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): May 8, 2019

Smith Micro Software, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-35525	33-0029027
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5800 Corporate Drive Pittsburgh, PA	15237
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (412) 837-5300

Not Applicable

(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 (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SMSI	NASDAQ

Item 2.02.Results of Operations and Financial Condition

On May 8, 2019, Smith Micro Software, Inc. issued a press release announcing its financial results for the three months ended March 31, 2019. A copy of the press release is hereby furnished to the Securities and Exchange 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.

(d) Exhibits

Exhibit	Description
99.1	Press Release issued on May 8, 2019

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 thereunto duly authorized.

	Smith Micro Software, Inc.
Date:  May 8, 2019	By:	/s/ Timothy C. Huffmyer
		Timothy C. Huffmyer
		Vice President and Chief Financial Officer

EX-99.1

EXHIBIT 99.1

IR INQUIRIES:

Charles Messman

Investor Relations

949-362-5800

IR@smithmicro.com

Smith Micro Reports First Quarter 2019 Financial Results

Revenue Increased to $8.4 Million

PITTSBURGH, PA, May 8, 2019– Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the “Company”) today reported financial results for its first quarter ended March 31, 2019.

“We delivered a very solid quarter for the Company as we launched our 2019 fiscal year,” said William W. Smith Jr., President and CEO of Smith Micro Software. “We saw accelerated revenue growth with our SafePath^® platform, a sixth consecutive quarter of subscriber revenue growth from the CommSuite^® platform, and strong contribution from ViewSpot™, our recent Smart Retail acquisition that closed in early January.”

Mr. Smith concluded, “We are off to a solid start to the fiscal year. Our sales pipeline continues to grow across all three of our core wireless solutions, with a broader geographical reach and a more viable ecosystem of opportunities than we have seen in several years. Moving forward, we will leverage and build upon that momentum and continue to deliver growth and profitability throughout 2019.”

First Quarter 2019 Financial Results:

Smith Micro reported revenue of $8.4 million for the first quarter ended March 31, 2019, compared to $5.5 million reported in the first quarter ended March 31, 2018.

First quarter 2019 gross profit was $7.5 million compared to $4.2 million reported in the first quarter of 2018.

Smith Micro Software First Quarter 2019 Financial Results Page 2

Gross profit as a percentage of revenue was 89 percent for the first quarter of 2019 compared to 76 percent for the first quarter of 2018.

Generally accepted accounting principles in the United States (“GAAP”) net income available to common stockholders for the first quarter of 2019 was $14 thousand, or break-even earnings per share, compared to a GAAP net loss available to common stockholders of $2.5 million, or $0.16 loss per share, for the first quarter of 2018.

Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, acquisition costs, preferred stock dividends, and a normalized tax expense) for the first quarter of 2019 was $0.6 million, or $0.02 earnings per share, compared to a non-GAAP net loss of $1.5 million, or $0.10 loss per share, for the first quarter of 2018.

Total cash and cash equivalents at March 31, 2019 were $7.4 million.

To supplement our financial information presented in accordance with GAAP, the Company considers and has included in this press release certain non-GAAP financial measures, including a non-GAAP reconciliation of gross profit, income (loss) before taxes, net income (loss) available to common stockholders, and earnings (loss) per share in the presentation of financial results in this press release. Management believes this non-GAAP presentation may be more meaningful in analyzing our income generation and has therefore excluded the following items from GAAP earnings calculations: stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, acquisition costs, and preferred stock dividends. Additionally, since we are in a cumulative loss position, a non-GAAP income tax expense (benefit) was computed using a 24 percent tax rate for 2019 and 2018 using the Company’s normalized combined U.S. federal, state, and foreign statutory tax rates less various tax adjustments. This presentation may be considered more indicative of our ongoing operational performance. The table below presents the differences between non-GAAP net income (loss) and net income (loss) on an absolute and per-share basis. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and the non-financial measures as reported by Smith Micro Software may not be comparable to similarly titled amounts reported by other companies.

Smith Micro Software First Quarter 2019 Financial Results Page 3

Investor Conference Call:

Smith Micro will hold an investor conference call today, May 8, 2019 at 4:30 p.m. EDT, to discuss the Company’s first quarter 2019 financial results. To access the call, dial 1-877-270-2148; international participants can call 1-412-902-6510. A passcode is not required to join the call; ask the operator to be placed into the Smith Micro conference. Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, the conference call will be available on the Smith Micro website in the Investor Relations section.

About Smith Micro Software, Inc.:

Smith Micro develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless service providers and cable MSOs around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, our solutions enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer IoT devices. The Smith Micro portfolio also includes a wide range of products for creating, sharing and monetizing rich content, such as visual voice messaging, optimizing retail content display, performing analytics on any product set, and 2D/3D graphics applications. For more information, visit www.smithmicro.com.

Smith Micro, the Smith Micro logo, SafePath, CommSuite and ViewSpot are registered trademarks or trademarks of Smith Micro Software, Inc. Third-party trademarks mentioned are the property of their respective owners.

