What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-05-09 · 113 added, 150 removed, 405 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except par value data)

September 30,

Current assets:

1 unchanged sentence

Restricted cash

Accounts receivable, less allowance for doubtful accounts of $ 83 and $ 384 as of March 31, 2022 and June 30, 2021, respectively

Accounts receivable, less allowance for doubtful accounts of $ 206 and $ 123 as of September 30, 2022 and June 30, 2022, respectively

Costs capitalized to obtain revenue contracts, net

21 unchanged sentences

Common stock, par value $ 0.001 - authorized:

60,000 and 50,000 shares;

31,821 and 31,231 shares as of March 31, 2022 and June 30, 2021, respectively

60,000 shares;

31,937 and 31,930 shares as of September 30, 2022 and June 30, 2022, respectively

Additional paid-in capital

9 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Professional services

11 unchanged sentences

Interest income

Other income (expense), net

(Loss) Income before income tax (provision) benefit

Income tax (provision) benefit

Other income, net

Income before income tax provision

Income tax provision

Net (loss) income

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net (loss) income

6 unchanged sentences

(in thousands)

Three Months Ended March 31, 2022

Additional Paid-in

Notes Receivable From

Accumulated Other Comprehensive

Total Stockholders'

Balances as of December 31, 2021

Interest on stockholder notes

Issuance of common stock upon exercise of stock options

Stock-based compensation

Foreign currency translation adjustments

Balances as of March 31, 2022

Three Months Ended March 31, 2021

Additional Paid-in

Notes Receivable From

Accumulated Other Comprehensive

Total Stockholders'

Balances as of December 31, 2020

Interest on stockholder notes

Issuance of common stock upon exercise of stock options

Stock-based compensation

Foreign currency translation adjustments

Balances as of March 31, 2021

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.)

(in thousands)

Nine Months Ended March 31, 2022

Three Months Ended September 30, 2022

Additional Paid-in

3 unchanged sentences

Balances as of June 30, 2022

Interest on stockholder notes

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Stock-based compensation

Foreign currency translation adjustments

Balances as of March 31, 2022

Nine Months Ended March 31, 2021

Balances as of September 30, 2022

Three Months Ended September 30, 2021

Additional Paid-in

5 unchanged sentences

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection with employee stock purchase plan

Stock-based compensation

Foreign currency translation adjustments

Balances as of March 31, 2021

Balances as of September 30, 2021

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Nine Months Ended

Three Months Ended

September 30,

Cash flows from operating activities:

1 unchanged sentence

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

Amortization of intangible assets

Amortization of costs capitalized to obtain revenue contracts

Amortization of right-of-use assets

(Recovery of) provision for doubtful accounts

Depreciation and amortization

Provision for (recovery of) doubtful accounts

Deferred income taxes

Stock-based compensation

Loss on disposal of property and equipment

Changes in operating assets and liabilities:

15 unchanged sentences

Cash flows from financing activities:

Proceeds from exercise of employee stock options

Proceeds from employee stock purchase plan

Issuance of common stock upon exercise of stock options

Net cash provided by financing activities

5 unchanged sentences

Cash paid for taxes

ROU assets and lease liabilities recognized from lease modification

Non-cash items:

6 unchanged sentences

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).

Approximately one hundred seventy 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.

Our fiscal year ends on June 30.

1 unchanged sentence

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2022 and the condensed consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the three and nine months ended March 31, 2022 and 2021, are unaudited.

The accompanying condensed consolidated balance sheet as of September 30, 2022 and the condensed consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for the three months ended September 30, 2022 and 2021, are unaudited.

The condensed consolidated balance sheet as of June 30, 2022 was derived from audited consolidated financial statements as of that date but does not include all the information and footnotes required by GAAP for complete financial statements.

4 unchanged sentences

Principles of Consolidation

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and included the accounts of our wholly-owned subsidiaries.

We prepared the condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and included the accounts of our wholly-owned subsidiaries.

All significant intercompany balances and transactions have been eliminated.

