EGAIN Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA eGain Corporation Consolidated Financial Statements As of June 30, 2020 and 2019 and for the years ended June 30, 2020 and 2019 ​ ​ Index to Consolidated Financial Statements ​ ​ ​ ​ Page Number ​ Report of BPM LLP, Independent Registered Public Accounting Firm ​ 48 ​ Consolidated Financial Statements: ​ ​ ​ Consolidated Balance Sheets as of June 30, 2020 and 2019 ​ 49 ​ Consolidated Statements of Operations for the years ended June 30, 2020 and 2019 ​ 50 ​ Consolidated Statements of Comprehensive Income for the years ended June 30, 2020 and 2019 ​ 51 ​ Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2020 and 2019 ​ 52 ​ Consolidated Statements of Cash Flows for the years ended June 30, 2020 and 2019 ​ 53 ​ Notes to Consolidated Financial Statements ​ 54 ​ ​ ​ 47 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders eGain Corporation Sunnyvale, California Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of eGain Corporation and subsidiaries (the “Company”) as of June 30, 2020 and 2019, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended June 30, 2020 and the related notes and financial statement schedule listed in the index to this Annual Report on Form 10-K at Part IV Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America. Change in Accounting Principle As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in fiscal year ended June 30, 2020 due to the adoption of the new lease standard. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BPM LLP We have served as the Company’s auditor since 2008. San Jose, California September 11, 2020 ​ 48 Table of Contents EGAIN CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2020 2019 ASSETS ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 46,609 ​ $ 31,860 Restricted cash ​ 6 ​ 7 Accounts receivable, less allowance for doubtful accounts of $384 and $320 as of June 30, 2020 and 2019, respectively ​ 22,708 ​ 20,411 Costs capitalized to obtain revenue contracts, net ​ 1,066 ​ 740 Prepaid expenses ​ ​ 2,514 ​ ​ 2,517 Other current assets ​ 617 ​ 1,054 Total current assets ​ 73,520 ​ 56,589 Property and equipment, net ​ 713 ​ 525 Operating lease right-of-use assets (Note 8) ​ ​ 2,962 ​ ​ — Costs capitalized to obtain revenue contracts, net of current portion ​ 2,380 ​ 1,777 Intangible assets, net ​ ​ 26 ​ ​ 294 Goodwill ​ 13,186 ​ 13,186 Other assets ​ 918 ​ 1,383 Total assets ​ $ 93,705 ​ $ 73,754 LIABILITIES AND STOCKHOLDERS' EQUITY ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ Accounts payable ​ $ 2,429 ​ $ 4,173 Accrued compensation ​ 7,916 ​ 5,480 Accrued liabilities ​ 3,423 ​ 2,353 Operating lease liabilities (Note 8) ​ ​ 1,753 ​ ​ — Deferred revenue ​ 36,644 ​ 30,688 Total current liabilities ​ 52,165 ​ 42,694 Deferred revenue, net of current portion ​ 4,826 ​ 5,801 Operating lease liabilities, net of current portion (Note 8) ​ ​ 1,385 ​ ​ — Other long-term liabilities ​ 688 ​ 952 Total liabilities ​ 59,064 ​ 49,447 Commitments and contingencies (Note 9) ​ ​ ​ ​ Stockholders' equity: ​ ​ ​ ​ Common stock, $0.001 par value - authorized: 50,000 shares; outstanding: 30,821 and 30,478 shares as of June 30, 2020 and 2019, respectively ​ 31 ​ 31 Additional paid-in capital ​ 374,399 ​ 371,099 Notes receivable from stockholders ​ (90) ​ (88) Accumulated other comprehensive loss ​ (1,631) ​ (1,459) Accumulated deficit ​ (338,068) ​ (345,276) Total stockholders' equity ​ 34,641 ​ 24,307 Total liabilities and stockholders' equity ​ $ 93,705 ​ $ 73,754 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 49 Table of Contents EGAIN CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ 2020 2019 Revenue: ​ ​ ​ ​ ​ ​ Subscription ​ $ 66,129 ​ $ 60,013 Professional services ​ 6,600 ​ 7,219 Total revenue ​ 72,729 ​ 67,232 Cost of revenue: ​ ​ ​ ​ ​ ​ Cost of subscription ​ 14,398 ​ 14,976 Cost of professional services ​ 6,683 ​ 6,865 Total cost of revenue ​ 21,081 ​ 21,841 Gross profit ​ 51,648 ​ 45,391 Operating expenses: ​ ​ ​ ​ Sales and marketing ​ 19,623 ​ 17,302 Research and development ​ 16,638 ​ 14,369 General and administrative ​ 7,981 ​ 8,198 Total operating expenses ​ 44,242 ​ 39,869 Income from operations ​ 7,406 ​ 5,522 Interest income (expense), net ​ 395 ​ (319) Other income (expense), net ​ 185 ​ (202) Income before income tax provision ​ 7,986 ​ 5,001 Income tax provision ​ (778) ​ (833) Net income ​ $ 7,208 ​ $ 4,168 Per share information: ​ ​ ​ ​ Earnings per share: ​ ​ ​ ​ ​ ​ Basic ​ $ 0.24 ​ $ 0.15 Diluted ​ $ 0.23 ​ $ 0.14 Weighted-average shares used in computation: ​ ​ ​ ​ ​ ​ Basic ​ $ 30,620 ​ $ 28,579 Diluted ​ $ 31,956 ​ $ 30,363 Below is a summary of stock-based compensation included in the costs and expenses above: ​ ​ ​ ​ ​ ​ Cost of revenue ​ $ 205 ​ $ 323 Research and development ​ $ 706 ​ $ 519 Sales and marketing ​ $ 551 ​ $ 313 General and administrative ​ $ 399 ​ $ 468 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 50 Table of Contents EGAIN CORPORATION C ONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ 2020 2019 Net income ​ $ 7,208 ​ $ 4,168 Other comprehensive income, net of taxes: ​ ​ ​ ​ Foreign currency translation adjustments ​ (172) ​ 159 Total comprehensive income ​ $ 7,036 ​ $ 4,327 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 51 Table of Contents EGAIN CORPORATION C ONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Notes Accumulated ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ Additional ​ Receivable ​ Other ​ ​ ​ ​ Stockholders' ​ ​ Common Stock ​ Paid-in ​ From ​ Comprehensive ​ Accumulated ​ Equity ​ ​ Shares ​ Amount ​ Capital ​ Stockholders ​ Loss ​ Deficit ​ (Deficit) BALANCES AS OF JULY 1, 2018 ​ 27,667 ​ ​ 28 ​ ​ 346,222 ​ ​ (85) ​ ​ (1,618) ​ ​ (353,260) ​ ​ (8,713) Cumulative-effect adjustment upon the modified retrospective adoption of ASU No. 2014-09 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,816 ​ ​ 3,816 Interest on stockholder notes ​ — ​ — ​ — ​ (3) ​ — ​ — ​ (3) Issuance of common stock upon exercise of stock options ​ 592 ​ 1 ​ 1,114 ​ — ​ — ​ — ​ 1,115 Issuance of common stock in connection with employee purchase plans ​ 70 ​ ​ — ​ ​ 422 ​ ​ — ​ ​ — ​ ​ — ​ ​ 422 Issuance of common stock from public offering, net of issuance costs ​ 2,149 ​ ​ 2 ​ ​ 21,718 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21,720 Stock-based compensation ​ — ​ — ​ 1,623 ​ — ​ — ​ — ​ 1,623 Foreign currency translation adjustments ​ — ​ — ​ — ​ ​ — ​ ​ 159 ​ ​ — ​ ​ 159 Net Income ​ — ​ — ​ — ​ — ​ — ​ 4,168 ​ 4,168 BALANCES AS OF JUNE 30, 2019 30,478 ​ ​ 31 ​ ​ 371,099 ​ ​ (88) ​ ​ (1,459) ​ ​ (345,276) ​ ​ 24,307 Interest on stockholder notes ​ — ​ — ​ — ​ (2) ​ — ​ — ​ (2) Issuance of common stock upon exercise of stock options ​ 210 ​ — ​ 543 ​ — ​ — ​ — ​ 543 Issuance of common stock in connection with employee stock purchase plan ​ 133 ​ ​ — ​ ​ 867 ​ ​ — ​ ​ — ​ ​ — ​ ​ 867 True-up of issuance costs related to public offering ​ — ​ — ​ 29 ​ — ​ — ​ — ​ 29 Stock-based compensation ​ — ​ — ​ 1,861 ​ — ​ — ​ — ​ 1,861 Foreign currency translation adjustments ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (172) ​ ​ — ​ ​ (172) Net income ​ — ​ — ​ — ​ — ​ — ​ 7,208 ​ 7,208 BALANCES AS OF JUNE 30, 2020 30,821 ​ $ 31 ​ $ 374,399 ​ $ (90) ​ $ (1,631) ​ $ (338,068) ​ $ 34,641 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 52 Table of Contents EGAIN CORPORATION CON SOLIDATED STATEMENTS OF CASH FLOWS (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ 2020 2019 Cash flows from operating activities: ​ ​ ​ ​ ​ Net income ​ $ 7,208 ​ $ 4,168 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Amortization of intangible assets ​ ​ 268 ​ ​ 438 Amortization of costs capitalized to obtain revenue contracts ​ 842 ​ 663 Amortization of deferred financing costs ​ ​ — ​ ​ 241 Amortization of right-of-use assets ​ ​ 1,540 ​ ​ — Depreciation and amortization ​ 304 ​ 362 Provision for doubtful accounts ​ 317 ​ 253 Deferred income taxes ​ ​ 261 ​ ​ 357 Stock-based compensation ​ 1,861 ​ 1,623 (Gain) loss on disposal of property and equipment ​ ​ (1) ​ ​ 51 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable ​ (2,882) ​ (13,270) Costs capitalized to obtain revenue contracts ​ (1,812) ​ (809) Prepaid expenses ​ (122) ​ (156) Other current assets ​ ​ 401 ​ ​ (774) Other non-current assets ​ 175 ​ (31) Accounts payable ​ (1,740) ​ 278 Accrued compensation ​ 2,525 ​ 159 Accrued liabilities ​ 1,105 ​ (240) Deferred revenue ​ 5,272 ​ 13,673 Operating lease liabilities ​ ​ (1,640) ​ ​ — Other long-term liabilities ​ 176 ​ (32) Net cash provided by operating activities ​ 14,058 ​ 6,954 Cash flows from investing activities: ​ ​ ​ ​ Purchases of property and equipment ​ (514) ​ (398) Net cash used in investing activities ​ (514) ​ (398) Cash flows from financing activities: ​ ​ ​ ​ Payments on bank borrowings ​ (31) ​ (16,901) Proceeds from bank borrowings ​ 31 ​ 7,459 Payments on capital lease obligations ​ — ​ (42) Proceeds from exercise of stock options ​ ​ 543 ​ ​ 1,115 Proceeds from employee stock purchase plan ​ ​ 867 ​ ​ 422 Proceeds from follow-on public offering, net of issuance costs ​ — ​ 21,720 Net cash provided by financing activities ​ 1,410 ​ 13,773 Effect of exchange rate differences on cash and cash equivalents ​ (206) ​ 34 Net increase in cash, cash equivalents and restricted cash ​ 14,748 ​ 20,363 Cash, cash equivalents and restricted cash at beginning of year ​ 31,867 ​ 11,504 Cash, cash equivalents and restricted cash at end of year ​ $ 46,615 ​ $ 31,867 ​ ​ ​ ​ ​ Supplemental cash flow disclosures: ​ ​ ​ ​ Cash paid for interest ​ $ 2 ​ $ 230 Cash paid for taxes ​ $ 374 ​ $ 237 Non-cash items: ​ ​ ​ ​ Purchases of equipment through trade accounts payable ​ $ 10 ​ $ 4 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 53 Table of Contents EGAIN CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Business eGain Corporation (“eGain”, the “Company”, “our”, “we” or “us”) is a leading provider of cloud-based customer engagement software with operations in the United States, United Kingdom and India. We help B2C brands operationalize digital customer engagement strategy. Our suite includes rich applications for digital interaction, knowledge management, and AI-based process guidance. We also provide advanced, integrated analytics for contact centers and digital properties to holistically measure, manage and optimize resources. We believe the benefits of our products include reduced customer effort, customer satisfaction, connected service