FOR ANNUAL AND TRANSITION
REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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(Mark
One)
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þ
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ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the Year Ended
December 31, 2007
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OR
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o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period
from to
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Commission File Number 0-28252
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Delaware
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94-3184303
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
Number)
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1600 Seaport Blvd, Suite 550,
North Bldg.
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Redwood City, California
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94063
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(Address
of principal executive offices)
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(Zip
code)
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(650)
331-1000
(Registrant's
telephone number, including area code)
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Securities registered pursuant
to Section 12(b) of the Act:
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None
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Securities registered pursuant
to Section 12(g) of the Act:
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Common Stock, $.0001 par
value
(Title
of Class)
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Business
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3 | |
Risk
Factors
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10 | |
Unresolved
Staff Comments
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16 | |
Properties
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16 | |
Legal
Proceedings
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16 | |
Submission
of Matters to a Vote of Security Holders
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16 | |
Market
for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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17 | |
Selected
Consolidated Financial Data
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19 | |
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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20 | |
Quantitative
and Qualitative Disclosures About Market Risk
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31 | |
Financial
Statements and Supplementary Data
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33 | |
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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57 | |
Controls
and Procedures
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58 | |
Other
Information
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58 | |
Directors,
Executive Officers and Corporate Governance
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59 | |
Executive
Compensation
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59 | |
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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59 | |
Certain
Relationships and Related Transactions, and Director
Independence
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59 | |
Principal
Accountant Fees and Services
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59 | |
Exhibits
and Financial Statement Schedules
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60 | |
61 | ||
PART I, ITEM 1 TABLE
OF CONTENTS (BUSINESS SECTION)
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3 | |
4 | |
6 | |
7 | |
7 | |
7 | |
8 | |
8 | |
9 | |
9 | |
9 |
l
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Low total cost of ownership
(TCO) philosophy -- Support for both commercial and open
source platforms as well as mixed commercial-open source deployment
environments
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l
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Agility and
extensibility -- Integrated tools for both business and
IT to rapidly create unique e-business applications with the combination
of out-of-the-box capabilities and custom
development
|
l
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Built-in best
practices -- Proven technology and methodologies that
take the guesswork out of building reliable, available and scalable web
applications
|
l
|
Configurability -- Modular
application services that can be assembled to meet customer's exact
business requirements
|
l
|
Focus on
e-business -- Mature applications and proven
methodologies developed from over 1,000 implementations and 14 years of
experience
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l
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Scalability -- Advanced
load balancing and multi-layered caching allow BroadVision applications to
support large numbers of concurrent customers and
transactions
|
l
|
Personalization -- Our
advanced personalization technology, including session and event-based
observations and transaction information, provide a better understanding
of site visitors and allow our customers to dynamically tailor content to
them
|
l
|
Ease of
use -- Our applications and tools are designed with
graphical user interfaces that allow non-technical business managers to
modify business rules and content in real
time
|
l
|
Secure transaction
processing -- Our applications provide secure handling of
a wide range of commercial and financial services transactions including
order pricing and discount/incentive handling, tax computation, shipping
and handling charges, payment authorization, credit card processing, order
tracking, news and stock feeds through a combination of built-in
functionality and integration with third-party
products
|
l
|
Multi-platform
availability -- Our applications are optimized for a
variety of hardware and software platforms including IBM AIX, Sun Solaris,
Microsoft Windows NT and Hewlett-Packard's HP-UX. Supported databases
include Oracle, Sybase, Informix, IBM and Microsoft SQL Server. Supported
application servers include WebLogic, WebSphere and SunOne. We also
support Open Source platforms, such as Linux with Jboss and
Hypersonic
|
l
|
Multilingual/multicurrency -- Our
applications are global ready and designed to support multiple languages
(including Arabic, Chinese, Hebrew, Japanese, Korean, Slovakian, Turkish
and most Western European languages) and a wide range of currencies,
including the euro
|
l
|
Business
Agility Suite
|
l
|
Commerce
Agility Suite
|
l
|
OnDemand™
and Collaborative Human Resource Management
|
l
|
QuickSilver™
|
l
|
BroadVision
e-business Methodology
|
l
|
Kukini
|
l
|
Kona
|
l
|
Commerce
Services
|
l
|
Portal
Services
|
l
|
Process
Services™
|
l
|
Content
Services™
|
l
|
Staging
Services™
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l
|
eMerchandising™
|
l
|
Search™
|
l
|
in-house
development efforts by prospective customers or
partners;
|
l
|
other
vendors of application software or application development platforms and
tools directed at interactive commerce and portal applications, such as
Art Technology Group, BEA Systems, IBM Corporation, Microsoft, Oracle and
SAP.
|
l
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web
content developers that develop custom software or integrate other
application software into custom
solutions.
|
l
|
depth
and breadth of functionality
offered;
|
l
|
availability
of knowledgeable developers;
|
l
|
time
required for application
deployment;
|
l
|
reliance
on industry standards;
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l
|
product
reliability;
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l
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proven
track record;
|
l
|
scalability;
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l
|
maintainability;
|
l
|
product
quality;
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l
|
price; and
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l
|
technical
support.
|
Name
|
Age
|
Position
|
||
Pehong
Chen
|
50
|
Chairman,
President, Chief Executive Officer and Interim Chief Financial
Officer
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||
Shin-Yuan
Tzou
|
50
|
Chief
Financial Officer (as of January,
2008)
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•
|
introduction
of products and services and enhancements by us and our
competitors;
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|
•
|
competitive
factors that affect our pricing;
|
|
•
|
market
acceptance of new products;
|
|
•
|
the
mix of products sold by us;
|
|
•
|
changes
in our pricing policies or our competitors;
|
|
•
|
changes
in our sales incentive plans;
|
|
•
|
the
budgeting cycles of our customers;
|
|
•
|
customer
order deferrals in anticipation of new products or enhancements by our
competitors or us or because of macro-economic
conditions;
|
|
•
|
nonrenewal
of our maintenance agreements, which generally automatically renew for
one-year terms unless earlier terminated by either party upon 90-days
notice;
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|
•
|
product
life cycles;
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|
•
|
changes
in strategy;
|
|
•
|
seasonal
trends;
|
|
•
|
the
mix of distribution channels through which our products are
sold;
|
|
•
|
the
mix of international and domestic sales;
|
|
•
|
the
rate at which new sales people become productive;
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|
•
|
changes
in the level of operating expenses to support projected
growth;
|
|
•
|
increase
in the amount of third party products and services that we use in our
products or resell with royalties attached;
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|
•
|
fluctuations
in the recorded value of outstanding common stock warrants that will be
based upon changes to the underlying market value of BroadVision common
stock;
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|
•
|
the
timing of receipt and fulfillment of significant orders;
and
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|
•
|
costs
associated with litigation, regulatory compliance and other corporate
events such as operational
reorganizations.
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•
|
develop
leading technologies;
|
|
•
|
enhance
our existing products and services;
|
|
•
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develop
new products and services that address the increasingly sophisticated and
varied needs of our prospective customers; and
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|
•
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respond
to technological advances and emerging industry standards and practices on
a timely and cost-effective basis.
|
•
|
Systems
integrators may not view their relationships with us as valuable to their
own businesses. The related arrangements typically may be terminated by
either party with limited notice and in some cases are not covered by a
formal agreement.
|
|
•
|
Under
our business model, we often rely on our system integrators' employees to
perform implementations. If we fail to work together effectively, or if
these parties perform poorly, our reputation may be harmed and deployment
of our products may be delayed or inadequate.
|
|
•
|
Systems
integrators may attempt to market their own products and services rather
than ours.
|
|
•
|
Our
competitors may have stronger relationships with our systems integrators
than us and, as a result, these integrators may recommend a competitor's
products and services over ours.
|
|
•
|
If
we lose our relationships with our systems integrators, we will not have
the personnel necessary to deploy our products effectively, and we will
need to commit significant additional sales and marketing resources in an
effort to reach the markets and customers served by these
parties.
|
•
|
difficulties
in staffing and managing foreign operations and safeguarding foreign
assets;
|
|
•
|
unexpected
changes in regulatory requirements;
|
|
•
|
export
controls relating to encryption technology and other export
restrictions;
|
|
•
|
tariffs
and other trade barriers;
|
|
•
|
difficulties
in staffing and managing foreign operations;
|
|
•
|
political
and economic instability;
|
|
•
|
fluctuations
in currency exchange rates;
|
|
•
|
reduced
protection for intellectual property rights in some
countries;
|
|
•
|
cultural
barriers;
|
|
•
|
seasonal
reductions in business activity during the summer months in Europe and
certain other parts of the world; and
|
|
•
|
potentially
adverse tax consequences.
|
•
|
the
composition of our board of directors and, through it, any determination
with respect to our business direction and policies, including the
appointment and removal of officers;
|
|
•
|
any
determinations with respect to mergers and other business
combinations;
|
|
•
|
our
acquisition or disposition of assets;
|
|
•
|
our
financing activities; and
|
|
•
|
the
payment of dividends on our capital
stock.
|
•
|
quarterly
variations in operating results;
|
|
•
|
announcements
of technological innovations;
|
|
•
|
announcements
of new software or services by us or our competitors;
|
|
•
|
changes
in financial estimates by securities analysts;
|
|
•
|
low
trading volume on the OTC Bulletin Board;
|
|
•
|
general
economic conditions; or
|
|
•
|
other
events or factors that are beyond our
control.