9 unchanged sentences

● Fair value of stock-based awards;

● Useful lives of intangible assets;

● Lease term and incremental borrowing rate for lease liabilities.

1 unchanged sentence

Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

12 unchanged sentences

Additionally, ASU No.

2019-10 defers the effective date for the adoption of the new standard on credit losses for public filers that are considered small reporting companies (“SRC”) as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which will be fiscal year 2024 for the Company if it continues to be classified as a SRC.

2019-10 defers the effective date for the adoption of the new standard on credit losses for public filers that are considered small reporting companies (SRC) as defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, which will be fiscal year 2024 for the Company if it continues to be classified as an SRC.

In February 2020, the FASB issued ASU 2020-02, which provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses.

3 unchanged sentences

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, 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 condensed consolidated financial statements.

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This update simplifies the accounting for income taxes.

We adopted this guidance as of our first quarter of fiscal year 2022 with no impact on our condensed consolidated financial statements.

Revenue Recognition

3 unchanged sentences

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

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

Professional services includes consulting, implementation and training.

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

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

Significant Judgment Applied in the Determination of Revenue Recognition

1 unchanged sentence

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.

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.

25 unchanged sentences

As the sales in connection with the royalty revenue agreement are reported by the customer 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.

The Company does not adjust transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the customer and payment for that good or service by the customer is expected to be one year or less.

The Company assessed 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 periods ended March 31, 2022 and 2021.

The Company does not adjust transaction price for the effects of a significant financing component when the period between the transfers of the promised good or service to the

customer and payment for that good or service by the customer is expected to be one year or less.

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.

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.

Managed services include a comprehensive set of processes and activities that range from implementation to monitoring the evolution and support of eGain solutions in a company.

Our consulting and implementation service contracts are bid either on a time-and-materials basis or on a fixed-fee basis.

Managed services contracts are bid on a time-and-material basis.

Fixed fees are generally paid upon milestone billing or customer acceptance at pre-determined points in the contract.

13 unchanged sentences

Amortization of costs to obtain revenue contracts is included as a component of sales and marketing expenses in our condensed consolidated statements of operations.

During the three and nine months ended March 31, 2022, we capitalized $ 604,000 and $ 2.0 million of costs to obtain revenue contracts, respectively, and amortized $ 392,000 and $ 1.1 million to sales and marketing expense, respectively.

During the three and nine months ended March 31, 2021, we capitalized $ 677,000 and $ 1.1 million of costs to obtain revenue contracts, respectively, and amortized $ 309,000 and $ 872,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $ 4.7 million and $ 3.9 million as of March 31, 2022 and June 30, 2021, respectively, on our condensed consolidated balance sheets.

During the three months ended September 30, 2022 and 2021, we capitalized $ 191,000 and $ 646,000 of costs to obtain revenue contracts, respectively, and amortized $ 375,000 and $ 356,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $ 4.3 million and $ 4.6 million as of September 30, 2022 and June 30, 2022, respectively, on our condensed consolidated balance sheets.

Deferred Revenue

11 unchanged sentences

The Company operates in one operating segment and all required financial segment information can be found in the condensed consolidated financial statements.

Our sales are derived from North America and Europe, Middle East, and Africa and is disclosed in Note 2.

However, we incur operating expenses in the North America, Europe, Middle East, Africa and Asia Pacific regions.

Our sales are derived from North America and combined Europe, Middle East, and Africa and is disclosed in Note 2.

However, we incur operating expenses in the North America, combined Europe, Middle East, and Africa, and Asia Pacific regions.

The following table presents our (loss) income from operations among our three operating regions (in thousands):

Three Months Ended

Nine Months Ended

September 30,

(Loss) income from operations:

3 unchanged sentences

The following table presents our long-lived assets, corresponding to our geographic areas are as follows (in thousands):

September 30,

Long-lived assets:

2 unchanged sentences

Long-lived assets

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.

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, net in the accompanying condensed consolidated balance sheets.

