What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-09-13 compared with 2021-09-10 · 147 added, 131 removed, 840 unchanged (25% of the section changed)

4 unchanged sentences

Index to Consolidated Financial Statements

Report of BPM LLP, Independent Registered Public Accounting Firm

Report of BPM LLP, Independent Registered Public Accounting Firm (PCAOB ID 207 )

Consolidated Financial Statements:

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Consolidated Statements of Operations for the years ended June 30, 2022 and 2021

Consolidated Statements of Comprehensive Income for the years ended June 30, 2021 and 2020

Consolidated Statements of Comprehensive (Loss) Income for the years ended June 30, 2022 and 2021

Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2022 and 2021

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Costs capitalized to obtain revenue contracts, net of current portion

Intangible assets, net

Other assets, net

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Total liabilities

Commitments and contingencies (Note 8 and 9)

Commitments and contingencies (Note 8)

Stockholders’ equity:

Common stock, $ 0.001 par value – authorized:

50,000 shares;

60,000 and 50,000 shares;

31,930 and 31,231 shares as of June 30, 2022 and 2021, respectively

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Operating expenses:

Sales and marketing

Research and development

Sales and marketing

General and administrative

Total operating expenses

Income from operations

Interest income, net

Other (expense) income, net

Income before income tax provision

Income tax benefit (provision)

(Loss) Income from operations

Interest income

Other income (expense), net

(Loss) Income before income tax provision

Income tax (provision) benefit

Net (loss) income

Per share information:

Earnings per share:

(Loss) Earnings per share:

Weighted-average shares used in computation:

Below is a summary of stock-based compensation included in the costs and expenses above:

Summary of stock-based compensation included in the costs and expenses above:

Cost of revenue

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General and administrative

Total stock-based compensation

The accompanying notes are an integral part of these consolidated financial statements.

EGAIN CORPORATION

C ONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

C ONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

Years Ended June 30,

Other comprehensive income, net of taxes:

Net (loss) income

Other comprehensive (loss) income, net of taxes:

Foreign currency translation adjustments

Total comprehensive income

Total comprehensive (loss) income

The accompanying notes are an integral part of these consolidated financial statements.

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Stockholders’

BALANCES AS OF JULY 1, 2019

BALANCES AS OF JUNE 30, 2020

Interest on stockholders’ notes

1 unchanged sentence

Issuance of common stock in connection with employee stock purchase plan

True-up of issuance costs related to public offering

Stock-based compensation

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Amortization of intangible assets

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Cash flows from financing activities:

Payments on bank borrowings

Proceeds from bank borrowings

Proceeds from exercise of stock options

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Supplemental cash flow disclosures:

Cash paid for interest

Cash paid for taxes

ROU assets and lease liabilities recognized from lease modification

Non-cash items:

Purchases of equipment through trade accounts payable

The accompanying notes are an integral part of these consolidated financial statements.

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eGain Corporation (“eGain”, the “Company”, “our”, “we” or “us”) automates customer engagement with an innovative Software as a service (SaaS) platform, powered by deep digital, Artificial intelligence (AI), and knowledge capabilities.

We are headquartered in the United States.

We also operate in United Kingdom and India.

We sell mostly to large enterprises across financial services, telecommunications, retail, government, healthcare, and utilities.

That is, organizations seeking to better serve customers at scale while coping with content silos, process complexity, and regulatory compliance.

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).

More than one hundred eighty leading brands use eGain cloud software to improve customer satisfaction, empower agents, reduce service cost and boost sales.

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

We are headquartered in the United States.

We also operate in United Kingdom and India.

Principles of Consolidation

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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 (expense) income, net” in the consolidated statements of operations, and resulted in a gain of $570,000 and a loss of $172,000, in fiscal years ended June 30, 2021 and 2020, respectively.

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 $ 824,000 and a gain of $ 570,000 , in fiscal years ended June 30, 2022 and 2021, respectively.

Cash and Cash Equivalents, Restricted Cash and Investments

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Cisco Systems, Inc.

accounted for 21% and 18% of total revenue and BT PLC accounted for 13% and 10% of total revenue in fiscal years 2021 and 2020, respectively.

remained consistent and accounted for 21 % of total revenue for the years ended June 30, 2022 and 2021.

BT PLC accounted for 11 % and 13 % of total revenue for the years ended June 30, 2022 and 2021, 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.

Three partners and customers accounted for 30%, 17%, and 16% of accounts receivable as of June 30, 2021, respectively.