|
High
|
Low
|
|||||||
Fiscal
Year 2007
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||||||||
First
Quarter
|
$ | 4.57 | $ | 0.76 | ||||
Second
Quarter
|
2.85 | 1.75 | ||||||
Third
Quarter
|
2.96 | 1.77 | ||||||
Fourth
Quarter
|
2.76 | 1.60 | ||||||
Fiscal
Year 2006
|
||||||||
First
Quarter
|
0.71 | 0.41 | ||||||
Second
Quarter
|
0.52 | 0.44 | ||||||
Third
Quarter
|
0.74 | 0.45 | ||||||
Fourth
Quarter
|
0.88 | 0.58 |
Years
Ended December 31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
(In
thousands, except per share amount)
|
||||||||||||||||||||
Consolidated
Statement of Operations Data:
|
||||||||||||||||||||
Revenues:
|
||||||||||||||||||||
Software
licenses
|
$ | 21,127 | $ | 15,215 | $ | 14,721 | $ | 26,883 | $ | 30,230 | ||||||||||
Services
|
28,891 | 36,769 | 45,400 | 51,121 | 57,851 | |||||||||||||||
Total revenues
|
50,018 | 51,984 | 60,121 | 78,004 | 88,081 | |||||||||||||||
Cost
of revenues:
|
||||||||||||||||||||
Cost
of (credit for) software licenses
|
45 | 258 | (38 | ) | 1,303 | 2,561 | ||||||||||||||
Cost
of services
|
8,961 | 12,456 | 21,931 | 24,978 | 25,708 | |||||||||||||||
Total cost of revenues
|
9,006 | 12,714 | 21,893 | 26,281 | 28,269 | |||||||||||||||
Gross
profit
|
41,012 | 39,270 | 38,228 | 51,723 | 59,812 | |||||||||||||||
Operating
expenses:
|
||||||||||||||||||||
Research
and development
|
9,668 | 10,510 | 13,831 | 18,024 | 21,067 | |||||||||||||||
Sales
and marketing
|
8,131 | 8,653 | 16,208 | 27,340 | 26,394 | |||||||||||||||
General
and administrative
|
6,293 | 8,019 | 9,479 | 9,538 | 9,790 | |||||||||||||||
Litigation
settlement costs
|
- | - | - | - | 4,250 | |||||||||||||||
Goodwill
and intangible amortization
|
- | - | - | - | 886 | |||||||||||||||
Goodwill
impairment
|
- | - | 31,368 | - | - | |||||||||||||||
Restructuring
charges (credits)
|
649 | (3,369 | ) | (462 | ) | (23,545 | ) | 35,356 | ||||||||||||
Business
combination charges
|
- | - | 2,817 | - | - | |||||||||||||||
Total operating expenses
|
24,741 | 23,813 | 73,241 | 31,357 | 97,743 | |||||||||||||||
Operating
income (loss)
|
16,271 | 15,457 | (35,013 | ) | 20,366 | (37,931 | ) | |||||||||||||
Other
income (expense), net
|
934 | 193 | (6,564 | ) | (2,109 | ) | 2,899 | |||||||||||||
Income
(loss) before income taxes
|
17,205 | 15,650 | (41,577 | ) | 18,257 | (35,032 | ) | |||||||||||||
Income
tax benefit (expense)
|
73 | (634 | ) | 2,611 | 309 | (439 | ) | |||||||||||||
Net
income (loss)
|
$ | 17,278 | $ | 15,016 | $ | (38,966 | ) | $ | 18,566 | $ | (35,471 | ) | ||||||||
Net
income (loss) per share:
|
||||||||||||||||||||
Basic
earnings (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) | $ | 0.55 | $ | (1.08 | ) | ||||||||
Shares
used in computation -- basic earnings (loss)
per share
|
107,755 | 65,734 | 34,228 | 33,539 | 32,800 | |||||||||||||||
Diluted
earnings (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) | $ | 0.54 | $ | (1.08 | ) | ||||||||
Shares
used in computation -- diluted earnings (loss) per
share
|
110,746 | 65,734 | 34,228 | 34,321 | 32,800 |
As
of December 31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Consolidated
Balance Sheet Data:
|
||||||||||||||||||||
Cash
and cash equivalents
|
$ | 53,973 | $ | 37,003 | $ | 4,849 | $ | 41,851 | $ | 78,776 | ||||||||||
Working
capital (deficit)
|
40,494 | 18,955 | (35,872 | ) | (20,273 | ) | 748 | |||||||||||||
Total
assets
|
90,312 | 76,942 | 49,942 | 144,653 | 195,082 | |||||||||||||||
Debt
and capital leases, less current portion
|
- | - | - | 4,227 | 969 | |||||||||||||||
Accumulated
deficit
|
(1,192,393 | ) | (1,210,059 | ) | (1,225,075 | ) | (1,186,109 | ) | (1,204,675 | ) | ||||||||||
Total
stockholders' equity (deficit)
|
64,765 | 43,254 | (9,723 | ) | 28,341 | 7,950 |
|
l For exit or
disposal activities initiated on or prior to December 31, 2002, we
account for costs in accordance with EITF 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring) ("EITF
94-3"). Accordingly, we record the liability related to these termination
costs when the following conditions have been met: (i) management
with the appropriate level of authority approves a termination plan that
commits us to such plan and establishes the benefits the employees will
receive upon termination; (ii) the benefit arrangement is
communicated to the employees in sufficient detail to enable the employees
to determine the termination benefits; (iii) the plan specifically
identifies the number of employees to be terminated, their locations and
their job classifications; and (iv) the period of time to implement
the plan does not indicate changes to the plan are
likely.
|
|
l For exit or
disposal activities initiated after December 31, 2002, we account for
costs in accordance with SFAS 146, Accounting for Costs
Associated with Exit or Disposal Activities ("SFAS 146"). SFAS
146 requires that a liability for a cost associated with an exit or
disposal activity be recognized and measured initially at fair value only
when the liability is incurred. This differed from EITF 94-3, which
required that a liability for an exit cost be recognized at the date of an
entity's commitment to an exit
plan.
|
|
l For exit or
disposal activities initiated on or prior to December 31, 2002, we
account for lease termination and/or abandonment costs in accordance with
EITF 88-10, Costs
Associated with Lease Modification or Termination. Accordingly, we
recorded the costs associated with lease termination and/or abandonment
when the leased property had no substantive future use or benefit to
us.
|
|
l For exit or
disposal activities initiated after December 31, 2002, we account for
lease termination and/or abandonment costs in accordance with SFAS 146,
which requires that a liability for such costs be recognized and measured
initially at fair value on the cease use date of the
facility.
|
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenues:
|
||||||||||||
Software
licenses
|
42 | % | 29 | % | 24 | % | ||||||
Services
|
58 | 71 | 76 | |||||||||
Total revenues
|
100 | 100 | 100 | |||||||||
Cost
of revenues:
|
||||||||||||
Cost
of software licenses
|
- | - | - | |||||||||
Cost
of services
|
18 | 24 | 36 | |||||||||
Total cost of revenues
|
18 | 24 | 36 | |||||||||
Gross
profit
|
82 | 76 | 64 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
19 | 20 | 23 | |||||||||
Sales
and marketing
|
16 | 17 | 27 | |||||||||
General
and administrative
|
13 | 15 | 16 | |||||||||
Goodwill
impairment
|
- | - | 52 | |||||||||
Restructuring
charges (credits)
|
1 | (6 | ) | (1 | ) | |||||||
Business
combination charges
|
- | - | 5 | |||||||||
Total operating expenses
|
49 | 46 | 122 | |||||||||
Operating
income (loss)
|
33 | 30 | (58 | ) | ||||||||
Other
income (expense), net
|
2 | - | (11 | ) | ||||||||
Income
(loss) before income taxes
|
35 | 30 | (69 | ) | ||||||||
Income
taxes benefit (expense)
|
- | (1 | ) | 4 | ||||||||
Net
income (loss)
|
35 | % | 29 | % | (65 | )% |
Software
Licenses
|
%
|
Services
|
%
|
Total
|
%
|
|||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||
Year
Ended December 31, 2007:
|
|
|
|
|||||||||||||||||||||
Americas
|
$ | 13,824 | 65 | $ | 17,890 | 62 | $ | 31,714 | 64 | |||||||||||||||
Europe
|
5,293 | 25 | 6,799 | 24 | 12,092 | 24 | ||||||||||||||||||
Asia/Pacific
|
2,010 | 10 | 4,202 | 14 | 6,212 | 12 | ||||||||||||||||||
Total
|
$ | 21,127 | 100 | $ | 28,891 | 100 | $ | 50,018 | 100 | |||||||||||||||
Year
Ended December 31, 2006:
|
||||||||||||||||||||||||
Americas
|
$ | 10,186 | 67 | $ | 20,790 | 57 | $ | 30,976 | 60 | |||||||||||||||
Europe
|
3,025 | 20 | 11,505 | 31 | 14,530 | 28 | ||||||||||||||||||
Asia/Pacific
|
2,004 | 13 | 4,474 | 12 | 6,478 | 12 | ||||||||||||||||||
Total
|
$ | 15,215 | 100 | $ | 36,769 | 100 | $ | 51,984 | 100 | |||||||||||||||
Year
Ended December 31, 2005:
|
||||||||||||||||||||||||
Americas
|
$ | 7,615 | 52 | $ | 26,713 | 59 | $ | 34,328 | 57 | |||||||||||||||
Europe
|
4,918 | 33 | 15,310 | 34 | 20,228 | 34 | ||||||||||||||||||
Asia/Pacific
|
2,188 | 15 | 3,377 | 7 | 5,565 | 9 | ||||||||||||||||||
Total
|
$ | 14,721 | 100 | % | $ | 45,400 | 100 | % | $ | 60,121 | 100 | % |
Years
Ended December 31,
|
||||||||||||||||||||||||
2007
|
%
|
2006
|
%
|
2005
|
%
|
|||||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||||||
Cost
of (credit for) software licenses (1)
|
$ | 45 | - | % | $ | 258 | 2 | % | $ | (38 | ) | - | % | |||||||||||
Cost
of services (2)
|
8,961 | 31 | 12,456 | 34 | 21,931 | 48 | ||||||||||||||||||
Total
cost of revenues (3)
|
$ | 9,006 | 18 | % | $ | 12,714 | 24 | % | $ | 21,893 | 36 | % |
|
l Research and development
expenses consist primarily of salaries, employee-related benefit
costs and consulting fees incurred in association with the development of
our products. Costs incurred for the research and development of new
software products are expensed as incurred until such time that
technological feasibility, in the form of a working model, is established
at which time such costs are capitalized and recorded at the lower of
unamortized cost or net realizable value. The costs incurred subsequent to
the establishment of a working model but prior to general release of the
product have not been significant. To date, we have not capitalized any
costs related to the development of software for external
use.
|
|
l Sales and marketing
expenses consist primarily of salaries, employee-related benefit
costs, commissions and other incentive compensation, travel and
entertainment and marketing program-related expenditures such as
collateral materials, trade shows, public relations, advertising and
creative services.
|
|
l General and administrative
expenses consist primarily of salaries, employee-related benefit
costs, provisions and credits related to uncollectible accounts receivable
and professional service fees.
|
|
l Goodwill and intangible
write-offs and amortization represents costs to write-off or
amortize goodwill and other intangible assets. As of January 1, 2002,
we no longer amortize goodwill or the assembled workforce as we have
identified the assembled workforce as an intangible asset that does not
meet the criteria of a recognizable intangible asset as defined by
SFAS 142.
|
|
l Restructuring (reversals)
charges represent costs incurred to restructure our operations.
