What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-05-11 · 129 added, 173 removed, 383 unchanged (44% 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 $ 169 and $ 123 as of March 31, 2023 and June 30, 2022, respectively

Accounts receivable, less provision for credit losses of $ 121 and $ 237 as of September 30, 2023 and June 30, 2023, respectively

Costs capitalized to obtain revenue contracts, net

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60,000 shares;

32,022 and 31,930 shares as of March 31, 2023 and June 30, 2022, respectively.

32,269 and 32,268 shares;

31,400 and 31,482 shares as of September 30, 2023 and June 30, 2023, respectively

Additional paid-in capital

Treasury stock, at cost:

145 and 0 common shares as of March 31, 2023 and June 30, 2022, respectively.

869 and 786 common shares as of September 30, 2023 and June 30, 2023, respectively

Notes receivable from stockholders

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Professional services

9 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Interest income

Other (expense) income, net

Income (Loss) before income tax provision

Provision for income taxes

Other income, net

Income before income tax provision

Income tax provision

Net income (loss)

Per share information:

Loss per share:

Earnings (loss) per share:

Weighted-average shares used in computation:

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss), net of taxes:

5 unchanged sentences

(in thousands)

Three Months Ended March 31, 2023

Treasury Stock

Notes Receivable

Comprehensive

Stockholders'

Balances as of December 31, 2022

Issuance of common stock upon exercise of stock options

Repurchase of common stock

Stock-based compensation

Foreign currency translation adjustments

Balances as of March 31, 2023

Three Months Ended March 31, 2022

Notes Receivable

Comprehensive

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

See accompanying notes to condensed consolidated financial statements.

EGAIN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (cont.)

(in thousands)

Nine Months Ended March 31, 2023

Three Months Ended September 30, 2023

Additional Paid-in

Treasury Stock

Notes Receivable

Comprehensive

Stockholders'

Notes Receivable From

Accumulated Other Comprehensive

Total Stockholders'

Balances as of June 30, 2023

Interest on stockholder notes

Repayment of notes receivable from stockholders

Issuance of common stock upon exercise of stock options

Issuance of common stock in connection

with employee stock purchase plan

Repurchase of common stock

1 unchanged sentence

Foreign currency translation adjustments

Balances as of March 31, 2023

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

Balances as of September 30, 2023

Three Months Ended September 30, 2022

Additional Paid-in

Notes Receivable From

Accumulated Other

Comprehensive

Accumulated Other Comprehensive

Total Stockholders'

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

Balances as of September 30, 2022

See accompanying notes to condensed consolidated financial statements.

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(in thousands)

Nine Months Ended

Three Months Ended

September 30,

Cash flows from operating activities:

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

Net income (loss)

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

Amortization of costs capitalized to obtain revenue contracts

Amortization of right-of-use assets

Provision for (recovery of) doubtful accounts

Depreciation and amortization

(Recovery of) provision for credit losses

Deferred income taxes

Stock-based compensation

Gain 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

Proceeds from exercise of stock options

Repurchases of common stock

Net cash provided by financing activities

Repayment of notes receivable from stockholders

Net cash (used in) provided by financing activities

Effect of change in exchange rates on cash and cash equivalents

4 unchanged sentences

Cash paid for taxes

ROU assets and lease liabilities recognized from lease modification

Non-cash items:

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The Company fiscal year ends on June 30.

References to fiscal year 2023 refer to fiscal year ending June 30, 2023.

References to fiscal year 2024 refers to fiscal year ending June 30, 2024.

Basis of Presentation

The accompanying condensed consolidated balance sheet as of March 31, 2023 and the condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the three and nine months ended March 31, 2023 and 2022, are unaudited.

The accompanying condensed consolidated balance sheet as of September 30, 2023 and the condensed consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for the three months ended September 30, 2023 and 2022, are unaudited.

The condensed consolidated balance sheet as of June 30, 2023 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.

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Actual results could differ significantly from estimates.

We make estimates that we believe to be reasonable based on historical experience and other assumptions.

We make estimates

that we believe to be reasonable based on historical experience and other assumptions.

Significant estimates and assumptions made by management include the following:

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Recent Accounting Pronouncements

Pronouncements Not Yet Adopted

Pronouncements Recently Adopted

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

2 unchanged sentences

2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model, which will result in earlier recognition of credit losses.

Subsequent to the issuance of ASU No.

2016-13, the FASB issued ASU No.

2018-19, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, ASU No.

2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instrument, ASU No.

2019-05, Financial Instruments - Credit Losses (Topic 326) Targeted Transition Relief, ASU No.

2016-13, ASU No.

2019-10 Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842), and ASU No.

2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses.

The subsequent ASUs do not change the core principle of the guidance in ASU No.

Instead, these amendments are intended to clarify and improve operability of certain topics included within ASU No.

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 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.

The subsequent amendments will have the same effective date and transition requirements as ASU No.

Early adoption is permitted.

Topic 326 requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.

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 condensed consolidated financial statements or the related disclosure.

We adopted this guidance as of our first quarter of fiscal year 2024 with no material impact on our condensed consolidated financial statements.

Revenue Recognition

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Subscription includes SaaS revenue and legacy revenue.

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 sell.

SaaS revenue includes cloud delivery arrangements, term licenses, embedded original equipment manufacturer (OEM) royalties, and associated support.

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

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

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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 based on relative 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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The Company has a royalty revenue agreement with a customer related to the Company’s embedded intellectual property.

Under the terms of the agreement, the customer is to remit a percentage of sales to the Company.

Under the terms of the agreement, the customer is to provide to the Company a combination of fixed fee, per agent fee, for each software license sold containing the embedded software.

These embedded OEM royalties are included as subscription revenue.

Under Topic 606, since these arrangements are for sales-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company recognizes revenue only as the subsequent sale occurs.

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, 2023 and 2022.

Under Topic 606 revenue guidance, since these arrangements are for usage-based licenses of intellectual property, for which the guidance in paragraph ASC 606-10-55-65 applies, the Company estimates revenue recognized only as the performance obligation of the OEM royalties has been satisfied or partially satisfied.

Differences between actual results and estimated amounts are adjusted in the following period as such sales are reported by the customer with a quarter in arrears.

Professional Services Revenue

3 unchanged sentences

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.

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

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

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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, 2023, we capitalized $ 6,000 and $ 415,000 of costs to obtain revenue contracts, respectively, and amortized $ 381,000 and $ 1.2 million to sales and marketing expense, respectively.

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.

On our condensed consolidated balance sheets, capitalized costs to obtain revenue contracts, net, were $ 3.9 million and $ 4.6 million as of March 31, 2023 and June 30, 2022, respectively.

Short-term capitalized costs to obtain revenue contracts, were $ 1.4 million and $ 1.5 million as of March 31, 2023 and June 30, 2022, respectively.

Long-term capitalized costs to obtain revenue contracts, were $ 2.6 million and $ 3.1 million as of March 31, 2023 and June 30, 2022, respectively.

During the three months ended September 30, 2023 and 2022, we capitalized $ 89,000 and $ 191,000 of costs to obtain revenue contracts, respectively, and amortized $ 500,000 and $ 375,000 to sales and marketing expense, respectively.

Capitalized costs to obtain revenue contracts, net were $ 3.2 million and $ 3.6 million as of September 30, 2023 and June 30, 2023, respectively, on our condensed consolidated balance sheets.

Deferred Revenue

Deferred revenue primarily consists of payments received or invoiced in advance of revenue recognition from cloud delivery arrangements, term licenses and embedded OEM royalties and associated support.

Deferred revenue is recognized as revenue once revenue recognition criteria is met.

We generally invoice our customers in annual installments.

The deferred revenue balance does not represent the total transaction price of our non-cancelable cloud delivery and support arrangements as a result from the timing of revenue recognition.

Deferred revenue that is expected to be recognized within one year and beyond one year is classified as current and noncurrent deferred revenue, respectively.

Deferred revenue primarily consists of payments received in advance of revenue recognition from cloud, term and ratable licenses, and maintenance and support services and is recognized as the revenue recognition criteria are met.

We generally invoice customers in annual or quarterly installments.

The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable cloud or maintenance and support agreements.

Deferred revenue is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration, invoice timing and new business linearity within the quarter.

Segment Information

We operate in one segment:

the development, license, implementation and support of our customer interaction software solutions.

Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision-makers in order to make decisions about resources to be allocated to the segment and assess its performance.

We operate in one segment - the development, license, implementation, and support of our customer service infrastructure software solutions.

Operating segments are identified as components of an enterprise for which discrete financial information is available and regularly reviewed by our chief operating decision-maker in order to make decisions about resources to be allocated to the segment and assess its performance.

Our chief operating decision-makers under ASC 280, Segment Reporting, are our executive management team.

Our chief operating decision-makers review financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance.

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

Our revenue is 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 from operations among our three operating regions (in thousands):

Our revenue is derived from North America and combined Europe, Middle East, and Africa (EMEA) and is disclosed in Note 2.

However, we incur operating expenses in the North America, EMEA, and Asia Pacific regions.

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

Three Months Ended

Nine Months Ended

Loss from operations:

September 30,

Income (loss) from operations

North America

Europe, Middle East, & Africa

Loss from operations

Income (loss) from operations

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, net in the accompanying condensed consolidated balance sheets.

For the purposes of entity-wide geographic area disclosures, long-lived assets consist of computers and equipment, furniture and fixtures, and leasehold improvements, net of accumulated depreciation and amortization.

These items are included in property and equipment, net, on the accompanying Company’s 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, restricted cash, and accounts receivable.

One customer, who is also a partner, accounted for 17 % of total revenue during the three months ended March 31, 2023.

The same partner accounted for 20 % of total revenue during the nine months ended March 31, 2023.

The same partner and a different partner, accounted for 20 % and 10 %, respectively, of total revenue during the

three months ended March 31, 2022 and 22 % and 12 %, respectively, for the nine months ended March 31, 2022.

No customer accounted for more than 10% of our gross accounts receivable balance as of March 31, 2023.

Accounts Receivable and Allowance for Doubtful Accounts

We complement direct sales with resell partnerships based on product connectors into cloud contact center platforms.

We also partner with system integrators and managed service providers.

Two customers, who are also our partners, accounted for 17 % and 11 %, respectively, of total revenue during the three months ended September 30, 2023.

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

Two and three different customers accounted for more than 10% of our gross accounts receivable, less provision for credit losses balance as of September 30, 2023 and 2022, respectively.

Accounts Receivable and Provision for Credit Losses

We extend unsecured credit to our customers on a regular basis.

Our accounts receivable are derived from revenue earned from customers and are not interest bearing.

We also maintain an allowance for doubtful accounts to reserve for potential uncollectible trade receivables.

We also maintain provision for credit losses 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.

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We write off a receivable after collection efforts have been exhausted and the amount is deemed uncollectible.

We maintain an allowance for doubtful accounts which is based on historical losses and the number of days past due for collection.

Receivables are written off against the allowance when we have exhausted collection efforts without success.

Recovered written off receivables are recorded as they occur.

1 unchanged sentence

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 $ 938,000 and $ 770,000 as of March 31, 2023 and June 30, 2022, respectively, and are included in the accounts receivable, less allowance for doubtful accounts balance on the accompanying condensed consolidated balance sheets.

Unbilled accounts receivables, for which the Company has the unconditional right to consideration, totaled $ 1.1 million and $ 1.7 million as of September 30, 2023, and June 30, 2023, respectively, and are included in the accounts receivable, provision for credit losses, balance on the accompanying condensed consolidated balance sheets.

Stock-Based Compensation

9 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 $ 31,000 and $ 113,000 during the three and nine months ended March 31, 2023, respectively.

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 the ESPP of $ 115,000 and $ 305,000 for the three and nine months ended March 31, 2023, 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.

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, 2023 and 2022, we granted options to purchase 22,300 and 197,365 shares of common stock with a weighted-average fair value of $ 4.66 and $ 6.31 per share, respectively.

During the nine months ended March 31, 2023 and 2022, we granted options to purchase 176,367 and 3,390,004 shares of common stock with a weighted-average fair value of $ 4.77 and $ 7.14 per share, respectively.

We used the following assumptions:

Total stock-based compensation includes expense related to non-employee awards of $ 26,000 and $ 44,000 during the three months ended September 30, 2023 and 2022, respectively.

Total stock-based compensation includes expense related to the ESPP of $ 79,000 and $ 127,000 for the three months ended September 30, 2023 and 2022, respectively.

We utilize the Black-Scholes valuation model for estimating the fair value of the stock-based compensation of options granted and ESPP stock purchase rights.

All shares of our common stock issued pursuant to our stock option and ESPP 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, 2023 and 2022, we granted options to purchase 29,100 and 100,867 shares of common stock with a weighted-average fair value of $ 3.39 and $ 5.04 per share, respectively.

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

Three Months Ended

Nine Months Ended

September 30,

Expected volatility

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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, 2022, employees were granted the right to purchase an aggregate of 88,414 shares under the ESPP, and compensation expense related to those purchase rights for the three and nine months ended March 31, 2023 was $ 115,000 and $ 156,000 , respectively.

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.

As of March 31, 2023, there were 1,025,112 shares of common stock available for issuance under the ESPP.

On June 1, 2023 and 2022, employees were granted the right to purchase an aggregate of 77,057 and 97,982 shares under the ESPP, respectively.

During each of the three months ended September 30, 2023 and 2022, no ESPP grants or purchase occurred.

As of September 30, 2023, there were 938,403 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, 2023 there was approximately $ 5.8 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 1.3 years.

There were 35,850 and 327,738 options exercised during the three months ended March 31, 2023 and 2022 , respectively.

There were 165,011 and 525,217 options exercised during the nine months ended March 31, 2023 and 2022, respectively.

As of September 30, 2023 there was approximately $ 3.5 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 1.1 years.

There were 1,000 and 7,225 options exercised during the three months ended September 30, 2023 and 2022 , 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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Lease expense is recognized on a straight-line basis over the lease term.

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.

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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 indicators of impairment during the three and nine months ended March 31, 2023.

We had no indicators of impairment during the three months ended September 30, 2023.

REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents our subscription and professional services revenue during the three and nine months ended March 31, 2023 and 2022, respectively (in thousands):

The following table presents our subscription and professional services revenue during the three months ended September 30, 2023 and 2022, 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 and nine months ended March 31, 2023 and 2022, respectively (in thousands):

The following table presents our revenue recognized over-time and at a point-in-time during the three months ended September 30, 2023 and 2022, respectively (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Point-in-time

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Three Months Ended

Nine Months Ended

September 30,

North America

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

March 31, 2023

June 30, 2022

Balance as of September 30, 2023

Balance as of June 30, 2023

Contract liabilities:

1 unchanged sentence

Deferred revenue, net of current portion

$ 8.2 million and $ 33.5 million of deferred revenue as of June 30, 2022 was recognized to revenue during the three and nine months ended March 31, 2023, respectively.

Total deferred revenue

$ 12.9 million of deferred revenue as of June 30, 2023 was recognized to revenue during the three months ended September 30, 2023.

Remaining Performance Obligations

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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 March 31, 2023, our remaining performance obligations were $ 87.3 million of which we expect to recognize $ 52.1 million and $ 35.2 million as revenue within one year and beyond one year, respectively.

LOSS PER SHARE

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding.

As of September 30, 2023, our remaining performance obligations were $ 82.4 million of which we expect to recognize $ 59.7 million and $ 22.7 million as revenue within one year and beyond one year, respectively.

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) 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 per share (in thousands, except per share data):

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

Three Months Ended

Nine Months Ended

September 30,

Net income (loss)

Per share information:

Loss per share:

Earnings (loss) per share:

Weighted-average shares used in computation:

Weighted-average shares of stock options to purchase 3,493,090 and 3,421,485 shares of common stock for the three months ended March 31, 2023 and 2022, respectively, and weighted-average shares of stock options to purchase 3,604,297 and 2,717,101 shares of common stock for the nine months ended March 31, 2023 and 2022, respectively, were not included in the computation of diluted net loss per share due to their anti-dilutive effect.

Effect of dilutive options

Weighted-average shares of stock options to purchase 3,564,660 and 3,707,271 shares of common stock for the three months ended September 30, 2023 and 2022, respectively, were not included in the computation of diluted net income (loss) per share due to their anti-dilutive effect.

Such securities could have a dilutive effect in future periods.

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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 March 31, 2023, 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, 2023, utilization of net operating loss (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 March 31, 2023, the Company did not identify any ownership change that would significantly limit the net operating loss carryovers.

As of September 30, 2023, the Company did not identify any ownership change that would significantly limit the NOL carryovers.

Under the Tax Cuts and Jobs Act, enacted on December 22, 2017 (TCJA), federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but generally may not be carried back, and the deductibility of such NOLs is limited to 80% of taxable income.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L.

116-136,was passed into law, amending portions of certain relevant US tax laws.

The CARES Act included a number of federal income tax law changes, including, but not limited to:

(i) permitting NOL carrybacks to offset 100% of taxable income for taxable years beginning before 2021, (ii) accelerating alternative minimum tax credit refunds, (iii) temporarily increasing the allowable business interest deduction from 30% to 50% of adjusted taxable income, and (iv) providing a technical correction for depreciation related to qualified improvement property.

The CARES Act had no impact on our consolidated financial statements.

Beginning in 2022, the TCJA eliminates the option to immediately deduct research and development expenditures and requires taxpayers to capitalize and amortize domestic expenditures over five years and foreign expenditures over 15 years.

While the mandatory capitalization requirement increases our deferred tax assets and cash tax liabilities for 2022, the tax year in which the provision took effect, the impact will decline annually over the five-year amortization period to an immaterial amount in year six.

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.

1 unchanged sentence

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, 2022.

We lease our office facilities under non-cancelable operating leases that expire on various dates through fiscal year 202 7 .

All of our office leases are classified as operating leases with lease expense recognized on a straight-line basis over the lease term.

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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 $ 325,000 and $ 329,000 for the three months ended March 31, 2023 and 2022, respectively.

Total operating lease costs were $ 961,000 and $ 1.0 million for the nine months ended March 31, 2023 and 2022, respectively.

For the three and nine months ended March 31, 2023, operating cash outflows for operating leases were $ 307,000 and $ 900,000 , respectively.

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

Total operating lease costs were $ 326,000 and $ 321,000 for the three months ended September 30, 2023 and 2022, respectively.

For the three months ended September 30, 2023 and 2022, operating cash outflows for operating leases were $ 315,000 and $ 298,000 , respectively.

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

September 30, 2023

June 30, 2023

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, 2023

As of June 30, 2022

September 30, 2023

June 30, 2023

Weighted average remaining lease term (in years)

Weighted average discount rate

As of March 31, 2023, remaining maturities of lease liabilities are as follows (in thousands):

As of September 30, 2023, remaining maturities of lease liabilities are as follows (in thousands):

Fiscal Period:

Remaining three months of fiscal 2023

Remaining nine months of fiscal 2024

Total minimum lease payments

Imputed interest

Total operating lease liabilities

Current operating lease liabilities

Total operating lease liabilities, net of current portion

COMMITMENTS AND CONTINGENCIES

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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, 2023 and June 30, 2022, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 78.5 million and $ 57.9 million, respectively.

As of September 30, 2023 and June 30, 2023, cash equivalents classified as level 1 instruments, including money market account investments, were measured at $ 73.6 million and $ 73.2 million, respectively.

SHARE REPURCHASE PROGRAM

On November 14, 2022, the Company’s Board of Directors authorized a stock repurchase program under which we may purchase up to $ 20.0 million of our outstanding common stock.

As of March 31, 2023, approximately $ 18.9 million remained available for stock repurchases pursuant to our stock repurchase program.

As of September 30, 2023, approximately $ 13.7 million remained available for stock repurchases pursuant to our stock repurchase program.

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.

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

During the three and nine months ended March 31, 2023, 145,453 shares have been repurchased for an average acquisition cost per share of $ 7.57 , totaling $ 1.1 million.

During the three months ended September 30, 2023, 83,056 shares have been repurchased for an average acquisition cost per share of $ 6.23 , totaling $ 517,000 .

We intend to reissue repurchased shares at a later date and therefore carry the shares as treasury stock at cost.

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