Two partners and customers accounted for 23% and 18% of accounts receivable as of June 30, 2020.

Three partners and customers accounted for 26 %, 20 %, and 13 % of accounts receivable as of June 30, 2022.

A set of different partners and customers accounted for 30 %, 17 %, and 16 % of accounts receivable as of June 30, 2021.

Accounts Receivable and Allowance for Doubtful Accounts

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uncollectible trade receivables.

We review our trade receivables by aging category to identify specific customers with known disputes or collectibility issues.

We review our trade receivables by aging category to identify specific customers with known disputes or collectability 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.

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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.

Recovered written off receivables are recorded as they occur.

In certain revenue 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 $719,000 and $1.4 million as of June 30, 2021 and 2020, respectively, and are included in the accounts receivable balance.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 770,000 and $ 719,000 as of June 30, 2022 and 2021, respectively, and are included in the accounts receivable balance.

Property and Equipment, Net

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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, 2021 and 2020.

We had no indicators of impairment for fiscal years ended June 30, 2022 and 2021.

Impairment of Long-Lived Assets

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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 2021 and 2020, we did not have any such impairment losses.

During fiscal years 2022 and 2021, we did no t have any such impairment losses.

Deferred Revenue

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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.

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, including stock-based compensation.

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 .

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The Company assessed each of its revenue contracts in order to determine whether a significant financing component exists, and determined its contracts did not include a significant financing component for the years ended June 30, 2022 and 2021.

During the fiscal year ended June 30, 2021 and 2020, we capitalized $1.5 million and $1.8 million of costs to obtain revenue contracts, respectively, and amortized $1.2 million and $842,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $3.9 million and $3.4 million as of June 30, 2021 and June 30, 2020, respectively.

During the fiscal years ended June 30, 2022 and 2021, we capitalized $ 2.4 million and $ 1.5 million of costs to obtain revenue contracts, respectively, and amortized $ 1.5 million and $ 1.2 million to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $ 4.6 million and $ 3.9 million as of June 30, 2022 and 2021, respectively.

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

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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 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, 2021, we have $923,000 of GILTI income inclusion and used our net operating losses to offset our taxable income.

For the fiscal year ended June 30, 2021, we did not incur any BEAT tax.

Our income tax rate differs from the statutory tax rates primarily due to the expiration of net operating loss carry-forwards which had previously been valued against as well our change in valuation allowance.

We account for uncertain tax positions according to the provisions of ASC 740.

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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.

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, 2021, we have completed a 382 study under Section 382 of the Internal Revenue Code through June 30, 2020, 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.

As of June 30, 2022, 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

The Company has not identified a change in ownership as of June 30, 2022 that would significantly limit the net operating loss carryovers.

Comprehensive (Loss) 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, 2021 is shown in the accompanying consolidated statements of comprehensive income.

Under the accounting standards, comprehensive (loss) income 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 year ended June 30, 2022 is shown in the accompanying consolidated statements of comprehensive (loss) income.

Accumulated other comprehensive loss presented in the accompanying consolidated balance sheets as of June 30, 2022 and 2021 consists 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):

(Loss) Earnings Per Common Share

Basic net (loss) 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 stock options in-the-money to calculate diluted net income per common share.

The following table represents the calculation of basic and diluted net (loss) income per common share (in thousands, except per share data):

Years Ended June 30,

Net income applicable to common stockholders

Basic net income per common share

Weighted average common shares used in computing basic net income per common share

Net (loss) income applicable to common stockholders

Basic net (loss) income per common share

Weighted average common shares used in computing basic net (loss) income per common share

Effect of dilutive common equivalents outstanding

Weighted average common shares used in computing diluted net income per common share

Diluted net income per common share

Weighted average common shares used in computing diluted net (loss) income per common share

Diluted net (loss) income per common share

Weighted average options to purchase 2,935,174 and 293,949 shares of common stock as of June 30, 2022 and 2021, respectively, were not included in the computation of diluted net income per common share due to their anti-dilutive effect.

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Information relating to our geographic areas for the fiscal years ended June 30, 2022 and 2021 is as follows (in thousands):

from Operations

Year ended June 30, 2022:

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While the Company is currently evaluating the impact of Topic 326, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements or the related disclosure.

Pronouncements Recently 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

We adopted this guidance as of our first quarter of fiscal year 2021 with no impact on our consolidated financial statements.

