What changed in this filing

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Item 2. Management’s Discussion and Analysis

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With our mantra of AX + BX + CX = DX™ , we guide clients to effortless digital experience (DX) by holistically optimizing agent experience (AX), business experience (BX) and customer experience (CX).

One hundred fifty leading brands use eGain’s cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

Approximately one hundred seventy leading brands use eGain’s cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

We have transitioned from a hybrid model, where we sold both SaaS and perpetual license solutions, to a SaaS only business model.

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The impact of COVID-19 and the related disruptions caused to the global economy and our business has not had a material adverse impact on our business.

However, the spread of the COVID-19 virus caused us to modify our business practices, including implementing work-from-home policies and restricting travel by our employees, among other things.

In response to the outbreak of COVID-19, we have taken the following measures to date:

● Implemented work-from-home and social distancing policies throughout our organization;

● Suspended all employee travel;

However, the ongoing spread of the COVID-19 virus, including new variants, current availability of COVID-19 vaccinations, and recent lockdown orders in China, caused us to adapt and modify our business practices, including implementing hybrid work model policies and limiting travel by our employees, among other things.

In response to the ongoing spread of COVID-19, we have taken the following measures to date:

● Implemented hybrid work model and social distancing policies throughout our organization;

● Limited employee travel;

● Cancelled certain sales and marketing events;

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Non-GAAP Operating Income

Non-GAAP operating income (loss) is defined as operating income (loss), adjusted for the impact of stock-based compensation expense and amortization of acquired intangible assets.

Non-GAAP operating income is defined as (loss) income from operations, adjusted for the impact of stock-based compensation expense and amortization of acquired intangible assets.

Management believes that it is useful to exclude certain non-cash charges and non-core operational charges from non-GAAP operating income because (i) the amount of such expenses in any specific period may not directly correlate to the

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(Loss) Income from operations

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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 exchange rates.

As of December 31, 2021, our remaining performance obligations were $89.8 million, of which we expect to recognize $58.7 million and $31.1 million as revenue within one year and beyond one year, respectively.

As of March 31, 2022, our remaining performance obligations were $84.2 million, of which we expect to recognize $53.4 million and $30.8 million as revenue within one year and beyond one year, respectively.

We expect our remaining performance obligations to change quarterly for several reasons including the timing of new contracts and renewals, duration and size of our subscription and support arrangements, variable billing cycles and foreign exchange rate fluctuation.

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Professional services

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We further break down subscription revenue into SaaS revenue and legacy revenue, with SaaS revenue being a key metric.

The following table presents our subscription and professional services revenue during the three and six months ended December 31, 2021 and 2020, respectively:

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2022 and 2021, respectively:

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Total revenue

Total revenue increased $3.9 million and $6.2 million during the three and six months ended December 31, 2021, compared to the same periods in 2020, respectively, due to an increase in SaaS revenue of $4.3 million and $7.5 million during the three and six months ended December 31, 2021, compared to the same periods in 2020.

The increase for the three months ended December 31, 2021 was primarily due to an increase in SaaS revenue that was partially offset by a decline in our legacy revenue as we continue to migrate legacy perpetual license customers to our SaaS model.

The increase for the six months ended December 31, 2021 was primarily due to an increase in SaaS revenue that was partially offset by a decline in our legacy revenue.

Total revenue increased approximately $4.2 million and $10.4 million during the three and nine months ended March 31, 2022, compared to the same periods in 2021, respectively, due to an increase in SaaS revenue of $3.8 million and $11.3 million during the three and nine months ended March 31, 2022, compared to the same periods in 2021.

The increase for the three months ended March 31, 2022 was primarily due to an increase in SaaS revenue that was partially offset by a decline in our legacy revenue as we continue to migrate legacy perpetual license customers to our SaaS model.

The increase for the nine months ended March 31, 2022 was primarily due to an increase in SaaS revenue that was partially offset by a decline in our legacy revenue.

Our revenue was impacted by foreign exchange rate fluctuation between the U.S.

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We recalculate our current period results using the comparable prior period exchange rates to exclude the impact of foreign exchange rate fluctuation.