processes, converted upsell opportunities, and improved compliance—across mobile, social, web, and phone. Hundreds of global enterprises rely on eGain to transform fragmented customer service systems into unified Customer Engagement Hubs. ​ Principles of Consolidation The consolidated financial statements include the accounts of eGain and our wholly-owned subsidiaries, eGain Communications Ltd., Exony Limited (Exony), eGain Communications Pvt. Ltd., eGain Communications (SA), eGain France S.A.R.L, Netherlands (eGain Communications B.V.) and eGain Deutschland GmbH. All significant intercompany balances and transactions have been eliminated. Follow-On Public Offering ​ In March 2019, we completed a follow-on public offering, in which we issued 2.0 million shares of our common stock at a public offering price of $11.00 per share. In April 2019, the underwriters exercised an over-allotment option to purchase 149,000 additional shares of our common stock. As of June 30, 2019, we received net proceeds of $21.7 million after deducting underwriting discounts and commissions of $1.6 million and other offering expenses of $282,000. ​ Business Combinations Business combinations are accounted for at fair value under the purchase method of accounting. Acquisition costs are expensed as incurred and recorded in general and administrative expenses and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date affect income tax expense. The accounting for business combinations requires estimates and judgment as to expectations for future cash flows of the acquired business, and the allocation of those cash flows to identifiable intangible assets, in determining the estimated fair value for assets acquired and liabilities assumed. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. If the actual results differ from the estimates and judgments used in these estimates, the amounts recorded in the consolidated financial statements could result in a possible impairment of the intangible assets and goodwill, or require acceleration of the amortization expense of finite-lived intangible assets. ​ 54 Table of Contents Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The estimates are based upon information available as of the date of the consolidated financial statements. Actual results could differ from those estimates. We evaluate our significant estimates, including those related to revenue recognition, provision for doubtful accounts, valuation of stock-based compensation, valuation of long-lived assets, valuation of deferred tax assets, and litigation, among others. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We refer to accounting estimates of this type as “critical accounting estimates.” Foreign Currency The functional currency of each of our international subsidiaries is the local currency of the country in which it operates. Assets and liabilities of our foreign subsidiaries are translated at month-end exchange rates, and revenue and expenses are translated at the average monthly exchange rates. The resulting cumulative translation adjustments are recorded as a component of accumulated other comprehensive income. Foreign currency transaction gains and losses are included in “other income (expense), net” in the consolidated statements of operations, and resulted in a loss of $172,000 and $149,000, in fiscal years 2020 and 2019, respectively. Cash and Cash Equivalents, Restricted Cash and Investments We consider all highly liquid investments with an original purchase to maturity date of three months or less to be cash equivalents. Time deposits held for investments that are not debt securities are included in short-term investments in the consolidated balance sheets. Investments in time deposits with original maturities of more than three months but remaining maturities of less than one year are considered short-term investments. Investments held with the intent to reinvest or hold for longer than a year, or with remaining maturities of one year or more, are considered long-term investments. As of June 30, 2020 and 2019 we did not have any short-term or long-term investments. Cash earmarked for a specific purpose and therefore not available for immediate and general use by the Company is considered restricted cash. Expected usage of restricted cash within one year is classified as a current asset; expected usage more than a year is considered a non-current asset. As of June 30, 2020 and 2019, our restricted cash was nominal. Fair Value of Financial Instruments Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities. We do not have any derivative financial instruments. We believe the reported carrying amounts of these financial instruments approximate fair value, based upon their short-term nature and comparable market information available at the respective balance sheet dates. Concentration of Credit Risk Financial instruments that subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. Cash and cash equivalents and investments are deposited with high credit quality institutions. We are exposed to credit risk in the event of default by these institutions to the extent of the amount recorded on the balance sheet. We invest excess cash primarily in money market funds, which are highly liquid securities that bear minimal risk. In addition, we have investment policies and procedures that are reviewed periodically to minimize credit risk. Our cash, cash equivalents and restricted cash were $46.6 million as of June 30, 2020 and exceeded the FDIC (Federal Deposit Insurance Corporation) limits. 55 Table of Contents Our customer base extends across many different industries and geographic regions. Revenue is allocated to individual countries and geographic region by customer, based on where the product is shipped to and location of services performed. Cisco Systems, Inc. accounted for 18% and 17% of total revenue in fiscal years 2020 and 2019, respectively. We perform ongoing credit evaluations of our customers with outstanding receivables and generally do not require collateral. In addition, we established an allowance for doubtful accounts based upon factors surrounding the credit risk of customers, historical trends and other information. One partner and customer accounted for 23% and 18% of accounts receivable as of June 30, 2020, respectively. Three customers accounted for 18%, 16%, and 15% of accounts receivable as of June 30, 2019. Accounts Receivable and Allowance for Doubtful Accounts We extend unsecured credit to our customers on a regular basis. Our accounts receivable are derived from revenue earned from customers and are not interest bearing. We also maintain an allowance for doubtful accounts to reserve for potential uncollectible trade receivables. We review our trade receivables by aging category to identify specific customers with known disputes or collectibility issues. We exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the U.S. and internationally, and changes in customer financial conditions. If we made different judgments or utilized different estimates, material differences may result in additional reserves for trade receivables, which would be reflected by charges in general and administrative expenses for any period presented. We write off a receivable after all collection efforts have been exhausted and the amount is deemed uncollectible. In certain Company contracts, contractual billings do not coincide with revenue recognized on the contract. Unbilled accounts receivables are recorded when revenue recognized on the contract exceeds billings, pursuant to contract provisions, and become billable upon certain criteria being met. Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $1.7 million and $1.4 million as of June 30, 2020 and 2019, respectively, and are included in the accounts receivable balance. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful life of the respective assets, which typically is between three or five years. Leasehold improvements and leased equipment are depreciated on a straight-line basis over the shorter of the lease term or useful life of the asset, which is typically three to five years. Goodwill and Other Intangible Assets We review goodwill annually for impairment or sooner whenever events or changes in circumstances indicate that it may be impaired. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. In addition, we evaluate purchased intangible assets to determine that all such assets have determinable lives. We operate under a single reporting unit and accordingly, all of our goodwill is associated with the entire company. We had no impairment for fiscal years ended June 30, 2020 and 2019. Impairment of Long-Lived Assets We review long-lived assets for impairment, including property and equipment, whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. During fiscal years 2020 and 2019, we did not have any such losses. ​ 56 Table of Contents Deferred Revenue Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met. We generally invoice customers in annual or quarterly installments. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements. Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity within the quarter. Deferred revenue that will be recognized during the succeeding twelve-month period is recorded as current deferred revenue and the remaining portion is recorded as noncurrent. Cost Capitalized to Obtain Revenue Contracts Under Topic 606, we capitalize incremental costs of obtaining non-cancelable subscription and support revenue contracts. The capitalized amounts consist primarily of sales commissions paid to our direct sales force. Capitalized amounts also include (i) amounts paid to employees other than the direct sales force who earn incentive payouts under annual compensation plans that are tied to the value of contracts acquired and (ii) the associated payroll taxes and fringe benefit costs associated with the payments to our employees. ​ Costs capitalized related to new revenue contracts are generally deferred and amortized on a straight-line basis over a period of benefit that we estimate to be five years. We determine the period of benefit by taking into consideration the historical and expected durations of our customer contracts, the expected useful lives of our technologies, and other factors. Commissions for renewal contracts relating to our cloud-based arrangements are expensed when incurred, as we do not consider renewal contracts to be commensurate with initial customer contracts. Historically, any commission associated with renewals have been immaterial. Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our consolidated statements of operations. ​ During the fiscal year ended June 30, 2020 and 2019, we capitalized $1.8 million and $809,000 of costs to obtain revenue contracts, respectively, and amortized $842,000 and $663,000 to sales and marketing expense, respectively. Capitalized costs to obtain revenue contracts, net were $3.4 million and $2.5 million as of June 30, 2020 and June 30, 2019, respectively. ​ Deferred Financing Costs Costs relating to obtaining the credit agreement (as amended from time to time, Credit Agreement) with Wells Fargo Bank, National Association, as administrative agent (Wells Fargo) were capitalized and amortized over the term of the related debt using the effective interest method. We capitalized deferred financing costs of $981,000 in connection with our term loan that has since been fully amortized. As of June 30, 2020, all financing costs have been charged to operations as interest expense in the prior fiscal year, in connection with the repayment of the term loan. No amortization of deferred financing costs was recorded to interest expense in fiscal year 2020. Amortization of deferred financing costs recorded as interest expense was $241,000 in fiscal year 2019. Leases Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases . ​ Operating leases are included in operating lease right-of-use (ROU) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the agreed upon term. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term. ​ For operating leases, ROU assets and lease liabilities are recognized at the commencement date of the lease. The lease liability is measured as the present value of the lease payments over the lease term, using the rate implicit in the lease if readily determinable. If the rate implicit in the lease cannot be readily determined, the Company uses its incremental 57 Table of Contents borrowing rate at lease commencement. The operating lease right-of-use assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs and any prepayments, less unamortized lease incentives received. ​ Operating leases typically include non-lease components such as common-area maintenance costs. We have elected to include non-lease components with lease payments for the purpose of calculating lease right-of-use assets and liabilities, to the extent that they are fixed. Non-lease component payments that are not fixed are expensed as incurred as variable lease payments. ​ Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize right-of-use assets and obligations for leases with an initial term of twelve months or less, and has applied a capitalization threshold to recognize a lease on the balance sheet. The expense associated with short-term leases and leases that do not meet the Company’s capitalization threshold are recorded to lease expense in the period it is incurred. ​ Software Development Costs We account for software development costs in accordance with ASC 985, Software , for costs of the software to be sold, leased or marketed, whereby costs for the development of new software products and substantial enhancements to existing software products are included in research and development expense as incurred until technological feasibility has been established, at which time any additional costs are capitalized. Technological feasibility is established upon completion of a working model. To date, software development costs incurred in the period between achieving technological feasibility and general availability of software have not been material and have been charged to operations as incurred. Advertising Costs We expense advertising costs as incurred. Total advertising expenses for the fiscal years ended June 30, 2020 and 2019 were $221,000 and $150,000, respectively. Stock-Based Compensation We account for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation . Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term. Stock-based compensation expense for employee and non-employee awards is recognized as expense over the vesting period. Fair value for employee awards is measured as of the grant date. Fair value for non-employee awards is measured as of the grant date and is subsequently remeasured each reporting period. Income Taxes Income taxes are accounted for using the asset and liability method in accordance with ASC 740, Income Taxes. Under this method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. For the legacy eGain business in the United States, based upon the weight of available evidence, which includes our historical operating performance, our future investment plans, and the uncertainty in the current market environment due to COVID-19, we have provided a full valuation allowance against our net deferred tax assets. For the legacy eGain business in the United Kingdom, based on the positive evidence, the Company has determined it would be able to utilize the deferred tax assets and does not have a valuation allowance against the deferred tax assets. The remaining eGain foreign operations as well as Exony’s business have historically been profitable and we believe it is more likely than not that those assets will be realized. Our tax provision primarily relates to foreign activities as well as state income taxes. Our income 58 Table of Contents tax rate differs from the statutory tax rates primarily due to the utilization of net operating loss carry-forwards which had previously been valued against as well as our foreign operations. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act revised the taxation of U.S. and multinational corporations which significantly reduced the statutory corporate U.S. federal income tax rate from 35% to 21%, imposed limitations on the ability of corporations to deduct interest expense and made taxation changes on U.S. multinational corporation’s foreign operations. The provisions of the Tax Act are complex and likely will be subject to regulatory and administrative guidance. The Tax Act includes a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries and a base erosion anti-abuse tax (BEAT) measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. For the fiscal year ended June 30, 2020, we have $3.2 million of GILTI income inclusion and used our net operating losses to offset our taxable income. For the fiscal year ended June 30, 2020, we did not incur any BEAT tax. We account for uncertain tax positions according to the provisions of ASC 740. ASC 740 contains a two-step approach for recognizing and measuring uncertain tax positions. Tax positions are evaluated for recognition by determining if the weight of available evidence indicates that it is probable that the position will be sustained on audit, including resolution of related appeals or litigation. Tax benefits are then measured as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes. As of June 30, 2020, we have completed a 382 study under Section 382 of the Internal Revenue Code, and have determined there was no loss of NOLs as a result of these changes. Utilization of the NOL or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required. Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization. ​ Comprehensive Income We report comprehensive income and its components in accordance with ASC 220, Comprehensive Income . Under the accounting standards, comprehensive loss includes all changes in equity during a period except those resulting from investments by or distributions to owners. Total comprehensive income for each of the two years in the period ended June 30, 2020 is shown in the accompanying statements of comprehensive income. Accumulated other comprehensive income presented in the accompanying consolidated balance sheets as of June 30, 2020 and 2019 consist of accumulated foreign currency translation adjustments. Net Income Per Common Share Basic net income per common share is computed using the weighted-average number of shares of common stock outstanding. In periods where net income is reported, the weighted average number of shares is increased by warrants and options in the money to calculate diluted net income per common share. The following table represents the calculation of basic and diluted net income per common share (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended June 30, ​ 2020 2019 Net income applicable to common stockholders ​ $ 7,208 ​ $ 4,168 Basic net income per common share ​ $ 0.24 ​ $ 0.15 Weighted average common shares used in computing basic net income per common share ​ 30,620 ​ 28,579 Effect of dilutive common equivalents outstanding ​ 1,336 ​ 1,784 Weighted average common shares used in computing diluted net income per common share ​ 31,956 ​ 30,363 Diluted net income per common share ​ $ 0.23 ​ $ 0.14 59 Table of Contents Weighted average options to purchase 613,643 and 256,538 shares of common stock as of June 30, 2020 and 2019, respectively, were not included in the computation of diluted net income per common share due to their anti-dilutive effect. Such securities could have a dilutive effect in future periods. Segment Information ​ We operate in one segment, the development, license, implementation and support of our customer service infrastructure software solutions. Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our chief operating decision-maker in order to make decisions about resources to be allocated to the segment and assess its performance. Our chief operating decision-makers under ASC 280, Segment Reporting , are our executive management team. Our chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. Information relating to our geographic areas for the fiscal years ended June 30, 2020 and 2019 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating ​ ​ ​ ​ Total ​ Income ​ Long-Lived ​ ​ Revenue ​ (Loss) ​ Assets Year ended June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ North America ​ $ 44,813 ​ $ 890 ​ $ 401 Europe, Middle East, & Africa ​ 27,916 ​ 11,944 ​ 90 Asia Pacific ​ — ​ (5,428) ​ 222 ​ ​ $ 72,729 ​ $ 7,406 ​ $ 713 Year ended June 30, 2019: ​ ​ ​ ​ ​ ​ North America ​ $ 37,435 ​ $ 359 ​ $ 206 Europe, Middle East, & Africa ​ 29,797 ​ 10,290 ​ 112 Asia Pacific ​ — ​ (5,127) ​ 207 ​ ​ $ 67,232 ​ $ 5,522 ​ $ 525 ​ For the purposes of entity-wide geographic area disclosures, we define long-lived assets as hard assets that cannot be easily removed, such as property and equipment. ​ Recent Accounting Pronouncements ​ Pronouncements Not Yet Adopted ​ In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) . This update requires a customer in a cloud computing service arrangement to follow the internal-use software guidance to determine which implementation costs to recognize and defer as an asset. This update is effective for fiscal years beginning after December 15, 2019 (our fiscal year 2021). We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures. ​ In December 2019, FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies the accounting for income taxes. This update is effective for fiscal years beginning after December 15, 2020 (our fiscal year 2022). We are currently evaluating the impact of this update on our consolidated financial statements and related disclosures. ​ Pronouncements Recently Adopted ​ In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This update provides the option to reclassify tax effects to retained earnings relating to items in accumulated other comprehensive income that the FASB refers to as having been stranded in accumulated other comprehensive income as a result of the U.S. Tax Act. ​ 60 Table of Contents We adopted this guidance as of our first quarter of fiscal year 2020 without a significant impact on our consolidated financial statements. ​ In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-Based Payment Accounting . This update expands the scope of Topic 718, Compensation—Stock Compensation, to include share-based awards granted to non-employees in exchange for goods or services. The accounting for employees and non-employees will be substantially aligned. We adopted this guidance as of our first quarter of fiscal year 2020 without a significant impact on our consolidated financial statements. ​ In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements , which provides an alternative transition method by allowing companies to initially apply the new leases guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. We adopted this guidance as of our first quarter of fiscal year 2020. ​ In February 2019, the FASB issued ASU No. 2019-01 Leases (Topic 842) Codification Improvements , which aligns the guidance for fair value of the underlying asset by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying asset at lease commencement is its cost. We adopted this guidance as of our first quarter of fiscal year 2020. ​ Leases ​ Effective July 1, 2019, the Company adopted the provisions and expanded disclosure requirements described in Topic 842. The Company adopted the standard under a modified retrospective approach, using the provision of ASU 2018-11, Leases (Topic 842) Targeted Improvements , which allows for the adoption of Topic 842 to be applied at the beginning of the fiscal year of adoption. As a result, the consolidated balance sheet and statement of operations for prior periods are not comparable to fiscal year 2020. In addition, the Company elected the package of practical expedients permitted under the transition guidance, which among other things, allowed the Company to not reassess prior conclusions on lease classifications or initial direct costs, or on whether contracts are or contain a lease. The Company did not use hindsight when determining the lease term. ​ Upon adoption, operating leases are now reported on the consolidated balance sheet, which has materially increased total assets and liabilities. As a result, the Company recorded operating lease right-of-use assets of approximately $4.5 million and corresponding operating lease liabilities of $4.8 million on its opening consolidated balance sheet. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2019 ($) ​ Adjustments due to ASC 842 ($) ​ Balance as of July 1, 2019 ($) Balance sheet captions: ​ ​ ​ ​ ​ ​ ​ ​ ​ Prepaid expenses ​ ​ 2,517 ​ ​ (114) 1 ​ ​ 2,403 Total current assets ​ ​ 56,589 ​ ​ (114) 1 ​ ​ 56,475 Operating lease right-of-use assets (Note 8) ​ ​ — ​ ​ 4,494 1,2,3 ​ ​ 4,494 Total assets ​ ​ 73,754 ​ ​ 4,380 1,2,3 ​ ​ 78,134 Accrued liabilities ​ ​ 2,353 ​ ​ (143) 3 ​ ​ 2,210 Operating lease liabilities (Note 8) ​ ​ — ​ ​ 1,653 4 ​ ​ 1,653 Total current liabilities ​ ​ 42,694 ​ ​ 1,510 3, 4 ​ ​ 44,204 Operating lease liabilities, net of current portion (Note 8) ​ ​ — ​ ​ 3,104 4 ​ ​ 3,104 Other long-term liabilities ​ ​ 952 ​ ​ (234) 4 ​ ​ 718 Total liabilities ​ ​ 49,447 ​ ​ 4,380 3,4 ​ ​ 53,827 Total liabilities and stockholders' equity ​ ​ 73,754 ​ ​ 4,380 3,4 ​ ​ 78,134 ​ 1. Represents prepaid rent reclassified to operating lease right-of-use assets. 2. Represents capitalization of operating lease right-of-use assets. 3. Represents reclassification of deferred rent reclassified to operating lease right-of-use assets. 4. Represents recognition of operating lease liabilities. ​ 61 Table of Contents Revenue Recognition Revenue Recognition Policy ​ Our revenue is comprised of two categories including subscription and professional services. Subscription includes SaaS revenue and legacy revenue. SaaS includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support. Legacy revenue is associated with license, maintenance and support contracts on perpetual license arrangements that we no longer sell. Professional services includes consulting, implementation and training. ​ Significant Judgment Applied in the Determination of Revenue Recognition ​ We enter into contractual arrangements with customers that may include promises to transfer multiple services, such as subscription, support and professional services. With respect to our business, a performance obligation is a promise to transfer a service to a customer that is distinct. Significant judgment is required to determine whether services are distinct performance obligations that should be accounted for separately or combined as one unit of accounting. Additionally, significant judgment is required to determine the timing of revenue recognition. ​ We allocate the transaction price to each performance obligation on a relative standalone selling price basis (SSP). The SSP is the price at which we would sell a promised service separately to one of our customers. Judgment is required to determine the SSP for each distinct performance obligation. ​ We determine the SSP by considering our pricing objectives in relation to market demand. Consideration is placed based on our history of discounting prices, size and volume of transactions involved, customer demographics and geographic locations, price lists, contract prices and our market strategy. ​ Determination of Revenue Recognition ​ Under Topic 606, we recognize revenue upon the transfer of control of promised services to our customers in the amount that is commensurate with the consideration that we expect to receive in exchange for those services. If consideration includes a variable amount in the arrangement, such as service level credits or contingent fees, then we include an estimate of the amount that we expect to receive for the total transaction price. The amount of revenue that we recognize is based on (i) identifying the contract with a customer; (ii) identifying the performance obligations in the contract; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract on a relative SSP basis; and (v) recognizing revenue when, or as, we satisfy each performance obligation in the contract typically through delivery or when control is transferred to the customer. ​ Subscription Revenue ​ The following customer arrangements are recognized ratably over the contract term as the performance obligations are delivered: ● Cloud delivery arrangements; ● Maintenance and support arrangements; and ● Term license subscriptions which incorporate on-premise software licenses and substantial cloud functionality that are not distinct in the context of our arrangements as such are considered highly interrelated and represent a single combined performance obligation. For contracts involving distinct software licenses, the license performance obligation is satisfied at a point in time when control is transferred to the customer. ​ ​ 62 Table of Contents We typically invoice our customers in advance upon execution of the contract or subsequent renewals with payment terms between 30 and 45 days. Invoiced amounts are recorded in accounts receivable, deferred revenue or revenue, depending if control transferred to our customers based on each arrangement. ​ The Company has a royalty revenue agreement with a customer related to the Company’s embedded intellectual property. Under the terms of the agreement, the customer is to provide a combined fixed fee, per agent, for each software license sold containing the embedded software to the Company. These embedded OEM royalties are included as subscription revenue. Under Topic 606 revenue guidance, since these arrangements are for sales-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company recognizes revenue only as the subsequent sale occurs. However, the Company notes that such sales are reported by the customer with a quarter in arrears, such revenue is recognized at the time it is reported and paid by the customer given that any estimated variable consideration would have to be fully constrained due to the unpredictability of such estimate and the unavoidable risk that it may lead to significant revenue reversals. ​ Professional Services Revenue ​ Professional services revenue includes system implementation, consulting and training. The transaction price is allocated to various performance obligations based on their stand-alone selling prices. Revenue allocated to each performance obligation is recognized at the earlier of satisfaction of discrete performance obligations, or as work is performed on a time and material basis. Our consulting and implementation service contracts are bid either on a time-and-materials basis or on a fixed-fee basis. Fixed fees are generally paid upon milestone billing or acceptance at pre-determined points in the contract. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether transfer of control to customers has occurred. ​ Training revenue that meets the criteria to be accounted for separately is recognized when training is provided. 