These charges, including charges for excess facilities, severance and
certain non-cash items, were recorded under the provisions of EITF 94-3,
and SFAS 146.
|
|
l Business combination
charges represent costs incurred in connection with merger or
acquisition activity.
|
Years
Ended December 31,
|
||||||||||||||||||||||||
2007
|
%
|
2006
|
%
|
2005
|
%
|
|||||||||||||||||||
Research
and development
|
$ | 9,668 | 19 | % | $ | 10,510 | 20 | % | $ | 13,831 | 23 | % | ||||||||||||
Sales
and marketing
|
8,131 | 16 | 8,653 | 17 | 16,208 | 27 | ||||||||||||||||||
General
and administrative
|
6,293 | 13 | 8,019 | 15 | 9,479 | 16 | ||||||||||||||||||
Goodwill
impairment
|
- | - | - | - | 31,368 | 52 | ||||||||||||||||||
Restructuring
charges (credits), net
|
649 | 1 | (3,369 | ) | (6 | ) | (462 | ) | (1 | ) | ||||||||||||||
Business
combination charges
|
- | - | - | - | 2,817 | 5 | ||||||||||||||||||
Total
operating expenses
|
$ | 24,741 | 49 | % | $ | 23,813 | 46 | % | $ | 73,241 | 122 | % |
Severance
|
Facilities/
|
|||||||||||
and
|
Excess
|
|||||||||||
Benefits
|
Assets
|
Total
|
||||||||||
Accrual
balances, December 31, 2004
|
$ | 824 | $ | 33,339 | $ | 34,163 | ||||||
Restructuring
charges (credits)
|
1,006 | (1,468 | ) | (462 | ) | |||||||
Cash
payments
|
(1,414 | ) | (25,032 | ) | (26,446 | ) | ||||||
Accrual
balances, December 31, 2005
|
416 | 6,839 | 7,255 | |||||||||
Restructuring charges
(credits)
|
348 | (3,717 | ) | (3,369 | ) | |||||||
Cash
payments
|
(417 | ) | (907 | ) | (1,324 | ) | ||||||
Accrual balances,
December 31, 2006
|
347 | 2,215 | 2,562 | |||||||||
Restructuring (credits)
charges
|
(347 | ) | 996 | 649 | ||||||||
Cash
payments
|
- | (1,877 | ) | (1,877 | ) | |||||||
Accrual
balances, December 31,
2007
|
$ | - | $ | 1,334 | $ | 1,334 |
Years
Ended December 31,
|
||||||||||||||||||||||||
2007
|
%
|
2006
|
%
|
2005
|
%
|
|||||||||||||||||||
Interest
income (expense), net
|
$ | 1,906 | 4 | % | $ | 638 | 1 | % | $ | (10,094 | ) | (17 | )% | |||||||||||
(Expense)
Income from derivatives
|
(3,147 | ) | (6 | ) | (1,333 | ) | (3 | ) | 11,346 | 19 | ||||||||||||||
Loss
on debt extinguishment
|
- | - | - | - | (6,967 | ) | (12 | ) | ||||||||||||||||
Other
income (expense), net
|
2,175 | 4 | 888 | 2 | (849 | ) | (1 | ) | ||||||||||||||||
Total
other income (expense), net
|
$ | 934 | $ | 193 | $ | (6,564 | ) |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Cash
and cash equivalents
|
$ | 53,973 | $ | 37,003 | ||||
Restricted
cash, current portion
|
$ | 20 | $ | 997 | ||||
Restricted
cash, net of current portion
|
$ | 1,000 | $ | 1,000 | ||||
Working
capital
|
$ | 40,494 | $ | 18,955 | ||||
Working
capital ratio
|
2.80 | 1.63 |
Cash
Provided By Investing Activities
|
Operating
|
||||
Leases
|
||||
Years
Ending December 31,
|
||||
2008
|
$ | 2.0 | ||
2009
|
1.8 | |||
2010
|
1.3 | |||
2011
|
1.1 | |||
2012
|
0.5 | |||
Total
minimum lease payments
|
$ | 6.7 |
Less
Than
|
1-3 | 4-5 |
Over
|
|||||||||||||||||
Total
|
1 Year
|
Years
|
Years
|
5 Years
|
||||||||||||||||
(In
millions)
|
||||||||||||||||||||
Letter
of credit
|
$ | 1.0 | $ | - | $ | - | $ | 1.0 | $ | - |
Three
Months Ended
|
||||||||||||||||||||||||||||||||
Dec 31,
|
Sep 30,
|
Jun 30,
|
Mar 31,
|
Dec 31,
|
Sep 30,
|
Jun 30,
|
Mar 31,
|
|||||||||||||||||||||||||
2007
|
2007
|
2007
|
2007
|
2006
|
2006
|
2006
|
2006
|
|||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Software
licenses
|
$ | 4,620 | $ | 5,280 | $ | 5,494 | $ | 5,733 | $ | 3,956 | $ | 4,750 | $ | 3,627 | $ | 2,882 | ||||||||||||||||
Services
|
6,629 | 7,476 | 7,774 | 7,012 | 9,090 | 8,835 | 9,102 | 9,742 | ||||||||||||||||||||||||
Total
revenues
|
11,249 | 12,756 | 13,268 | 12,745 | 13,046 | 13,585 | 12,729 | 12,624 | ||||||||||||||||||||||||
Cost
of revenues:
|
||||||||||||||||||||||||||||||||
Cost
of software licenses
|
8 | 3 | 22 | 12 | 32 | 22 | 142 | 62 | ||||||||||||||||||||||||
Cost
of services
|
2,251 | 2,102 | 2,215 | 2,393 | 2,173 | 2,729 | 3,496 | 4,058 | ||||||||||||||||||||||||
Total
cost of revenues
|
2,259 | 2,105 | 2,237 | 2,405 | 2,205 | 2,751 | 3,638 | 4,120 | ||||||||||||||||||||||||
Gross
profit
|
8,990 | 10,651 | 11,031 | 10,340 | 10,841 | 10,834 | 9,091 | 8,504 | ||||||||||||||||||||||||
Operating
expenses:
|
||||||||||||||||||||||||||||||||
Research
and development
|
2,247 | 2,283 | 2,483 | 2,655 | 2,708 | 2,766 | 2,405 | 2,631 | ||||||||||||||||||||||||
Sales
and marketing
|
2,383 | 1,898 | 1,781 | 2,069 | 2,529 | 1,761 | 1,982 | 2,381 | ||||||||||||||||||||||||
General
and administrative
|
2,042 | 1,705 | 1,479 | 1,067 | 613 | 2,429 | 3,239 | 1,738 | ||||||||||||||||||||||||
Goodwill
impairment
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restructuring
(credits), charges
|
(195 | ) | 260 | 306 | 278 | (1,966 | ) | (1,878 | ) | (15 | ) | 490 | ||||||||||||||||||||
Business
combination charges
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total
operating expenses
|
6,477 | 6,146 | 6,049 | 6,069 | 3,884 | 5,078 | 7,611 | 7,240 | ||||||||||||||||||||||||
Operating
income
|
2,513 | 4,505 | 4,982 | 4,271 | 6,957 | 5,756 | 1,480 | 1,264 | ||||||||||||||||||||||||
Other income (expense), net | 3,419 | 538 | 3,688 | (6,711 | ) | 248 | (163 | ) | 335 | (227 | ) | |||||||||||||||||||||
Income
taxes (expense) benefit
|
(60 | ) | 419 | (230 | ) | (56 | ) | (185 | ) | (228 | ) | (65 | ) | (156 | ) | |||||||||||||||||
Net
income (loss)
|
$ | 5,872 | $ | 5,462 | $ | 8,440 | $ | (2,496 | ) | $ | 7,020 | $ | 5,365 | $ | 1,750 | $ | 881 | |||||||||||||||
Basic
net income (loss) per share
|
$ | 0.05 | $ | 0.05 | $ | 0.08 | $ | (0.02 | ) | $ | 0.09 | $ | 0.08 | $ | 0.03 | $ | 0.02 | |||||||||||||||
Diluted
net income (loss) per share
|
$ | 0.05 | $ | 0.05 | $ | 0.08 | $ | (0.02 | ) | $ | 0.09 | $ | 0.08 | $ | 0.03 | $ | 0.02 | |||||||||||||||
Shares
used in computing basic net income (loss) per share
|
108,648 | 108,253 | 107,424 | 106,667 | 80,878 | 69,489 | 69,151 | 42,958 | ||||||||||||||||||||||||
Shares
used in computing diluted net income (loss) per share
|
111,896 | 111,577 | 111,035 | 106,667 | 80,878 | 69,489 | 69,151 | 43,068 |
Three
Months Ended
|
||||||||||||||||||||||||||||||||
Dec
31,
|
Sep
30,
|
Jun
30,
|
Mar
31,
|
Dec
31,
|
Sep
30,
|
Jun
30,
|
Mar
31,
|
|||||||||||||||||||||||||
2007
|
2007
|
2007
|
2007
|
2006
|
2006
|
2006
|
2006
|
|||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Software
licenses
|
41 | % | 41 | % | 41 | % | 45 | % | 30 | % | 35 | % | 28 | % | 23 | % | ||||||||||||||||
Services
|
59 | 59 | 59 | 55 | 70 | 65 | 72 | 77 | ||||||||||||||||||||||||
Total
revenues
|
100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | ||||||||||||||||||||||||
Cost
of revenues:
|
||||||||||||||||||||||||||||||||
Cost
of software licenses
|
- | - | - | - | - | - | 1 | - | ||||||||||||||||||||||||
Cost
of services
|
20 | 16 | 17 | 19 | 17 | 20 | 27 | 32 | ||||||||||||||||||||||||
Total
cost of revenues
|
20 | 16 | 17 | 19 | 17 | 20 | 28 | 32 | ||||||||||||||||||||||||
Gross
profit
|
80 | 84 | 83 | 81 | 83 | 80 | 72 | 68 | ||||||||||||||||||||||||
Operating
expenses:
|
||||||||||||||||||||||||||||||||
Research
and development
|
20 | 18 | 19 | 21 | 21 | 20 | 19 | 21 | ||||||||||||||||||||||||
Sales
and marketing
|
21 | 15 | 13 | 16 | 19 | 13 | 16 | 19 | ||||||||||||||||||||||||
General
and administrative
|
18 | 13 | 11 | 8 | 5 | 18 | 25 | 14 | ||||||||||||||||||||||||
Goodwill
impairment
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restructuring
(credits), charges
|
(2 | ) | 2 | 2 | 2 | (15 | ) | (14 | ) | - | 4 | |||||||||||||||||||||
Business
combination charges
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total
operating expenses
|
57 | 48 | 45 | 47 | 30 | 37 | 60 | 58 | ||||||||||||||||||||||||
Operating
income
|
23 | 36 | 38 | 34 | 53 | 43 | 12 | 10 | ||||||||||||||||||||||||
Other
income (expense), net
|
30 | 8 | 26 | (53 | ) | - | (3 | ) | 2 | (3 | ) | |||||||||||||||||||||
Net
income (loss)
|
53 | % | 44 | % | 64 | % | (19 | )% | 53 | % | 40 | % | 14 | % | 7 | % |
Classified
on Consolidated Balance Sheet as:
|
||||||||||||||||||||||||||||
Restricted | ||||||||||||||||||||||||||||
Purchase/
|
Gross
|
Gross
|
Cash
and
|
Restricted
|
Cash
|
|||||||||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Aggregate
|
Cash
|
Cash,
|
Non-
|
||||||||||||||||||||||
Cost
|
Gains
|
Losses
|
Fair
Value
|
Equivalents
|
Current
|
Current
|
||||||||||||||||||||||
As
of December 31, 2007:
|
||||||||||||||||||||||||||||
Cash
and certificates of deposits
|
$ | 14,249 | $ | - | $ | - | $ | 14,249 | $ | 13,229 | $ | 20 | $ | 1,000 | ||||||||||||||
Money
market
|
40,744 | - | - | 40,744 | 40,744 | - | - | |||||||||||||||||||||
Total
|
$ | 54,993 | $ | - | $ | - | $ | 54,993 | $ | 53,973 | $ | 20 | $ | 1,000 | ||||||||||||||
As
of December 31, 2006:
|
||||||||||||||||||||||||||||
Cash
and certificates of deposits
|
$ | 17,827 | $ | - | $ | - | $ | 17,827 | $ | 15,830 | $ | 997 | $ | 1,000 | ||||||||||||||
Money
