This report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. These forward-looking statements are generally identified by words such as "expect," "anticipate," "intend," "believe," "hope," "assume," "estimate," "plan," "will" and other similar words and expressions. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements as a result of certain factors, including those described herein and in the Company's most recently filed Annual Report on Form 10-K and other documents filed with the SEC. 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.

Critical Accounting Policies, Estimates and Judgments There have been no material changes in our critical accounting policies, estimates and judgments during the three month period ended March 31, 2009 compared to the disclosures in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2008, other than as disclosed herein.

Revenue Recognition

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

Results of Operations

Revenues

  Total revenues decreased 20% during the three months ended March 31, 2009, to
$8.0 million, as compared to $10.0 million for the three months ended March 31,
2008. A summary of our revenues by geographic region is as follows (dollars in
thousands, unaudited):
                             Software
                             Licenses        %        Services        %        Total         %
      Three Months Ended:
      March 31, 2009
      Americas              $    2,097        73 %   $    2,263        44 %   $  4,360        55 %
      Europe                       597        21          2,160        42        2,757        34
      Asia Pacific                 158         6            726        14          884        11
      Total                 $    2,852       100 %   $    5,149       100 %   $  8,001       100 %
      March 31, 2008
      Americas              $    2,157        55 %   $    2,768        45 %   $  4,925        49 %
      Europe                     1,211        30          2,458        41        3,669        37
      Asia Pacific                 609        15            827        14        1,436        14
      Total                 $    3,977       100 %   $    6,053       100 %   $ 10,030       100 %

We experienced declines in revenues as a result of a decline in general global economic conditions and the fact that we operate in a very competitive industry. Financial comparisons discussed herein may not be indicative of future performance. We believe a significant challenge we face is to persuade prospective customers with limited budgets to purchase our products and services instead of investing in competing IT projects.

Software license revenues decreased 28% during the three months ended March 31, 2009, to $2.9 million, as compared to $4.0 million for the three months ended March 31, 2008. The decreases came from all regions due to decreased demand for our products and services.

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Services revenues consisting of consulting revenues, customer training revenues and maintenance revenues decreased 15% during the three months ended March 31, 2009, to $5.1 million, as compared to $6.0 million for the three months ended March 31, 2008. Maintenance revenues decreased 13% for the three months ended March 31, 2009, to $3.9 million, as compared to $4.5 million for the three months ended March 31, 2008. This decrease in maintenance revenues was due to a decline in demand for additional licenses by customers. Consulting and training revenues decreased 20% for the three months ended March 31, 2009, to $1.2 million, as compared to $1.5 million for the three months ended March 31, 2008. This decrease in consulting revenues was attributable to a decline in demand for new licenses from our existing customers.

Cost of Revenues

  Cost of software license revenues includes the costs of product media,
duplication, packaging and other manufacturing costs, as well as royalties
payable to third parties for software that is either embedded in, or bundled and
licensed with our products. Cost of services consists primarily of
employee-related costs, third-party consultant fees incurred on consulting
projects, post-contract customer support and instructional training services. A
summary of our cost of revenues is as follows (dollars in thousands, unaudited):
                                              Three Months Ended March 31,
                                       2009           % (1)       2008        % (1)
         Cost of software licenses   $       6             - %   $     7           - %
         Cost of services                1,964            25 %     2,253          23 %
         Total cost of revenues      $   1,970            25 %   $ 2,260          23 %


_____

Cost of software licenses decreased 14% during the three months ended March 31, 2009, to $6,000, as compared to $7,000 for the three months ended March 31, 2008. This decrease is primarily the result of a decrease in the portion of license revenues generated from royalty-bearing products.

Cost of services decreased 13% during the three months ended March 31, 2009, to $2.0 million, as compared to $2.3 million for the three months ended March 31, 2008. This decrease is the result of a reduction in consulting expenses and a decrease in services revenue.

Gross margin decreased to 75% during the three months ended March 31, 2009 as compared to 77% for the three months ended March 31, 2008. This decrease is the result of a decline in total revenues, offset only in part by a reduction in cost of revenue.

A summary of operating expenses, including as a percentage of total revenues, is set forth in the following table (dollars in thousands, unaudited):

                                                    Three Months Ended
                                                         March 31,
                                         2009        % (1)       2008        % (1)
           Research and development     $ 2,168          27 %   $ 2,337          23 %
           Sales and marketing            2,036          25       1,885          19
           General and administrative     1,451          18       1,698          17
           Restructuring charge              (2 )         -         (18 )         -
           Total operating expenses     $ 5,653          70 %   $ 5,902          59 %


_______

Research and development expenses decreased 4% during the three months ended March 31, 2009, to $2.2 million, as compared to $2.3 million for the three months ended March 31, 2008. This decrease was the result of reductions in contractor expenses.

Sales and marketing expenses increased 5% during the three months ended March 31, 2009, to $2.0 million, as compared to $1.9 million for the three months ended March 31, 2008.This increase was the result of marketing expansions during the three months ended March 31, 2009.