In December 2019, FASB issued ASU 2019-12, Income Taxes (Topic 740):

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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 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.

We adopted this guidance as of our first quarter of fiscal year 2021 with no impact on our consolidated financial statements.

During the current year, the Company has adopted this provision with no material impact to the consolidated financial statements.

Revenue Recognition

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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).

We allocate the transaction price to each performance obligation based on 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.

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Professional Services Revenue

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

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

The transaction price is allocated to various performance obligations based on their stand-alone selling prices.

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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.

Fixed fees are generally paid upon milestone billing or customer 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.

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Depreciation and amortization expense was $ 478,000 and $ 428,000 for the fiscal years ended June 30, 2022 and 2021, respectively.

Disposed fixed assets, which were substantially fully-depreciated, were $0 and $920,000 for the years ended June 30, 2021, and 2020, respectively.

Disposed fixed assets, which were substantially fully-depreciated, were $ 71,000 and none for the years ended June 30, 2022, and, 2021, respectively.

Accrued compensation consists of the following:

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Total revenue

The following table presents our revenue recognized over-time and at a point-in-time during the fiscal years ended June 30, 2022 and 2021, respectively:

Fiscal Year Ended June 30,

(in thousands)

Point-in-time

Total revenue

The following table presents our revenue by geography.

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North America

Europe, Middle East, & Africa

Total revenue

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The following table presents the changes in contract liabilities (in thousands):

Balance as of July 1, 2020

Balance as of June 30, 2021

Balance as of

June 30, 2022

Balance as of

Contract liabilities:

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Deferred revenue, net of current portion

With respect to deferred revenue balances as of June 30, 2020, $36.5 million was recognized to revenue during fiscal year ended June 30, 2021.

$ 41.4 million of deferred revenue as of June 30, 2021 was recognized as revenue during the fiscal year ended June 30, 2022.

$ 36.5 million of deferred revenue as of June 30, 2020 was recognized as revenue during the fiscal year ended June 30, 2021.

Total deferred revenue includes additions of $ 91.4 million and deductions of $ 91.5 million for the fiscal year ended June 30, 2022.

Deductions consist of revenue recognize from beginning of period and impact of foreign currency translation.

Remaining Performance Obligations

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As of June 30, 2022, our remaining performance obligations were $ 100.5 million of which we expect to recognize $ 63.2 million and $ 37.3 million as revenue within one year and beyond one year, respectively.

Income before income tax (benefit) provision consisted of the following (in thousands):

(Loss) income before income tax (provision) benefit consisted of the following (in thousands):

Fiscal Year Ended June 30,

United States

Income before income tax (benefit) provision

The following table reconciles the federal statutory tax rate to the effective tax rate of the income tax (benefit) provision:

(Loss) Income before income tax (provision) benefit

The fiscal 2021 (provision) benefit for income tax reconciliations have been recast to dollar values versus a percentage of income before taxes for comparability to the fiscal 2022 presentation.

The reconciliation of income tax (expense) benefit at the statutory federal income tax rate and the Company’s effective tax rate is as follows (in thousands):

Fiscal Year Ended June 30,

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Expiration of tax attributes

Effective tax rate

The components of the income tax (benefit) provision are as follows (in thousands):

Income tax (provision) benefit

The components of the income tax (provision) benefit are as follows (in thousands):

Fiscal Year Ended June 30,

Current (benefit) provision:

Current (provision) benefit:

Total current:

Total deferred:

Income tax (benefit) provision

Income tax (provision) benefit

As of June 30, 2022, we had federal and state net operating loss carryforwards of approximately $ 67.1 million and $ 13.7 million, respectively.

The net operating loss carryforwards will expire at various dates beginning in fiscal year ending June 30, 2023, if not utilized.

We also had federal research and development credit carryforwards of approximately $3.2 million

as of June 30, 2021, which will expire at various dates beginning in fiscal year ending June 30, 2022, if not utilized.

We also had federal research and development credit carryforwards of approximately $ 3.6 million as of June 30, 2022, which will expire at various dates beginning in fiscal year ending June 30, 2023, if not utilized.

The California research and development credit carryforwards are approximately $ 6.0 million as of June 30, 2022 and have an indefinite carryover period.

As of June 30, 2021, we have completed a 382 study under Section 382 of the Internal Revenue Code through June 30, 2020, and have determined there was no loss of NOLs as a result of these changes.

Any limitation may result in expiration of all or a portion of its NOL and or tax credit carryforwards before utilization.