Foreign exchange rate fluctuation resulted in increases of $121,000 and $72,000 in total revenue during the three months ended December 31, 2021 and 2020, respectively.

Foreign exchange rate fluctuation resulted in an increase of $479,000 and $515,000 for the six months ended December 31, 2021 and 2020, respectively.

Foreign exchange rate fluctuation resulted in decreases of $181,000 and an increase of $475,000 in total revenue during the three months ended March 31, 2022 and 2021, respectively.

Foreign exchange rate fluctuation resulted in an increase of $310,000 and $885,000 for the nine months ended March 31, 2022 and 2021, respectively.

Subscription Revenue

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SaaS revenue includes revenue from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.

Revenue from SaaS increased by $4.3 million and $7.5 million during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

Revenue from SaaS increased by $3.8 million and $11.3 million during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

In connection with our SaaS transition, we are actively migrating our remaining perpetual license clients to SaaS and continue to sell SaaS to new customers.

We expect our SaaS revenue to increase on a year over year basis.

SaaS revenue represents 88% of total revenue for the three and six months ended December 31, 2021, respectively, compared to 84% during the same periods in 2020.

This represented an increase in SaaS revenue of 26% and 23% for the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

Excluding increases of $107,000 and $396,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $4.2 million and $7.1 million during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

SaaS revenue represents 87% and 88% of total revenue for the three and nine months ended March 31, 2022, compared to 85% and 84%, respectively, during the same periods in 2021.

This represented an increase in SaaS revenue of 23% for the three and nine months ended March 31, 2022, compared to the same periods in 2021.

Excluding a decrease of $154,000 and an increase of $252,000 due to foreign exchange rate fluctuation, SaaS revenue increased by $4.0 million and $11.1 million during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

Legacy Revenue

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Legacy revenue is associated with license, maintenance and support contracts on perpetual license arrangements that we no longer offer.

We experienced decreases of $667,000 and $1.5 million during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

We experienced decreases of $161,000 and $1.7 million during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

This decrease was primarily due to our focus in migrating our legacy customers to SaaS.

We expect these legacy fees to continue to decline in future quarters.

Excluding increases of $6,000 and $49,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $661,000 and $1.5 million during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

Excluding decreases of $10,000 and an increase of $39,000 due to foreign exchange rate fluctuation, legacy revenue decreased by $151,000 and $1.7 million during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

Professional Services Revenue

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Professional services revenue includes consulting, implementation, managed services and training.

Revenue from professional services increased by $253,000 and $243,000 during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

The increase for three and six months ended December 31, 2021 compared to the prior year was primarily due to new customer implementations and an increase in managed services.

Excluding increases of $8,000 and $33,000 due to foreign exchange rate fluctuation, professional services revenue increased by $245,000 and decreased by $210,000 during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

Revenue from professional services increased by $511,000 and $754,000 during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

The increase for three and nine months ended March 31, 2022 compared to the prior year was primarily due to new customer implementations and an increase in managed services.

Excluding a decrease of $17,000 and an increase of $19,000 due to foreign exchange rate fluctuation, professional services revenue increased by $528,000 and $735,000 during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

Revenue by Geography

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Total revenue

Revenue from North America sales increased by 27% from $13.2 million during the three months ended December 31, 2020 to $16.8 million during the three months ended December 31, 2021 due to increases of (i) $3.7 million in SaaS revenue and (ii) $351,000 in professional services revenue;

Revenue from North America sales increased by 28% from $13.6 million during the three months ended March 31, 2021 to $17.5 million during the three months ended March 31, 2022 due to increases of (i) $3.8 million in SaaS revenue and (ii) $366,000 in professional services revenue;

partially offset by a decrease of $283,000 in legacy revenue.

Revenue from North America sales increased by 19% from $26.9 million during the six months ended December 31, 2020 to $32.0 million during the six months ended December 31, 2021 due to increases of (i) $5.8 million in SaaS revenue, and (ii) $253,000 in professional services revenue;

partially offset by a decrease of $1.0 million in professional services revenue.

Revenue from international sales increased by 4% from $6.1 million for the three months ended December 31, 2020 to $6.3 million during the three months ended December 31, 2021, due to increases of $593,000 in SaaS revenue;

offset by a decrease of (i) $231,000 in legacy revenue and (ii) $97,000 in professional services revenue.

