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 six month period ended June 30, 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 increased 3% during the three months ended June 30, 2009, to
$8.2 million, as compared to $8.0 million for the three months ended June 30,
2008. Total revenues decreased 10% during the six months ended June 30, 2009, to
$16.2 million, as compared to $18.1 million for the six months ended June 30,
2008. A summary of our revenues by geographic region is as follows (dollars in
thousands, unaudited):
                       Software
                       Licenses        %       Services        %        Total         %
Three Months Ended:
June 30, 2009
Americas              $    2,709        86 %   $   2,235        45 %   $  4,944        60 %
Europe                       394        12 %       2,081        41 %      2,475        30 %
Asia Pacific                  58         2 %         695        14 %        753        10 %
Total                 $    3,161       100 %   $   5,011       100 %   $  8,172       100 %
June 30, 2008
Americas              $    1,410        58 %   $   2,701        48 %   $  4,111        51 %
Europe                       753        31 %       2,006        36 %      2,759        34 %
Asia Pacific                 285        11 %         875        16 %      1,160        15 %
Total                 $    2,448       100 %   $   5,582       100 %   $  8,030       100 %

Six Months Ended:
June 30, 2009
Americas              $    4,806        80 %   $   4,498        44 %   $  9,304        58 %
Europe                       991        16 %       4,241        42 %      5,232        32 %
Asia Pacific                 216         4 %       1,421        14 %      1,637        10 %
Total                 $    6,013       100 %   $  10,160       100 %   $ 16,173       100 %
June 30, 2008
Americas              $    3,568        56 %   $   5,469        47 %   $  9,037        50 %
Europe                     1,964        30 %       4,464        38 %      6,428        36 %
Asia Pacific                 893        14 %       1,702        15 %      2,595        14 %

We experienced declines in revenues for the six months ended June 30, 2009 as compared to the same period of 2008 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 busgets to purchase our products and services instead of investing in competing IT projects.

Software license revenues increased 33% during the three months ended June 30, 2009, to $3.2 million, as compared to $2.4 million for the three months ended June 30, 2008 due to more licenses deals closed in the three months ended June 30, 2009. Software license revenues decreased 6% during the six months ended June 30, 2009, to $6.0 million, as compared to $6.4 million for the six months ended June 30, 2008. The decreases came from Europe and Asia Pacific regions due to decreased demand for our products and services as a result of the general economic slow down.

Services revenues consisting of consulting revenues, customer training revenues and maintenance revenues decreased 11% during the three months ended June 30, 2009, to $5.0 million, as compared to $5.6 million for the three months ended June 30, 2008. Services revenues consisting of consulting revenues, customer training revenues and maintenance revenues decreased 12% during the six months ended June 30, 2009, to $10.2 million, as compared to $11.6 million for the six months ended June 30, 2008. Maintenance revenues decreased 14% for the three months ended June 30, 2009, to $3.7 million, as compared to $4.3 million for the three months ended June 30, 2008. Maintenance revenues decreased 15% for the six months ended June 30, 2009, to $7.6 million, as compared to $8.9 million for the six months ended June 30, 2008. This decrease in maintenance revenues was due to a decline in demand for additional licenses by customers because our prospective customers have limited budgets on IT projects. Consulting and training revenues increased 8% for the three months ended June 30, 2009, to $1.3 million, as compared to $1.2 million for the three months ended June 30, 2008. Consulting and training revenues decreased 7% for the six months ended June 30, 2009, to $2.6 million, as compared to $2.8 million for the six months ended June 30, 2009. 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):

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                           Three Months Ended June 30,                      Six Months Ended June 30,
                    2009         %(1)         2008       %(1)         2009       %(1)         2008       %(1)
Cost of software
licenses           $    14           0 %   $     6           0 %   $    20           0 %   $    13           0 %
Cost of services     1,959          24 %     2,155          27 %     3,923          24 %     4,408          24 %
Total cost of

Cost of software licenses increased 133% during the three months ended June 30, 2009, to $14,000, as compared to $6,000 for the three months ended June 30, 2008. Cost of software licenses increased 53% during the six months ended June 30, 2009, to $20,000, as compared to $13,000 for the six months ended June 30, 2008. This increase is primarily the result of an increase in the portion of license revenues generated from royalty-bearing products.

