agreements, CHRM LLC received, in exchange for the assignment of certain intellectual property rights, 20 Class B Shares of BVD, representing the right to receive a portion of any distribution of Funds from “Capital Transactions” (as such term is defined in the BVD Operating Agreement), with the exact amount to be determined based on our and CHRM LLC’s capital account balances at the time of such distribution. A Capital Transaction under that agreement is any merger or sale of substantially all of the assets of BVD as a result of which the members of BVD will no longer have an interest in BVD or the assets of BVD will be distributed to its members. Class B Shares do not participate in any profits of BVD except for net profits related to a Capital Transaction, in which case the net profits are allocated to the owners of Class A and Class B

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Shares in proportion to their respective number of shares. To the extent BVD’s losses do not exceed undistributed net profits accumulated since the date of issuance of Class B Shares, such losses are allocated to Class A Shares. To the extent net losses exceed the undistributed net profits accumulated since the date of issuance of Class B Shares, such excess is allocated to the owners of Class A and Class B Shares in proportion to their respective cumulative capital contributions less any return of capital, until allocation of such losses results in having the capital account balances equal to zero. Then, net losses are allocated to the owners of Class A and Class B Shares in proportion to their respective number of shares. Upon liquidation, the net assets of BVD are distributed to the owners of Class A and Class B in proportion to their capital account balances.



BVD is the sole owner of BroadVision (Barbados) Limited (“BVB”) and BVB is the sole owner of BroadVision On Demand, a Chinese entity (“BVOD”). We have invested approximately $9.0 million in BVOD (directly and through BVD and BVB) from 2007 through 2016. In 2014 we began making payments directly to BVOD for certain labor outsourcing services however, we discontinued our BVOD operations during the fourth quarter of 2018 and do not expect to pay BVOD for such services in subsequent periods. We made aggregate payments to BVOD of zero and $0.5 million (based on the RMB to USD exchange rates on the applicable dates of payment) for such services in the three months ended March 31, 2019 and 2018, respectively. These payments in part covered services rendered outside of the applicable years. We have a controlling voting interest in BVD. Pursuant to the terms of the BVD Operating Agreement, the Class B Shares held by CHRM LLC have no voting rights.



The 20 Class B Shares of BVD represent a non-controlling interest. We allocate profits and losses of BVD to the non-controlling interest under the Hypothetical Liquidation Book Value (“HLBV”) method. Under this method the profits and losses are allocated by reference to the profit sharing provisions in the BVD Operating Agreement assuming liquidation of BVD at its book value at the end of each reporting period. Profits and losses allocated to the balance of such interest under the HLBV method have not been material.



VMSO 

As discussed in Note 1 above, on January 2, 2019, we entered into a Series A Preferred Stock Purchase Agreement with VMSO for the purchase of 745,000 shares of VMSO’s Series A Preferred Stock for a purchase price comprising the contribution of our intellectual property and other assets valued by our Board of Directors at $745,000. The contributed assets represent substantially all of the intellectual property and other assets relating to our Clearvale and Vmoso platforms, including our current Clearvale and Vmoso products and our MVN development project. VMSO will continue the commercialization of the Clearvale and Vmoso products and the development of MVN.    



The Company recognized a gain of $745,000 from the transfer of its intellectual property to VMSO and this gain is reported as a component of Other Income in the Condensed Consolidated Statement of Comprehensive Income (Loss).    



Following the completion of VMSO’s sale of Class 1 Common Stock described below, the shares of Series A Preferred Stock owned by our Company represent approximately 19.9% of the total number of shares of VMSO’s capital stock outstanding. The rights, preferences and privileges of VMSO’s Series A Preferred Stock include a liquidation preference of $1.00 per share.



Pursuant to the financing plan that we announced in October 2018, on January 2, 2019, Dr. Chen, our and VMSO’s President and Chief Executive Officer and our largest stockholder, purchased 3,000,000 shares of VSMO’s Class 1 Common Stock, representing approximately 80.1% of the total number of shares of VMSO’s capital stock outstanding after such purchase, for a purchase price of $3,000,000 in cash pursuant to a Class 1 Common Stock Purchase Agreement between Dr. Chen and VMSO.



On January 2, 2019, we entered into the Intercompany Agreement with VMSO, the terms of which provide for the payment of certain fees to us by VMSO, in exchange for the contribution of our expertise, resources, services, as well as the limited use of our facilities in VMSO’s business and operations.  The Intercompany Agreement became effective as of January 1, 2019 and shall continue for a period of one year, unless earlier terminated, and shall be renewable upon written consent from both parties.