Revenue from international sales increased by 11% from $11.4 million for the six months ended December 31, 2020 to $12.6 million during the six months ended December 31, 2021, due to increases of (i) $1.7 million in SaaS revenue;

and partially offset by a decrease of $479,000 in legacy revenue and (ii) $1,000 in professional services revenue.

Revenue from North America sales increased by 22% from $40.6 million during the nine months ended March 31, 2021 to $49.5 million during the nine months ended March 31, 2022 due to increases of (i) $9.6 million in SaaS revenue, and (ii) $619,000 in professional services revenue;

partially offset by a decrease of $1.3 million in legacy revenue.

Revenue from international sales increased by 5% from $6.1 million for the three months ended March 31, 2021 to $6.4 million during the three months ended March 31, 2022, due to increases of $43,000 in SaaS revenue, (ii) $122,000 in legacy revenue, and (iii) $145,000 in professional services revenue.

Revenue from international sales increased by 9% from $17.5 million for the nine months ended March 31, 2021 to $19.0 million during the nine months ended March 31, 2022, due to increases of (i) $1.7 million in SaaS revenue and $136,000 in professional services revenue;

partially offset by a decrease of $356,000 in legacy revenue.

Cost of Revenue

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These expenses are comprised of cloud computing costs, personnel-related costs directly associated with cloud operations, and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Cost of subscription revenue increased by $273,000 during the three months ended December 31, 2021, from the same period in fiscal year 2020.

This increase was primarily due to increases of (i) $249,000 in cloud-computing costs, (ii) $92,000 in personnel-related costs;

partially offset by a decrease of $73,000 in outside consulting costs.

Cost of subscription revenue increased by $538,000 during the six months ended December 31, 2021, from the same period in fiscal year 2020.

This increase was primarily due to increases of (i) $372,000 in personnel-related costs and (ii) $374,000 in cloud-computing costs;

partially offset by a decrease of $217,000 in outside consulting costs.

Excluding increases of $5,000 and $35,000 due to foreign exchange rate fluctuation, cost of subscription revenue increased by $268,000 and $503,000 during the three and six months ended December 31, 2021, respectively, from the same periods in 2020.

Cost of subscription revenue increased by $462,000 during the three months ended March 31, 2022, from the same period in fiscal year 2021.

This increase was primarily due to increases of (i) $300,000 in cloud-computing costs, (ii) $172,000 in personnel-related costs, and (iii) $14,000 in outside consulting costs.

Cost of subscription revenue increased by $1.0 million during the nine months ended March 31, 2022, from the same period in fiscal year 2021.

This increase was primarily due to increases of (i) $674,000 in cloud-computing costs and (ii) $541,000 in personnel related costs;

partially offset by a decrease of (i) $203,000 in outside consulting costs and (ii) $26,000 in intangible amortization costs.

Excluding a decrease of $24,000 and an increase of $14,000 due to foreign exchange rate fluctuation, cost of subscription revenue increased by $486,000 and $986,000 during the three and nine months ended March 31, 2022, respectively, from the same periods in 2021.

Excluding any future foreign exchange rate fluctuation, we expect our cost of subscription revenue to increase in absolute dollar terms but expect subscription revenue gross margins to improve.

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Cost of professional services consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses, and stock-based compensation and allocated overhead.

Cost of professional services increased $1.1 million during the three months ended December 31, 2021, from the same period in 2020.

This increase was primarily due to increases of $1.1 million in personnel-related costs, of which $1.0 million is associated with stock based-compensation cost;

Cost of professional services increased $1.2 million during the three months ended March 31, 2022, from the same period in 2021.

This increase was primarily due to increases of $1.2 million in personnel-related costs, of which $825,000 is associated with stock-based compensation cost;

partially offset with a decrease of $2,000 in outside consulting costs.

Cost of professional services increased by $1.5 million during the six months ended December 31, 2021, from the same period in 2020.

This increase was primarily due to increases of $1.5 million in personnel-related costs, all of which is mainly associated with stock based-compensation cost;

Cost of professional services increased by $2.7 million during the nine months ended March 31, 2022, from the same period in 2021.