Cost of services decreased 9% during the three months ended June 30, 2009, to $2.0 million, as compared to $2.2 million for the three months ended June 30, 2008. Cost of services decreased 11% during the six months ended June 30, 2009, to $3.9 million, as compared to $4.4 million for the six months ended June 30, 2008. This decrease is the result of a reduction in consulting expenses and a decrease in services revenue.

Gross margin increased to 76% during the three months ended June 30, 2009 as compared to 73% for the three months ended June 30, 2008. This increase is the result of a reduction in cost of revenue. Gross margin remained constant at 76% during the six months ended June 30, 2009, as compared to the six months ended June 30, 2008.

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                                Six Months Ended
                                    June 30,                                         June 30,
                    2009         %(1)         2008       %(1)          2009       %(1)          2008       %(1)
Research and
development        $ 2,009          24 %   $ 2,309          29 %   $  4,177          26 %   $  4,646          26 %
Sales and
marketing            1,942          24 %     1,961          24        3,978          25 %      3,846          21
General and
administrative       1,146          14 %     1,603          20        2,597          16 %      3,301          18
Restructuring
charges                 56           1 %        (5 )        (0 )         54           0 %        (23 )         0
Total operating
expenses           $ 5,153          63 %   $ 5,868          73 %   $ 10,806          67 %   $ 11,770          65 %


______

Research and development expenses decreased 13% during the three months ended June 30, 2009, to $2.0 million, as compared to $2.3 million for the three months ended June 30, 2008. Research and development expenses decreased 9% during the six months ended June 30, 2009, to $4.2 million, as compared to $4.6 million for the six months ended June 30, 2008. This decrease was the result of reductions in contractor related expenses.

Sales and marketing expenses remained constant at $1.9 million during the three months ended June 30, 2009, as compared to the three months ended June 30, 2008. Sales and marketing expenses increased 5% during the six months ended June 30, 2009, to $4.0 million, as compared to $3.8 million for the six months ended June 30, 2008. This increase was the result of marketing expansions during the first three months of 2009.

General and administrative expenses decreased 31% during the three months ended June 30, 2009, to $1.1 million, as compared to $1.6 million for the three months ended June 30, 2008. General and administrative expenses decreased 21% during the six months ended June 30, 2009, to $2.6 million, as compared to $3.3 million for the six months ended June 30, 2008. This decrease is primarily as a result of a reduction in headcount and one-time reduction of approximately $200,000 due to a reversal of an accrued legal fee from the local governmental regulatory entity of our subsidiary for the six months ended June 30, 2009. The reversal was due to the final settlement with the local subsidiary government's filing and other regulatory requirements.

Interest income, net decreased 40% for the three months ended June 30, 2009, to $203,000, as compared to $337,000 for the three months ended June 30, 2008. Interest income, net decreased 40% for the six months ended June 30, 2009, to $484,000, as compared to $801,000 for the six months ended June 30, 2008. The decrease is due to a decline in interest rates.

Gain (loss) on revaluation of warrants for the three months ended June 30, 2009 was a total gain of $24,000, as compared to a gain of $625,000 for the three months ended June 30, 2008. Gain (loss) on revaluation of warrants for the six months ended June 30, 2009 was a loss of $7,000, as compared to a gain of $3,079,000 for the six months ended June 30, 2008. These changes are primarily due to fluctuations in our stock price during the relevant periods.

Other income (loss), net during the three months ended June 30, 2009, was income of $915,000, as compared to income of $476,000 for the three months ended June 30, 2008. Other income (loss), net during the six months ended June 30, 2009, was a loss of $198,000, as compared to a gain of $1.3 million for the six months ended June 30, 2008. The changes were primarily due to unrealized gain or loss on foreign exchange transactions. Additionally, the quarter ended June 30, 2009, included a reversal of royalty accrual of $290,000 as a result of the statute of limitation expiring as of June 30, 2009.