Concentration of Credit Risk and Significant Customers

Our financial instruments that are exposed to concentrations of credit risk include cash and cash equivalents and accounts receivable.

Two customers, who are also our partners, accounted for 20 % and 10 %, respectively, of total revenue during the three months ended March 31, 2022 and 22 % and 12 %, respectively, during the nine months ended March 31, 2022.

The same partners, accounted for 23 % and 13 %, respectively, of total revenue during the three months ended March 31, 2021 and 20 % and 12 %, respectively, for the nine months ended March 31, 2021.

Three different customers accounted for more than 10% of our gross accounts receivable balance as of March 31, 2022 and 2021, respectively.

One customer, who is also our partner, accounted for 24 % of total revenue during the three months ended September 30, 2022.

Two customers, who are also our partners, accounted for 24 % and 13 %, respectively, of total revenue during the three months ended September 30, 2021.

Three and two different customers accounted for more than 10% of our gross accounts receivable balance as of September 30, 2022 and 2021, respectively.

Accounts Receivable and Allowance for Doubtful Accounts

2 unchanged sentences

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 collectability 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.

6 unchanged sentences

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 $ 913,000 and $ 719,000 as of March 31, 2022, and June 30, 2021, respectively, and are included in the accounts receivable balance on the accompanying condensed consolidated balance sheets.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 692,000 and $ 770,000 as of September 30, 2022, and June 30, 2022, respectively, and are included in the accounts receivable balance on the accompanying condensed consolidated balance sheets.

Stock-Based Compensation

3 unchanged sentences

The ESPP provides that eligible employees may 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.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Stock-Based Compensation Expense:

4 unchanged sentences

Total stock-based compensation expense

Total stock-based compensation includes expense related to non-employee awards of $ 49,000 and $ 179,000 during the three and nine months ended March 31, 2022, respectively.

Total stock-based compensation includes expense related to non-employee awards of $ 12,000 and $ 21,000 during the three and nine months ended March 31, 2021, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 138,000 and $ 363,000 for the three and nine months ended March 31, 2022, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 137,000 and $ 354,000 for the three and nine months ended March 31, 2021, respectively.

Total stock-based compensation includes expense related to non-employee awards of $ 44,000 and $ 55,000 during the three months ended September 30, 2022, and 2021, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 127,000 and $ 132,000 for the three months ended September 30, 2022, and 2021, respectively.

We utilize 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 SEC on Registration Statements on Form S-8.

During the three months ended March 31, 2022 and 2021, we granted options to purchase 197,365 and 47,050 shares of common stock with a weighted-average fair value of $ 6.31 and $ 5.98 per share, respectively.

During the nine months ended March 31, 2022 and 2021, we granted options to purchase 3,390,004 and 163,625 shares of common stock with a weighted-average fair value of $ 7.14 and $ 6.86 per share, respectively.

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 SEC on Registration Statements on Form S-8.

During the three months ended September 30, 2022 and 2021, we granted options to purchase 100,867 and 2,950,560 shares of common stock with a weighted-average fair value of $ 5.04 and $ 7.30 per share, respectively.

We used the following assumptions:

Three Months Ended

Nine Months Ended

September 30,

Expected volatility

5 unchanged sentences

The risk-free interest rate is derived from the average U.S.

Treasury Strips rate with maturities

approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.

On December 1, 2020, employees were granted the right to purchase an aggregate of 74,752 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2021 was $ 87,000 and $ 185,000 , respectively.

Employees purchased an aggregate of 57,361 shares under the ESPP for the nine months ended March 31, 2021.

On December 1, 2021, employees were granted the right to purchase an aggregate of 86,928 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2022 was $ 138,000 and $ 185,000 , respectively.

Employees purchased an aggregate of 64,666 shares under the ESPP for nine months ended March 31, 2022.

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 March 31, 2022, there were 1,178,409 shares of common stock available for issuance under the ESPP.

Treasury Strips rate with maturities approximating the expected lives of the awards during the period, which approximate the rate in effect at the time of the grant.