This increase was primarily due to increases of $2.8 million in personnel-related costs, of which $2.3 million is associated with stock-based compensation cost;

partially offset with a decrease of $20,000 in outside consulting costs.

Excluding increases of $5,000 and $28,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $1.1 million and $1.5 million during the three and six months ended December 31, 2021, respectively, compared to the same periods in 2020.

Excluding a decrease of $17,000 and an increase of $12,000 due to foreign exchange rate fluctuation, cost of professional services revenue increased by $1.2 million and $2.7 million during the three and nine months ended March 31, 2022, respectively, compared to the same periods in 2021.

Operating Expenses

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Research and development expense also includes outside consulting services contracted for research and development, and amortization of intangible assets.

Research and development expense increased 37% to $6.2 million for the three months ended December 31, 2021, from $4.5 million in the same period in 2020.

Excluding an increase of $2,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to an increase of (i) $1.6 million in personnel-related costs, of which $988,000 is associated with stock based-compensation cost, and (ii) $46,000 from outside consulting costs.

Research and development expense increased 31% to $11.8 million for the six months ended December 31, 2021, from $9.0 million in the same period in 2020.

Excluding an increase of $55,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to an increase of $2.7 million in personnel-related costs, of which $1.5 million is associated with stock based-compensation cost, and $65,000 from outside consulting costs.

Research and development expense increased 42% to $6.2 million for the three months ended March 31, 2022, from $4.4 million in the same period in 2021.

Excluding a decrease of $51,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to an increase of (i) $1.8 million in personnel-related costs, of which $783,000 is associated with stock-based compensation cost, and (ii) $63,000 from outside consulting costs.

Research and development expense increased 34% to $18.0 million for the nine months ended March 31, 2022, from $13.4 million in the same period in 2021.

Excluding an increase of $10,000 due to foreign exchange rate fluctuation, research and development expense increased primarily due to an increase of (i) $4.5 million in personnel-related costs, of which $2.3 million is associated with stock-based compensation cost, and (ii) $128,000 from outside consulting costs.

Excluding any future foreign exchange rate fluctuation, we expect our research and development expense to remain relatively consistent as a percentage of total revenue in future quarters based on our product development plans.

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Sales and marketing expenses also include amortization of commissions paid to our sales staff, lead generation activities, advertising, trade show and other promotional costs and, to a lesser extent, occupancy costs and related overhead.

Sales and marketing expenses increased 30% to $8.2 million for the three months ended December 31, 2021, from $6.3 million in the same period in fiscal year 2020.

Excluding an increase of $38,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $1.7 million in personnel-related expenses, of which $750,000 is associated with stock based-compensation cost, and (ii) $185,000 in marketing program expenses;

Sales and marketing expenses increased 25% to $8.7 million for the three months ended March 31, 2022, from $6.9 million in the same period in fiscal year 2021.

Excluding a decrease of $60,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $1.4 million in personnel-related expenses, of which $580,000 is associated with stock-based compensation cost, and (ii) $441,000 in marketing program expenses;

offset by a decrease of $12,000 in outside consulting expenses.

Sales and marketing expenses increased 31% to $15.6 million for the six months ended December 31, 2021, from $11.9 million in the same period in fiscal year 2020.

Excluding an increase of $150,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $3.5 million in personnel-related expenses, of which $1.3 million is associated with stock based-compensation cost, and (ii) $51,000 in marketing program expenses;

Sales and marketing expenses increased 29% to $24.3 million for the nine months ended March 31, 2022, from $18.8 million in the same period in fiscal year 2021.

Excluding an increase of $91,000 due to foreign exchange rate fluctuation, sales and marketing expense increased primarily due to increases of (i) $4.9 million in personnel-related expenses, of

which $1.8 million is associated with stock-based compensation cost, and (ii) $489,000 in marketing program expenses;

offset by a decrease of $33,000 in outside consulting expenses.

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General and administrative expenses also include fees for professional services, provision for doubtful accounts and, to a lesser extent, occupancy costs and related overhead.