We and VMSO anticipate that, pursuant to the Intercompany Agreement, we will provide substantially all of the personnel, facilities and equipment required for VMSO’s operations for the foreseeable future. The fees contemplated by the Intercompany Agreement are generally intended to permit us to recover the cost to us of providing these personnel, facilities, and equipment. At March 31, 2019, we have a net receivable and VMSO has a net payable of $907,000 for services performed/received under the Intercompany Agreement. These amounts eliminate upon consolidation.



The Class 1 Common Stock owned by Dr. Chen represents a noncontrolling interest and profits and losses in VMSO are allocated pro-rata between our Company and the non-controlling interest based on equity ownership.





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

 

This report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, which are subject to the "safe harbor" created by those sections. Forward-looking statements include all statements that are not historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations.  The words "expect," "anticipate," "intend," "believe," "hope," "assume," "estimate," "plan," "will" and other similar words and expressions. These forward-looking statements, including those described in the section titled “Risk Factors” included under Part II, Item 1A below.  Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to publicly release any revisions to the forward-looking statements or to reflect events and circumstances after the date of this document.



Overview

 

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, cloud and mobile 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, portal solutions, Enterprise Social Networks (ESN), and collaboration and knowledge management solutions. Most recently, we have added mobile and cloud capabilities to our platforms to enable rapid deployment of robust, secure, and scalable solutions for our customers.



Our objective is to further our position as a global supplier of innovative e-business solutions with the addition of enterprise collaboration and engagement solutions such as our mobile and cloud-based Vmoso, a collaboration and knowledge management product, and Clearvale, an ESN product.  Together with our legacy Business Agility Suite, Commerce Agility Suite and QuickSilver solutions, our new enterprise collaboration and engagement solutions are designed to enhance the communication, collaboration and knowledge management capabilities of organizations with their customers, partners and employees to improve productivity and efficiency. In 2017, we announced a major incremental release of our Vmoso platform with a range of new functionality across several key modules. 



We generate revenues from fees for licenses or access and use of our software products and related maintenance, consulting services and customer training. We generally charge fees for licenses of our software products based on (1) the number of persons registered to use the product; or (2) the number of CPUs utilized by the machines on which the product is installed. We also charge fees for access and use of Cloud or SaaS solutions. Payment terms are generally 30 to 60 days from the date that the software products are delivered, the maintenance or subscription contracts are booked, or the consulting services are provided.



We have not generated net income since 2009, except the generation of $0.6 million of net income attributable to BroadVision during the three months ended March 31, 2019. Our ability to generate profits or positive cash flows in future periods remains uncertain. 



Our operations face two key challenges: maturity of our major revenue-generating legacy products, and competing in a crowded ESN solution space.  We continue to invest heavily in cloud-based, mobile, messaging and collaboration technologies, while continuing to support our legacy base.  Total revenues of $1.1 million in the first quarter of 2019 declined from total revenues of $1.6 million for the first quarter of 2018, with the decrease mainly in legacy revenue. We expect that the decline in our legacy revenue, which is the majority of our revenue mix, will continue to dominate our overall financial performance until a significant installed base of new product revenues is established. We are continuing to diligently invest in new technologies in an effort to maintain our competitive advantages in the mobile communications and collaboration and knowledge management spaces. 

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Recent Developments



MyVmoso Network Product Development Initiatives



In 2018, we began working on initiatives to develop and advance a new platform, MyVmoso Network (MVN), a personal digital hub that will utilize our Vmoso platform in conjunction with blockchain technology to act as a bank for consumers’ personal data, as well as provide secure, personalized, persistent, symmetrical engagement channels between consumers and the businesses with which they have relationships. MVN is being developed to provide secure storage for important data such as health records, financial transactions, product purchases and warranties, such that users can trust, unify, manage and monetize their personal data. MVN is being designed to provide:





 

 

 



 

 

 



 

 

 



 

a place for users to communicate with organizations that they deal with on their terms;



 

a platform for businesses to build blockchain-enabled applications for customer engagement;



 

a way for users to monetize their personal data by allowing third parties to use it in exchange for compensation;



 

a consent audit trail for users to keep track of who they have allowed to access their data, for what purpose and for how long; and



 

a toolkit for exercising data-relat