2. BALANCE SHEET COMPONENTS Property and equipment consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ 2020 2019 ​ ​ (in thousands) Computers and equipment ​ $ 3,324 ​ $ 3,741 Furniture and fixtures ​ 940 ​ 1,077 Leasehold improvements ​ 554 ​ 542 Total ​ 4,818 ​ 5,360 Accumulated depreciation and amortization ​ (4,105) ​ (4,835) Property and equipment, net ​ $ 713 ​ $ 525 ​ Depreciation and amortization expense was $304,000 and $362,000 for the fiscal years ended June 30, 2020 and 2019, respectively. Disposed fixed assets, which were substantially fully-depreciated, were $920,000 and $3.6 million for the years ended June 30, 2020, and 2019, respectively. ​ Accrued compensation consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ 2020 2019 ​ ​ (in thousands) Accrued bonuses ​ $ 3,223 ​ $ 2,362 Accrued vacation ​ 2,235 ​ 1,840 Payroll and other employee related costs ​ 1,745 ​ 1,043 Accrued commissions ​ 713 ​ 235 Accrued compensation ​ $ 7,916 ​ $ 5,480 ​ 63 Table of Contents Accrued liabilities consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ 2020 2019 ​ ​ (in thousands) Customer advances ​ $ 471 ​ $ 294 Sales tax payable ​ ​ 672 ​ ​ 411 VAT liability ​ 848 ​ 717 Accrued other liabilities ​ 1,432 ​ 931 Accrued liabilities ​ $ 3,423 ​ $ 2,353 ​ ​ 3. REVENUE RECOGNITION ​ Disaggregation of Revenue ​ The following table presents our subscription and professional services revenue during the fiscal years ended June 30, 2020 and 2019, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ 2020 ​ 2019 ​ ​ (in thousands) Revenue: ​ ​ ​ ​ ​ ​ SaaS ​ $ 56,793 ​ $ 44,788 Legacy revenue ​ ​ 9,336 ​ ​ 15,225 Total subscription ​ ​ 66,129 ​ ​ 60,013 Professional services ​ ​ 6,600 ​ ​ 7,219 Total revenue ​ $ 72,729 ​ $ 67,232 ​ The following table presents our revenue by geography. Revenue by geography is generally determined on the region of our contracting entity rather than the region of our customer. The relative proportion of our total revenues between each geographic region as presented in the table below was materially consistent across each of our operating segments’ revenues for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ 2020 ​ 2019 ​ ​ (in thousands) Revenue: ​ ​ ​ ​ ​ ​ North America ​ $ 44,813 ​ $ 37,435 EMEA ​ ​ 27,916 ​ ​ 29,797 Total Revenue ​ $ 72,729 ​ $ 67,232 ​ Contract Balances ​ Contract assets, if any, consist of unbilled receivables for completed performance obligations which have not been invoiced, and for which we do not have an unconditional right to consideration. Contract liabilities consist of deferred revenue for which we have an obligation to transfer services to customers and have received consideration in advance or the amount is due from customers. Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period. ​ There were no contract assets for the years ended June 30, 2020 and 2019. ​ ​ 64 Table of Contents The following table presents the changes in contract liabilities (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of July 1, 2019 ($) Additions ($) ​ Deductions ($) ​ Balance as of June 30, 2020 ($) Contract liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue ​ ​ 30,688 ​ ​ 78,381 ​ ​ (72,425) ​ ​ 36,644 Deferred revenue, net of current portion ​ 5,801 ​ — ​ (975) ​ 4,826 ​ ​ With respect to deferred revenue balances as of June 30, 2019, $32.5 million was recognized to revenue during fiscal year ended June 30, 2020. ​ Remaining Performance Obligations ​ Remaining performance obligations represent contracted revenues that had not yet been recognized, and include deferred revenues, invoices that have been issued to customers but were uncollected and have not been recognized as revenues, and amounts that will be invoiced and recognized as revenues in future periods. The transaction price allocated to the remaining performance obligation is influenced by a variety of factors, including seasonality, timing of renewals, average contract terms and foreign currency rates. As of June 30, 2020, our remaining performance obligations were $68.6 million of which we expect to recognize $47.3 million and $21.3 million as revenue within one year and beyond one year, respectively. ​ ​ ​ ​ 4. BANK BORROWINGS On January 27, 2017, we entered into Amendment Number Two to the Credit Agreement, which further amended the Credit Agreement with Wells Fargo and the lenders party thereto dated November 21, 2014 (as amended, the Credit Agreement). The loan was secured by substantially all of our assets. ​ Our Credit Agreement and the obligations under the agreement matured on November 21, 2019. All remaining principal was paid prior to that date and all remaining deferred financing costs have been amortized to interest expense. ​ ​ 5. INCOME TAXES Income before income tax provision consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2020 2019 United States $ 5,260 ​ $ 2,904 Foreign ​ 2,726 ​ 2,097 Income before income tax provision ​ $ 7,986 ​ $ 5,001 ​ ​ 65 Table of Contents The following table reconciles the federal statutory tax rate to the effective tax rate of the income tax provision: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ 2020 ​ 2019 ​ ​ ​ ​ ​ ​ ​ ​ Federal statutory income tax rate ​ 21.0 % ​ 21.0 % Current state taxes, net of federal benefit ​ 3.3 ​ 2.6 ​ Foreign rate differential ​ (0.6) ​ 3.6 ​ Research and development credits ​ (0.6) ​ ​ (7.5) ​ Foreign withholding tax ​ 1.2 ​ 0.5 ​ Stock-based compensation ​ ​ (0.3) ​ ​ (12.1) ​ Deferred return to provision ​ ​ 0.7 ​ ​ — ​ Other items ​ 0.5 ​ 9.0 ​ Net change in valuation allowance ​ ​ (71.5) ​ ​ (7.3) ​ Foreign income ​ ​ 8.5 ​ ​ 6.9 ​ Expiration of tax attributes ​ 47.5 ​ — ​ Effective tax rate ​ 9.7 % ​ 16.7 % ​ The components of the income tax provision are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2020 2019 Current provision (benefit): ​ ​ ​ ​ ​ Foreign ​ $ 401 ​ $ 454 Federal ​ ​ (12) ​ ​ (62) State ​ 128 ​ 84 Total current: ​ 517 ​ 476 Deferred: ​ ​ ​ ​ Federal ​ ​ 62 ​ ​ 62 Foreign ​ 199 ​ 295 Total deferred: ​ 261 ​ 357 Income tax provision ​ $ 778 ​ $ 833 ​ As of June 30, 2020, we had federal and state net operating loss carryforwards of approximately $163.6 million and $12.3 million, respectively. The net operating loss carryforwards will expire at various dates beginning in fiscal year ending June 30, 2021, if not utilized. We also had federal research and development credit carryforwards of approximately $3.5 million as of June 30, 2020, which will expire at various dates beginning in fiscal year ending June 30, 2021, if not utilized. The California research and development credit carryforwards are approximately $5.2 million as of June 30, 2020 and have an indefinite carryover period. As of June 30, 2020, we have completed a 382 study under Section 382 of the Internal Revenue Code, and have determined there was no loss of NOLs as a result of these changes. Utilization of the NOL or tax credit carryforwards to offset future taxable income and taxes, respectively, are subject to an annual limitation under the Internal Revenue Code of 1986 and similar state provisions, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments such as built in gain or built in loss, as required. Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization. ​ Deferred tax assets and liabilities reflect the net tax effects of net operating loss and credit carryforwards and of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. ​ 66 Table of Contents Significant components of our deferred tax assets and liabilities for federal, state and foreign income taxes are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, ​ 2020 2019 Deferred tax assets: ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 35,105 ​ $ 44,244 Research credits ​ 7,525 ​ 7,353 Deferred revenue ​ 2,483 ​ 1,596 Stock-based compensation ​ 1,100 ​ 802 Accruals and reserves ​ 2,898 ​ 1,044 Lease liability ​ ​ 542 ​ ​ — Other ​ 56 ​ 163 Gross deferred tax assets ​ 49,709 ​ 55,202 Less valuation allowance ​ (48,700) ​ (54,445) Net deferred tax assets ​ $ 1,009 ​ $ 757 Gross deferred tax liabilities ​ ​ ​ ​ ​ ​ Right-of-use asset ​ $ (500) ​ $ — Fixed assets ​ ​ (20) ​ ​ — Gross deferred tax liabilities ​ ​ (520) ​ ​ — Total deferred tax assets, net * ​ $ 489 ​ $ 757 ​ ​ ​ ​ ​ ​ ​ *included in other assets on balance sheet ​ ​ ​ ​ ​ ​ ​ ASC 740, Income Taxes , provides for the recognition of deferred tax assets if realization of such assets is more likely than not. For the legacy eGain business in the United States, based upon the weight of available evidence, which includes our historical operating performance and the reported cumulative net losses in prior years, we have provided a full valuation allowance against our U.S. net deferred tax assets. With respect to our foreign operations, we expect to utilize the deferred tax assets and have not placed a valuation allowance against them. Our tax provision primarily relates to foreign activities as well as state income taxes. Our income tax rate differs from the statutory tax rates primarily due to the utilization of net operating loss carryforwards which had previously been valued against, change in valuation allowance, stock-based compensation, research and development credits, and our foreign operations. The net valuation allowance decreased by $5.7 million and $2.7 million for the fiscal years ended June 30, 2020 and 2019, respectively. We have not provided for taxes on $17.1 million of undistributed earnings of our foreign subsidiaries as of June 30, 2020. It is our intention to reinvest such undistributed earnings indefinitely in our foreign subsidiaries. If we distribute these earnings, in the form of dividends or otherwise, we would be subject to withholding taxes payable to the foreign jurisdiction. ​ 67 Table of Contents Uncertain Tax Positions The aggregate changes in the balance of our gross unrecognized tax benefits during fiscal years 2020 and 2019 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2020 2019 Beginning balance ​ $ 1,665 ​ $ 1,578 Increases in balances related to tax positions taken during current periods ​ 26 ​ 87 Ending balance ​ $ 1,691 ​ $ 1,665 ​ There is no amount of unrecognized tax benefit, if recognized currently, that would impact the Company’s effective tax rate as of June 30, 2020 and 2019, respectively. No accrued interest and penalties have been recognized in the tax provision related to unrecognized tax benefits. We do not anticipate the amount of existing unrecognized tax benefit to significantly increase or decrease during the next twelve months. Our policy is to record interest and penalties related to unrecognized tax benefits as income tax expense. We file income tax returns in the United States as well as various state and foreign jurisdictions. In these jurisdictions, tax years between 2001 and 2019 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years. 