Provision for income taxes expense during the three months ended June 30, 2009, was $79,000, as compared to a provision for income tax expenses of $4,000 for the three months ended June 30, 2008. Provision for income taxes expense during the six months ended June 30, 2009, was $220,000, as compared to a provision for income tax expenses of $287,000 for the six months ended June 30, 2008. The provision for year 2009 was primarily related to a FIN 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, and to Alternative Minimum Taxes (AMT) calculated for Federal purposes.

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Overview

We continue to maintain a strong cash position on our Condensed Consolidated Balance Sheet. As of June 30, 2009, we had $62.6 million of cash and cash equivalents and short-term investments with no long-term debt borrowings, as compared to a balance of $61.9 million at December 31, 2008. The increase was due primarily to the $600,000 of cash received from our subtenant relating to the early settlement of termination of the sublease in the six months ended June 30, 2009.

Revenues for the first six months of 2009 were $16.2 million, as compared to revenues of $18.1 million for the first six months of 2008. License revenue for the first six months of 2009 was $6.0 million compared to $6.4 million for the first six months of 2008. The majority of our license revenue for the first six months of 2009 was generated by our core BroadVisionÒBusiness Agility Suite™, Commerce Agility Suite™ and eMerchandising Uplift™ and QuickSliver™ solutions. Our customers include Bank of Ayudhya, Bombardier, IBERIA L.A.E., Hewlett Packard Polska SP., Guidance International, Cardinal Health, Inc., Highmark BCBS, Rockwell Collins, The Education Center, and several other brand name global customers. License revenues decreased in Europe and Asia Pacific regions as compared to the first six months of 2008, due to decreased demand for our products and weak macroeconomic conditions.

We continued to focus on expense control in the second quarter of 2009. Operating expenses for the second quarter of 2009 were $5.2 million, as compared to $5.9 million for the second quarter of 2008. For the three months ended June 30, 2009 and 2008, we had a gain of $24,000 and $625,000, respectively, on the revaluation of warrants. For the three months ended June 30, 2009, net income was $2.1 million, or $0.48 per diluted share. This compares to net income of $1.4 million, or $0.33 per diluted share, for the three months ended June 30, 2008.

The following table represents our liquidity at June 30, 2009 and December 31, 2008 (dollars in thousands):

                                            June 30,         December 31,
                                              2009               2008
                                           (unaudited)
Cash and cash equivalents                 $      44,198     $       52,884
Short-term investments                    $      18,388     $        9,004
Restricted cash, current portion          $          20     $           20
Restricted cash, net of current portion   $       1,000     $        1,000
Working capital                           $      52,717     $       51,070
Working capital ratio                              4.08               3.37

Cash Provided By Operating Activities

Cash provided by operating activities was $817,000 for the six months ended June 30, 2009. Net cash provided by operating activities was mainly due to operating profit and an additional $600,000 of cash received from our subtenant relating to the early settlement and termination of the sublease during this quarter.

Cash provided by operating activities was $5.0 million for the six months ended June 30, 2008. Net cash provided by operating activities in this period consisted primarily of $3.5 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 $1.5 million in the other areas, such as accounts payable, accrued expenses, unearned revenue accounts, accounts receivable and other liabilities.

Cash Used For Investing Activities

Cash used for investing activities was $9.4 million for the six months ended June 30, 2009. This figure reflects the purchase of short-term investments in bonds and certificates of deposit. Cash used for investing activities was $3.5 million for the six months ended June 30, 2008. This figure reflects a $3.5 million investment in a 6-month time deposit account.

Cash Provided By Financing Activities

Cash provided by financing activities was $273,000 for the six months ended June 30, 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 $465,000 for the six months ended June 30, 2008, primarily consisting of cash received in connection with the exercise of stock options and employees' purchases of common stock under the Employee Stock 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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