On June 1, 2022 and 2021, employees were granted the right to purchase an aggregate of 97,982 and 80,018 shares under the ESPP, respectively.

As of September 30, 2022, there were 1,097,360 shares of common stock available for issuance under the ESPP.

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 equity shares have been publicly traded, the contractual term of the option, the vesting period and the expected remaining term of the outstanding options.

1 unchanged sentence

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

As of March 31, 2022 there was approximately $ 13.6 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 1.8 years.

There were 327,738 and 43,796 options exercised during the three months ended March 31, 2022 and 2021 , respectively.

There were 525,217 and 213,850 options exercised during the nine months ended March 31, 2022 and 2021, respectively.

As of September 30, 2022 there was approximately $ 9.4 million of total unrecognized compensation cost, net of expected forfeitures, related to unvested stock options, which is expected to be recognized over the weighted-average period of 1.5 years.

There were 7,225 and 156,170 options exercised during the three months ended September 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.

5 unchanged sentences

If the rate implicit in the lease cannot be readily determined, the Company uses its incremental 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.

The operating lease ROU 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.

We have elected to include non-lease components with lease payments for the purpose of calculating lease ROU 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.

3 unchanged sentences

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 Company has elected not to recognize ROU 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.

Goodwill and Other Intangible Assets, Net

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 indicators of impairment during the three and nine months ended March 31, 2022.

We had no indicators of impairment during the three months ended September 30, 2022.

REVENUE RECOGNITION

Disaggregation of Revenue

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

The following table presents our subscription and professional services revenue during the three months ended September 30, 2022 and 2021, respectively (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Legacy revenue

2 unchanged sentences

Total revenue

The following table presents our revenue recognized over-time and at a point-in-time during the three months ended September 30, 2022 and 2021, respectively (in thousands):

Three Months Ended

September 30,

Point-in-time

Total revenue

The following table presents our revenue by geography.

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

North America

4 unchanged sentences

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 contract assets of unbilled accounts receivable of $ 913,000 as of March 31, 2022 and $ 719,000 as of June 30, 2021, on our condensed consolidated balance sheets.

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

Once the obligations are fulfilled, then deferred revenue is recognized to revenue in the respective period.

There were no contract assets as of September 30, 2022, on our condensed consolidated balance sheets.

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

Balance as of June 30, 2022

Balance as of March 31, 2022

Balance as of September 30, 2022

Contract liabilities:

1 unchanged sentence

Deferred revenue, net of current portion

$ 8.9 million and $ 35.8 million of deferred revenue as of June 30, 2021 was recognized to revenue during the three and nine months ended March 31, 2022.

Total deferred revenue includes additions of $ 60,415 and deductions of $ 68,917 for the nine months ended March 31, 2022.

$ 14.4 million of deferred revenue as of June 30, 2022 was recognized to revenue during the three months ended September 30, 2022.

Total deferred revenue includes additions and deductions of $ 25.0 million for the three months ended September 30, 2022.

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

2 unchanged sentences

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 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.

NET (LOSS) INCOME 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 (unaudited, in thousands, except per share data):

As of September 30, 2022, our remaining performance obligations were $ 94.5 million of which we expect to recognize $ 67.2 million and $ 27.3 million as revenue within one year and beyond one year, respectively.

(LOSS) EARNINGS PER SHARE

Basic net (loss) income per 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 share.

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

Three Months Ended

Nine Months Ended

September 30,

Net (loss) income

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Effect of dilutive options

Weighted-average shares of stock options to purchase 3,421,485 and 322,088 shares of common stock for the three months ended March 31, 2022 and 2021, respectively, and weighted-average shares of stock options to purchase 2,717,101 and 283,600 shares of common stock for the nine months ended March 31, 2022 and 2021, respectively, were not included in

the computation of diluted net (loss) income per common share due to their anti-dilutive effect.

Weighted-average shares of stock options to purchase 3,707,271 and 1,372,400 shares of common stock for the three months ended September 30, 2022 and 2021, respectively, were not included in the computation of diluted net (loss) income per share due to their anti-dilutive effect.