As of June 30, 2022, the Company did not identify any ownership change that would significantly limit the net operating loss carryovers.

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.

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Total deferred tax assets, net *

*included in other assets on consolidated balance sheet

*included in other assets, net on the consolidated balance sheet

ASC 740, Income Taxes , provides for the recognition of deferred tax assets if realization of such assets is more likely than not.

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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, GILTI inclusion, research and development credits, and our foreign operations.

Our income tax rate differs from the statutory tax rates primarily due to the expiration 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 $ 3.1 million and $ 13.2 million for the fiscal years ended June 30, 2022 and 2021, respectively.

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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 and potential state taxes.

If we distribute these earnings, in the form of dividends or otherwise, we would be subject to withholding taxes payable to the foreign jurisdiction and potential state taxes.

For the fiscal years ended June 30, 2022 and 2021, we have none and $ 923,000 of Global Intangible Low Tax Income (GILTI) income inclusion and used our net operating losses to offset our taxable income.

Uncertain Tax Positions

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Increases in balances related to tax positions taken during current periods

Expired Attributes

Ending balance

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In these jurisdictions, tax years between 2002 and 2016 remain subject to examination by the appropriate governmental agencies due to tax loss carryovers from those years.

tax purposes, tax years after 2016 are subject to a three year statute of limitations.

The Company is not currently under audit with either the IRS, foreign, or any state or local jurisdictions, nor has it been notified of any other potential future income tax audit.

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STOCKHOLDERS’ EQUITY

On December 8, 2021, our board of directors authorized the amended and restated Certificate of Incorporation which increased the total authorized shares of common stock from 50,000,000 to 60,000,000 shares.

As of June 30, 2022, and June 30, 2021, the Company had 31,930,000 and 31,231,000 shares of common stock issued and outstanding , respectively.

We have reserved shares of common stock for issuance as of June 30, 2022 as follows:

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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.

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.

2005 Management Stock Option Plan

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The options generally vest ratably over a period of four years and expire no later than ten years from the date of grant.

During the fiscal year ended June 30, 2022, we have increased our number of authorized shares available for grant by 3,000,000 shares.

The following table represents the activity under the 2005 Stock Incentive Plan:

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Options Granted

( 3,607,661 )

Options Exercised

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Balance as of June 30, 2022

No shares were granted to consultants during the fiscal year ended June 30, 2021.

During the fiscal year ended June 30, 2022, we granted 71,100 stock options to consultants.

The following table summarizes information about stock options outstanding and exercisable under all stock option plans as of June 30, 2022:

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$ 8.2 -$ 10.96

$ 11.05 -$ 11.26

$ 11.47 -$ 13.75

$ 1.6 -$ 19.11

The summary of options vested and exercisable as of June 30, 2022 comprised:

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Options exercisable

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 $11.48 as of June 30, 2021 that would have been received by the option holders, had they exercised their options on June 30, 2021.

received by the option holders, had they exercised their options on June 30, 2022.

The total intrinsic value of stock options exercised was $ 4.3 million and $ 2.0 million during fiscal years 2022 and 2021, respectively.

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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.

On December 17, 2021, our board of directors authorized an additional 600,000 shares of common stock to be available for issuance under ESPP.

As of June 30th, 2022 we have 1,097,360 reserved stock available for issuance under ESPP.

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.

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Income tax expense

Net income effect

The Company recognized $51,000 and $56,000 of tax expense related to stock-based compensation expense for eGain UK and Exony for the fiscal year ended June 30, 2021 and 2020, respectively.

Net (loss) income effect

The Company recognized $ 102,000 and $ 51,000 of tax expense related to stock-based compensation expense for eGain UK and Exony for the fiscal years ended June 30, 2022 and 2021, respectively.

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 $ 232,000 and $ 47,000 during the fiscal years ended June 30, 2022 and 2021, respectively.

Total stock-based compensation includes expense related to the ESPP of $473,000 and $294,000 during the fiscal year ended June 30, 2021 and 2020, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 457,000 and $ 473,000 during the fiscal years ended June 30, 2022 and 2021, respectively.

We utilized the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted.

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During the fiscal years ended June 30, 2022 and 2021, there were 3,607,661 and 207,700 options granted, respectively, with a weighted average grant date fair value of $ 5.83 and $ 6.60 , per share, respectively.