market
|
21,173 | - | - | 21,173 | 21,173 | - | - | |||||||||||||||||||||
Total
|
$ | 39,000 | $ | - | $ | - | $ | 39,000 | $ | 37,003 | $ | 997 | $ | 1,000 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 53,973 | $ | 37,003 | ||||
Accounts
receivable, net of reserves of $585 and $1,141 as of December 31,
2007 and 2006, respectively
|
7,614 | 10,106 | ||||||
Restricted
cash
|
20 | 997 | ||||||
Prepaids
and other
|
1,410 | 1,108 | ||||||
Total current assets
|
63,017 | 49,214 | ||||||
Property
and equipment, net
|
688 | 1,144 | ||||||
Restricted
cash, net of current portion
|
1,000 | 1,000 | ||||||
Goodwill
|
25,066 | 25,066 | ||||||
Other
assets
|
541 | 518 | ||||||
Total
assets
|
$ | 90,312 | $ | 76,942 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 1,359 | $ | 1,249 | ||||
Accrued
expenses
|
6,386 | 10,538 | ||||||
Warrant
liability
|
4,195 | 1,610 | ||||||
Unearned
revenue
|
2,857 | 6,278 | ||||||
Deferred
maintenance
|
7,726 | 10,584 | ||||||
Total current liabilities
|
22,523 | 30,259 | ||||||
Other
non-current liabilities
|
3,024 | 3,429 | ||||||
Total liabilities
|
25,547 | 33,688 | ||||||
Stockholders'
equity:
|
||||||||
Convertible
preferred stock, $0.0001 par value; 1,000 shares authorized as of December
31, 2007 and 10,000 shares authorized as of December 31, 2006; none issued
and outstanding
|
- | - | ||||||
Common
stock, $0.0001 par value; 280,000 shares authorized and 108,929 shares
issued and outstanding as of December 31, 2007; 2,000,000 shares
authorized and 106,523 shares issued and outstanding as of December 31,
2006
|
10 | 10 | ||||||
Additional
paid-in capital
|
1,257,132 | 1,253,135 | ||||||
Accumulated
other comprehensive income
|
16 | 168 | ||||||
Accumulated
deficit
|
(1,192,393 | ) | (1,210,059 | ) | ||||
Total stockholders' equity
|
64,765 | 43,254 | ||||||
Total
liabilities and stockholders' equity
|
$ | 90,312 | $ | 76,942 |
Years
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenues:
|
||||||||||||
Software
licenses
|
$ | 21,127 | $ | 15,215 | $ | 14,721 | ||||||
Services
|
28,891 | 36,769 | 45,400 | |||||||||
Total revenues
|
50,018 | 51,984 | 60,121 | |||||||||
Cost
of revenues:
|
||||||||||||
Cost
of (credit for) software licenses
|
45 | 258 | (38 | ) | ||||||||
Cost
of services
|
8,961 | 12,456 | 21,931 | |||||||||
Total cost of revenues
|
9,006 | 12,714 | 21,893 | |||||||||
Gross
profit
|
41,012 | 39,270 | 38,228 | |||||||||
Operating
expenses:
|
||||||||||||
Research
and development
|
9,668 | 10,510 | 13,831 | |||||||||
Sales
and marketing
|
8,131 | 8,653 | 16,208 | |||||||||
General
and administrative
|
6,293 | 8,019 | 9,479 | |||||||||
Goodwill
impairment
|
- | - | 31,368 | |||||||||
Restructuring
charges (credits), net
|
649 | (3,369 | ) | (462 | ) | |||||||
Business
combination charges
|
- | - | 2,817 | |||||||||
Total operating expenses
|
24,741 | 23,813 | 73,241 | |||||||||
Operating
income (loss)
|
16,271 | 15,457 | (35,013 | ) | ||||||||
Other
income (expense):
|
||||||||||||
Interest
income (expense), net
|
1,906 | 638 | (10,094 | ) | ||||||||
(Expense)
income from derivatives
|
(3,147 | ) | (1,333 | ) | 11,346 | |||||||
Loss
on debt extinguishment
|
- | - | (6,967 | ) | ||||||||
Other
income (expense), net
|
2,175 | 888 | (849 | ) | ||||||||
Total other income (expense)
|
934 | 193 | (6,564 | ) | ||||||||
Income
(loss) before income taxes
|
17,205 | 15,650 | (41,577 | ) | ||||||||
Income
taxes benefit (expense)
|
73 | (634 | ) | 2,611 | ||||||||
Net income (loss)
|
$ | 17,278 | $ | 15,016 | $ | (38,966 | ) | |||||
Basic
net income (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) | |||||
Diluted
net income (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) | |||||
Shares
used in computing basic net income (loss) per share
|
107,755 | 65,734 | 34,228 | |||||||||
Shares
used in computing diluted net income (loss) per share
|
110,746 | 65,734 | 34,228 |
Common
Stock
|
|
|
|
|
||||||||||||||||||||||||
|
|
Accumulated
|
|
|
Total
|
|||||||||||||||||||||||
|
|
Additional
|
Other
|
|
|
Stockholders'
|
||||||||||||||||||||||
|
|
Paid-in
|
Comprehensive
|
Accumulated
|
Comprehensive
|
Equity
|
||||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Income
(Loss)
|
Deficit
|
Income
(Loss)
|
(Deficit)
|
|||||||||||||||||||||
Balances as of December 31,
2004
|
33,951 | $ | 3 | $ | 1,214,619 | $ | (172 | ) | $ | (1,186,109 | ) | $ | 28,341 | |||||||||||||||
Comprehensive
loss:
|
||||||||||||||||||||||||||||
Net loss
|
- | - | - | - | (38,966 | ) | $ | (38,966 | ) | (38,966 | ) | |||||||||||||||||
Foreign currency
translations
|
- | - | - | 265 | - | 265 | 265 | |||||||||||||||||||||
Total comprehensive
loss
|
$ | (38,701 | ) | |||||||||||||||||||||||||
Issuance of common stock under
employee stock purchase plan
|
516 | - | 512 | - | - | 512 | ||||||||||||||||||||||
Issuance of common stock from
exercise of options
|
55 | - | 125 | - | - | 125 | ||||||||||||||||||||||
Balances as of December 31,
2005
|
34,522 | 3 | 1,215,256 | 93 | (1,225,075 | ) | (9,723 | ) | ||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 15,016 | $ | 15,016 | 15,016 | ||||||||||||||||||||
Foreign currency
translations
|
- | - | - | 75 | - | 75 | 75 | |||||||||||||||||||||
Total comprehensive
income
|
$ | 15,091 | ||||||||||||||||||||||||||
Exchange of debt to common
stock
|
34,500 | 3 | 20,698 | - | - | 20,701 | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | 950 | - | - | 950 | ||||||||||||||||||||||
Issuance of common stock under
employee stock purchase plan
|
931 | - | 383 | - | - | 383 | ||||||||||||||||||||||
Issuance of common stock from
rights offering, net of issuance costs
|
36,380 | 4 | 15,822 | - | - | 15,826 | ||||||||||||||||||||||
Issuance of common stock from
exercise of options
|
190 | - | 26 | - | - | 26 | ||||||||||||||||||||||
Balances as of December 31,
2006
|
106,523 | 10 | 1,253,135 | 168 | (1,210,059 | ) | 43,254 | |||||||||||||||||||||
Cumulative-effect adjustments from the adoption of FIN No.48 (Note 6) | - | - | - | - | 388 | 388 | ||||||||||||||||||||||
Adjusted Balance as of December 31, 2006 | 106,523 | 10 | 1,253,135 | 168 | (1,209,671 | ) | 43,642 | |||||||||||||||||||||
Comprehensive
income:
|
||||||||||||||||||||||||||||
Net income
|
- | - | - | - | 17,278 | $ | 17,278 | 17,278 | ||||||||||||||||||||
Foreign currency
translations
|
- | - | - | (152 | ) | - | (152 | ) | (152 | ) | ||||||||||||||||||
Total comprehensive
income
|
$ | 17,126 | ||||||||||||||||||||||||||
Stock-based
compensation
|
- | 1,447 | - | - | 1,447 | |||||||||||||||||||||||
Issuance of common stock from
restricted stocks awards
|
11 | - | - | - | - | - | ||||||||||||||||||||||
Issuance of common stock under
employee stock purchase plan
|
1,146 | - | 863 | - | - | 863 | ||||||||||||||||||||||
Issuance of common stock from
warrants exercise
|
341 | - | 1,066 | - | - | 1,066 | ||||||||||||||||||||||
Issuance of common stock from
exercise of options
|
908 | - | 621 | - | - | 621 | ||||||||||||||||||||||
Balances as of December 31,
2007
|
108,929 | $ | 10 | $ | 1,257,132 | $ | 16 | $ | (1,192,393 | ) | $ | 64,765 |
Years
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | 17,278 | $ | 15,016 | $ | (38,966 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash provided by (used for)
operating activities:
|
||||||||||||
Depreciation
and amortization
|
969 | 1,385 | 1,231 | |||||||||
Stock-based
compensation expense
|
1,447 | 950 | - | |||||||||
Provision for (reversal of) receivable reserves | 248 | 487 | (678 | ) | ||||||||
Amortization
of prepaid royalties
|
7 | 36 | 70 | |||||||||
Gain
on cost method investments
|
- | (426 | ) | (1,117 | ) | |||||||
(Gain)
loss on sale or abandonment of property and equipment
|
(78 | ) | 51 | 117 | ||||||||
Goodwill
impairment
|
- | - | 31,368 | |||||||||
Loss
on debt extinguishment
|
- | - | 6,967 | |||||||||
Restructuring
charge (credit)
|
649 | (3,369 | ) | - | ||||||||
Loss
(gain) on revaluation of embedded derivatives and warrants
|
3,147 | 1,333 | (11,346 | ) | ||||||||
Amortization
of discount and revaluation of convertible notes
|
- | - | 9,422 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Accounts
receivable
|
2,244 | 2,047 | 2,408 | |||||||||
Prepaids
and other
|
(304 | ) | 787 | 248 | ||||||||
Other
non-current assets
|
(27 | ) | 607 | 228 | ||||||||
Accounts
payable and accrued expenses
|
(2,828 | ) | (4,272 | ) | (6,970 | ) | ||||||
Restructuring
accrual
|
(1,877 | ) | (1,323 | ) | (26,908 | ) | ||||||
Unearned
revenue and deferred maintenance
|
(6,278 | ) | 3,274 | (3,921 | ) | |||||||
Other
non-current liabilities
|
(6 | ) | (530 | ) | (54 | ) | ||||||
Net cash provided by (used for) operating activities
|
14,591 | 16,053 | (37,901 | ) | ||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of property and equipment
|
(517 | ) | (246 | ) | (142 | ) | ||||||
Proceeds
from sale of assets
|
82 | - | 26 | |||||||||
Proceeds
from sale of cost method investments
|
- | 426 | 590 | |||||||||