Such securities could have a dilutive effect in future periods.

11 unchanged sentences

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 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 September 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.

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

The 2017 Tax Cuts and Jobs Act includes a provision to tax global intangible low-taxed income (GILTI) of foreign subsidiaries.

As of March 31, 2022, we estimate no GILTI income or deduction for fiscal year 2022.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 2027.

Additionally, we are the sublessor for certain office space.

As of September 30, 2022, we estimate $ 2.2 million of GILTI will be an addback for fiscal year 2023.

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law and is effective for taxable years beginning after December 31, 2022.

The IRA includes multiple incentives to promote clean energy with tax provisions primarily focused on implementing a 15% minimum tax on global adjusted financial statement income and a 1% excise tax on share repurchases.

These measures may affect our condensed consolidated financial statements and we will continue to evaluate the applicability and effect of the IRA as more guidance is issued.

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

Total operating lease costs were $ 329,000 and $ 437,000 for the three months ended March 31, 2022 and 2021, respectively.

Total operating lease costs were $ 1.0 million and $ 1.3 million for the nine months ended March 31, 2022 and 2021, respectively.

Operating lease amounts above do not include sublease income.

The Company secured a sublease agreement with a third party and recognized sublease income of $ 154,000 for the three months ended March 31, 2022 and 2021, and $ 463,000 for the nine months ended March 31, 2022 and 2021.

For the three and nine months ended March 31, 2022, operating cash outflows for operating leases were $ 468,000 and $ 1.4 million, respectively.

For the three and nine months ended March 31, 2021, operating cash outflows for operating leases were $ 461,000 and $ 1.5 million, respectively.

In August 2021, the Company modified one of its existing operating leases by extending it to 2027, which resulted in an increase to operating lease right-of-use assets and operating lease liabilities in the amount of $ 2.8 million.

The following tables present information about leases on our condensed consolidated balance sheet (in thousands):

Lease ROU 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 .

Total operating lease costs were $ 321,000 and $ 366,000 for the three months ended September 30, 2022 and 2021, respectively.

For the three months ended September 30, 2022, and 2021, operating cash outflows for operating leases were $ 298,000 and $ 460,000 , respectively.

The following tables present information about leases on our condensed consolidated balance sheets (in thousands):

September 30,

Operating lease right-of-use assets

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

As of March 31, 2022

As of September 30, 2022

As of June 30, 2022

1 unchanged sentence

Weighted average discount rate

As of March 31, 2022, remaining maturities of lease liabilities are as follows (in thousands):

As of September 30, 2022, remaining maturities of lease liabilities are as follows (in thousands):

Fiscal Period:

Remaining three months of fiscal 2022

Remaining nine months of fiscal 2023

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 March 31, 2022 and June 30, 2021, cash equivalents classified as level 1 instruments were measured at $ 57.9 million and $ 55.4 million, respectively.

STOCKHOLDERS’ EQUITY

On December 17, 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 March 31, 2022, and June 30, 2021, the Company had 31,821,000 and 31,231,000 shares of common stock issued and outstanding , respectively.

As of September 30, 2022 and June 30, 2022, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 57.5 million and $ 57.9 million, respectively.

SUBSEQUENT EVENT

On November 14, 2022 the Board of Directors authorized a stock repurchase program under which we may purchase up to $ 20 million of our outstanding common stock.

Under the stock repurchase program, we may purchase shares of common stock on a discretionary basis from time to time through open market transactions or privately negotiated transactions at prices deemed appropriate by us.

In addition, at our discretion, open market repurchase of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the company might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions.

The timing and number of shares repurchased will be determined based on an evaluation of market conditions and other factors, including stock price, trading volume, general business and market conditions, and the availability of capital.

The stock repurchase program is effective immediately, has a term of one year from adoption unless extended, does not obligate us to acquire a specified number of shares and may be modified, suspended, or discontinued at any time at our discretion without notice.

The stock repurchase program will be funded using existing cash or future cash flows.

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 1. Financial Statements