We used the following assumptions:

We used the following assumptions as inputs into the Black-Scholes valuation model to estimate the fair value of the options granted:

Fiscal Year Ended June 30,

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Expected life (in years)

The fair value of the ESPP stock purchase right is estimated on the date of grant using the following weighted-average assumptions:

We used the following weighted-average assumptions as inputs to estimate the fair value of the ESPP stock purchase right:

Fiscal Year Ended June 30,

Dividend yield

Expected volatility

Average risk-free interest rate

Expected term (in years)

Expected dividend

Risk-free interest rate

Fair Value of grants per share

During the fiscal year ended June 30, 2021, employees were granted the right to purchase an aggregate of 152,092 shares under the ESPP, and compensation expense related to those purchase rights for the fiscal year ended June 30, 2021 was $473,000.

During the fiscal year ended June 30, 2021, 130,408 shares were purchased and 643,075 shares remain available to be purchased pursuant to the 2017 ESPP.

During the fiscal year ended June 30, 2022, employees were granted the right and purchased an aggregate of 145,715 shares pursuant to the 2017 ESPP.

Compensation expense related to those purchase rights was $ 457,000 and $ 473,000 for the fiscal years ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, unrecognized compensation expense related to purchase rights that will be recognized over a weighted average period of 0.42 years was $ 220,000 .

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Improvements to Employee Share-Based Accounting , we elected to continue to estimate forfeitures in the calculation of stock-based compensation expense.

The following table summarizes stock-based compensation expense relating to stock options for the year ended June 30, 2021 and 2020, respectively (in thousands):

The following table summarizes stock-based compensation expense relating to stock options for the years ended June 30, 2022 and 2021, respectively (in thousands):

Fiscal Year Ended June 30,

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Cost of recurring

Amortization expense related to the above intangible assets for fiscal year ended June 30, 2021 and 2020 was $26,000 and $268,000, respectively.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2025.

Additionally, we are the sublessor for certain office space.

Amortization expense related to the above intangible assets were $ 0 and $ 26,000 for fiscal years ended June 30, 2022 and 2021, respectively.

During our fiscal year ended June 30, 2022, we leased our office facilities under non-cancelable operating leases that expire on various dates through the fiscal year 2027;

and we were the sublessor for some office spaces through March 2022.

We also modified one of the existing operating leases by extending it through 2027, which resulted in an increase in operating lease right-of-use assets and operating lease liabilities in the amount of $ 2.8 million during our fiscal year ended June 30.

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.

Lease right-of-use assets and liabilities are recognized on 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 to determine the present value of lease payments.

The following table presents information about the weighted average lease term and discount rate as follows:

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Fiscal Period:

Fiscal year 2022

Fiscal year 2023

Fiscal year 2024

Total minimum lease payments

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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, 2021 and 2020, cash equivalents classified as level 1 instruments were measured at $55.4 million and $41.8 million, respectively.

As of June 30, 2022 and 2021, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 57.9 million and $ 55.4 million, respectively.

QUARTERLY FINANCIAL DATA (Unaudited)

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Fiscal Year 2022

Income from operations

Basic net income per share

Diluted net income per share

Income (loss) from operations

Net income (loss)

Basic net income (loss) per share

Diluted net income (loss) per share

Fiscal Year 2021

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OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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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 “Delinquent Section 16(a) Reports” in the Proxy Statement is incorporated herein by reference.

To the extent disclosure for delinquent reports is being made, it can be found under the caption “Delinquent Section 16(a) Reports” in the Proxy Statement and is incorporated herein by reference.

EXECUTIVE COMPENSATION

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The information contained under the captions “Related Party Transactions” and “Director Independence” in the Proxy Statement is incorporated herein by reference.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

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.

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Description of Exhibits

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).

Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to the Registrant’s Current Report on Form 8-K filed on December 10, 2021).

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).

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333-83439, originally filed with the Commission on July 22, 1999, as subsequently amended (Form S-1)).

Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form S-1).

Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s R egistration Statement on Form S-8, File No.

333-261722 filed on December 17, 2021).

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.2 the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020).

Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form S-1).

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).

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).

eGain Corporation Amended and Restated 2005 Stock Incentive Plan (as amended through October 11, 2021) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on December 10, 2021) .

eGain Corporation Amended and Restated 2005 Management Stock Option Plan, as amended through August 25, 2021.

(incorporated by reference to Exhibit 10.2# to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021).

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) .

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002 of Chief Financial Officer.

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Label Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (embedded within the Inline XBRL document)

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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-K

Item 8. Financial Statements and Supplementary Data