Transfer from
restricted cash
|
977 | - | 22,259 | |||||||||
Proceeds
from dividends on equity investments
|
- | - | 1,101 | |||||||||
Net cash provided by investing activities
|
542 | 180 | 23,834 | |||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds from issuance of common stock, net | 1,484 | 409 | 637 | |||||||||
Proceeds from issuance of common stock from warrant exercised | 505 | - | - | |||||||||
Proceeds
from bank line of credit and term debt borrowings
|
- | - | 35,000 | |||||||||
Repayments
of bank line of credit and term debt borrowings
|
- | (389 | ) | (55,638 | ) | |||||||
Repayment
of convertible debt
|
- | - | (3,199 | ) | ||||||||
Proceeds
from rights offering, net
|
- | 15,826 | - | |||||||||
Net cash provided by (used for) financing activities
|
1,989 | 15,846 | (23,200 | ) | ||||||||
Effect
of exchange rates on cash and cash equivalents
|
(152 | ) | 75 | 265 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
16,970 | 32,154 | (37,002 | ) | ||||||||
Cash
and cash equivalents, beginning of year
|
37,003 | 4,849 | 41,851 | |||||||||
Cash
and cash equivalents, end of year
|
$ | 53,973 | $ | 37,003 | $ | 4,849 | ||||||
Supplemental
cash flows disclosures:
|
||||||||||||
Cash
paid for interest
|
$ | - | $ | 364 | $ | 873 | ||||||
Cash
paid (refunded) for income taxes
|
$ | 1 | $ | 502 | $ | (445 | ) | |||||
Supplemental
information of noncash financing and investing activities:
|
||||||||||||
Exchange
of convertible debt to common stock
|
$ | - | $ | 20,535 | $ | - | ||||||
Conversion
of accrued interest to common stock
|
$ | - | $ | 166 | $ | - | ||||||
Retirement
of fully depreciated property and equipment
|
$ | 13,598 | $ | 21,556 | $ | - | ||||||
Cumulative-effect
adjustments from the adoption of FIN No.48
|
$ | 388 | $ | - | $ | - | ||||||
Conversion
of warrant liability to equity
|
$ | 561 | $ | - | $ | - |
Classified
on Consolidated Balance Sheet as:
|
||||||||||||||||||||||||||||
Restricted | ||||||||||||||||||||||||||||
Purchase/
|
Gross
|
Gross
|
Cash
and
|
Restricted
|
Cash
|
|||||||||||||||||||||||
Amortized
|
Unrealized
|
Unrealized
|
Aggregate
|
Cash
|
Cash,
|
Non-
|
||||||||||||||||||||||
Cost
|
Gains
|
Losses
|
Fair
Value
|
Equivalents
|
Current
|
Current
|
||||||||||||||||||||||
As
of December 31, 2007:
|
||||||||||||||||||||||||||||
Cash
and certificates of deposits
|
$ | 14,249 | $ | - | $ | - | $ | 14,249 | $ | 13,229 | $ | 20 | $ | 1,000 | ||||||||||||||
Money
market
|
40,744 | - | - | 40,744 | 40,744 | - | - | |||||||||||||||||||||
Total
|
$ | 54,993 | $ | - | $ | - | $ | 54,993 | $ | 53,973 | $ | 20 | $ | 1,000 | ||||||||||||||
As
of December 31, 2006:
|
||||||||||||||||||||||||||||
Cash
and certificates of deposits
|
$ | 17,827 | $ | - | $ | - | $ | 17,827 | $ | 15,830 | $ | 997 | $ | 1,000 | ||||||||||||||
Money
market
|
21,173 | - | - | 21,173 | 21,173 | - | - | |||||||||||||||||||||
Total
|
$ | 39,000 | $ | - | $ | - | $ | 39,000 | $ | 37,003 | $ | 997 | $ | 1,000 |
Year Ended December
31,
|
||||||||
2007
|
2006
|
|||||||
Cost of
services
|
$ | 266,735 | $ | 160,428 | ||||
Research and
development
|
567,041 | 381,664 | ||||||
Sales and
marketing
|
319,145 | 229,906 | ||||||
General and
administrative
|
294,166 | 178,150 | ||||||
$ | 1,447,087 | $ | 950,147 |
For
the Year Ended
|
||||||||
December
31, 2007
|
December
31, 2006
|
|||||||
Weighted
average volatility
|
96 | % | 84 | % | ||||
Expected
dividends
|
0 | % | 0 | % | ||||
Expected
term (in years)
|
6.00 | 6.00 | ||||||
Risk
free interest rate
|
4.20 | % | 4.79 | % | ||||
Forfeiture
rate
|
9 | % | 11 | % |
Years
Ended December 31,
|
|||||||||||||||
2007 | 2006 | 2005 | |||||||||||||
Expected
volatility
|
90 |
%
|
107 |
%
|
84 |
%
|
|||||||||
Weighted
average volatility
|
89 |
%
|
106 |
%
|
89 |
%
|
|||||||||
Risk-free
interest rate
|
5 |
%
|
5 |
%
|
4 |
%
|
|||||||||
Expected
life (in years)
|
1 |
year
|
1 |
year
|
1 |
year
|
|||||||||
Expected
dividend yield
|
- |
%
|
- |
%
|
- |
%
|
Aggregate
|
||||||||
Number
of
|
||||||||
Common
Shares
|
Weighted | |||||||
Issuable
Under
|
Average
|
|||||||
Accelerated
Stock
|
Exercise
Price
|
|||||||
Options
|
per
Share
|
|||||||
Total
Non-Employee Directors
|
122,181 | $ | 2.98 | |||||
Total
Named Executive Officers
|
391,886 | 2.87 | ||||||
Total
Directors and Named Executive Officers
|
514,067 | 2.89 | ||||||
Total
All Other Employees
|
610,707 | 2.97 | ||||||
Total
|
1,124,774 | 2.94 |
Year Ended December
31, 2005
|
||||
Net income (loss), as
reported
|
$ | (38,966 | ) | |
Add: Stock-based compensation
(income) expense included in reported net income (loss), net of related
tax effects
|
- | |||
Deduct: Total stock-based employee
compensation expense determined under fair value based method for all
awards, net of related tax effects
|
(2,666 | ) | ||
Pro forma net income
(loss)
|
$ | (41,632 | ) | |
Net income (loss) per
share:
|
||||
Basic --as
reported
|
$ | (1.14 | ) | |
Basic --pro
forma
|
$ | (1.22 | ) | |
Diluted --as
reported
|
$ | (1.14 | ) | |
Diluted --pro
forma
|
$ | (1.22 | ) |
Year
Ended December 31, 2005
|
|||||
Expected
life
|
7.40 |
years
|
|||
Risk-free
interest rate
|
4.12 |
%
|
|||
Volatility
|
84.00 |
%
|
Years
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Net
income (loss)
|
$ | 17,278 | $ | 15,016 | $ | (38,966 | ) | |||||
Weighted-average
common shares outstanding used to compute basic income (loss) per
share
|
107,755 | 65,734 | 34,228 | |||||||||
Weighted-average
common equivalent shares from outstanding common stock options and
warrants
|
2,991 | - | - | |||||||||
Total
weighted-average common and common equivalent shares outstanding used to
compute diluted loss per share
|
110,746 | 65,734 | 34,228 | |||||||||
Basic
income (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) | |||||
Diluted
income (loss) per share
|
$ | 0.16 | $ | 0.23 | $ | (1.14 | ) |
Foreign
|
Accumulated
|
|||||||
|
Currency
|
Other
|
||||||
Translation
|
Comprehensive
|
|||||||
and Other
|
Income
(Loss)
|
|||||||
Balance, December 31,
2004
|
$ | (172 | ) | $ | (172 | ) | ||
Net change during the
year
|
265 | 265 | ||||||
Balance, December 31,
2005
|
93 | 93 | ||||||
Net change during the
year
|
75 | 75 | ||||||
Balance, December 31,
2006
|
168 | 168 | ||||||
Net change during the
year
|
(152 | ) | (152 | ) | ||||
Balance, December 31,
2007
|
$ | 16 | $ | 16 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Furniture
and fixtures
|
$ | 654 | $ | 795 | ||||
Computer
and software
|
5,359 | 14,547 | ||||||
Leasehold
improvements
|
1,296 | 5,007 | ||||||
7,309 | 20,349 | |||||||
Less
accumulated depreciation and amortization
|
(6,621 | ) | (19,205 | ) | ||||
Total
property and equipment, net
|
$ | 688 | $ | 1,144 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Employee
benefits
|
$ | 1,076 | $ | 961 | ||||
Commissions
and bonuses
|
656 | 885 | ||||||
Sales
and other taxes
|
1,245 | 2,000 | ||||||
Income
tax and tax contingency reserves
|
427 | 1,378 | ||||||
Restructuring
|
439 | 1,272 | ||||||
Customer
advances
|
288 | 654 | ||||||
Royalty
|
1,376 | 2,482 | ||||||
Other
|
879 | 906 | ||||||
Total
accrued expenses
|
$ | 6,386 | $ | 10,538 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Restructuring
|
$ | 895 | $ | 1,290 | ||||
Deferred
maintenance and unearned revenue
|
1,481 | 1,739 | ||||||
Other
|
648 | 400 | ||||||
Total
other non-current liabilities
|
$ | 3,024 | $ | 3,429 |
Years Ended
December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
|||||||||
Current:
|
||||||||||||
Federal
|
$ | 440 | $ | (350 | ) | $ | 660 | |||||
State
|
(61 | ) | (75 | ) | (10 | ) | ||||||
Foreign
|
(306 | ) | (209 | ) | 1,961 | |||||||
Total
current
|
73 | (634 | ) | 2,611 | ||||||||
Deferred:
|
||||||||||||
Federal
|
- | - | - | |||||||||
State
|
- | - | - | |||||||||
Total
deferred
|
- | - | - | |||||||||
Income tax benefit
(expense)
|
$ | 73 | $ | (634 | ) | $ | 2,611 |
Years Ended December 31, | ||||||||||||
|
2007
|
2006
|
2005
|
|||||||||
Expected income tax (expense)
benefit
|
$ | (6,022 | ) | $ | (5,744 | ) | $ | 14,552 | ||||
Expected state income taxes
(expense) benefit, net of federal tax benefit
|
(39 | ) | (49 | ) | 662 | |||||||
Research and development
credit
|
89 | - | - | |||||||||
Foreign
taxes
|
(894 | ) | (209 | ) | (264 | ) | ||||||
Change in valuation
allowance
|
7,116 | 5,941 | (575 | ) | ||||||||
Stock based compensation and
warrant revaluation
|
(1,039 | ) | (91 | ) | 0 | |||||||
True-ups
|
261 | - | - | |||||||||
Reserve
release
|
424 | - | - | |||||||||
Foreign loss not
benefited
|
- | (584 | ) | (952 | ) | |||||||
Utilization of foreign net
operating loss carryforwards
|
- | - | 913 | |||||||||
Non-deductible goodwill and
intangible amortization
|
- | - | (10,806 | ) | ||||||||
Tax credits and other permanent
items
|
199 | 114 | - | |||||||||
Other
|
(22 | ) | (12 | ) | (919 | ) | ||||||
Income tax (expense)
benefit
|
$ | 73 | $ | (634 | ) | $ | 2,611 |
December 31,
|
||||||||
|
2007
|
2006
|
||||||
