<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)
[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

                                       OR

[_]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File No. 0-30260

                        eGAIN COMMUNICATIONS CORPORATION
             -------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                       77-046636
          --------                                      ----------
 (State or other jurisdiction              (I.R.S. Employer Identification No.)
of incorporation or organization)

                       714 E. Evelyn Avenue, Sunnyvale, CA
                       -----------------------------------
                    (Address of principal executive offices)

                                      94086
                                      -----
                                   (Zip Code)

                                 (408) 212-3400
                                 --------------
                         (Registrant's telephone number,
                              including area code)

                                       N/A
                                       ---
                     (Former name, former address and former
                   fiscal year, if changed since last report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                    YES    [X]                             NO    [_]

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

             Class                        Outstanding at September 30, 2001
             -----                        ---------------------------------
  Common Stock $0.001 par value                     36,407,857



<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 Page
                                                                                 ----
<S>                                                                              <C>
PART I.   FINANCIAL INFORMATION ..................................................  1

Item 1.   Financial Statements ...................................................  1

          Condensed Consolidated Balance Sheets at September 30, 2001 and
               June 30, 2001 .....................................................  1

          Condensed Consolidated Statements of Operations for the Three
               Months Ended September 30, 2001 and 2000 ..........................  2

          Condensed Consolidated Statements of Cash Flows for the Three
               Months Ended September 30, 2001 and 2000 ..........................  3

          Notes to Condensed Consolidated Financial Statements ...................  4

Item 2.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations .............................................  9

Item 3.   Quantitative and Qualitative Disclosure About Market Risk .............. 24


PART II   OTHER INFORMATION ...................................................... 25


Item 1.   Legal Proceedings ...................................................... 25

Item 2.   Changes in Securities .................................................. 25

Item 3.   Defaults upon Senior Securities ........................................ 25

Item 4.   Submission of Matters to a Vote of Security Holders .................... 25

Item 5.   Other Information ...................................................... 25

Item 6.   Exhibits and Reports on Form 8-K ....................................... 25

          Signatures ............................................................. 26
</TABLE>

                                        i

<PAGE>

                          Part I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                        eGAIN COMMUNICATIONS CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                 September 30,    June 30,
                                                                                      2001          2001
                                                                                  ----------     ---------
ASSETS                                                                           (unaudited)

<S>                                                                               <C>            <C>
Current assets:
     Cash and cash equivalents .............................................      $  29,945      $  42,613
     Accounts receivable, net ..............................................          9,682         13,803
     Prepaid and other current assets ......................................          7,453          7,365
                                                                                  ---------      ---------
        Total current assets ...............................................         47,080         63,781

Property and equipment, net ................................................          9,479         11,677
Goodwill, net ..............................................................         65,390         74,616
Intangible assets, net .....................................................          6,560          6,890
Other assets ...............................................................          1,148          1,187
                                                                                  ---------      ---------
                                                                                  $ 129,657      $ 158,151
                                                                                  =========      =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable ......................................................      $   3,609      $   5,397
     Accrued compensation ..................................................          5,216          6,309
     Accrued liabilities ...................................................          7,196          3,460
     Deferred revenue ......................................................          4,588          5,438
     Current portion of bank borrowings ....................................          4,528          4,268
     Current portion of notes payable ......................................            230            199
     Current portion of capital lease obligations ..........................            835            952
                                                                                  ---------      ---------
        Total current liabilities ..........................................         26,202         26,023

Bank borrowings, net of current portion ....................................            951          1,167
Notes payable, net of current portion ......................................             80            161
Capital lease obligations, net of current portion ..........................            259            392
Other long term liabilities ................................................            612            597
                                                                                  ---------      ---------
        Total liabilities ..................................................         28,104         28,340

Commitments

Stockholders' equity:
     Series A Cumulative Convertible Preferred stock .......................         89,632         88,034
     Common stock ..........................................................             36             36
     Additional paid-in capital ............................................        225,315        227,375
     Notes receivable from stockholders ....................................           (204)          (380)
     Deferred stock compensation ...........................................         (1,225)        (1,844)
     Accumulated other comprehensive loss ..................................           (256)           (84)
     Accumulated deficit ...................................................       (211,745)      (183,326)
                                                                                  ---------      ---------
        Total shareholders' equity .........................................        101,553        129,811
                                                                                  ---------      ---------
                                                                                  $ 129,657      $ 158,151
                                                                                  =========      =========
</TABLE>

                             See accompanying notes

                                       -1-

<PAGE>



                        eGAIN COMMUNICATIONS CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                              Three Months
                                                                                           Ended September 30,
                                                                                      ---------------------------
                                                                                         2001              2000
                                                                                      --------           --------
<S>                                                                                   <C>                <C>
Revenue:
   Hosting ...................................................................        $  2,041           $  2,295
   License ...................................................................           2,060              4,604
   Services ..................................................................           3,939              5,159
                                                                                      --------           --------
     Total revenue ...........................................................           8,040             12,058
   Cost of revenue - direct ..................................................           5,068              8,724
   Cost of revenue - acquisition related .....................................             362                362
                                                                                      --------           --------
     Gross profit ............................................................           2,610              2,972

Operating costs and expenses:
   Research and development ..................................................           4,574              6,079
   Sales and marketing .......................................................           8,602             12,461
   General and administrative ................................................           3,805              4,228
   Amortization of goodwill and other intangible assets ......................           9,194              9,200
   Amortization of deferred compensation .....................................             302              1,098
   Restructuring .............................................................           4,785                 --
                                                                                      --------           --------
     Total operating costs and expenses ......................................          31,262             33,066
                                                                                      --------           --------
Loss from operations .........................................................         (28,652)           (30,094)
Non-operating income .........................................................             233                231
                                                                                      --------           --------
Net loss .....................................................................         (28,419)           (29,863)

Dividends on convertible preferred stock .....................................          (1,598)              (884)
Beneficial conversion feature on convertible preferred stock .................         (43,834)              (767)
                                                                                      --------           --------
Net loss applicable to common stockholders ...................................        $(73,851)          $(31,514)
                                                                                      ========           ========
Per Share information:

   Basic and diluted net loss per common share ...............................        $  (2.06)          $  (0.91)
                                                                                      ========           ========
   Weighted average shares used in computing basic and diluted net loss per
     common share ............................................................          35,916             34,474
                                                                                      ========           ========

</TABLE>

                             See accompanying notes

                                       -2-

<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                          Three Months
                                                                                       Ended September 30,
                                                                                   --------------------------
                                                                                     2001              2000
                                                                                   --------          --------
<S>                                                                               <C>               <C>
Cash flows from operating activities:
   Net loss ..................................................................... $(28,419)         $(29,863)
   Adjustments to reconcile net loss to net cash used in operating activities:
       Depreciation .............................................................    1,850             1,314
       Loss on disposal of fixed assets .........................................      812              --
       Amortization of goodwill and other intangible assets .....................    9,556             9,562
       Amortization of deferred compensation ....................................      302             1,098
       Changes in operating assets and liabilities:
         Accounts receivable ....................................................    4,121            (1,448)
         Prepaid and other current assets .......................................      (88)              170
         Other assets ...........................................................       39               (14)
         Accounts payable .......................................................   (1,788)             (648)
         Accrued compensation ...................................................   (1,093)              (65)
         Accrued liabilities ....................................................    3,736              (854)
         Deferred revenue .......................................................     (850)             (700)
         Other liabilities ......................................................       15                43
                                                                                  --------          --------
Net cash used in operating activities ...........................................  (11,807)          (21,405)

Cash flows from investing activities:
   Purchases of property and equipment ..........................................     (464)           (3,030)
   Proceeds from sale of short-term securities ..................................       --             3,140
                                                                                  --------          --------
Net cash provided by (used in) investing activities .............................     (464)              110

Cash flows from financing activities:
   Payments on borrowings .......................................................     (277)              (43)
   Payments on capital lease obligations ........................................     (250)             (274)
   Proceeds from borrowings .....................................................      271                --
   Net proceeds from issuance of convertible preferred stock ....................       --            82,601
   Net proceeds from issuance of common stock ...................................       31             1,406
                                                                                  --------          --------
Net cash provided by (used in) financing activities .............................     (225)           83,690

Effect of exchange rate differences on cash .....................................     (172)              222
                                                                                  --------          --------
Net increase (decrease) in cash and cash equivalents ............................  (12,668)           62,617
Cash and cash equivalents at beginning of year ..................................   42,613            27,201
                                                                                  --------          --------
Cash and cash equivalents at end of year ........................................ $ 29,945          $ 89,818
                                                                                  ========          ========
Supplemental cash flow disclosures:
   Cash paid for interest ....................................................... $    154          $    103
   Equipment acquired under capital leases ......................................       --               381
</TABLE>


                             See accompanying notes

                                       -3-

<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.  Basis of Presentation

         The condensed consolidated financial statements have been prepared by
eGain pursuant to the rules and regulations of the Securities and Exchange
Commission and include the accounts of eGain and its wholly-owned subsidiaries.
All significant intercompany balances and transactions have been eliminated.

         Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations. In the opinion of eGain, the unaudited condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of eGain's financial
position, results of operations and cash flows for the periods presented. These
financial statements and notes should be read in conjunction with eGain's
audited consolidated financial statements and notes thereto for the year ended
June 30, 2001, included in eGain's Annual Report on Form 10-K. The condensed
consolidated balance sheet at June 30, 2001 has been derived from audited
financial statements as of that date. The results of eGain's operations for the
interim periods presented are not necessarily indicative of results that may be
expected for any other interim period or for the full fiscal year ending June
30, 2002.

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

         Certain reclassifications have been made to prior period amounts in
order to conform to the current period's presentation.

Note 2.  Software Revenue Recognition

         eGain recognizes revenue in accordance with Statement of Position 97-2,
Software Revenue Recognition ("SOP 97-2"), as amended. Under SOP 97-2, revenue
from license fees is recognized when persuasive evidence of an agreement exists,
delivery of the product has occurred, no significant eGain obligations remain,
the fee is fixed or determinable, and collectibility is probable. License
revenue in multiple element contracts is recognized using the residual method
when there is vendor-specific objective evidence of the fair value of all
undelivered elements in an arrangement but vendor-specific objective evidence of
fair value does not exist for one or more of the delivered elements in an
arrangement. Under the residual method, the total fair value of the undelivered
elements, as indicated by vendor-specific objective evidence, is deferred and
the difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
If sufficient vendor-specific objective evidence does not exist for undelivered
elements in an arrangement, all revenue from the arrangement is deferred until
the earlier of the point at which (a) such sufficient vendor-specific objective
evidence does exist or (b) all elements of the arrangement have been delivered.
License revenue from all distributors and resellers are generally recognized by
eGain when the distributor or reseller has resold the product to an end user.

         Revenue from hosting services is recognized ratably over the period of
the agreement as services are provided. Hosting agreements are typically for a
period of one year and automatically renew unless either party cancels the
agreement.

         Service revenue is primarily derived from consulting fees, maintenance
agreements, and training. Service revenue from consulting and training billed on
a time and materials basis is recognized as performed. Service revenue on fixed
price service arrangements is recognized upon completion of specific contractual
milestone events, or based on an estimated percentage of completion as work
progresses. Maintenance agreements include the right to software updates on an
if-and-when-available basis. Maintenance revenue is deferred and recognized on a
straight-line basis as service revenue over the life of the related agreement,
which is typically one year.

                                       -4-

<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

         In all cases, eGain assesses whether the service element of the
arrangement is essential to the functionality of the other elements of the
arrangement. In this determination, eGain focuses on whether the services
include significant alterations to the features and functionality of the
software, whether the services involve the building of complex interfaces, the
timing of payments and the existence of milestones. In making this
determination, eGain considers the following: (1) the relative fair value of the
services compared to the software, (2) the amount of time and effort subsequent
to delivery of the software until the interfaces or other modifications are
completed, (3) the degree of technical difficulty in building the interfaces or
other modifications, and (4) any contractual cancellation, acceptance, or
termination provisions for failure to complete the interfaces. In those
instances where eGain determines that the service elements are essential to the
other elements of the arrangement, eGain accounts for the entire arrangement in
accordance with Accounting Research Bulletin (ARB) No. 45, "Long -Term
Construction - Type Contracts," using the relevant guidance from SOP 97-2 and
SOP 81-1, "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts."

Note 3.  Net Loss Per Common Share

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

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

<TABLE>
<CAPTION>
                                                                          Three Months
                                                                       Ended September 30,
                                                                   -------------------------
                                                                        2001        2000
                                                                   ----------    -----------
<S>                                                                <C>           <C>
Net loss applicable to common stockholders .......................   $(73,851)   $   (31,514)
                                                                   ==========    ===========
Basic and diluted:

   Weighted-average shares outstanding ...........................     36,416         35,743
   Less weighted-average shares subject to repurchase ............       (500)        (1,269)
                                                                   ----------    -----------
   Weighted-average shares used in computing basic and diluted
     net loss per common share ...................................     35,916         34,474
                                                                   ==========    ===========
Basic and diluted net loss per common share ...................... $    (2.06)   $     (0.91)
                                                                   ==========    ===========
</TABLE>


         Options and warrants to purchase approximately 9,216,000 and 10,013,000
shares of common stock were outstanding at September 30, 2001 and 2000,
respectively. In addition, convertible preferred stock convertible into
approximately 16,796,000 and 9,661,000 shares of common stock were outstanding
at September 30, 2001 and 2000, respectively. The above amounts were excluded
from the computation of net loss per common share, as their effect is
anti-dilutive.

Note 4.  Comprehensive Loss

         eGain's comprehensive loss is comprised of net loss, foreign currency
translation adjustments and unrealized gains or losses on short-term investments
held as available-for-sale. Comprehensive loss was $28.6 million and $29.5
million for the three months ended September 30, 2001 and 2000, respectively.
These amounts were not materially different from net loss as reported in the
consolidated statements of operations.

Note 5.  Segment Information

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

                                       -5-

<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

SFAS No. 131, is its executive management team. eGain's chief operating decision
maker reviews financial information presented on a consolidated basis,
accompanied by separate information about operating results by geographic region
for purposes of making operating decisions and assessing financial performance.
Accordingly, eGain operates in one segment, the development, license,
implementation and support of its customer interaction management software
solutions.

         Information relating to eGain's geographic areas for the three months
ended September 30, 2001 and 2000 is as follows (in thousands):

                                           Total     Operating  Identifiable
                                          Revenues     Loss        Assets
                                          --------  ----------  ------------

Three months ended September 30, 2001:
    North America ....................   $  4,995    $ 26,427     $ 52,617
    Europe ...........................      2,246       1,075        3,859
    Asia Pacific .....................        799       1,150        1,231
                                         --------    --------     --------
                                         $  8,040    $ 28,652     $ 57,707
                                         ========    ========     ========

Three months ended September 30, 2000:
    North America ....................   $  9,209    $ 28,701     $113,740
    Europe ...........................      2,805       1,022        5,500
    Asia Pacific .....................         44         371           46
                                         --------    --------     --------
                                         $ 12,058    $ 30,094     $119,286
                                         ========    ========     ========

         During the three months ended September 30, 2001 and 2000, no single
customer accounted for more than 10% of eGain's total revenue.

Note 6.  Preferred Stock

         On August 8, 2000, eGain issued 35.11 shares of non-voting Series A
Cumulative Convertible Preferred Stock ("Series A"), $100,000 stated value per
share, and 849.89 shares of non-voting Series B Cumulative Convertible Preferred
Stock ("Series B"), $100,000 stated value per share in a private placement to
certain investors (the "Investors"). The Series B shares automatically converted
into Series A shares upon stockholder approval on November 20, 2000 at the
annual stockholders meeting. In addition, the Investors received warrants to
purchase 3,826,000 shares of eGain's common stock (the "Warrants"). The net cash
proceeds of the offering, after expenses, were $82,601,000. The Series A shares
have a liquidation preference of $100,000 per share which increases on a daily
basis at an annual rate of 6.75% from August 8, 2000, compounded on a
semi-annual basis. The Series A stockholders are entitled cash dividends only
when and if declared by the board of directors.

         If not sooner converted, eGain has the option to convert the Series A
shares into common stock after August 8, 2003 if the closing bid price of
eGain's common stock on 20 of the 30 consecutive trading days prior to the date
of notice requesting conversion is equal to or greater than 250% of the initial
conversion price (or $23.13). If not sooner converted, on August 8, 2005 eGain
must either, at its option, redeem the Series A shares for cash or convert the
Series A shares into common stock at a price per share equal to 95% of the
average closing bid price per share of eGain's common stock on the 20
consecutive trading days immediately prior to the redemption date.

         Pursuant to the terms and conditions of the Series A agreement, on
August 8, 2001, the conversion price of the Series A shares was reset from the
original conversion price of $9.2517 per share to $5.6875 per share. As a result
of this reset of the conversion price, the currently outstanding Series A shares
were convertible into approximately 16,796,000 shares of common stock as of
September 30, 2001. In addition, on August 8, 2001, pursuant to the terms and
conditions of the Warrant agreement, the exercise price of the Warrants
underwent a reset from the original exercise price of $9.2517 per share to
$5.6875 per share. This reset of the exercise price of the Warrants will not
result in the issuance of additional warrants or shares of common stock upon the
exercise of the Warrants.

                                       -6-

<PAGE>


                        eGAIN COMMUNICATIONS CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

         As a result of the reset of the original conversion price of the Series
A shares, an additional beneficial conversion charge of $43,834,000 was recorded
during the three months ended September 30, 2001. Based upon the accounting
literature in effect at the time of the issuance of the Series A shares, (EITF
98-5, "Accounting for Convertible Securities with Beneficial Conversion Features
or Contingently Adjustable Conversion Ratios"), the initial beneficial
conversion charge of $19,335,000 was measured using an intrinsic value
methodology at the date of issuance (the "commitment date") and recognized at
the date the Series A became convertible. In addition, the contingent beneficial
conversion charge was measured at the commitment date but not recognized as the
contingency (reset on August 8, 2001) had not been resolved. The incremental
amount recognized at the date of reset was limited to the allocated proceeds of
$63,169,000, less the initial charge of $19,335,000. The amount representing the
beneficial conversion feature was included in net loss applicable to common
stockholders.

         Accrued dividends, representing the increase in liquidation value at
the rate of 6.75% per annum, are charged against additional paid-in capital and
are included in net loss applicable to common stockholders. In the three months
ended September 30, 2001 and 2000, accrued dividends were $1,598,000 and
$884,000, respectively.

Note 7.  Restructuring

         During the three months ended September 30, 2001, pursuant to a plan
approved by the required level of management necessary to execute its
components, eGain recorded restructuring charges totaling $4,785,000. These
charges were primarily related to the consolidation of eGain's facilities in
North America, which resulted in a charge of $4,336,000. This amount includes
estimated future net rental payments on exited facilities of $3,511,000, as well
as $810,000 in write-offs of leasehold improvements and $15,000 in professional
services associated with the exited facilities. In addition, eGain incurred
$449,000 in severance costs during the three months ended September 30, 2001
related to a reduction in eGain's worldwide workforce of 56 employees across all
departments pursuant to the adoption of eGain's expense management strategy.

         Details of the restructuring charges for the three months ended
September 30, 2001 are as follows (in thousands):

                                                  Original   Amount  Balance at
                                  Cash/Non-cash    Charge  Paid/Used  9/30/01
                                  -------------    ------  ---------  -------

Excess facilities ..............       Cash       $3,511   $   --     $3,511
Leasehold improvement write-offs     Non-cash        810      810         --
Employee severance .............       Cash          449      449         --
Professional services ..........       Cash           15       --         15
                                                  ------   ------     ------
    Total restructuring charges                   $4,785   $1,259     $3,526
                                                  ======   ======     ======

Note 8.  Stock Exchange Program

         On September 7, 2001, eGain filed a final amendment to a tender offer
statement on Schedule TO dated May 24, 2001 announcing the final results of its
offer to exchange certain eligible options outstanding under eGain's stock
option plans for new options to purchase shares of eGain common stock. The new
options will be granted on or after six months and one day after August 10,
2001, the date the tendered options were accepted and canceled. eGain currently
anticipates issuing new options to purchase 906,000 shares of eGain common stock
in exchange for the options surrendered in the offer to exchange. In addition,
there were 15,000 untendered options associated with the exchange program that
are subject to variable accounting. There was no compensation expense associated
with these options during the three months ended September 30, 2001.

Note 9.  New Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible
Assets, effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill and intangible assets deemed to have indefinite lives will
no

                                       -7-

<PAGE>

                        eGAIN COMMUNICATIONS CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

longer be amortized but will be subject to annual impairment tests in accordance
with SFAS No. 142. Other intangibles will continue to be amortized over their
useful lives. eGain will adopt SFAS No. 142 in its first quarter of fiscal 2003.
As a result of the discontinuance of the amortization of goodwill and excluding
the impact of potential impairment charges, the application of SFAS No. 142 is
expected to result in an increase in eGain's results of operations of
approximately $24,129,000 during fiscal 2003. Goodwill related to acquisitions
subsequent to June 30, 2001 will not be amortized. During fiscal 2003, we will
perform the first of the required impairment tests of goodwill and intangible
assets deemed to have indefinite lives as of July 1, 2002. eGain has not yet
determined what effect these tests will have on its earnings and financial
position.

         In October 2001, the FASB issued SFAS No. 144, Accounting for
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, and addresses financial accounting and reporting for
the impairment or disposal of long-lived assets. This statement is effective for
fiscal years beginning after December 15, 2001. Adoption of this statement will
not have a material impact on eGain's financial position or results of
operations.

                                       -8-

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

         This report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. These statements may be identified by the use
of the words such as "anticipates," "believes," "continue," "could," "would,"
"estimates," "forecasts," "expects," "intends," "may," "might," "plans,"
"potential," "predicts," "should," or "will" and similar expressions or the
negative of those terms. The forward-looking statements include, but are not
limited to, the expansion of eGain's multi-channel interaction management
platform, the continued expansion of eGain's global distribution capabilities,
the development of eGain's strategic relationships, the factors influencing
competition in eGain's market, eGain's limited operating history and expected
net losses, the adequacy of eGain's capital resources, the continued need for
online customer communications, the continued acceptance of eGain's Web-native
architecture, eGain's levels of investment in research and development and sales
and marketing and the overall volatility of Internet-related technology
companies. eGain's actual results could differ materially from those discussed
in statements relating to eGain's future plans, product releases, objectives,
expectations and intentions, and other assumptions underlying or relating to any
of these statements. Factors that could contribute to such differences include
those discussed in "Factors That May Affect Future Results" and elsewhere in
this document. These forward-looking statements speak only as of the date
hereof. eGain expressly disclaims any obligation or understanding to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in eGain's expectations with regard thereto or any
change in events, conditions or circumstances on which any such statement is
based.

Overview

         eGain is a leading provider of interaction management software for the
Internet that enables companies to transform traditional customer call centers
into multi-channel contact centers. To help businesses deliver a superior
customer experience and establish profitable, long-term customer relationships,
while reducing operating and technology costs, eGain offers best-of-breed
applications that enable online customers to communicate through each of the
three primary channels for online customer interaction - email, real-time and
self-service. Built using a 100% Web-native architecture, eGain's comprehensive
eService solutions are designed to provide robust scalability, global access,
diverse integration capabilities and rapid deployment. In addition, eGain's
solution is designed to integrate with leading customer relationship management,
enterprise relationship management and call center systems, enabling customers
to leverage investments in existing systems and providing an enterprise wide
solution.

         On April 30, 1999, eGain acquired Sitebridge Corporation and added its
real-time Web collaboration product to eGain's platform. The product, eGain
Live, is an application that allows ecommerce companies to interact in real-time
with visitors to their Web sites. eGain acquired Sitebridge in exchange for
common stock and the transaction was accounted for under the purchase method of
accounting.

         On March 7, 2000, eGain acquired Big Science Company and added its
Web-native self-service product to eGain's platform. The resulting product,
eGain Assistant, enables personalized customer assistance on Web sites through
virtual service agents. Customers interact in natural language dialogue with a
life-like character, which answers questions and leads customers through problem
resolution and sales situations. eGain acquired Big Science in exchange for
common stock and cash and the transaction was accounted for under the purchase
method of accounting.

         On June 29, 2000, eGain acquired Inference Corporation in exchange for
its common stock and assumption of outstanding options to purchase Inference
common stock. The acquisition brought together eGain's strength in Web-native,
multi-channel customer communications with Inference's powerful customer
profiling and contact center support capabilities. It also significantly
expanded eGain's European business and add critical new product and technology
components to the eGain platform. The merger was accounted for under the
purchase method of accounting.

         On April 23, 2001, eGain acquired all of the outstanding capital stock
of eGain Communications Private Limited ("eGain India") for cash. eGain believes
the acquisition will enhance its product development, licensed customer support,
information technology and hosted business services capabilities. The
transaction was accounted for under the purchase method of accounting.

                                       -9-

<PAGE>


         eGain intends to continue to make investments in product development
and technology to enhance its current products and services, develop new
products and services and further advance its solution offerings. In addition,
eGain has incurred significant losses since its inception and had an accumulated
deficit of $211.7 million as of September 30, 2001. eGain has not achieved
profitability on a quarterly or annual basis. In view of the rapidly evolving
nature of its business and limited operating history, eGain believes that period
to period comparisons of its revenue and operating results may not be meaningful
and should not be relied upon as indications of future performance.

Results of Operations

         The following table sets forth the results of operations for the
periods presented expressed as a percentage of total revenue:

                                                             Three Months
                                                           Ended September 30,
                                                        ------------------------
                                                           2001           2000
                                                        ---------      ---------
Revenue:
   Hosting ............................................     25%           19%
   License ............................................     26%           38%
   Services ...........................................     49%           43%
                                                        --------      --------
     Total revenue ....................................    100%          100%
   Cost of revenue - direct ...........................     63%           72%
   Cost of revenue - acquisition related ..............      4%            3%
                                                        --------      --------
     Gross profit (loss) ..............................     33%           25%

Operating costs and expenses:
   Research and development ...........................     57%           51%
   Sales and marketing ................................    107%          103%
   General and administrative .........................     47%           35%
   Amortization of goodwill and other intangible assets    114%           76%
   Amortization of deferred compensation ..............      4%            9%
   Restructuring ......................................     60%           --
                                                        --------      --------
     Total operating costs and expenses ...............    389%          274%
                                                        --------      --------
Loss from operations ..................................   (356%)        (249%)
                                                        ========      ========

Revenue

         eGain recognizes revenue in accordance with Statement of Position 97-2,
Software Revenue Recognition ("SOP 97-2"), as amended. Under SOP 97-2, revenue
from license fees is recognized when persuasive evidence of an agreement exists,
delivery of the product has occurred, no significant eGain obligations remain,
the fee is fixed or determinable, and collectibility is probable. License
revenue in multiple element contracts is recognized using the residual method
when there is vendor-specific objective evidence of the fair value of all
undelivered elements in an arrangement but vendor-specific objective evidence of
fair value does not exist for one or more of the delivered elements in an
arrangement. Under the residual method, the total fair value of the undelivered
elements, as indicated by vendor-specific objective evidence, is deferred and
the difference between the total arrangement fee and the amount deferred for the
undelivered elements is recognized as revenue related to the delivered elements.
If sufficient vendor-specific objective evidence does not exist for undelivered
elements in an arrangement, all revenue from the arrangement is deferred until
the earlier of the point at which (a) such sufficient vendor-specific objective
evidence does exist or (b) all elements of the arrangement have been delivered.
License revenue from all distributors and resellers are generally recognized by
eGain when the distributor or reseller has resold the product to an end user.

         Revenue from hosting services is recognized ratably over the period of
the agreement as services are provided. Hosting agreements are typically for a
period of one year and automatically renew unless either party cancels the
agreement.

                                      -10-

<PAGE>


         Service revenue is primarily derived from consulting fees, maintenance
agreements, and training. Service revenue from consulting and training billed on
a time and materials basis is recognized as performed. Service revenue on fixed
price service arrangements is recognized upon completion of specific contractual
milestone events or based on an estimated percentage of completion as work
progresses. Maintenance agreements include the right to software updates on an
if-and-when-available basis. Maintenance revenue is deferred and recognized on a
straight-line basis as service revenue over the life of the related agreement,
which is typically one year.

         In all cases, eGain assesses whether the service element of the
arrangement is essential to the functionality of the other elements of the
arrangement. In this determination, eGain focuses on whether the services
include significant alterations to the features and functionality of the
software, whether the services involve the building of complex interfaces, the
timing of payments and the existence of milestones. In making this
determination, eGain considers the following: (1) the relative fair value of the
services compared to the software, (2) the amount of time and effort subsequent
to delivery of the software until the interfaces or other modifications are
completed, (3) the degree of technical difficulty in building the interfaces or
other modifications, and (4) any contractual cancellation, acceptance, or
termination provisions for failure to complete the interfaces. In those
instances where eGain determines that the service elements are essential to the
other elements of the arrangement, eGain accounts for the entire arrangement in
accordance with Accounting Research Bulletin (ARB) No. 45, "Long -Term
Construction - Type Contracts," using the relevant guidance from SOP 97-2 and
SOP 81-1, "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts."

         Total revenue decreased 33% to $8.0 million in the quarter ended
September 30, 2001 from $12.1 million in the quarter ended September 30, 2000.
The decrease was primarily attributable to a sharp decline in customer orders
resulting from the weak macro-economic economic environment, the traditionally
weak summer selling season in international markets and the events of September
11. During the quarter ended September 30, 2001, no single customer accounted
for more than 10% of total revenue.

         Hosting revenue decreased 11% to $2.0 million in the quarter ended
September 30, 2001 from $2.3 million in the quarter ended September 30, 2000.
The decrease was primarily attributable to a decline in new hosted customer
contracts, coupled with the termination of existing hosted customer contracts.
Hosting revenue represented 25% and 19% of total revenue for the quarters ended
September 30, 2001 and 2000, respectively.

         License revenue decreased 55% to $2.1 million in the quarter ended
September 30, 2001 from $4.6 million in the quarter ended September 30, 2000.
The decrease was primarily due to a large decline in customer orders. License
revenue represented 26% and 38% of total revenue for the quarters ended
September 30, 2001 and 2000, respectively.

         Services revenue decreased 24% to $3.9 million in the quarter ended
September 30, 2001 from $5.2 million in the quarter ended September 30, 2000.
The decrease was primarily attributable to a decline in customer license orders,
resulting in decreased revenue from customer implementations, system integration
projects and maintenance contracts. Services revenue represented 49% and 43% of
total revenue for the quarters ended September 30, 2001 and 2000, respectively.

Cost of Revenue - Direct

         Cost of revenue - direct includes personnel costs for eGain's hosting
services, consulting services and customer support. It also includes
depreciation of capital equipment used in eGain's hosted network, cost of
third-party products and lease costs paid to remote co-location centers. Cost of
revenue-direct decreased 42% to $5.1 million in the quarter ended September 30,
2001 from $8.7 million in the quarter ended September 30, 2000, representing 63%
and 72% of total revenue, respectively. The decrease was primarily due to a
decline in headcount through attrition and planned workforce reductions, as well
as ongoing stringent cost control measures in an effort to better align expenses
with recent revenue trends. These measures contributed to an overall improvement
in gross profit margin in the quarter ended September 30, 2001 compared to the
quarter ended September 30, 2000. eGain anticipates that costs of revenue will
continue to decrease next quarter but will then be relatively stable in future
periods.

                                      -11-

<PAGE>


Cost of Revenue - Acquisition Related

         Cost of revenue - acquisition related expense of $362,000 in each of
the three months ended September 30, 2001 and 2000, consisted of amortization of
developed technology resulting from eGain's business combinations in fiscal
2000.

Research and Development

         Research and development expenses primarily consist of compensation and
benefits of engineering and quality assurance personnel and, to a lesser extent,
occupancy costs and related overhead. Research and development expenses
decreased 25% to $4.6 million in the quarter ended September 30, 2001 from $6.1
million in the quarter ended September 30, 2000, representing 57% and 51% of
total revenue, respectively. The decrease in absolute dollars was primarily
attributable to the ongoing migration of development resources to eGain India
and a reduction in outside contractor services pursuant to eGain's commitment to
reduce operating costs. eGain anticipates that research and development expenses
in absolute dollars will continue to decrease next quarter but will then be
relatively stable in future periods.

Sales and Marketing

         Sales and marketing expenses primarily consist of compensation and
benefits of eGain's sales, marketing and business development personnel,
advertising, trade show and other promotional costs and, to a lesser extent,
occupancy costs and related overhead. Sales and marketing expenses decreased 31%
to $8.6 million in the quarter ended September 30, 2001 from $12.5 million in
the quarter ended September 30, 2000, representing 107% and 103% of total
revenue, respectively. The decrease in absolute dollars was primarily due to a
decline in headcount through attrition and planned workforce reductions, as well
as decreased spending on marketing programs pursuant to eGain's commitment to
reduce operating costs. eGain anticipates that sales and marketing expenses in
absolute dollars will continue to decrease next quarter but will then be
relatively stable in future periods.

General and Administrative

         General and administrative expenses primarily consist of compensation
and benefits for eGain's finance, human resources, administrative and legal
services personnel, fees for outside professional services and, to a lesser
extent, occupancy costs and related overhead. General and administrative
expenses decreased 10% to $3.8 million in the quarter ended September 30, 2001
from $4.2 million in the quarter ended September 30, 2000, representing 47% and
35% of total revenue, respectively. The decrease in absolute dollars was
principally due to a decline in headcount through attrition and planned
workforce reductions, as well as decreased spending on outside professional
services pursuant to eGain's commitment to reduce operating costs. These
decreases were partially offset by an increase in bad debt expense. eGain
anticipates that general and administrative expenses in absolute dollars will
continue to decrease next quarter but will then be relatively stable in future
periods.

Amortization of Goodwill and Other Intangible Assets

         Goodwill and other intangible assets are being amortized using the
straight-line method. The amounts allocated to goodwill, customer base, acquired
technology, workforce and trademark are being amortized over the assets'
estimated useful lives, which range from three to four years. Amortization of
goodwill and other intangible assets was $9.2 million in each of the quarters
ended September 30, 2001 and 2000. Amortization of intangible assets principally
relates to goodwill acquired in connections with eGain's acquisitions of
Inference Corporation, Big Science Company and Sitebridge Corporation.

Amortization of Deferred Compensation

         Deferred compensation is recorded in connection with grants of stock
options to employees on the date of grant when the deemed fair value of the
underlying common stock exceeds the exercise price for stock options. Deferred
compensation is amortized on a graded vesting method over the vesting period of
the individual grants. In addition, eGain records compensation expense in
connection with grants of stock options to non-employees pursuant

                                      -12-

<PAGE>


to "Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation" ("SFAS 123"). These grants are periodically revalued
as they vest in accordance with SFAS 123 and "EITF 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services." eGain recorded amortization of
deferred compensation of $302,000 and $1.1 million in the quarters ended
September 30, 2001 and 2000, respectively.

Restructuring

         During the quarter ended September 30, 2001, pursuant to a plan
approved by the required level of management necessary to execute its
components, eGain recorded restructuring charges totaling $4,785,000. These
charges were primarily related to the consolidation of eGain's facilities in
North America, which resulted in a charge of $4,336,000. This amount includes
estimated future net rental payments on exited facilities of $3,511,000, as well
as $810,000 in write-offs of leasehold improvements and $15,000 in professional
services associated with the exited facilities. In addition, eGain incurred
$449,000 in severance costs during the quarter ended September 30, 2001 related
to a reduction in eGain's worldwide workforce of 56 employees across all
departments pursuant to the adoption of eGain's expense management strategy.
eGain expects to realize cash and operational savings in future periods from
these restructuring plans.

Non-operating Income

         Non-operating income remained flat as the amount increased to $233,000
in the quarter ended September 30, 2001 from $231,000 in the quarter ended
September 30, 2000. The activity in non-operating income primarily consisted of
a decrease in foreign exchange losses, which was offset by a decrease in
interest income resulting from a decline in the average cash balance.

Liquidity and Capital Resources

         Prior to eGain's initial public offering, operations were primarily
financed through the private placement of convertible preferred stock, a bank
line of credit, and financing for capital purchases. On September 28, 1999,
eGain completed an initial public offering of common stock, in which 5.8 million
shares of common stock were sold (including exercise of an over-allotment option
in October 1999), at a price of $12.00 per share. Net proceeds from the offering
were $63.0 million.

         On August 8, 2000, eGain raised net proceeds of $82.6 million through
the issuance of convertible preferred stock and warrants to purchase
approximately 3.8 million shares of common stock in a private placement. The
convertible preferred stock liquidation value accretes at 6.75% per annum. eGain
is using the net proceeds from this private placement for general corporate
purposes.

         On September 30, 2001, cash and cash equivalents were $29.9 million, a
decrease of $12.7 million since June 30, 2001. Working capital at September 30,
2001 was $20.9 million, a decrease of $16.9 million since June 30, 2001.

         Net cash used in operating activities was $11.8 million and $21.4
million in the three months ended September 30, 2001 and 2000, respectively.
Cash used in operating activities in each period was primarily the result of net
losses, partially offset by non-cash charges.

         Net cash used in investing activities of $464,000 in the three months
ended September 30, 2001 consisted solely of property and equipment purchases,
while net cash provided by investing activities of $110,000 in the three months
ended September 30, 2000 consisted of proceeds from the sale of short-term
securities, partially offset by property and equipment purchases.

         Net cash used in financing activities of $225,000 in the three months
ended September 30, 2001 primarily consisted of payments on borrowings and
capital leases, partially offset by proceeds from bank borrowings. Cash provided
by financing activities of $83.7 million in the three months ended September 30,
2000 was primarily due to the issuance of preferred stock and common stock,
which included net proceeds of $82.6 million through the private placement on
August 8, 2000.

                                      -13-

<PAGE>

         eGain intends to continue to make investments in product development
and technology to enhance its current products and services, develop new
products and services and further advance its solution offerings. eGain believes
that its existing capital resources will enable it to maintain its current and
planned operations for the next twelve months. Additionally, eGain's management
has the ability to further reduce operating expense, if necessary, to provide
sufficient resources to meet it's obligations as they become due through the
next twelve months. eGain's capital requirements depend on numerous factors,
including the demand for eGain's online customer communications applications,
eGain's ability to attract and retain customers and maintain customer
satisfaction and eGain's ability to develop new products and services. To meet
eGain's longer term liquidity needs, eGain may need to raise additional funds,
establish additional credit facilities or seek other financing arrangements.
Additional funding may not be available in sufficient amounts or on terms
acceptable to eGain.

                                      -14-

<PAGE>


                Additional Factors That May Affect Future Results

eGain expects continuing losses and may never achieve profitability, which in
turn may harm its future operating performance and may cause the market price of
eGain common stock to decline

         eGain incurred a net loss of $28.4 million for the quarter ended
September 30, 2001. As of September 30, 2001, eGain had an accumulated deficit
of approximately $211.7 million. eGain does not know when or if it will become
profitable. If eGain does not become profitable within the timeframe expected by
financial analysts or investors, the market price of eGain common stock may
decline. If eGain does achieve profitability, it may not be able to sustain or
increase profitability in the future.

eGain's revenue and operating expenses may fluctuate as eGain builds its
business, and this increase may harm its operating results and financial
condition

         eGain has spent heavily on technology and infrastructure development.
eGain expects to continue to spend substantial financial and other resources on
developing and introducing product and service offerings. Accordingly, if
eGain's revenue does not correspondingly increase, its business and operating
results could suffer.

         eGain was incorporated in September 1997 and shipped its first product
in September 1998. Because of this limited operating history and other factors,
eGain's quarterly revenue and operating results are difficult to predict. In
addition, due to the emerging nature of the online customer communications
market and other factors, eGain's revenue and operating results may fluctuate
from quarter to quarter. It is possible that eGain's operating results in some
quarters will be below the expectations of financial analysts or investors. In
this event, the market price of eGain common stock is likely to decline.

         A number of factors are likely to cause fluctuations in eGain's
operating results, including, but not limited to, the following:

         .    the growth rate of ecommerce;

         .    demand for online customer communications applications;

         .    eGain's ability to attract and retain customers and maintain
              customer satisfaction;

         .    eGain's ability to upgrade, develop and maintain its systems and
              infrastructure;

         .    eGain's ability to develop new products and services;

         .    the amount and timing of operating costs and capital expenditures
              relating to the expansion of eGain's business and infrastructure;

         .    technical difficulties or system outages;

         .    eGain's ability to attract and retain qualified personnel with
              software and Internet industry expertise, particularly sales and
              marketing personnel;

         .    the announcement or introduction of new or enhanced products and
              services by eGain's competitors;

         .    changes in eGain's pricing policies and those of its competitors;

         .    litigation relating to proprietary rights;

         .    seasonal trends in technology purchases;

         .    timing of large contracts;

                                       -15-

<PAGE>

         .  changes in market conditions limiting eGain's ability to raise
            capital;

         .  general business conditions in the industry;

         .  failure to increase eGain's international sales; and

         .  governmental regulation regarding the Internet and ecommerce in
            particular.

         eGain bases its expense levels in part on its expectations regarding
future revenue levels. In the short term, eGain's expenses are generally fixed
and if eGain's revenue for a particular quarter is lower than it expects, it may
be unable to proportionately reduce its operating expenses for that quarter. For
example, eGain's hosting agreements are typically for a period of one year and
automatically renew unless terminated by either party with 30 days' prior
notice. In addition, some of eGain's hosting agreements give the customer the
right to terminate the contract at any time. Period-to-period comparisons of
eGain's operating results may not be a good indication of its future
performance.

         Like all companies, eGain's business is linked to the health of the
U.S. and international economies. Economic growth has slowed significantly, and
some analysts believe the U.S. economy will experience a recession. The recent
terrorist attacks in New York and Washington D.C. may also have an adverse
effect on eGain's orders and revenue.

eGain must compete successfully in its market segment

         The market for online customer interaction management software is
relatively new, growing rapidly, and intensely competitive. There are no
substantial barriers to entry in this market, and established or new entities
may enter this market in the near future. eGain competes with companies that
develop and maintain internally developed customer interaction management
applications. eGain also competes directly with companies that provide licensed
software products to assist in handling customer interactions, including
AskJeeves, Inc., Avaya, Inc., (which recently acquired the assets of Quintus
Corp.), E.Piphany, Inc., Kana Software, Inc., (the combination of the former
Kana Communications, Inc. and Broadbase Software), Primus Knowledge Solutions,
Inc., and Serviceware. In addition, some of eGain's competitors who currently
offer licensed software products are now beginning to offer hosted approaches.
eGain also faces actual or potential competition from larger, front office
software companies such as Clarify, Inc. (a subsidiary of Nortel Networks
Corp.), Onyx Software Corporation, PeopleSoft, Inc. and Siebel Systems, Inc.
Furthermore, established enterprise software companies, including
Hewlett-Packard Company, IBM, Microsoft Corporation, Oracle Corporation, SAP,
Inc., and similar companies, may seek to leverage their existing relationships
and capabilities to offer online customer interaction management solutions.

eGain's business is premised on a novel business model that is largely untested

         eGain's business is premised on novel business assumptions that are
largely untested. Customer communications historically have been conducted
primarily in person or over the telephone. eGain's business model assumes that
companies engaged in ecommerce will continue to elect to communicate with
customers mainly through the Internet rather than by telephone. eGain's business
model also assumes that many companies recognize the benefits of a hosted
delivery model and will seek to have their customer communications applications
hosted by eGain. If any of these assumptions is incorrect, eGain's business will
be seriously harmed.

eGain may engage in future acquisitions or investments that could dilute eGain's
existing stockholders, cause eGain to incur significant expenses or harm its
business

         eGain may review acquisition or investment prospects that might
complement its current business or enhance its technological capabilities.
Integrating any newly acquired businesses or their technologies or products may
be expensive and time-consuming. For example, eGain acquired eGain India, an
ecommerce software development company in India, in April 2001. There can be no
assurance that eGain can effectively integrate eGain India's operations with
those of eGain's. To finance any acquisitions, it may be necessary for eGain to
raise additional funds through public or private financings. Additional funds
may not be available on terms that are

                                       -16-

<PAGE>


favorable to eGain, if at all, and, in the case of equity financings, may result
in dilution to eGain's existing stockholders. eGain may not be able to operate
acquired businesses profitably or otherwise implement its growth strategy
successfully. If eGain is unable to integrate newly acquired entities or
technologies effectively, eGain's operating results could suffer. Future
acquisitions by eGain could also result in large and immediate write-offs,
incurrence of debt and contingent liabilities, or amortization of expenses
related to goodwill and other intangibles, any of which could harm eGain's
operating results.

eGain could incur additional non-cash charges associated with stock-based
compensation arrangements

         eGain's operating results may be impacted if it incurs significant
non-cash charges associated with stock-based compensation arrangements with
employees and non-employees. eGain has issued options to non-employees which are
subject to various vesting schedules of up to 48 months. For deferred
compensation purposes, non-employee options are required to be remeasured at
each vesting date, which may require eGain to record additional non-cash
accounting expenses. These expenses may result in eGain incurring net losses or
increased net losses for a given period, and this could seriously harm eGain's
operating results and common stock price.

If eGain fails to expand its sales activities, it may be unable to expand its
business

         If eGain does not successfully expand its sales activities, eGain may
not be able to expand its business, and eGain's common stock price could
decline. The complexity of eGain's ecommerce customer communications platform
and related products and services requires it to have highly trained sales
personnel to educate prospective customers regarding the use and benefits of
eGain's services, and provide effective customer support. With eGain's
relatively brief operating history and its plans for continued growth, eGain has
considerable need to recruit, train, and retain qualified sales staff. Any
delays or difficulties eGain encounters in these staffing efforts could impair
its ability to attract new customers and to enhance its relationships with
existing customers. This in turn would adversely affect the timing and extent of
eGain's revenue. Because many of eGain's current sales personnel have recently
joined eGain and have limited experience working together, eGain's sales
organization may not be able to compete successfully against bigger and more
experienced organizations of its competitors.

eGain must recruit and retain its key employees to expand its business

         eGain's success will depend on the skills, experience and performance
of eGain's senior management, engineering, sales, marketing and other key
personnel, many of whom have worked together for only a short period of time.
The loss of the services of any of eGain's senior management or other key
personnel, including eGain's Chief Executive Officer and co-founder, Ashutosh
Roy, and eGain's President and co-founder, Gunjan Sinha, could harm its
business. eGain does not have employment agreements with, or life insurance
policies on, most of its key employees. Most of these employees may terminate
their employment with eGain at any time. eGain's success also will depend on its
ability to recruit, retain and motivate other highly skilled engineering, sales,
marketing and other personnel. If eGain fails to retain and recruit necessary
engineering, sales and marketing, customer support or other personnel, eGain's
business and its ability to develop new products and services and to provide
acceptable levels of customer service could suffer. In addition, companies in
the software industry whose employees accept positions with competitors
frequently claim that competitors have engaged in unfair hiring practices. eGain
could incur substantial costs in defending itself against any of these claims,
regardless of the merits of such claims.

eGain's failure to expand third-party distribution channels would impede its
revenue growth

         To increase its revenue, eGain must increase the number of its
marketing and distribution partners, including software and hardware vendors and
resellers. eGain's existing or future marketing and distribution partners may
choose to devote greater resources to marketing and supporting the products of
competitors which could also harm eGain. eGain's failure to expand third-party
distribution channels would impede its revenue growth.

         Similarly, to increase its revenue and implementation capabilities,
eGain must develop and expand relationships with systems integrators. eGain
relies on systems integrators to recommend eGain's products to their customers
and to install and support eGain's products for their customers. Systems
integrators may develop, market or recommend software applications that compete
with eGain's products. Moreover, if these firms fail to implement

                                       -17-

<PAGE>


eGain's products successfully for their customers, eGain may not have the
resources to implement its products on the schedule required by its customers.

Unknown software defects could disrupt eGain's products and services, which
could harm eGain's business and reputation

         eGain's product and service offerings depend on complex software, both
internally developed and licensed from third parties. Complex software often
contains defects, particularly when first introduced or when new versions are
released. eGain may not discover software defects that affect its new or current
services or enhancements until after they are deployed. It is possible that,
despite testing by eGain, defects may occur in the software. These defects could
result in damage to eGain's reputation, lost sales, product liability claims,
delays in or loss of market acceptance of eGain's products, product returns and
unexpected expenses and diversion of resources to remedy errors.

eGain may face liability associated with its management of sensitive customer
information

         eGain's applications manage sensitive customer information, and eGain
may be subject to claims associated with invasion of privacy or inappropriate
disclosure, use or loss of this information. Any imposition of liability,
particularly liability that is not covered by insurance or is in excess of
insurance coverage, could harm eGain's reputation and its business and operating
results.

If eGain's system security is breached, eGain's business and reputation could
suffer

         A fundamental requirement for online communications and transactions is
the secure transmission of confidential information over public networks. Third
parties may attempt to breach eGain's security or that of eGain's customers.
eGain may be liable to its customers for any breach in its security and any
breach could harm its business and reputation. Although eGain has implemented
network security measures, eGain's servers are vulnerable to computer viruses,
physical or electronic break-ins and similar disruptions, which could lead to
interruptions, delays or loss of data. eGain may be required to expend
significant capital and other resources to license encryption technology and
additional technologies to protect against security breaches or to alleviate
problems caused by any breach.

Due to the lengthy sales cycles of some of eGain's products, the timing of its
sales is difficult to predict and may cause eGain to miss its revenue
expectations

         eGain's sales cycle for its products can be six months or more, and
varies substantially from customer to customer. While eGain's potential
customers are evaluating eGain's products before executing definitive
agreements, eGain may incur substantial expenses and spend significant
management effort in connection with the potential customer. eGain's
multi-product offering and the increasingly complex needs of its customers may
make it more difficult for eGain to forecast when eGain may recognize the
corresponding revenue. In addition, the recent economic slowdown in North
America may cause potential customers to delay or cancel major information
technology purchasing decisions. If this slowdown continues, eGain's average
sales cycle could increase and, in some cases, prevent deals from closing that
eGain has been forecasting as likely to close. Consequently, eGain may not meet
its revenue forecast and may incur significant expenses that are not offset by
corresponding revenue.

If eGain does not successfully address the risks inherent in the expansion of
its international operations, its business could suffer

         eGain intends to continue to expand into international markets and to
spend significant financial and managerial resources to do so. For example,
eGain has established subsidiaries in Europe, Asia Pacific and India. If eGain's
revenue from international operations does not exceed the expense associated
with establishing and maintaining these operations, eGain's business and
operating results will suffer. eGain has limited experience in international
operations and may not be able to compete effectively in international markets.
eGain faces various risks inherent in conducting business internationally, such
as the following:

         . unexpected changes in international regulatory requirements;

                                       -18-

<PAGE>


         .   difficulties and costs of staffing and managing international
             operations;

         .   differing technology standards;

         .   difficulties in collecting accounts receivable and longer
             collection periods;

         .   political and economic instability;

         .   fluctuations in currency exchange rates;

         .   imposition of currency exchange controls;

         .   potentially adverse tax consequences;

         .   reduced protection for intellectual property rights in foreign
             countries; and

         .   general business conditions.

eGain's recent growth has placed a strain on its resources and if eGain fails to
manage its future growth, its business could suffer

         eGain has expanded its operations rapidly. The completed acquisitions
of Inference, Big Science and eGain India are three examples of this expansion.
This rapid expansion has placed, and is expected to continue to place, a
significant strain on eGain's managerial, operational and financial resources.
To manage further growth, eGain will need to improve or replace its existing
operational, customer support and financial systems, procedures and controls.
Any failure by eGain to properly manage these system and procedural transitions
could impair its ability to attract and service customers, and could cause it to
incur higher operating costs and delays in the execution of its business plan.
eGain's management may not be able to hire, train, retain, motivate and manage
required personnel. In addition, eGain's management may not be able to
successfully identify, manage and exploit existing and potential market
opportunities.

eGain may not be able to upgrade its systems and the eGain Hosted Network to
accommodate growth in ecommerce

         eGain faces risks related to the ability of the eGain Hosted Network to
operate with higher activity levels while maintaining expected performance. As
the volume and complexity of ecommerce customer communications increase, eGain
will need to expand its systems and hosted network infrastructure. The expansion
and adaptation of eGain's network infrastructure will require substantial
financial, operational and management resources. Customer demand for eGain's
products and services could be greatly reduced if eGain fails to maintain high
capacity data transmission. In addition, as eGain upgrades its network, eGain is
likely to encounter equipment or software incompatibility. eGain may not be able
to expand or adapt the eGain Hosted Network to meet additional demand or eGain's
customers' changing requirements in a timely manner or at all.

Unplanned system interruptions and capacity constraints could reduce eGain's
ability to provide hosting services and could harm its business and reputation

         eGain's customers have in the past experienced some interruptions with
the eGain Hosted Network. eGain believes that these interruptions will continue
to occur from time to time. These interruptions could be due to hardware and
operating system failures. eGain expects a substantial portion of its revenue to
be derived from customers who use the eGain Hosted Network. As a result, eGain's
business will suffer if it experiences frequent or long system interruptions
that result in the unavailability or reduced performance of the eGain Hosted
Network or reduce eGain's ability to provide remote management services. eGain
expects to experience occasional temporary capacity constraints due to sharply
increased traffic, which may cause unanticipated system disruptions, slower
response times, impaired quality and degradation in levels of customer service.
If this were to continue to happen, eGain's business and reputation could be
seriously harmed.

                                       -19-

<PAGE>

         eGain's success largely depends on the efficient and uninterrupted
operation of its computer and communications hardware and network systems. Most
of eGain's computer and communications systems are located in Sunnyvale,
California. eGain's systems and operations are vulnerable to damage or
interruption from fire, earthquake, power loss, telecommunications failure and
similar events.

         eGain has entered into service agreements with some of its customers
that require minimum performance standards, including standards regarding the
availability and response time of eGain's remote management services. If eGain
fails to meet these standards, eGain's customers could terminate their
relationships with eGain, and eGain could be subject to contractual monetary
penalties. Any unplanned interruption of services may harm eGain's ability to
attract and retain customers.

eGain relies on relationships with, and the system integrity of, hosting
partners for the eGain Hosted Network

         The eGain Hosted Network consists of virtual data centers co-located in
the physical data centers of eGain's hosting partners. Accordingly, eGain relies
on the speed and reliability of the systems and networks of these hosting
partners. If eGain's hosting partners experience system interruptions or delays,
or if eGain does not maintain or develop relationships with reliable hosting
partners, eGain's business could suffer.

Problems arising from use of eGain's products with other vendors' products could
cause eGain to incur significant costs, divert attention from eGain's product
development efforts and cause customer relations problems

         eGain's customers generally use eGain products together with products
from other companies. As a result, when problems occur in the network, it may be
difficult to identify the source of the problem. Even when eGain's products do
not cause these problems, these problems may cause eGain to incur significant
warranty and repair costs, divert the attention of eGain's engineering personnel
from product development efforts and cause significant customer relations
problems.

eGain may be unable to protect its intellectual property and proprietary rights

         eGain regards its patents, copyrights, service marks, trademarks, trade
secrets and similar intellectual property as critical to its success, and relies
on trademark and copyright law, trade secret protection and confidentiality
and/or license agreements with eGain employees, customers and partners to
protect its proprietary rights. eGain has numerous registered trademarks and
trademark applications pending in the United States and internationally, as well
as common law trademark rights. In addition, eGain owns several patents in the
area of case-based reasoning, and has patents pending relating to various
technologies. eGain will seek additional trademark and patent protection in the
future. eGain does not know if its trademark and patent applications will be
granted, or whether they will provide the protection eGain desires, or whether
they will subsequently be challenged or invalidated. It is difficult to monitor
unauthorized use of technology, particularly in foreign countries, where the
laws may not protect eGain's proprietary rights as fully as in the United
States. Furthermore, eGain's competitors may independently develop technology
similar to eGain's technology.

         Despite eGain's efforts to protect its proprietary rights through
confidentiality and license agreements, unauthorized parties may attempt to copy
or otherwise obtain and use eGain's products or technology. These precautions
may not prevent misappropriation or infringement of eGain's intellectual
property. In addition, eGain routinely requires its employees, customers, and
potential business partners to enter into confidentiality and nondisclosure
agreements before eGain will disclose any sensitive aspects of its products,
technology, or business plans. In addition, eGain requires employees to agree to
surrender to eGain any proprietary information, inventions or other intellectual
property they generate or come to possess while employed by eGain. In addition,
some of eGain's license agreements with certain customers and partners require
eGain to place the source code for its products into escrow. These agreements
typically provide that some party will have a limited, non-exclusive right to
access and use this code as authorized by the license agreement if there is a
bankruptcy proceeding instituted by or against eGain, or if eGain materially
breaches a contractual commitment to provide support and maintenance to the
party.

                                       -20-

<PAGE>

eGain may face intellectual property infringement claims that could be costly to
defend

         Third parties may infringe or misappropriate eGain's copyrights,
trademarks and similar proprietary rights. In addition, other parties may assert
infringement claims against eGain. Although eGain has received no notice of any
alleged infringement, eGain's products may infringe issued patents that may
relate to its products. In addition, because the contents of patent applications
in the United States are not publicly disclosed until the patent is issued,
applications may have been filed which relate to eGain's software products.
eGain may be subject to legal proceedings and claims from time to time in the
ordinary course of its business, including claims of alleged infringement of the
trademarks and other intellectual property rights of third parties. Intellectual
property litigation is expensive and time-consuming and could divert
management's attention away from running eGain's business. This litigation could
also require eGain to develop non-infringing technology or enter into royalty or
license agreements. These royalty or license agreements, if required, may not be
available on acceptable terms, if at all, in the event of a successful claim of
infringement. eGain's failure or inability to develop non-infringing technology
or license the proprietary rights on a timely basis would harm its business.

eGain may need to license third-party technologies and may be unable to do so

         To the extent eGain needs to license third-party technologies, it may
be unable to do so on commercially reasonable terms or at all. In addition,
eGain may fail to successfully integrate any licensed technology into its
products or services. Third-party licenses may expose eGain to increased risks,
including risks associated with the integration of new technology, the diversion
of resources from the development of eGain's own proprietary technology, and
eGain's inability to generate revenue from new technology sufficient to offset
associated acquisition and maintenance costs. eGain's inability to obtain any of
these licenses could delay product and service development until equivalent
technology can be identified, licensed and integrated. This in turn would harm
eGain's business and operating results.

The conversion of eGain's preferred shares and the exercise of the related
warrants would result in a substantial number of additional shares being issued,
which could result in a decline in the market price of eGain's common stock

         On August 8, 2000, eGain issued 35.11 shares of non-voting Series A
Cumulative Convertible Preferred Stock ("Series A"), $100,000 stated value per
share, and 849.89 shares of non-voting Series B Cumulative Convertible Preferred
Stock ("Series B"), $100,000 stated value per share in a private placement to
certain investors. The Series B shares automatically converted into Series A
shares upon stockholder approval on November 20, 2000 at the annual stockholders
meeting. In addition, the investors received warrants to purchase 3,826,000
shares of eGain's common stock with a current warrant exercise price of $5.6875
per share. The total proceeds of the offering were $88,500,000. The Series A
shares have a liquidation preference of $100,000 per share which increases on a
daily basis at an annual rate of 6.75% from August 8, 2000, compounded on a
semi-annual basis. The Series A stockholders are entitled to cash dividends only
when and if declared by the board of directors. The Series A shares are
convertible into common stock (including all amounts accreted from August 8,
2000) at a conversion price of $5.6875 per share. By way of illustration, at the
current conversion price of $5.6875 per share, the Series A shares would be
convertible into 16.8 million shares of common stock.

         To the extent the preferred shares are converted into common stock
(including all amounts accreted from August 8, 2000), a significant number of
shares of common stock may be sold into the market, which could decrease the
price of eGain's common stock.

eGain's stock price may be volatile

         The price at which eGain common stock trades has been and will likely
continue to be highly volatile and fluctuate substantially due to factors such
as the following:

         .  actual or anticipated fluctuations in eGain's operating results;

         .  changes in or failure to meet securities analysts' expectations;

                                      -21-

<PAGE>


         .  announcements of technological innovations;

         .  introduction of new services by eGain or its competitors;

         .  developments with respect to intellectual property rights;

         .  conditions and trends in the Internet and other technology
            industries; and

         .  general market conditions.

eGain may become involved in securities class action litigation which could
divert management's attention and harm its business

         The stock market has from time to time experienced significant price
and volume fluctuations that have affected the market prices for the common
stocks of technology companies, particularly Internet companies. These broad
market fluctuations may cause the market price of eGain common stock to decline.
In the past, following periods of volatility in the market price of a particular
company's securities, securities class action litigation has often been brought
against that company. eGain may become involved in this type of litigation in
the future. Litigation is often expensive and diverts management's attention and
resources, which could harm eGain business and operating results (See Item 1.
Legal Proceedings in Part II of this 10-Q).

eGain may need additional capital, and raising additional capital may dilute
existing stockholders

         eGain believes that its existing capital resources will enable it to
maintain its current and planned operations for the next twelve months. However,
eGain may choose to, or be required to, raise additional funds due to unforeseen
circumstances. If eGain's capital requirements vary materially from those
currently planned, it may require additional financing sooner than anticipated.
This financing may not be available in sufficient amounts or on terms acceptable
to eGain and may be dilutive to existing stockholders.

         eGain believes competition will increase as its current competitors
increase the sophistication of their offerings and as new participants enter the
market. Many of eGain's current and potential competitors have:

         .  longer operating histories;

         .  larger customer bases;

         .  greater brand recognition;

         .  more diversified lines of products and services; and

         .  significantly greater financial, marketing and other resources.

         These competitors may enter into strategic or commercial relationships
with larger, more established and better-financed companies. These competitors
may be able to:

         .  undertake more extensive marketing campaigns;

         .  adopt more aggressive pricing policies; and

         .  make more attractive offers to businesses to induce them to use
            their products or services.

         Further, any delays in the general market acceptance of eGain's
ecommerce customer communications applications would likely harm its competitive
position. Any delay would allow eGain's competitors additional time to improve
their service or product offerings, and also provide time for new competitors to
develop ecommerce

                                       -22-

<PAGE>

customer communications applications and solicit prospective customers within
eGain's target markets. Increased competition could result in pricing pressures,
reduced operating margins and loss of market share.

eGain depends on broad market acceptance of online customer communications
applications

         eGain depends on the widespread acceptance and use of online customer
communications applications as an effective solution for businesses seeking to
manage high volumes of customer communication over the Internet. eGain cannot
estimate the size or growth rate of the potential market for its product and
service offerings, and does not know whether its products and services will
achieve broad market acceptance. The market for online customer communications
is new and rapidly evolving, and concerns over the security and reliability of
online transactions, the privacy of users and quality of service or other issues
may inhibit the growth of the Internet and commercial online services. If the
market for online customer communications applications fails to grow or grows
more slowly than eGain currently anticipates, its business will be seriously
harmed.

eGain may be unable to develop or enhance products or services that address the
changing needs of the online customer communications market

         To be competitive in the online customer communications market, eGain
must continually improve the performance, features and reliability of eGain
products and services, including eGain's existing online customer communications
applications, and develop new products, services, functionality and technology
that address changing industry standards and customer needs. If eGain cannot
bring new or enhanced products to market in a timely and effective way, its
business and operating results will suffer. More generally, if eGain cannot
adapt or respond in a cost-effective and timely manner to changing industry
standards, market conditions or customer requirements, eGain's business and
operating results will suffer.

eGain will only be able to execute its business plan if Internet usage continues
to grow

         eGain's business will be seriously harmed if Internet usage does not
continue to grow or grows at significantly lower rates compared to current
trends. The continued growth of the Internet depends on various factors, most of
which are outside eGain's control. These factors include the following:

         .  the Internet infrastructure may be unable to support the demands
            placed on it;

         .  the performance and reliability of the Internet may decline as
            usage grows;

         .  security and authentication concerns with respect to transmission
            over the Internet of confidential information, such as credit card
            numbers, and attempts by unauthorized computer users, so-called
            hackers, to penetrate online security systems; and

         .  privacy concerns, including those related to the ability of Web
            sites to gather user information without the user's knowledge or
            consent.

Because eGain provides its customer interaction management software to companies
conducting business over the Internet, eGain's business could suffer if
efficient transmission of data over the Internet is interrupted

         The recent growth in the use of the Internet has caused frequent
interruptions and delays in accessing the Internet and transmitting data over
the Internet. Because eGain provides Internet-based customer interaction
management software, interruptions or delays in Internet transmissions will harm
eGain customers' ability to receive and respond to online interactions.
Therefore, eGain's market depends on improvements being made to the entire
Internet infrastructure to alleviate overloading and congestion.

                                      -23-

<PAGE>


Governmental regulation and legal uncertainties could impair the growth of the
Internet and decrease demand for eGain's services or increase eGain's cost of
doing business

         Governmental regulation may impair the growth of the Internet or
commercial online services. This could decrease the demand for eGain's products
and services, increase its cost of doing business or otherwise harm its business
and operating results. Although there are currently few laws and regulations
directly applicable to the Internet and the use of the Internet as a commercial
medium, a number of laws have been proposed involving the Internet. These
proposed laws include laws addressing user privacy, pricing, content,
copyrights, distribution, antitrust, and characteristics and quality of products
and services. Further, the growth and development of the market for commercial
online transactions may prompt calls for more stringent consumer protection laws
that may impose additional burdens on those companies engaged in ecommerce.
Moreover, the applicability to the Internet of existing laws in various
jurisdictions governing issues such as property ownership, sales and other
taxes, libel and personal privacy is uncertain and may take years to resolve.

eGain may be liable for activities of its customers or others using the eGain
Hosted Network

         As a provider of customer interaction management software for the
Internet, eGain faces potential liability for defamation, negligence, copyright,
patent or trademark infringement and other claims based on the actions of eGain
customers or others using the eGain Hosted Network. This liability could result
from the nature and content of the communications transmitted by eGain customers
through the eGain Hosted Network. eGain does not and cannot screen all of the
communications generated by its customers, and eGain could be exposed to
liability with respect to this content. Furthermore, some foreign governments
have enforced laws and regulations related to content distributed over the
Internet that are more strict than those currently in place in the United
States.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         eGain develops products in the United States and India and sells these
products internationally. Generally, sales are made in local currency. As a
result, eGain's financial results could be affected by factors such as changes
in foreign currency exchange rates or weak economic conditions in foreign
markets. To date, the effect of changes in foreign currency exchange rates on
revenues and operating expenses has not been material. eGain does not currently
use derivative instruments to hedge against foreign exchange risk.

         eGain's exposure to market rate risk for changes in interest rates
relates primarily to its investment portfolio. eGain's investments consist
primarily of commercial paper and money market funds, which have an average
fixed rate of 3.5% to 4.5%, and have maturities of three months or less. eGain
does not consider its cash equivalents to be subject to interest rate risk due
to their short maturities.

                                       -24-

<PAGE>


                           Part II. OTHER INFORMATION

Item 1.  Legal Proceedings

         On October 25, 2001, the law firm of Bernstein Liebhard & Lifshitz, LLP
issued a press release indicating that eGain Communications Corp., certain of
its officers, and the lead underwriters for eGain's initial public offering have
been named as defendants in a federal securities class action lawsuit in the
United States District Court for the Southern District of New York. As of
November 8, 2001, neither eGain nor its named officers have been served with a
copy of the complaint. According to the press release, the complaint alleges
violations of Section 11, 12(a)(2) and Section 15 of the Securities Act of 1933
and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, on behalf of a class of plaintiffs who purchased eGain
common stock between September 23, 1999 and December 6, 2000 in connection with
eGain's initial public offering. Specifically, the press release indicates that
the complaint alleges that the prospectus eGain filed in connection with its
initial public offering was materially false and misleading because it failed to
disclose that the underwriter defendants solicited and received excessive and
undisclosed commissions from certain investors in exchange for shares of eGain
common stock, and that the underwriters entered into agreements with certain
investors in which these investors agreed to purchase additional shares of eGain
common stock in the aftermarket in exchange for receiving shares of eGain common
stock in the initial public offering. Finally, the press release indicates that
the lawsuit is being prosecuted by the Plaintiffs' Executive Committee in In re:
Initial Public Offering Securities Litigation, 21 MC 92 (SAS), pending before
the Honorable Shira A. Scheindlin. In the event eGain is ultimately served with
the complaint, eGain believes it will have good and valid defenses to these
allegations, and eGain intends to defend the action vigorously. However, these
claims, even if not meritorious, could result in the expenditure of significant
financial and managerial resources.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults upon Senior Securities

         None.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.

Item 5.  Other Information

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits required by Item 601 of Regulation S-K.

              None.

         (b)  Reports on Form 8-K.

              1. On August 10, 2001, eGain filed a Form 8-K with the Securities
                 and Exchange Commission announcing that on August 8, 2001 the
                 registrant's Series A Cumulative Convertible Preferred Stock
                 and warrants issued in a private placement on August 8, 2000,
                 underwent a reset from the original conversion price of $9.2517
                 per share to $5.6875 per share.

                                       -25-

<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated:  November 14, 2001             EGAIN COMMUNICATIONS CORPORATION



                                      By      /s/ Harpreet Grewal
                                         ------------------------------
                                                  Harpreet Grewal
                                             Chief Financial Officer
                                           (Duly Authorized Officer and
                                     Principal Financial and Accounting Officer)

                                       -26-