General and administrative expenses decreased 11% during the three months ended March 31, 2009, to $1.5 million, as compared to $1.7 million for the three months ended March 31, 2008.This decrease is primarily as a result of a reduction in headcount for the three months ended March 31, 2009 as compared to the three months ended March 31, 2008.

Interest income, net decreased 39% for the three months ended March 31, 2009, to $281,000, as compared to $464,000 for the three months ended March 30, 2008. The decrease is due to a decline in interest rates.

(Loss) gain on revaluation of warrants for the three months ended March 31, 2009 was a total loss of $31,000, as compared to a gain of $2,454,000 for the three months ended March 31, 2008. These changes are primarily due to fluctuations in our stock price during the relevant periods.

Other (loss) income, net during the three months ended March 31, 2009, was a loss of $1,113,000, as compared to a gain of $858,000 for the three months ended March 31, 2008. The changes in both years were primarily due to realized and unrealized gains (for 2008) and loss (in 2009) on foreign exchange transactions.

Provision for income taxes expense during the three months ended March 31, 2009, was $141,000, as compared to a provision for income tax expenses of $283,000 for the three months ended March 31, 2008. The provision for year 2009 was primarily related to a FIN No. 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No.109, accrual related to an ongoing income tax audit of a foreign subsidiary for the tax year ended December 31, 2006. The provision for year 2008 primarily relates to Alternative Minimum Taxes (AMT) calculated for Federal purposes after application of net operating loss (NOL) carryforwards and state income tax in various jurisdictions.

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Liquidity and Capital Resources

Overview

We continue to maintain a strong cash position on our Consolidated Balance Sheet. As of March 31, 2009, we had $61.1 million of cash and cash equivalents and short-term investments with no long-term debt borrowings, as compared to a balance of $61.8 million at December 31, 2008. The decrease was due primarily to the $0.4 million cash used for our operations in the three months ended March 31, 2009.

Revenues for the first three months of 2009 were $8.0 million, as compared to revenues of $10.0 million for the first three months of 2008. License revenue for the first three months of 2009 was $2.9 million compared to $4.0 million for the first three months of 2008. The majority of our license revenue for the first three months of 2009 was generated by our core BroadVision†Business Agility Suite™, Commerce Agility Suite™ and eMerchandising™ solutions from customers includingTechtree IT System, ClubMed, SPX, Siemens Medical Solutions USA Inc. and We@Service and several other brand name global customers. License revenues decreased in all regions as compared to the first three months of 2008, due to decreased demand for our products and weak macroeconomic conditions.

We continued to focus on expense control in the first quarter of 2009. Operating expenses for the first quarter of 2009 were $5.7 million, as compared to $5.9 million for the first quarter of 2008. For the three months ended March 31, 2009 and 2008, we had a loss of $31,000 and a gain of $2,454,000, respectively, on the revaluation of warrants. For the three months ended March 31, 2009, net loss was $626,000, or $0.14 per diluted share. This compares to net income of $5.4 million, or $1.21 per diluted share, for the three months ended March 31, 2008.

The following table represents our liquidity at March 31, 2009 and December 31, 2008 (dollars in thousands):

                                                 March 31,        December 31,
                                                    2009              2008
                                                (unaudited)
      Cash and cash equivalents                 $     51,347     $       52,884
      Short-term investments                    $      9,799     $        9,004
      Restricted cash, current portion          $         20     $           20
      Restricted cash, net of current portion   $      1,000     $        1,000
      Working capital                           $     50,151     $       51,070
      Working capital ratio                             3.65               3.37

Cash (Used For) Provided By Operating Activities

Cash used for operating activities was $378,000 for the three months ended March 31, 2009. Net cash used for operating activities was due to operating expenses in excess of the cash collections from our customers during this quarter.
Cash provided by operating activities was $3.6 million for the three months ended March 31, 2008. Net cash provided operating activities in this period consisted primarily of $2.8 million in operating profit (excluding restructuring charges and revaluation of warrants) generated from sales margin improvement and company-wide cost reduction efforts, plus the increase of $0.8 million in accounts payable and accrued expenses and unearned revenue accounts.

Cash Used For Investing Activities

Cash used for investing activities was $823,000 for the three months ended March 31, 2009. This figure reflects the purchase of short-term investments for $795,000 and the purchase of property and equipment for $28,000. Cash used for investing activities was $73,000 for the three months ended March 31, 2008. This figure reflects the purchase of property and equipment and leasehold improvements.

Cash Provided By Financing Activities

Cash provided by financing activities was $142,000 for the three months ended March 31, 2009, primarily consisting of cash received in employees' purchases of common stock under the Employee Stock Purchase Plan ("Purchase Plan"). Cash provided by financing activities was $215,000 for the three months ended March 31, 2008, primarily consisting of cash received in connection with the exercise of stock options and employees purchases of common stock under the Purchase Plan.

Leases and Other Contractual Obligations

We lease our headquarters facility and other facilities under non-cancelable operating lease agreements expiring through the year 2012. A total of $1.0 million of restricted cash as shown on our Condensed Consolidated Balance Sheets represents collateral for the letter of credit. This letter of credit has been issued in connection with our facility lease obligation.

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