Deferred tax
assets:
|
||||||||
Depreciation and
amortization
|
$ | 2,111 | $ | 3,602 | ||||
Accrued, allowance and
others
|
2,967 | 4,751 | ||||||
Capitalized research and
development
|
1,846 | 2,430 | ||||||
Net operating
losses
|
206,477 | 211,331 | ||||||
Tax credits
|
6,547 | 13,946 | ||||||
Unrealized loss on marketable
securities
|
1,589 | 1,589 | ||||||
Total deferred tax
assets
|
221,537 | 237,649 | ||||||
Less: valuation
allowance
|
(221,537 | ) | (237,649 | ) | ||||
Net deferred tax
assets
|
$ | - | $ | - |
Balance at January 1,
2007
|
$ | 2,248,000 | ||
Additions based on tax positions
related to the current year
|
- | |||
Additions for tax positions of
prior years
|
- | |||
Reductions for tax positions of
prior years
|
(388,000 | ) | ||
Settlements
|
- | |||
Balance at December 31,
2007
|
$ | 1,860,000 |
Operating
|
||||
Leases
|
||||
Years
Ending December 31,
|
||||
2008
|
$ | 2.0 | ||
2009
|
1.8 | |||
2010
|
1.3 | |||
2011
|
1.1 | |||
2012
|
0.5 | |||
Total
minimum lease payments
|
$ | 6.7 |
Severance
|
Facilities/
|
|||||||||||
and
|
Excess
|
|||||||||||
Benefits
|
Assets
|
Total
|
||||||||||
Accrual
balances, December 31, 2004
|
$ | 824 | $ | 33,339 | $ | 34,163 | ||||||
Restructuring
charges (credits)
|
1,006 | (1,468 | ) | (462 | ) | |||||||
Cash
payments
|
(1,414 | ) | (25,032 | ) | (26,446 | ) | ||||||
Accrual
balances, December 31, 2005
|
416 | 6,839 | 7,255 | |||||||||
Restructuring charges
(credits)
|
348 | (3,717 | ) | (3,369 | ) | |||||||
Cash
payments
|
(417 | ) | (907 | ) | (1,324 | ) | ||||||
Accrual balances,
December 31, 2006
|
347 | 2,215 | 2,562 | |||||||||
Restructuring (credits)
charges
|
(347 | ) | 996 | 649 | ||||||||
Cash
payments
|
- | (1,877 | ) | (1,877 | ) | |||||||
Accrual
balances, December 31,
2007
|
$ | - | $ | 1,334 | $ | 1,334 |
l
|
Severance and
benefits -- In 2007, we have reversed these severance accruals
due to the expiration of the relevant statute of limitations. This
resulted into a reversal of the related accrual of
$347,000.
|
l
|
Facilities/excess
assets -- During 2007, one of the leases located in Redwood
City, California expired. We incurred an asset retirement obligation of
$40,000 before returning the property to the
landlord.
|
l
|
Severance and
benefits -- During the year ended December 31, 2006, we
recorded $348,000 in severance charges related to the approved Work
Reduction Plan. Due to this strict European labor law we were not able to
recognize severance charges for three employees until
2006.
|
l
|
Facilities/excess
assets -- During the year ended December 31, 2006, we
recorded a facilities-related restructuring credit of $3.7 million.
In the third quarter of 2006, we did not exercise a $4.5 million option to
buy out the residual lease obligation entered in 2004 and the buyout
option expired. Therefore, we reversed the 2004 accrual in the third
quarter of 2006. In the fourth quarter of 2006, we subleased 22,500 square
feet of excess space and adjusted the restructuring accrual accordingly.
We made cash payments of $0.9 million during the year ended
December 31, 2006 related to these
agreements.
|
l
|
Severance and benefits ---
On June 29, 2005, our Board of Directors approved a business
restructuring plan, primarily consisting of headcount reductions, designed
to adjust expenses to a level more consistent with anticipated revenues.
The reduction included approximately 63 employees, or 22% of our
workforce. We recorded severance charges of approximately $1.1 million in
the year ended December 31, 2005, related to workforce reductions as a
component of our restructuring plans executed during the
year.
|
l
|
Facilities/excess assets
--- During the year ended December 31, 2005, we recorded a
facilities-related restructuring credit of $1.5 million. During the third
and fourth quarters of 2004 and the first quarter of 2005, we reached
agreements with certain landlords to extinguish future real estate
obligations. In addition, we entered into subleases in 2005 in excess of
those anticipated. We made cash payments of $25.0 million during the
twelve months ended December 31, 2005 related to buyout agreements. We
have a letter of credit of $2.0 million secured by equal amount of
restricted cash to the landlord securing facilities
leases.
|
Non-
|
||||||||||||
Current
|
Current
|
Total
|
||||||||||
Severance
and termination
|
$ | - | $ | - | $ | - | ||||||
Excess
facilities
|
0.5 | 0.8 | 1.3 | |||||||||
Total
|
$ | 0.5 | $ | 0.8 | $ | 1.3 |
Amounts
|
Amounts
|
|||||||||||||||||||
Charged to
|
Reversed to
|
|||||||||||||||||||
Accrued
|
Restructuring
|
Restructuring
|
Amounts
|
Accrued
|
||||||||||||||||
Restructuring
|
Costs and
|
Costs and
|
Paid or
|
Restructuring
|
||||||||||||||||
Costs,
Beginning
|
Other
|
Other
|
Written Off
|
Costs,
Ending
|
||||||||||||||||
Year Ended December 31,
2007:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 77 | $ | 126 | $ | - | $ | (195 | ) | $ | 8 | |||||||||
Termination payments to employees
and related costs
|
- | - | - | - | - | |||||||||||||||
Write-off on disposal of assets
and related costs
|
- | - | - | - | - | |||||||||||||||
$ | 77 | $ | 126 | $ | - | $ | (195 | ) | $ | 8 | ||||||||||
Year Ended December 31,
2006:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 4,188 | $ | 389 | $ | (4,500 | ) | - | $ | 77 | ||||||||||
Termination payments to employees
and related costs
|
105 | 348 | - | (453 | ) | - | ||||||||||||||
$ | 4,293 | $ | 737 | $ | (4,500 | ) | $ | (453 | ) | $ | 77 | |||||||||
Year Ended December 31,
2005:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 21,824 | $ | (821 | ) | $ | - | $ | (16,815 | ) | $ | 4,188 | ||||||||
Termination payments to employees
and related costs
|
365 | 1,006 | - | (1,266 | ) | 105 | ||||||||||||||
$ | 22,189 | $ | 185 | $ | - | $ | (18,081 | ) | $ | 4,293 |
|
Amounts
|
Amounts
|
|
|
||||||||||||||||
|
Accrued
|
Charged to
|
Reversed to
|
Amounts
|
|
|||||||||||||||
|
Restructuring
|
Restructuring
|
Restructuring
|
Paid or
|
Accrued
|
|||||||||||||||
|
Costs,
|
Costs and
|
Costs and
|
Written
|
Restructuring
|
|||||||||||||||
|
Beginning
|
Other
|
Other
|
Off
|
Costs,
Ending
|
|||||||||||||||
Year Ended December 31,
2007:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 2,138 | $ | 870 | $ | - | $ | (1,682 | ) | $ | 1,326 | |||||||||
Termination payments to employees
and related costs
|
347 | - | (347 | ) | - | - | ||||||||||||||
Write-off on disposal of assets
and related costs
|
- | - | - | - | - | |||||||||||||||
|
$ | 2,485 | $ | 870 | $ | (347 | ) | $ | (1,682 | ) | $ | 1,326 | ||||||||
Year Ended December 31,
2006:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 2,651 | $ | 394 | $ | - | $ | (907 | ) | $ | 2,138 | |||||||||
Termination payments to employees
and related costs
|
311 | - | - | 36 | 347 | |||||||||||||||
$ | 2,962 | $ | 394 | - | $ | (871 | ) | $ | 2,485 | |||||||||||
Year Ended December 31,
2005:
|
||||||||||||||||||||
Lease cancellations and
commitments
|
$ | 11,515 | $ | - | $ | (647 | ) | $ | (8,217 | ) | $ | 2,651 | ||||||||
Termination payments to employees
and related costs
|
459 | - | - | (148 | ) | 311 | ||||||||||||||
|
$ | 11,974 | $ | - | $ | (647 | ) | $ | (8,365 | ) | $ | 2,962 |
Vesting
|
||||||||||||||||
Options
|
Options
|
Period
|
||||||||||||||
Date
Granted
|
Granted
|
Price
|
Vested
|
(Months)
|
||||||||||||
06/23/1999
|
500,000 | $ | 60.00 | 500,000 | 60 | |||||||||||
05/25/2001
|
500,000 | 66.51 | 500,000 | 48 | ||||||||||||
11/27/2001
|
4,444 | 35.01 | 4,444 | 24 | ||||||||||||
02/19/2002
|
55,555 | 18.63 | 55,555 | 48 | ||||||||||||
10/30/2002
|
644,445 | 2.16 | 644,445 | 48 | ||||||||||||
Totals
|
1,704,444 | 1,704,444 |
Years Ended
December 31,
|
||||||||||||||||||||||||||||||||
|
2007
|
2006
|
2005
|
|||||||||||||||||||||||||||||
|
|
Weighted-
|
Weighted-
|
Aggregate
|
|
Weighted-
|
|
Weighted-
|
||||||||||||||||||||||||
|
|
Average
|
Average
|
Intrinsic
|
|
Average
|
|
Average
|
||||||||||||||||||||||||
|
Options
|
Exercise
|
Remaining
|
Value
|
Options
|
Exercise
|
Options
|
Exercise
|
||||||||||||||||||||||||
Price | Contractual | Price | Price | |||||||||||||||||||||||||||||
(000's) | Term | (000's) | (000's) | |||||||||||||||||||||||||||||
Outstanding at beginning of
period
|
6,239 | $ | 13.48 | 3,765 | $ | 23.48 | 4,876 | $ | 21.93 | |||||||||||||||||||||||
Granted
|
599 | 1.70 | 3,880 | 0.59 | 422 | 2.18 | ||||||||||||||||||||||||||
Exercised
|
(788 | ) | 0.60 | (46 | ) | 0.57 | (26 | ) | 1.50 | |||||||||||||||||||||||
Forfeited
|
(138 | ) | 0.70 | (387 | ) | 0.57 | (1,507 | ) | 13.24 | |||||||||||||||||||||||
Expired
|
(66 | ) | 26.58 | (973 | ) | 6.41 | - | - | ||||||||||||||||||||||||
Outstanding at end of
period
|
5,846 | 14.16 | 6.41 | $ | 3,326,701 | 6,239 | 13.48 | 3,765 | 23.48 | |||||||||||||||||||||||
Options exercisable at end of
period
|
4,831 | $ | 16.89 | 5.88 | $ | 2,616,658 | 3,910 | $ | 21.15 | 3,748 | $ | 23.49 | ||||||||||||||||||||
Option vested and expected to vest