General and administrative expenses increased 77% to $3.3 million for the three months ended December 31, 2021, from $1.9 million in the same period in fiscal year 2020.

Excluding an increase of $7,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to increases of (i) $1.3 million in personnel-related expenses, of which $1.1 million is associated with stock based-compensation cost, (ii) $174,000 in accounting, audit, and administrative expenses, (iii) $47,000 in outside consulting expenses, and (iv) $15,000 in legal expenses;

primarily offset by a decrease of $129,000 in bad debt expenses.

General and administrative expenses increased 51% to $5.7 million for the six months ended December 31, 2021, from $3.8 million in the same period in 2020.

Excluding an increase of $30,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to increases of (i) $1.9 million in personnel-related expenses, of which $1.6 million is associated with stock based-compensation cost, (ii) $154,000 in accounting, audit, and administrative expenses, (iii) $84,000 in outside consulting expenses, (iv) $53,000 in legal expenses, and (v) $13,000 in investor relations expense.

General and administrative expenses increased 46% to $3.0 million for the three months ended March 31, 2022, from $2.0 million in the same period in fiscal year 2021.

Excluding a decrease of $11,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to an increase of $1.2 million in personnel-related expenses, of which $820,000 is associated with stock-based compensation cost;

partially offset by decreases of (i) $73,000 in outside-consulting expenses, (ii) $62,000 in accounting, audit, and administrative expenses, (iii) $45,000 in bad debt expenses, and (iv) $40,000 in legal related expenses.

General and administrative expenses increased 49% to $8.7 million for the nine months ended March 31, 2022, from $5.8 million in the same period in 2021.

Excluding an increase of $19,000 due to foreign exchange rate fluctuation, general and administrative expense increased primarily due to increases of (i) $3.0 million in personnel-related expenses, of which $2.4 million is associated with stock-based compensation cost, (ii) $92,000 in accounting, audit, and administrative expenses, (iii) $17,000 in investor relations expenses, (iv) $13,000 in legal related expenses, and (v) $12,000 in outside consulting expense.

Excluding any future foreign exchange rate fluctuation, we expect our general and administrative expense to remain relatively consistent as a percentage of total revenue in future quarters based on our current business plan.

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Operating margin

Loss from operations was $630,000 with an operating loss margin of 2% during the three months ended December 31, 2021.

Loss from operations during the three months ended December 31, 2021 included $3.8 million of stock-based compensation and $376,000 of amortization of costs capitalized to obtain revenue contracts.

Income from operations was $60 million with a break even margin of 0% during the six months ended December 31, 2021.

Income from operations during the six months ended December 31, 2021 included $5.9 million of stock-based compensation and $732,000 of amortization of costs capitalized to obtain revenue contracts.

Interest Income, Net

Interest income, net consists of interest earned on money market accounts and interest paid on bank borrowings.

Interest income, net was income of $2,000 during the three months ended December 31, 2021 and 2020, respectively.

Interest income, net was income of $4,000 and $6,000 during the six months ended December 31, 2021 and 2020, respectively.

We expect interest income in future quarters to remain relatively low compared to previous periods, as we continue to see low yields in interest rates for the duration of and possibly beyond the COVID-19 pandemic.

Loss from operations was $476,000 with an operating loss margin of 2% during the three months ended March 31, 2022.

Loss from operations during the three months ended March 31, 2022 included $3.0 million of stock-based compensation and $1.1 million of amortization of costs capitalized to obtain revenue contracts.

Loss from operations was $416,000 with a break even margin of 0% during the nine months ended March 31, 2022.

Loss from operations during the nine months ended March 31, 2022 included $8.9 million of stock-based compensation and $1.1 million of amortization of costs capitalized to obtain revenue contracts.

Interest Income

Interest income primarily consists of interest earned on money market accounts.

Interest income was income of $3,000 and $5,000 during the three months ended March 31, 2022 and 2021, respectively.

Interest income was income of $7,000 and $10,000 during the nine months ended March 31, 2022 and 2021, respectively.

Other Income (Expense), Net

Other expense, net was expense of $29,000 and $160,000 during the three months ended December 31, 2021 and 2020, respectively.