6. STOCKHOLDERS’ EQUITY Common Stock We have reserved shares of common stock for issuance as of June 30, 2020 as follows: ​ ​ ​ ​ Reserved ​ ​ Stock ​ ​ Options Stock options outstanding 2,885,966 Stock available for future grants or issuance: ​ 2005 Stock Incentive Plan ​ 1,073,386 2005 Management Stock Option Plan ​ 68,649 2017 Employee Stock Purchase Plan ​ 773,483 Total reserved shares of common stock for issuance 4,801,484 ​ Preferred Stock We are authorized to issue 5,000,000 shares of preferred stock with a par value of $0.001 per share, and no shares of preferred stock are outstanding. Our board of directors has the authority, without further action by our stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of the common stock. ​ 68 Table of Contents 2005 Management Stock Option Plan In May 2005, our board of directors adopted the 2005 Management Stock Option Plan (2005 Management Plan) which provides for the grant of non-statutory stock options to directors, officers and key employees of eGain and its subsidiaries. Our board extended the expiration date of the 2005 Management Plan to September 30, 2024. Options under the 2005 Management Plan are granted at a price not less than 100% of the fair market value of the common stock on the date of grant. Options granted under the 2005 Management Plan are subject to eGain’s right of repurchase, whose right shall lapse with respect to one-forty-eighth (1/48 th ) of the shares granted to a director, officer or key employee for each month of continuous service provided by such director, officer or key employee to eGain. The options granted under this plan are exercisable for up to ten years from the date of grant. The following table represents the activity under the 2005 Management Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ Available for ​ Options ​ Weighted ​ ​ Grant ​ Outstanding ​ Average Price Balance as of June 30, 2018 68,649 ​ 1,492,125 ​ $ 3.51 Options Granted — ​ — ​ $ — Options Exercised — ​ (174,399) ​ $ 3.12 Options Forfeited / Expired — ​ — ​ $ — Balance as of June 30, 2019 68,649 ​ 1,317,726 ​ $ 3.56 Options Granted ​ — ​ — ​ $ — Options Exercised ​ — ​ (39,209) ​ $ 2.89 Options Forfeited / Expired ​ — ​ — ​ $ — Balance as of June 30, 2020 ​ 68,649 ​ 1,278,517 ​ $ 3.58 ​ 2005 Stock Incentive Plan ​ In March 2005, our board of directors adopted the 2005 Stock Incentive Plan which provides for the grant of stock options to eGain’s employees, officers, directors and consultants. Our board extended the expiration date of the 2005 Stock Incentive Plan to September 30, 2024 and made certain other changes. Options granted under the 2005 Stock Incentive Plan are non-qualified stock options. Non-qualified stock options may be granted to employees with exercise prices of no less than the fair value of the common stock on the date of grant. The options generally vest ratably over a period of four years and expire no later than ten years from the date of grant. The following table represents the activity under the 2005 Stock Incentive Plan: ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Weighted ​ ​ Available for ​ Options ​ Average ​ ​ Grant ​ Outstanding ​ Price Balance as of June 30, 2018 588,654 ​ 1,680,734 ​ $ 2.90 Options Granted (334,500) ​ 334,500 ​ $ 9.58 Options Exercised — ​ (418,078) ​ $ 1.37 Options Forfeited / Expired 93,549 ​ (93,549) ​ $ 5.26 Balance as of June 30, 2019 347,703 ​ 1,503,607 ​ $ 4.67 Shares Added ​ 1,000,000 ​ — ​ $ — Options Granted ​ (350,125) ​ 350,125 ​ $ 8.29 Options Exercised ​ — ​ (170,475) ​ $ 2.52 Options Forfeited / Expired ​ 75,808 ​ (75,808) ​ $ 6.40 Balance as of June 30, 2020 ​ 1,073,386 ​ 1,607,449 ​ $ 5.60 ​ No shares were granted to consultants during the fiscal year ended June 30, 2020. 69 Table of Contents The following table summarizes information about stock options outstanding and exercisable under all stock option plans as of June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Outstanding ​ Options Exercisable ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Range of ​ ​ ​ Average ​ Weighted ​ ​ ​ Weighted ​ Exercise ​ Number of ​ Remaining ​ Average ​ Number of ​ Average ​ Prices Shares Contractual Life Exercise Price Shares Exercise Price ​ $1.2-$2.13 ​ 174,656 ​ 5.93 ​ $ 1.73 ​ 135,117 ​ $ 1.72 ​ $2.5-$2.5 ​ 1,290,001 ​ 6.26 ​ $ 2.50 ​ 961,824 ​ $ 2.50 ​ $3.4-$5.28 ​ 438,341 ​ 4.71 ​ $ 4.26 ​ 346,544 ​ $ 4.49 ​ $5.31-$6.65 ​ 350,688 ​ 5.40 ​ $ 6.32 ​ 289,726 ​ $ 6.30 ​ $7.1-$7.96 ​ 314,755 ​ 8.71 ​ $ 7.86 ​ 73,620 ​ $ 7.92 ​ $8.2-$12.15 ​ 242,825 ​ 8.86 ​ $ 10.17 ​ 63,003 ​ $ 10.89 ​ $12.8-$12.8 ​ 3,000 ​ 7.96 ​ $ 12.80 ​ 1,500 ​ $ 12.80 ​ $13.4-$13.4 ​ 1,000 ​ 3.36 ​ $ 13.40 ​ 1,000 ​ $ 13.40 ​ $13.75-$13.75 ​ 67,150 ​ 8.04 ​ $ 13.75 ​ 32,175 ​ $ 13.75 ​ $14.4-$14.4 ​ 3,550 ​ 8.12 ​ $ 14.40 ​ 1,627 ​ $ 14.40 ​ $1.2-$14.4 ​ 2,885,966 ​ 6.43 ​ $ 4.71 ​ 1,906,136 ​ $ 4.08 The summary of options vested and exercisable as of June 30, 2020 comprised: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ Weighted ​ Aggregate ​ Remaining ​ ​ Number of ​ Average ​ Intrinsic ​ Contractual ​ ​ Shares ​ Exercise Price ​ Value ​ Term Options outstanding 2,885,966 ​ $ 4.71 ​ $ 18,749,416 ​ 6.43 Fully vested and expected to vest options 2,764,982 ​ $ 4.61 ​ $ 18,223,187 ​ 6.35 Options exercisable 1,906,136 ​ $ 4.08 ​ $ 13,523,577 ​ 5.58 ​ The aggregate intrinsic value in the preceding table represents the total intrinsic value based on stock options with a weighted average exercise price less than our closing stock price of $11.11 as of June 30, 2020 that would have been received by the option holders, had they exercised their options on June 30, 2020. The total intrinsic value of stock options exercised during fiscal years 2020 and 2019 was $1.3 million and $4.5 million, respectively. Stock-Based Compensation We account for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation . Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the vesting period. Stock-based compensation expense consists of expenses for stock options and our employee stock purchase plan (ESPP). ​ 2017 Employee Stock Purchase Plan In October 2017, our board of directors adopted the 2017 Employee Stock Purchase Plan (ESPP) which provided eligible employees the option purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market value at the entry date of the applicable offering period or at the end of each applicable purchasing period. The offering period, meaning a period with respect to which the right to purchase shares of our common stock may be granted under the ESPP, will not exceed twenty-seven months and consist of a series of six-month purchase periods. Eligible employees may join the ESPP at the beginning of any six-month purchase period. Under the terms of the ESPP, employees can choose to have between 1% and 15% of their base earnings withheld to purchase the Company’s common stock. ​ 70 Table of Contents Determining the fair value of the stock-based awards at the grant date requires significant judgment and the use of estimates, particularly surrounding Black-Scholes valuation assumptions such as stock price volatility and expected option term. ​ The table below summarizes the effect of stock-based compensation (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ 2020 2019 Non-cash stock-based compensation expense ​ $ (1,861) ​ $ (1,623) Income tax expense ​ (56) ​ — Net income effect ​ $ (1,917) ​ $ (1,623) ​ The Company recognized $56,000 of tax expense related to stock-based compensation expense for eGain UK and Exony for the fiscal year ended June 30, 2020. The tax effect related to stock-based compensation in 2019 was nominal. There is no income tax effect that has been recognized relating to the stock-based compensation expense in the US due to full valuation allowance. ​ Total stock-based compensation includes expense related to non-employee awards of $120,000 and $138,000 during the fiscal years ended June 30, 2020 and 2019, respectively. ​ Total stock-based compensation includes expense related to the ESPP of $294,000 and $305,000 during the fiscal year ended June 30, 2020 and 2019, respectively. We utilized the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted. All shares of our common stock issued pursuant to our stock option plans are only issued out of an authorized reserve of shares of common stock, which were previously registered with the Securities and Exchange Commission on a registration statement on Form S-8. During the fiscal years ended June 30, 2020 and 2019, there were 350,125 and 334,500 options granted, respectively, with a weighted average fair value of $4.50 and $5.17, per share, respectively. We used the following assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ 2020 ​ 2019 Dividend yield ​ — ​ ​ — ​ Expected volatility ​ 70 % ​ 68 % Average risk-free interest rate ​ 1.37 % ​ 2.61 % Expected life (in years) ​ 4.33 ​ ​ 4.36 ​ ​ The fair value of the ESPP stock purchase right is estimated on the date of grant using the following weighted-average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended June 30, ​ ​ ​ 2020 ​ 2019 ​ Expected term (in years) ​ ​ 0.50 ​ ​ 0.48 ​ Volatility ​ ​ 65 % ​ 87 % Expected dividend ​ ​ — ​ ​ — ​ Risk-free interest rate ​ ​ 1.88 % ​ 2.45 % Fair Value of grants per share ​ $ 2.97 ​ $ 2.92 ​ ​ During the fiscal year ended June 30, 2020, employees were granted the right to purchase an aggregate of 127,464 shares under the ESPP, and compensation expense related to those purchase rights for the fiscal year ended June 30, 2020 was $294,000. During the fiscal year ended June 30, 2020, 133,533 shares were purchased and 773,483 shares remain available to be purchased pursuant to the 2017 ESPP. 71 Table of Contents As of June 30, 2020 unrecognized compensation expense related to purchase rights that will be recognized over a weighted average period of 0.4 years was $172,000. ​ The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. We determined the appropriate measure of expected volatility by reviewing historic volatility in the share price of our common stock, as adjusted for certain events that management deemed to be non-recurring and non-indicative of future events. The risk-free interest rate is derived from the average U.S. Treasury Strips rate. We base our estimate of expected life of a stock option on the historical exercise behavior, and cancellations of all past option grants made by the Company during the time period which its common stock has been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options. In accordance with Accounting Standards Updates (ASU) 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Accounting , we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense. Total compensation cost, net of forfeitures, for all options granted but not yet vested as of June 30, 2020 was $1.2 million which is expected to be recognized over the weighted average period of 1.13 years. 7. INTANGIBLE ASSETS ​ Intangible assets are amortized over the estimated lives, as follows (in thousands, except expected life): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ Carrying ​ Accumulated ​ Net Balance ​ ​ ​ Statements of Operations Intangible Asset Amount Amortization June 30, 2020 Life Category Customer relationships - maintenance contracts ​ 1,610 ​ (1,584) ​ 26 6 ​ Cost of recurring ​ ​ $ 1,610 ​ $ (1,584) ​ $ 26 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ ​ ​ ​ ​ Consolidated ​ ​ Carrying ​ Accumulated ​ Net Balance ​ ​ ​ Statements of Operations Intangible Asset Amount Amortization June 30, 2019 Life Category Customer relationships - maintenance contracts ​ 1,610 ​ (1,316) ​ 294 6 ​ Cost of recurring ​ ​ $ 1,610 ​ $ (1,316) ​ $ 294 ​ ​ ​ ​ ​ Amortization expense related to the above intangible assets for fiscal year ended June 30, 2020 and 2019 was $268,000 and $438,000, respectively. ​ ​ 8. LEASES We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2024. Additionally, we are the sublessor for certain office space. All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term. Lease right-of-use assets and liabilities are recognized at the commencement date at the present value of lease payments over the lease term. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on information available at the commencement date in determining the present value of lease payments. ​ 72 Table of Contents The following table presents information about leases on our consolidated balance sheet (in thousands): ​ ​ ​ ​ ​ ​ ​ As of June 30, 2020 Assets: ​ ​ ​ Operating lease right-of-use assets ​ $ 2,962 Liabilities: ​ ​ ​ Operating lease liabilities ​ 1,753 Operating lease liabilities, net of current portion ​ 1,385 ​ The following table presents information about the weighted average lease term and discount rate as follows: ​ ​ ​ ​ ​ ​ ​ As of June 30, 2020 ​ Weighted average remaining lease term (in years) ​ ​ 2.01 ​ Weighted average discount rate ​ ​ 4.81 % ​ The following table presents information about leases on our consolidated statement of operations (in thousands): ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ June 30, 2020 Operating lease expense ​ $ 1,726 Short-term lease expense ​ ​ 13 Sublease income ​ ​ 618 ​ The following table presents supplemental cash flow information about our leases (in thousands): ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ June 30, 2020 Operating cash outflows from operating leases ​ $ 1,809 Right-of-use assets obtained in exchange for new operating lease liabilities ​ ​ — ​ As of June 30, 2020, remaining maturities of lease liabilities are as follows (in thousands): ​ ​ ​ ​ ​ Fiscal Period: ​ ​ ​ Fiscal 2021 ​ $ 1,858 Fiscal 2022 ​ ​ 1,165 Fiscal 2023 ​ 193 Fiscal 2024 ​ 64 Fiscal 2025 ​ ​ — Thereafter ​ ​ — Total minimum lease payments ​ ​ 3,280 Less: Imputed interest ​ ​ (142) Total ​ $ 3,138 ​ ​ ​ ​ ​ 73 Table of Contents 9. COMMITMENTS AND CONTINGENCIES ​ Employee benefit plans Defined Contribution Plans We sponsor an employee savings and retirement plan, the 401(k) Plan, as allowed under Section 401(k) of the Internal Revenue Code. The 401(k) Plan is available to all domestic employees who meet minimum age and service requirements, and provides employees with tax deferred salary deductions and alternative investment options. Employees may contribute up to 60% of their salary, subject to certain limitations. We, at the discretion of our board of directors, may contribute to the 401(k) Plan. In fiscal years 2020 and 2019, we contributed approximately $463,000 and $464,000 to the 401(k) Plan, respectively. We also have a defined contribution plan related to our foreign subsidiaries. Amounts expensed under this plan were $466,000 and $441,000, for the fiscal years ended June 30, 2020 and 2019, respectively. ​ Gratuity Plan—India In accordance with Gratuity Act of 1972, we sponsor a defined benefit plan (Gratuity Plan) for all of our India employees. The Gratuity Plan is required by local law, which provides a lump sum payment to vested employees upon retirement or termination of employment in an amount based on each employee’s salary and duration of employment with the Company. The Gratuity Plan benefit cost for the year is calculated on an actuarial basis. Current service costs and actuarial gains or losses, or prior service cost, for the Gratuity Plan were insignificant for the fiscal years 2020 and 2019. Warranty We generally warrant that the program portion of our software will perform substantially in accordance with certain specifications for a period up to one year from the date of delivery. Our liability for a breach of this warranty is either a return of the license fee or providing a fix, patch, work-around or replacement of the software. We also provide standard warranties against and indemnification for the potential infringement of third party intellectual property rights to our customers relating to the use of our products, as well as indemnification agreements with certain officers and employees under which we may be required to indemnify such persons for liabilities arising out of their duties to us. The terms of such obligations vary. Generally, the maximum obligation is the amount permitted by law. Historically, costs related to these warranties have not been significant. However, we cannot guarantee that a warranty reserve will not become necessary in the future. Indemnification We have agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by us, arising out of that person’s services as our director or officer or that person’s services provided to any other company or enterprise at our request. Transfer Pricing We have received transfer-pricing assessments from tax authorities with regard to transfer pricing issues for certain fiscal years, which we have appealed with the appropriate authority. We review the status of each significant matter and assess its potential financial exposure. We believe that such assessments are without merit and would not have a significant impact on our consolidated financial statements. ​ ​ 74 Table of Contents Contractual Obligations and Commitments Contractual agreements with third parties consist of software licenses, maintenance and support for our operations. As of June 30, 2020, we have paid all non-cancelable contractual agreements related to these software licenses. As of June 30, 2019, future payments for non-cancelable contractual agreements was $1.3 million. ​ We have no significant commitments related to co-location services for cloud operations as of June 30, 2020 and 2019. 10. LITIGATION In the ordinary course of business, we are involved in various legal proceedings and claims related to alleged infringement of third-party patents and other intellectual property rights, commercial, corporate and securities, labor and employment, wage and hour, and other claims that are not expected to have a material impact. We have been, and may in the future be, put on notice and/or sued by third parties for alleged infringement of their proprietary rights, including patent infringement. We evaluate all claims and lawsuits with respect to their potential merits, our potential defenses and counterclaims, settlement or litigation potential and the expected effect on us. Our technologies may be subject to injunction if they are found to infringe the rights of a third party. In addition, our agreements require us to indemnify our customers for third-party intellectual property infringement claims, which could increase the cost to us of an adverse ruling on such a claim. 11. FAIR VALUE MEASUREMENT ASC 820, Fair Value Measurement and Disclosures, defines fair value, establishes a framework for measuring fair value of assets and liabilities, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the assets or liabilities in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive income when they occur. ASC 820 applies whenever other statements require or permit assets or liabilities to be measured at fair value. ASC 820 includes a fair value hierarchy, of which the first two are considered observable and the last unobservable, that is intended to increase the consistency and comparability in fair value measurements and related disclosures. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: Level 1 – instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets. Level 2 – instrument valuations are obtained from readily-available pricing sources for comparable instruments. Level 3 – instrument valuations are obtained without observable market value and require a high level of judgment to determine the fair value. Our money market funds are measured at fair value on a recurring basis based on quoted market prices in active markets and are classified as level 1 within the fair value hierarchy. As of June 30, 2020 and 2019, cash equivalents classified as level 1 instruments were measured at $41.8 million and $29.2 million, respectively. ​ ​ ​ 75 Table of Contents 12. QUARTERLY FINANCIAL DATA (Unaudited) Following is a summary of quarterly operating results and share data for the years ended June 30, 2020 and 2019, respectively: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1st Quarter ​ 2nd Quarter ​ 3rd Quarter ​ 4th Quarter ​ Fiscal Year ​ ​ (in thousands, except per share data) Fiscal 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 17,190 ​ $ 18,155 ​ $ 18,354 ​ $ 19,030 ​ $ 72,729 Gross profit ​ $ 11,875 ​ $ 12,911 ​ $ 12,854 ​ $ 14,007 ​ $ 51,648 Income from operations ​ $ 1,095 ​ $ 2,002 ​ $ 1,757 ​ $ 2,553 ​ $ 7,406 Net income ​ $ 1,217 ​ $ 1,973 ​ $ 1,867 ​ $ 2,151 ​ $ 7,208 Basic net income per share ​ $ 0.04 ​ $ 0.06 ​ $ 0.06 ​ $ 0.07 ​ $ 0.24 Diluted net income per share ​ $ 0.04 ​ $ 0.06 ​ $ 0.06 ​ $ 0.07 ​ $ 0.23 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 15,701 ​ $ 17,704 ​ $ 17,004 ​ $ 16,823 ​ $ 67,232 Gross profit ​ $ 10,466 ​ $ 12,162 ​ $ 11,707 ​ $ 11,056 ​ $ 45,391 Income from operations ​ $ 753 ​ $ 2,129 ​ $ 1,789 ​ $ 851 ​ $ 5,522 Net income ​ $ 604 ​ $ 2,000 ​ $ 1,398 ​ $ 166 ​ $ 4,168 Basic net income per share ​ $ 0.02 ​ $ 0.07 ​ $ 0.05 ​ $ 0.01 ​ $ 0.15 Diluted net income per share ​ $ 0.02 ​ $ 0.07 ​ $ 0.05 ​ $ 0.01 ​ $ 0.14 ​ ​ ​ ​ 76 Table of Contents I TEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. I TEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (Exchange Act), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures 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. Based on their evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2020, our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Controls. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control— Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control— Integrated Framework (2013) , our management concluded that our internal control over financial reporting was effective as of June 30, 2020. ITEM 9B. OTHER INFORMATION None. ​ 77 Table of Contents ​ P ART III ​ I TEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this item (with respect to our Directors) is incorporated by reference from the information under the heading “Election of Directors” contained in eGain’s definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies for eGain’s 2020 Annual Meeting of Stockholders (Proxy Statement). Certain information required by this item concerning executive officers is set forth in Part I, Item 1 of this report under the caption “Information About Our Executive Officers” and is incorporated herein by reference. The information contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement is incorporated herein by reference. I TEM 11. EXECUTIVE COMPENSATION The information contained under the headings “Executive Compensation” and “Compensation Committee Report” and under the captions “Director Compensation” in the Proxy Statement is incorporated herein by reference. I TEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information contained under the heading “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement is incorporated herein by reference. The following table summarizes our equity compensation plans as of June 30, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of securities ​ ​ Number of ​ ​ ​ ​ remaining available for ​ ​ securities to be ​ Weighted-average ​ future issuance under ​ ​ issued upon exercise ​ exercise price of ​ equity compensation ​ ​ of outstanding ​ outstanding options ​ plans (excluding securities ​ ​ options and rights ​ and rights ​ reflected in column (a)) Plan Category ​ (a) ​ (b) ​ (c) Equity compensation plans approved by security holders ​ ​ ​ ​ ​ 2005 Stock Incentive Plan 1,607,449 ​ $ 5.60 1,073,386 Equity compensation plans not approved by security holders ​ ​ ​ ​ ​ 2005 Management Stock Option Plan 1,278,517 ​ $ 3.58 68,649 Total 2,885,966 ​ $ 4.71 1,142,035 ​ ​ 78 Table of Contents Equity Compensation Plans Not Approved By Security Holders 2005 Management Stock Option Plan In May 2005, our board of directors adopted the 2005 Management Stock Option Plan (2005 Management Plan), pursuant to which the Compensation Committee may grant non-qualified stock options to purchase up to 962,400 shares of eGain common stock, at an exercise price of not less than 100% of the fair market value of such common stock, to directors, officers and key employees of the Company and its subsidiaries. Options granted under the 2005 Management Plan are subject to vesting as determined by the Compensation Committee. The options are exercisable for up to ten years from the date of grant. Our board of directors approved an increase of 500,000 shares of common stock authorized for issuance under the 2005 Management Plan in November 2007 and another increase of 500,000 shares of common stock authorized for issuance under the 2005 Management Plan in September 2011. In September 2014, our board of directors approved an amendment to the 2005 Management Plan that increased the number of shares of common stock reserved for issuance by 1,000,000 shares from 1,962,400 shares to 2,962,400 shares and extended the expiration date of the of the 2005 Management Plan to September 30, 2024. I TEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information contained under the captions “Related Party Transactions” and “Director Independence” in the Proxy Statement is incorporated herein by reference. I TEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information contained under the heading “Ratification of Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated herein by reference. ​ 79 Table of Contents P ART IV ​ I TEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) 1. Financial Statements See Index to Consolidated Financial Statements in Item 8 of this report. 2. Financial Statement Schedule The following schedule, which is filed as part of this Form 10-K: Schedule II—Valuation and Qualifying Accounts for the fiscal years ended June 30, 2020 and 2019. ​ SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS Years Ended June 30, 2020 and 2019 (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amounts ​ ​ ​ ​ Balance at Additions Written Off, ​ ​ ​ Beginning of ​ Charged to ​ Net of ​ Balance at ​ ​ Period ​ Expense ​ Recoveries ​ End of Period Allowance for Doubtful Accounts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended June 30, 2020 ​ $ 320 ​ $ 317 ​ $ (253) ​ $ 384 Year ended June 30, 2019 ​ $ 256 ​ $ 253 ​ $ (189) ​ $ 320 ​ All other financial statement schedules have been omitted because they are not applicable or not required or because the information in included elsewhere in the Consolidated Financial Statements or the Notes thereto. 3. Exhibits See Item 15(b) of this report. All other schedules have been omitted since they are either not required, not applicable or the information has been included in the consolidated financial statements or notes thereto. ​ (b) Exhibits The exhibits listed below are filed or incorporated by reference herein. Each management contract or compensatory plan or arrangement required to be filed has been identified. Exhibit No. Description of Exhibits 3(i).1 Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008). 3(i).2 Certificate of Amendment of Certificate of Incorporation (incorporated by reference to Exhibit 3(iii) to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012). 3(ii) Amended and Restated Bylaws (incorporated by reference to Exhibit 3.4 to the Registrant’s Registration Statement on Form S-1, File No. 333-83439, originally filed with the Commission on July 22, 1999, as subsequently amended (Form S-1). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form S-1). 4.2 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 80 Table of Contents 10.1# Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form S-1). 10.2# eGain Corporation Amended and Restated 2005 Stock Incentive Plan (as amended through August 30 2019) (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019). 10.3# Amended and Restated 2005 Management Stock Option Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014). 10.4# F orm of Executive Change in Control Severance Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015) . 10.5# eGain Corporation 2017 Employee Stock Purchase Plan. 10.6 Credit Agreement dated as of November 21, 2014 among the Registrant, certain subsidiaries of the Registrant. Wells Fargo Bank N.A. as agent and the lenders party thereto. 10.7 Amendment Number One to Credit Agreement dated as of September 1, 2015 among the Registrant, certain subsidiaries of the Registrant, Wells Fargo Bank, N.A., as agent and the lenders party thereto. 10.8 Amendment Number Two to Credit Agreement dated as of January 27, 2017 among the Registrant, certain subsidiaries of the Registrant, Wells Fargo Bank, N.A., as agent and the lenders party thereto. ​ ​ ​ 10.9 Standard Industrial/Commercial Multi-Tenant Lease Modified Net dated as of May 9, 2011 between the Registrant and DeGuigne Ventures, LLC (incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014). ​ ​ ​ 10.11 ​ First Amendment to Standard Industrial/Commercial Multi-Tenant Lease Modified Net dated as of May 14, 2014 between the Registrant and D.R. Stephens Industrial Partners, LLC (Successor in Interest to DeGuigne Ventures, LLC) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on May 19, 2014). ​ ​ ​ 21.1 Subsidiaries of eGain. ​ ​ ​ 23.1 ​ Consent of BPM LLP, Independent Registered Public Accounting Firm. ​ ​ ​ 31.1 ​ Rule 13a-14(a) Certification of Chief Executive Officer. ​ ​ ​ 31.2 ​ Rule 13a-14(a) Certification of Chief Financial Officer. ​ ​ ​ 32.1* ​ Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Ashutosh Roy, Chief Executive Officer. ​ ​ ​ 32.2* ​ Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Eric Smit, Chief Financial Officer. ​ ​ ​ 101.INS ​ XBRL Instance Document ​ ​ ​ 101.SCH ​ XBRL Taxonomy Extension Schema Document ​ ​ ​ 101.CAL ​ XBRL Taxonomy Extension Calculation Linkbase Document ​ ​ ​ 101.DEF ​ XBRL Taxonomy Extension Definition Linkbase Document ​ ​ ​ 101.LAB ​ XBRL Taxonomy Extension Label Linkbase Document ​ ​ ​ 101.PRE ​ XBRL Taxonomy Extension Presentation Linkbase Document # Indicates management contract or compensatory plan or arrangement. 81 Table of Contents * This exhibit is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after date hereof and irrespective of any general incorporation language contained in such filing. (c) Financial Statements Reference is made to Item 15(a)(2) above. ITEM 16. FORM 10-K SUMMARY Not applicable. ​ ​ 82 Table of Contents S IGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ ​ ​ ​ ​ ​ eGain Corporation ​ ​ ​ ​ ​ Date: September 11, 2020 By: /s/ A SHUTOSH R OY ​ Chief Executive Officer ​ KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears below constitutes and appoints Ashutosh Roy and Eric Smit, and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments to this annual report, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Name Title Date ​ ​ ​ ​ ​ /s/ A SHUTOSH R OY Chief Executive Officer and Director (Principal Executive Officer) September 11, 2020 Ashutosh Roy ​ ​ ​ ​ ​ ​ ​ /s/ E RIC N. S MIT ​ Chief Financial Officer ​ September 11, 2020 Eric N. Smit ​ (Duly Authorized Officer and Principal Financial and Accounting Officer) ​ ​ ​ ​ ​ ​ ​ /s/ C HRISTINE R USSELL Director September 11, 2020 Christine Russell ​ ​ ​ ​ ​ ​ ​ /s/ G UNJAN S INHA Director September 11, 2020 Gunjan Sinha ​ ​ ​ ​ ​ ​ ​ /s/ P HIROZ P. D ARUKHANAVALA Director September 11, 2020 Phiroz P. Darukhanavala ​ ​ ​ ​ ​ ​ ​ /s/ B RETT S HOCKLEY ​ Director September 11, 2020 Brett Shockley ​ ​ ​ ​ ​ ​ ​ ​ 83