at end of period
|
5,775 | $ | 14.31 | 6.38 | $ | 3,301,812 | ||||||||||||||||||||||||||
Weighted-average fair value of
options granted during the period
|
$ | 1.33 | $ | 0.34 | $ | 0.70 | ||||||||||||||||||||||||||
Aggregate Intrinsic
Value:
|
||||||||||||||||||||||||||||||||
Options
exercised
|
$ | 1,303,996 | $ | 9,855 | ||||||||||||||||||||||||||||
Options
exercisable
|
$ | 2,616,658 | $ | 249,438 |
|
Outstanding
|
|
|
|
|||||||||||||||||||||||||||
Weighted- | |||||||||||||||||||||||||||||||
|
Average
|
|
|
|
|||||||||||||||||||||||||||
|
Remaining
|
Weighted
|
Exercisable
|
Weighted
|
|||||||||||||||||||||||||||
Options
|
Contractual
|
Exercise
|
Options
|
Exercise
|
|||||||||||||||||||||||||||
Range of Exercise Prices | (000's) | Life in Years | Price | (000's) | Price | ||||||||||||||||||||||||||
$ | 0.57 | - | $ | 0.57 | 2,333 | 8.17 | $ | 0.57 | 1,982 | $ | 0.57 | ||||||||||||||||||||
0.63 | - | 1.90 | 809 | 8.49 | 1.22 | 319 | 1.16 | ||||||||||||||||||||||||
2.10 | - | 2.21 | 862 | 5.96 | 2.17 | 688 | 2.16 | ||||||||||||||||||||||||
2.35 | - | 35.01 | 737 | 5.10 | 11.76 | 737 | 11.76 | ||||||||||||||||||||||||
35.25 | - | 66.51 | 1,093 | 2.43 | 62.29 | 1,093 | 62.29 | ||||||||||||||||||||||||
80.09 | - | 252.00 | 10 | 2.49 | 132.65 | 10 | 132.65 | ||||||||||||||||||||||||
282.38 | - | 282.38 | 1 | 2.40 | 282.38 | 1 | 282.37 | ||||||||||||||||||||||||
$ | 299.81 | - | $ | 299.81 | 1 | 2.58 | 299.81 | 1 | 300 | ||||||||||||||||||||||
5,846 | 6.41 | $ | 14.16 | 4,831 | $ | 16.89 |
Years Ended
December 31,
|
||||||||||||||||||||||||||||||||
|
2007
|
2006
|
2005
|
|||||||||||||||||||||||||||||
|
|
Weighted-
|
Weighted
|
Aggregate
|
|
Weighted-
|
|
Weighted-
|
||||||||||||||||||||||||
|
|
Average
|
Average
|
Intrinsic
|
|
Average
|
|
Average
|
||||||||||||||||||||||||
|
Options
|
Exercise
|
Remaining
|
Value
|
Options
|
Exercise
|
Options
|
Exercise
|
||||||||||||||||||||||||
Price | Contractual | Price | Price | |||||||||||||||||||||||||||||
(000's) | Term | (000's) | (000's) | |||||||||||||||||||||||||||||
Outstanding at beginning of
period
|
765 | $ | 9.70 | 588 | $ | 16.70 | 1,151 | $ | 17.69 | |||||||||||||||||||||||
Granted
|
- | - | 432 | 0.53 | 3 | 2.10 | ||||||||||||||||||||||||||
Exercised
|
(120 | ) | 1.26 | - | - | (28 | ) | 1.50 | ||||||||||||||||||||||||
Forfeited
|
- | - | (93 | ) | 0.57 | (141 | ) | 2.14 | ||||||||||||||||||||||||
Expired
|
(23 | ) | 18.96 | (162 | ) | 15.74 | (397 | ) | 27.73 | |||||||||||||||||||||||
Outstanding at end of
period
|
622 | 11.02 | 6.39 | $ | 454,759 | 765 | 9.70 | 588 | 16.70 | |||||||||||||||||||||||
Options exercisable at end of
period
|
565 | $ | 12.09 | 6.20 | $ | 380,860 | 495 | $ | 14.72 | 588 | $ | 16.70 | ||||||||||||||||||||
Option vested and expected to vest
at end of period
|
621 | $ | 11.04 | 6.39 | $ | 453,441 | ||||||||||||||||||||||||||
Weighted-average fair value of
options granted during the period
|
$ | - | $ | 0.30 | $ | 0.42 | ||||||||||||||||||||||||||
Aggregate Intrinsic
Value:
|
||||||||||||||||||||||||||||||||
Options
exercised
|
$ | 171,595 | $ | - | ||||||||||||||||||||||||||||
Options
exercisable
|
$ | 380,860 | $ | 14,175 |
Outstanding
|
|||||||||||||||||||||||||||||||
Weighted-
|
|||||||||||||||||||||||||||||||
Average
|
|||||||||||||||||||||||||||||||
Remaining
|
Weighted
|
Exercisable
|
Weighted
|
||||||||||||||||||||||||||||
Options
|
Contractual
|
Exercise
|
Options
|
Exercise
|
|||||||||||||||||||||||||||
Range of Exercise Prices | (000's) | Life in Years | Price | (000's) | Price | ||||||||||||||||||||||||||
$ | 0.46 | - | $ | 0.46 | 140 | 8.39 | $ | 0.46 | 111 | $ | 0.46 | ||||||||||||||||||||
0.48 | - | 0.50 | 40 | 8.47 | 0.49 | 30 | 0.49 | ||||||||||||||||||||||||
0.57 | - | 0.57 | 127 | 8.17 | 0.57 | 109 | 0.57 | ||||||||||||||||||||||||
1.50 | - | 1.50 | 210 | 4.81 | 1.50 | 210 | 1.50 | ||||||||||||||||||||||||
2.10 | - | 60.00 | 78 | 4.63 | 17.89 | 78 | 17.89 | ||||||||||||||||||||||||
64.44 | - | 97.37 | 10 | 1.63 | 87.46 | 10 | 87.46 | ||||||||||||||||||||||||
241.88 | - | 241.88 | 16 | 2.30 | 241.88 | 16 | 241.88 | ||||||||||||||||||||||||
$ | 381.94 | - | $ | 381.94 | 1 | 2.09 | 381.93 | 1 | 381.93 | ||||||||||||||||||||||
622 | 6.39 | $ | 11.02 | 565 | $ | 12.09 |
Shares
at
|
Fair
Value at
|
|||||||||||||||||||
December 31,
|
Price
per
|
December 31,
|
||||||||||||||||||
Description
|
2007
|
2006
|
Share
|
2007
|
2006
|
|||||||||||||||
Issued
to landlord in real estate buyout transaction in August
2004
|
700,000 | 700,000 | $ | 5.00 | $ | 167 | $ | 79 | ||||||||||||
Issued
to convertible debenture investors in November 2004
|
3,865,811 | 4,206,811 | 1.48 | 4,028 | 1,531 | |||||||||||||||
Others
issued in connection with revenue transactions in 1997 and
2000
|
620 | 4,798 |
Various
|
- | - | |||||||||||||||
Total
|
4,566,431
|
4,911,609 | 2.04 | $ | 4,195 | $ | 1,610 |
Years
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Software
licenses
|
$ | 21,127 | $ | 15,215 | $ | 14,720 | ||||||
Services
|
6,204 | 12,099 | 19,095 | |||||||||
Maintenance
|
22,687 | 24,670 | 26,306 | |||||||||
Total
revenues
|
$ | 50,018 | $ | 51,984 | $ | 60,121 |
Years
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenues:
|
||||||||||||
Americas
|
$ | 31,714 | $ | 30,976 | $ | 34,328 | ||||||
Europe
|
12,092 | 14,530 | 20,228 | |||||||||
Asia/Pacific
|
6,212 | 6,478 | 5,565 | |||||||||
Total
Company
|
$ | 50,018 | $ | 51,984 | $ | 60,121 |
December 31,
|
||||||||
2007
|
2006
|
|||||||
Long-Lived
Assets:
|
||||||||
Americas
|
$ | 25,581 | $ | 26,025 | ||||
Europe
|
62 | 104 | ||||||
Asia/Pacific
|
111 | 81 | ||||||
Total
Company
|
$ | 25,754 | $ | 26,210 |
Three
Months Ended
|
||||||||||||||||||||||||||||||||
Dec 31,
|
Sep 30,
|
Jun 30,
|
Mar 31,
|
Dec 31,
|
Sep 30,
|
Jun 30,
|
Mar 31,
|
|||||||||||||||||||||||||
2007
|
2007
|
2007
|
2007
|
2006
|
2006
|
2006
|
2006
|
|||||||||||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Software
licenses
|
$ | 4,620 | $ | 5,280 | $ | 5,494 | $ | 5,733 | $ | 3,956 | $ | 4,750 | $ | 3,627 | $ | 2,882 | ||||||||||||||||
Services
|
6,629 | 7,476 | 7,774 | 7,012 | 9,090 | 8,835 | 9,102 | 9,742 | ||||||||||||||||||||||||
Total
revenues
|
11,249 | 12,756 | 13,268 | 12,745 | 13,046 | 13,585 | 12,729 | 12,624 | ||||||||||||||||||||||||
Cost
of revenues:
|
||||||||||||||||||||||||||||||||
Cost
of software licenses
|
8 | 3 | 22 | 12 | 32 | 22 | 142 | 62 | ||||||||||||||||||||||||
Cost
of services
|
2,251 | 2,102 | 2,215 | 2,393 | 2,173 | 2,729 | 3,496 | 4,058 | ||||||||||||||||||||||||
Total
cost of revenues
|
2,259 | 2,105 | 2,237 | 2,405 | 2,205 | 2,751 | 3,638 | 4,120 | ||||||||||||||||||||||||
Gross
profit
|
8,990 | 10,651 | 11,031 | 10,340 | 10,841 | 10,834 | 9,091 | 8,504 | ||||||||||||||||||||||||
Operating
expenses:
|
||||||||||||||||||||||||||||||||
Research
and development
|
2,247 | 2,283 | 2,483 | 2,655 | 2,708 | 2,766 | 2,405 | 2,631 | ||||||||||||||||||||||||
Sales
and marketing
|
2,383 | 1,898 | 1,781 | 2,069 | 2,529 | 1,761 | 1,982 | 2,381 | ||||||||||||||||||||||||
General
and administrative
|
2,042 | 1,705 | 1,479 | 1,067 | 613 | 2,429 | 3,239 | 1,738 | ||||||||||||||||||||||||
Goodwill
impairment
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Restructuring
(credits), charges
|
(195 | ) | 260 | 306 | 278 | (1,966 | ) | (1,878 | ) | (15 | ) | 490 | ||||||||||||||||||||
Business
combination charges
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Total
operating expenses
|
6,477 | 6,146 | 6,049 | 6,069 | 3,884 | 5,078 | 7,611 | 7,240 | ||||||||||||||||||||||||
Operating
income
|
2,513 | 4,505 | 4,982 | 4,271 | 6,957 | 5,756 | 1,480 | 1,264 | ||||||||||||||||||||||||
Other income (expense), net | 3,419 | 538 | 3,688 | (6,711 | ) | 248 | (163 | ) | 335 | (227 | ) | |||||||||||||||||||||
Income
taxes (expense) benefit
|
(60 | ) | 419 | (230 | ) | (56 | ) | (185 | ) | (228 | ) | (65 | ) | (156 | ) | |||||||||||||||||
Net
income (loss)
|
$ | 5,872 | $ | 5,462 | $ | 8,440 | $ | (2,496 | ) | $ | 7,020 | $ | 5,365 | $ | 1,750 | $ | 881 | |||||||||||||||
Basic
net income (loss) per share
|
$ | 0.05 | $ | 0.05 | $ | 0.08 | $ | (0.02 | ) | $ | 0.09 | $ | 0.08 | $ | 0.03 | $ | 0.02 | |||||||||||||||
Diluted
net income (loss) per share
|
$ | 0.05 | $ | 0.05 | $ | 0.08 | $ | (0.02 | ) | $ | 0.09 | $ | 0.08 | $ | 0.03 | $ | 0.02 | |||||||||||||||
Shares
used in computing basic net income (loss) per share
|
108,648 | 108,253 | 107,424 | 106,667 | 80,878 | 69,489 | 69,151 | 42,958 | ||||||||||||||||||||||||
Shares
used in computing diluted net income (loss) per share
|
111,896 | 111,577 | 111,035 | 106,667 | 80,878 | 69,489 | 69,151 | 43,068 |
(a)
|
Evaluation
of Disclosure Controls and
Procedures
|
|
By:
|
/s/ PEHONG CHEN | |
Pehong Chen | |||
Chairman of the Board, President, and Chief Executive Officer | |||
Signature
|
Title
|
Date
|
||
/s/ Pehong
Chen
|
February
21, 2008
|
|||
Pehong
Chen
|
Chairman
of the Board, President, Chief Executive Officer, and (Principal Executive