Other income (expense), net was expense of $19,000 and $323,000 during the six months ended December 31, 2021 and 2020, respectively.

Other income (expense), net was income of $200,000 and expense of $378,000 during the three months ended March 31, 2022 and 2021, respectively.

Other income (expense), net was income of $182,000 and expense of $700,000 during the nine months ended March 31, 2022 and 2021, respectively.

Other income (expense), net primarily included foreign exchange rate fluctuations on international trade receivables.

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Due to cumulative losses, we maintain a valuation allowance against U.S.

deferred tax assets as of December 31, 2021.

deferred tax assets as of March 31, 2022.

We consider all available evidence, both positive and negative, including but not limited to earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets.

We recorded income tax provisions of $46,000 and $198,000 for the three and six months ended December 31, 2021, respectively.

We recorded income tax provision of $132,000 and $280,000 for the three and six months ended December 31, 2020, respectively.

We recorded income tax provision of $342,000 and $663,000 for the three and nine months ended March 31, 2022, respectively.

We recorded income tax benefit of $57,000 and provision of $223,000 for the three and nine months ended March 31, 2021, respectively.

Liquidity and Capital Resources

As of December 31, 2021 and June 30, 2021, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $83.3 million and $89.5 million, respectively.

Our cash, cash equivalents and restricted cash were $68.5 million and $63.2 million as of December 31, 2021 and June 30, 2021, respectively.

As of March 31, 2022 and June 30, 2021, our principal sources of liquidity were cash and cash equivalents, and accounts receivable totaling $88.7 million and $89.5 million, respectively.

Our cash, cash equivalents and restricted cash were $70.5 million and $63.2 million as of March 31, 2022 and June 30, 2021, respectively.

Based upon our current business plan, we believe that existing capital resources will enable us to maintain current and planned operations for at least the next 12 months.

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Our expectations as to our future cash flows and our future cash balances are subject to a number of assumptions, including assumptions regarding anticipated increases in our revenue, our ability to retain existing customers and customer purchasing and payment patterns, many of which are beyond our control.

For the six months ended December 31, 2021 and 2020, our cash flows were as follows (in thousands):

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For the nine months ended March 31, 2022 and 2021, our cash flows were as follows (in thousands):

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Net cash provided by operating activities

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Net cash provided by financing activities

Cash provided by operating activities mainly consists of net income (loss) adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Net cash provided by operating activities decreased by $1.3 million during the six months ended December 31, 2021, from the same period in 2020, driven primarily by the timing of payments for accounts payable and accrued liabilities.

Net cash used in investing activities decreased by $41,000 during the six months ended December 31, 2021, from the same period in 2020, driven primarily by activities related to the purchase of equipment for new employees and facility expenditures.

Cash provided by operating activities mainly consists of net (loss) income adjusted for non-cash expense items such as depreciation and amortization, expense associated with stock-based awards, the timing of employee related costs including commissions and bonus payments, and changes in operating assets and liabilities during the year.

Net cash provided by operating activities increased by $840,000 during the nine months ended March 31, 2022, from the same period in 2021, driven primarily by the timing of payments for accounts payable and accrued liabilities.

Net cash used in investing activities increased by $188,000 during the nine months ended March 31, 2022, from the same period in 2021, driven primarily by activities related to the purchase of equipment for new employees and facility expenditures.

Historically, cash used in investing activities has been used to purchase equipment and software to support our business and growth.

Net cash provided by financing activities decreased by $163,000 during the six months ended December 31, 2021, from the same period in 2020.

Net cash provided by financing activities increased by $1.1 million during the nine months ended March 31, 2022, from the same period in 2021.

Our current proceeds consist primarily of proceeds from the exercise of employee stock options and our employee stock purchase plan.

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Lease agreements are evaluated to determine whether an arrangement is or contains a lease in accordance with ASC 842, Leases .

As December 31, 2021, the future non-cancelable minimum payments under these commitments were approximately $4.7 million.

As March 31, 2022, the future non-cancelable minimum payments under these commitments were approximately $4.3 million.

Off-Balance Sheet Arrangements

As of December 31, 2021, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

As of March 31, 2022, we had no significant off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

New Accounting Pronouncements

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis