8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 26, 2006

Smith Micro Software, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-26536	33-0029027
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
51 Columbia, Suite 200, Aliso Viejo, California		92656
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (949) 362-5800

None

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o Pre-commencement communications pursuant to Rule 4d-2(b) under the Exchange Act

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition.
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
Index to Exhibits
EXHIBIT 99.1

Item 2.02. Results of Operations and Financial Condition.

On July 26, 2006, the Registrant issued a press release announcing its financial results for the quarter ended June 30, 2006. A copy of the press release is hereby furnished to the Commission as Exhibit 99.1 and incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01 Financial Statements and Exhibits.

9.01(c) Exhibits.

     99.1 Press Release issued July 26, 2006, reporting Registrant’s financial results for the quarter ended June 30, 2006, furnished pursuant to Item 2.02.

SIGNATURES

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

	SMITH MICRO SOFTWARE, INC.
	(Registrant)
July 26, 2006	By:	/s/ Andrew C. Schmidt
Date		Name:	Andrew C. Schmidt
		Title:	Chief Financial Officer

Index to Exhibits

Exhibit Number	Exhibit
99.1	Press Release issued July 26, 2006.

EX-99.1

AT THE COMPANY:	IR INQUIRIES:
Bruce T. Quigley	Charles Messman, Todd Kehrli
Vice President of Business Development and	MKR Group
Investor Relations	818-556-3700
949-362-5800	ir@mkr-group.com
bquigley@smithmicro.com

FOR IMMEDIATE RELEASE

SMITH MICRO SOFTWARE REPORTS RECORD SECOND QUARTER REVENUE & PRO FORMA EARNINGS
Second Quarter Revenue Increased 277% To $12.6 Million;
Pro-Forma Net Income Increased to a Record $3.2 Million;

Aliso Viejo, Calif., July 26, 2006 — Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its 2006 second quarter financial results.

Second Quarter 2006 Key Financial Results:

• Revenue increased to a record $12.6 million, up 27% sequentially and 277% year-over-year.

• Pro forma net income was a record $3.2 million, compared to pro forma net income of $2.9 million in the first quarter of 2006 and $764,000 in the second quarter of 2005

• Pro forma earnings were a record $0.13 per fully diluted share on 25.6 million shares, compared to pro forma earnings of $0.12 per fully diluted share on 24.3 million shares in the first quarter of 2006, and earning of $0.03 per fully diluted share on 22.7 million shares in the second quarter of 2005.

• Cash and cash equivalents were $31.3 million, compared to $26.0 million from March 31, 2006.

Second Quarter Financial Discussion:

“Our strong second quarter results reflect strong sales with our OEM partners, specifically our Music Essential kit with Verizon Wireless,” said William W. Smith, Jr., President and Chief Executive Officer of Smith Micro Software. “Our business relationship with Verizon remains very strong as they continue to roll out their wireless broadband products and services. We look forward to a continued strong and productive relationship with Verizon in future years as part of our multi year contract. In addition, we further expanded our customer base within our OEM business with the addition of UTStarcom, which will expand distribution of our QuickLink Mobile into Mexico through IUSACELL, one of Mexico leading wireless carriers.”

Smith Micro 2006 Second Quarter Financial Results Page 2 of 8

Mr. Smith continued, “We achieved solid progress for the first half of fiscal 2006. Within our Enterprise software division, we signed three new customers for initial deployment orders and have a significant number of potential customers in the pipeline. Our recent launch of our QuickLink Mobile Music program is currently on track and is being marketed to several wireless carriers worldwide. We currently expect to see multiple orders before the end of this fiscal year from this product offering.”

“We also keep moving our StuffIt Wireless initiative forward, as we are now providing both handset resource compression as well as enhanced JPEG compression on selected prototype handsets In addition, our recent acquisition of PhoTags is now fully integrated and operating at full efficiency, and we have begun marketing our StuffIt Image product suite to the photo sharing market. Finally, we have expanded our international presence with several potential new customers throughout Europe, Asia and Australia.”

Smith Micro reported record net revenue of $12.6 million for the second quarter ended June 30, 2006, a 27% increase over revenue of $9.9 million in the first quarter of 2006 and nearly four times the $3.3 million recorded in the second quarter of 2005.

Pro forma net income (which excludes amortization of intangible assets associated with acquisitions and stock compensation related expenses) for the second quarter was $3.2 million, or $0.13 per fully diluted share, compared to pro forma net income of $2.9 million, or $0.12 per fully diluted share in the first quarter of 2006 and net income of $764,000, or $0.03 per share, in the second quarter of 2005.

On a GAAP basis, the company earned $0.04 per fully diluted share for second quarter 2006 as compared to $0.03 per fully diluted share in the second quarter of 2005.

For the six months ended June 30, 2006, the company reported net revenues of $22.4 million or a 319% increase over the $5.4 million reported for the six months ended June 30, 2005. Proforma net income for the first six months of 2006 was $6.1 million, or $0.25 per diluted share as compared to $636,000, or $0.03 per diluted share reported for the six months ended June 30, 2005.

Earnings for the first six months of 2006, on a GAAP basis, were $0.12 per diluted share as compared to $0.03 per diluted share for the six months ended June 30, 2005.

Total cash and equivalents at June 30, 2006 were $31.3 million, compared to $26.0 million for the 2006 first quarter ended March 31, 2006.

Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s second quarter results at 4:30 p.m. Eastern time today, July 26, 2006. The call can be accessed by dialing (800) 257-7063 and giving the pass code “SMSI.” Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. Also, the conference call will be available over the Internet at www.smithmicro.com in the Investor Relations section.

About Smith Micro Software
Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communication, broadband and utility software products for multiple OS platforms. The company designs integrated cross platform, easy-to-use software for personal computing

Smith Micro 2006 Second Quarter Financial Results Page 3 of 8

and business solutions around the world. With a focus on Wireless and Broadband technologies and the Internet, the company’s products and services enable wireless communications, file and image compression, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, and traditional computer telephony. Smith Micro’s complete line of products are available primarily online at the company’s websites, direct from our enterprise group, retailers, and through original equipment manufacturers (OEMs). Smith Micro’s common stock trades on The NASDAQ Stock Market^® under the symbol SMSI. For more information, contact Smith Micro at (949) 362-5800.

This release may contain forward-looking statements that involve risks and uncertainties, including without limitation risks and uncertainties relating to the company’s financial prospects and projections, the company’s plans for returning to sustained profitability and the company’s ability to increase its business in the Wireless and Broadband segments. These forward-looking statements speak only as of the date hereof and are based upon the information currently available to the company. Such information is subject to change, and the company will not necessarily inform you of such changes. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, unforeseen delays in the timing of orders from OEM customers, new and continuing adverse economic conditions, and the company’s ability to compete effectively with other software companies. These and other factors could cause actual results to differ materially from those presented in any forward-looking statement and are discussed in the company’s filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.

Smith Micro and the Smith Micro logo are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.

Note: Financial Schedules Attached

Smith Micro 2006 Second Quarter Financial Results Page 4 of 8

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended June 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)

	Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	12,362	$	—		$	12,362
Services		193		—			193
Total Net Revenues		12,555		—			12,555
COST OF SALES
Products		5,226		(327	)		4,899
Services		79		0			79
Total Cost of Sales		5,305		(327	)		4,978
GROSS PROFIT
Products		7,136		327			7,463
Services		114		—			114
Total Gross Profit		7,250		327			7,577
Selling & Marketing		2,293		(804	)		1,489
Research & Development		2,077		(401	)		1,676
General & Administrative		2,029		(618	)		1,411
Total Operating Expenses		6,399		(1,823	)		4,576
Operating Income		851		2,150			3,001
Interest Income		265					265
Income Before Income Taxes		1,116		2,150			3,266
Income Tax Expense		33					33
Net Income	$	1,083	$	2,150		$	3,233
Income Per Share, Basic	$	0.05				$	0.14
Weighted Average Shares Outstanding, Basic		23,635					23,635
Income Per Share, Fully Diluted	$	0.04				$	0.13
Weighted Average Shares Outstanding, Fully Diluted		25,598					25,598

Smith Micro 2006 Second Quarter Financial Results Page 5 of 8

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Six Months Ended June 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)

	Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	22,072	$	—		$	22,072
Services		368		—			368
Total Net Revenues		22,440		—			22,440
COST OF SALES
Products		8,455		(600	)		7,855
Services		150		0			150
Total Cost of Sales		8,605		(600	)		8,005
GROSS PROFIT
Products		13,617		600			14,217
Services		218		—			218
Total Gross Profit		13,835		600			14,435
Selling & Marketing		4,166		(1,153	)		3,013
Research & Development		3,754		(652	)		3,102
General & Administrative		3,438		(842	)		2,596
Total Operating Expenses		11,358		(2,647	)		8,711
Operating Income		2,477		3,247			5,724
Interest Income		489					489
Income Before Income Taxes		2,966		3,247			6,213
Income Tax Expense		72					72
Net Income	$	2,894	$	3,247		$	6,141
Income Per Share, Basic	$	0.13				$	0.27
Weighted Average Shares Outstanding, Basic		22,973					22,973
Income Per Share, Fully Diluted	$	0.12				$	0.25
Weighted Average Shares Outstanding, Fully Diluted		24,740					24,740

Smith Micro 2006 Second Quarter Financial Results Page 6 of 8

Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended June 30, 2006 and 2005
(in thousands, except per share amounts)

	Unaudited
	2006		2005
NET REVENUE
Products	$	12,362	$	3,179
Services		193		151
Total Net Revenues		12,555		3,330
COST OF SALES
Products		5,226		476
Services		79		69
Total Cost of Sales		5,305		545
GROSS PROFIT
Products		7,136		2,703
Services		114		82
Total Gross Profit		7,250		2,785
Selling & Marketing		2,293		369
Research & Development		2,077		697
General & Administrative		2,029		1,161
Total Operating Expenses		6,399		2,227
Operating Income		851		558
Interest Income		265		214
Income Before Income Taxes		1,116		772
Income Tax Expense		33		8
Net Income	$	1,083	$	764
Income Per Share, Basic	$	0.05	$	0.04
Weighted Average Shares Outstanding, Basic		23,365		21,584
Income Per Share, Fully Diluted	$	0.04	$	0.03
Weighted Average Shares Outstanding, Fully Diluted		25,598		22,713

Smith Micro 2006 Second Quarter Financial Results Page 7 of 8

Smith Micro Software, Inc.
Statement of Operations for the Six Months Ended June 30, 2006 and 2005
(in thousands, except per share amounts)

	Unaudited
	2006		2005
NET REVENUE
Products	$	22,072	$	5,038
Services		368		322
Total Net Revenues		22,440		5,360
COST OF SALES
Products		8,455		746
Services		150		144
Total Cost of Sales		8,605		890
GROSS PROFIT
Products		13,617		4,292
Services		218		178
Total Gross Profit		13,835		4,470
Selling & Marketing		4,166		809
Research & Development		3,754		1,394
General & Administrative		3,438		1,937
Total Operating Expenses		11,358		4,140
Operating Income		2,477		330
Interest Income		489		314
Income Before Income Taxes		2,967		644
Income Tax Expense		72		8
Net Income	$	2,894	$	636
Income Per Share, Basic	$	0.13	$	0.03
Weighted Average Shares Outstanding, Basic		22,973		20,629
Income Per Share, Fully Diluted	$	0.12	$	0.03
Weighted Average Shares Outstanding, Fully Diluted		24,740		21,901

Smith Micro 2006 Second Quarter Financial Results Page 8 of 8

Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	June 30,			December 31,
	2006			2005
	(unaudited)
ASSETS
Current Assets:
Cash & Cash Equivalents	$	31,319		$	21,215
Accounts Receivable, (Net)		4,200			6,786
Inventory		1,035			530
Prepaid & Other Assets		299			556
Total Current Assets		36,853			29,087
Equipment & Improvements, Net		384			241
Goodwill		15,039			9,288
Intangible Assets, Net		4,524			4,093
Other Assets		—			7
TOTAL ASSETS	$	56,800		$	42,716
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	2,197		$	2,383
Accrued Liabilities		3,186			1,376
Total Current Liabilities		5,383			3,759
Common Stock		24			22
Additional Paid In Capital		60,444			50,880
Accumulated Deficit		(9,051	)		(11,945	)
Total Stockholders’ Equity		51,417			38,957
TOTAL LIABILITIES & EQUITY	$	56,800		$	42,716

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