Officer)
|
|||
/s/ Shin-yuan
Tzou
|
||||
Shin-Yuan
Tzou
|
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
February
21, 2008
|
||
/s/ Francois
Stieger
|
February
21, 2008
|
|||
Francois
Stieger
|
Director
|
|||
/s/ James
D. Dixon
|
February
21, 2008
|
|||
James
D. Dixon
|
Director
|
|||
/s/
Robert Lee
|
February
21, 2008
|
|||
Robert
Lee
|
Director
|
Charged
|
||||||||||||||||
Balance
at
|
(Credited)
to
|
Balance
at
|
||||||||||||||
Beginning
of
|
Costs
and
|
End
of
|
||||||||||||||
Period
|
Expenses
|
Deductions(1)
|
Period
|
|||||||||||||
Receivable
reserves:
|
||||||||||||||||
Year
Ended December 31, 2007
|
$ | 1,141 | $ | 248 | $ | (804 | ) | $ | 585 | |||||||
Year
Ended December 31, 2006
|
$ | 731 | $ | 487 | $ | (77 | ) | $ | 1,141 | |||||||
Year
Ended December 31, 2005
|
$ | 1,409 | $ | (598 | ) | $ | (80 | ) | $ | 731 |
Exhibit
|
Description
|
|
3.1(1)
|
Amended
and Restated Certificate of Incorporation.
|
|
3.2(6)
|
Certificate
of Amendment of Certificate of Incorporation.
|
|
3.3(16)
|
Amended
and Restated Bylaws.
|
|
3.4(20)
|
Certificate
of Amendment of Certificate of Incorporation.
|
|
4.1(1)
|
References
are hereby made to Exhibits 3.1, 3.2, and 3.4.
|
|
4.2(18)
|
Registration
Rights Agreement dated November 10, 2004 among the company and
certain investors listed on Exhibit A thereto.
|
|
4.3(14)
|
Registration
Rights Agreement dated March 8, 2006, between the company and Honu
Holdings LLC.
|
|
10.1(8)(a)
|
Equity
Incentive Plan as amended through May 1, 2002 (the "Equity Incentive
Plan").
|
|
10.2(1)(a)
|
Form
of Incentive Stock Option under the Equity Incentive Plan.
|
|
10.3(1)(a)
|
Form
of Nonstatutory Stock Option under the Equity Incentive
Plan.
|
|
10.4(1)(a)
|
Form
of Nonstatutory Stock Option (Performance-Based).
|
|
10.5(8)(a)
|
1996
Employee Stock Purchase Plan as amended May 1, 2002 (the "Employee
Stock Purchase Plan").
|
|
10.6(1)(a)
|
Employee
Stock Purchase Plan Offering (Initial Offering).
|
|
10.7(1)(a)
|
Employee
Stock Purchase Plan Offering (Subsequent Offering).
|
|
10.8(1)(b)
|
Terms
and Conditions dated January 1, 1995 between IONA
Technologies LTD and the company.
|
|
10.9(2)(a)
|
Employee
Stock Purchase Plan Offering (2007 Offering).
|
|
10.10(5)
|
BroadVision, Inc.
Change in Control Severance Benefit Plan, established effective March 26,
2007.
|
|
10.11(11)
|
Lease
Termination Agreement with The Board of Trustees of The Leland Stanford
Junior University.
|
|
10.12(3)(a)
|
2000
Non-Officer Equity Incentive Plan.
|
|
10.13(4)(b)
|
Independent
Software Vendor Agreement dated June 30, 1998 between the company and
IONA Technologies, PLC, as amended.
|
|
10.14(7)
|
Form
of Indemnity Agreement between the company and each of its directors and
executive officers.
|
|
10.15(9)
|
Offer
letter dated March 4, 2003 by and between the company and William
Meyer.
|
|
10.16(10)
|
BroadVision, Inc.
Change in Control Severance Benefit Plan, established effective
May 22, 2003.
|
|
10.17(10)
|
BroadVision, Inc.
Executive Severance Benefit Plan, established effective May 22,
2003.
|
|
10.18(13)
|
Assignment
and Assumption of Master Lease, Partial Termination of Master Lease and
Assignment and Assumption of Subleases, dated July 7, 2004, between
Pacific Shores Investors, LLC and the company.
|
|
10.19(13)
|
Warrant
to Purchase up to 700,000 share of common stock, dated July 7, 2004,
issued to Pacific Shores Investors, LLC.
|
|
10.20(13)
|
Triple
Net Space Lease, dated as of July 7, 2004, between Pacific Shores
Investors, LLC and the company.
|
|
10.21(14)
|
Securities
Purchase Agreement dated as of November 10, 2004.
|
|
10.22(16)
|
Agreement
to Restructure Lease and To Assign Subleases dated as of October 1,
2004 between VEF III Funding, LLC and the company.
|
|
10.23(17)
|
Amendment
No. 5 to IONA Independent Software Vendor Agreement dated
December 20, 2004, between IONA Technologies, Inc. and the
company.
|
|
10.24(15)
|
Debt
Conversion Agreement dated as of December 20, 2005, between the company
and Honu Holdings, LLC
|
|
10.25(12)
|
2006
Equity Incentive Plan
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10.26(19)
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Agreement
to Assign Lease and Sublease dated as of January 8, 2007 between the company
and Dexterra, Inc.
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21.1
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Subsidiaries
of the company.
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23.1
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Consent
of Stonefield Josephson, Inc.
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23.2
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Consent
of Odenberg, Ullakko, Muranishi & Co. LLP, an independent registered
public accounting firm
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24.1
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Power
of Attorney, pursuant to which amendments to this Annual Report on
Form 10-K may be filed, is included on the signature pages
hereto.
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31.1
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Certification
of the Chief Executive Officer of the company.
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31.2
|
Certification
of the Chief Financial Officer of the company.
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32.1
|
Certification
of the Chief Executive Officer and Chief Financial Officer of the company
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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(1) Incorporated
by reference to the company's Registration Statement on Form S-1
filed on April 19, 1996 as amended by Amendment No. 1 filed on
May 9, 1996, Amendment No. 2 filed on May 29, 1996 and
Amendment No. 3 filed on June 17,
1996.
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(2) Incorporated
by reference to the company's Registration Statement on Form S-8
filed on August 29, 2007.
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(3) Incorporated
by reference to the company's Registration Statement on Form S-8
filed on October 15, 2003.
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(4) Incorporated
by reference to the company's Form 10-Q for the quarter ended
June 30, 2001 filed on August 14,
2001.
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(5)
Incorporated by reference to the company's Current Report on Form 8-K
filed on March 30, 2007.
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(6) Incorporated
by reference to the company's Proxy Statement filed on May 14,
2002.
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(7) Incorporated
by reference to the company's Form 10-Q for the quarter ended
September 30, 2002 filed on November 14,
2002.
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(8) Incorporated
by reference to the company's Registration Statement on Form S-8
filed on August 1, 2002.
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(9) Incorporated
by reference to the company's Form 10-Q for the quarter ended
March 31, 2003 filed on May 14,
2003.
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(10)
Incorporated by reference to the company's Form 10-Q for the quarter
ended June 30, 2003 filed on August 14,
2003.
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(11)
Incorporated by reference to the company's Current Report on Form 8-K
filed on November 09, 2007.
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(12)
Incorporated by reference to the company's Registration Statement on Form
S-8 filed on November 6, 2006.
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(13)
Incorporated by reference to the company's Current Report on Form 8-K
filed on August 9, 2004.
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(14)
Incorporated by reference to the company's Current Report on Form 8-K
filed on November 10, 2004.
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(15) Incorporated
by reference to the company's Current Report on Form 8-K filed on December
22, 2005.
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(16)
Incorporated by reference to the company's Current Report on Form 8-K
filed on November 19, 2004.
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(17)
Incorporated by reference to the company's Current Report on Form 8-K
filed on December 23, 2004.
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(18)
Incorporated by reference to the company's Current Report on Form 8-K
filed on February 1, 2005.
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(19)
Incorporated by reference to the company's Current Report on Form 8-K
filed on January 10, 2007.
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(20)
Incorporated by reference to the company's Form 10-K for the fiscal
year ended December 31, 2006 filed on March 27,
2007.
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