UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
10-Q
(Amendment No. 1)
| |
|
|
|
|
(Mark One) |
|
|
|
|
|
|
|
|
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
|
|
|
|
For the Quarter ended March 31, 2006 |
|
|
|
|
|
|
|
|
|
OR |
|
|
|
|
|
|
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
|
|
|
|
|
|
0-28252 |
|
|
|
|
(Commission File Number) |
|
|
BROADVISION, INC.
(Exact name of registrant as specified in its charter)
| |
|
|
| Delaware
|
|
94-3184303 |
| (State or other jurisdiction of
|
|
(I.R.S. Employer |
| incorporation or organization)
|
|
Identification Number) |
| |
|
|
| 585 Broadway,
|
|
94063 |
| Redwood City, California |
|
|
| (Address of principal executive offices)
|
|
(Zip code) |
(650) 542-5100
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer or a
non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule
12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer o
Non-accelerated filer þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
As of June 30, 2006 there were 69,168,997 shares of the Registrant’s Common Stock issued and
outstanding.
BROADVISION, INC. AND SUBSIDIARIES
FORM 10-Q/A
Quarter Ended March 31, 2006
TABLE OF CONTENTS
EXPLANATORY NOTE
This Amendment No. 1 to our quarterly report on Form 10-Q/A (this “Amendment”) amends our quarterly
report on Form 10-Q for the quarter ended March 31, 2006 filed on August 10, 2006 (the “Initial
Filing”). We have filed this Amendment to amend Item 4 of Part I. No other information contained
in the Initial Filing, including our financial statements and the notes thereto, has been modified
or updated in any way.
Page 2
PART I. FINANCIAL INFORMATION
ITEM 4. Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer is responsible for establishing and
maintaining “disclosure controls and procedures” (as defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended) for our company. Based on his evaluation of our
disclosure controls and procedures (as defined in the rules promulgated under the Securities
Exchange Act of 1934), our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of March 31, 2006, the end of the period
covered by this report. This conclusion was based on the identification of one material weakness
in internal control over financial reporting as of December 31, 2005 and March 31, 2006, the
untimeliness of this filing, and having an insufficient period of time in which to evaluate the
performance and effectiveness of the new personnel referred to below.
Changes in Internal Control over Financial Reporting
We reported one material weakness as of December 31, 2005, as set forth in our Annual Report on
Form 10-K filed with the Commission on June 9, 2006. There were no changes in our internal control
over financial reporting during the first quarter of 2006 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
As of March 31, 2006, we did not have a sufficient number of experienced personnel in our
accounting and finance organization to facilitate an efficient financial statement close process
and permit the preparation of our financial statements in accordance with generally accepted
accounting principles. For example, there were a significant number of adjustments to our financial
statements during the course of the 2005 audit, at least one of which was individually material and
required us to make the restatement described above. We also recorded several material journal
entries in the first quarter of 2006 and were unable to file this Form 10-Q on a timely basis. Our
personnel also lacked certain required skills and competencies to oversee the accounting operations
and perform certain important control functions, such as the review, periodic inspection and
investigation of transactions of our foreign locations. We consider this to be a deficiency that is
also a material weakness in the operation of entity-level controls. Although we have made new hires
to augment the capabilities of our organization, they replaced employees who had left the Company
for various reasons. This turnover has caused degradation in our institutional knowledge regarding
historical events. If we are not successful in remedying the deficiencies that caused this
material weakness, there is more than a remote likelihood that our quarterly or annual financial
statements could be materially misstated, which could require a restatement.
In addition, in June 2006, William Meyer resigned as our Chief Financial Officer, a position Mr.
Meyer had held since April 2003. Our Chief Executive Officer has also served as Chief Financial
Officer since Mr. Meyer’s resignation and will continue to serve in that capacity until a permanent
replacement is hired.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect
that our disclosure controls and procedures or our internal controls will prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can
occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed
in achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected. Our disclosure controls and
procedures are designed to provide reasonable assurance of
Page 3