Forward-Looking Statements:

Certain statements in this press release are, and certain statements on the related conference call may be, forward-looking statements regarding future events or results, including statements related to our financial prospects and other projections of our performance and our future business plans, and statements using such words as “expect,” “anticipate,” “believe,” “plan,” “intend,” “could,” “will” and other similar expressions. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Among the important factors that could cause or contribute to such differences are changes in demand for our products from our customers and their end-users, customer concentration, given that the majority of our sales depend on a few large customer relationships, changes in requirements for our products imposed by our customers or by the third party providers of software and/or platforms that we use, our ability to effectively integrate, market and sell acquired product lines, new and changing technologies, customer acceptance and timing of deployment of those technologies, and our ability to compete effectively with other software and technology companies. These and other factors discussed in our filings with the Securities and Exchange Commission, including our filings on Forms 10-K and 10-Q, could cause actual results to differ materially from those expressed or implied in any forward-looking statements. The forward-looking statements contained in this release are made on the basis of the views and assumptions of management, and we do not undertake any obligation to update these statements to reflect events or circumstances occurring after the date of this release.

Smith Micro Software First Quarter 2019 Financial Results Page 4

Smith Micro Software, Inc.

Reconciliation of GAAP to Non-GAAP Results

(in thousands, except per share amounts) – unaudited

	GAAP			Stock Compensation		Intangibles Amortization		Note Issue/ Discount		Fair Value Adjustments		Acquisition Costs		Preferred Stock Dividends		Taxes			Non- GAAP
Three Months Ended 3/31/19:
Gross profit	$	7,516		$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	7,516
Income before provision for     income taxes		52			456		196		-		-		76		-		-			780
Net income available to      common stockholders		14			456		196		-		-		76		34		(183	)		593
Earnings per share: basic		0.00			0.01		0.01		-		-		0.00		0.00		(0.01	)		0.02
Earnings per share: diluted		0.00			0.01		0.01		-		-		0.00		0.00		(0.01	)		0.02
Three Months Ended 3/31/18:
Gross profit	$	4,154		$	-	$	-	$	-	$	-	$	-	$	-	$	-		$	4,154
Loss before provision for     income taxes		(2,371	)		163		64		65		139		-		-		-			(1,940	)
Net loss available to common      stockholders		(2,522	)		163		64		65		139		-		141		476			(1,474	)
Loss per share: basic and      diluted		(0.16	)		0.01		0.00		0.00		0.01		-		0.01		0.03			(0.10	)
Note: Loss per share: basic and diluted - may be impacted by rounding to allow rows to calculate.

Smith Micro Software First Quarter 2019 Financial Results Page 5

Smith Micro Software, Inc.

Statements of Operations

(in thousands, except per share amounts) - unaudited

	For the Three Months
	Ended March 31,
	2019			2018
Revenues	$	8,432		$	5,463
Cost of revenues		916			1,309
Gross profit		7,516			4,154
Operating expenses:
Selling and marketing		1,968			1,730
Research and development		2,682			2,255
General and administrative		2,700			2,190
Restructuring expense		104			-
Total operating expenses		7,454			6,175
Operating income (loss)		62			(2,021	)
Non-operating expenses:
Interest expense, net		-			(171	)
Change in fair value of warrant liability		-			(139	)
Other expense, net		(10	)		(40	)
Income (loss) before provision for income taxes		52			(2,371	)
Provision for income tax expense		4			10
Net income (loss)		48			(2,381	)
Less preferred stock dividends		(34	)		(141	)
Net income (loss) available to common stockholders	$	14		$	(2,522	)
Earnings (loss) per share:
Basic	$	0.00		$	(0.16	)
Diluted	$	0.00		$	(0.16	)
Weighted average shares outstanding:
Basic		31,297			15,299
Diluted		31,323			15,299

Smith Micro Software First Quarter 2019 Financial Results Page 6

Smith Micro Software, Inc.

Consolidated Balance Sheets

(in thousands)

	March 31,			December 31,
	2019			2018
ASSETS
Current Assets:
Cash & cash equivalents	$	7,378		$	12,159
Accounts receivable, net		8,951			7,130
Prepaid and other assets		565			795
Total current assets		16,894			20,084
Equipment & improvements, net		852			865
Right-of-use assets		2,419			-
Deferred tax asset, net		191			191
Other assets		175			140
Intangible assets, net		5,270			238
Goodwill		7,797			3,685
TOTAL ASSETS	$	33,598		$	25,203
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	1,249		$	1,160
Accrued payroll and benefits		2,121			1,745
Current operating lease liabilities		987			-
Other accrued liabilities		330			450
Deferred revenue		234			28
Total current liabilities		4,921			3,383
Lease liabilities		1,876			-
Deferred rent		578			723
Other long-term liabilities		185			534
Total non-current liabilities		2,639			1,257
Stockholders' Equity:
Preferred stock		-			-
Common stock		32			28
Additional paid in capital		261,990			256,626
Accumulated comprehensive deficit		(235,984	)		(236,091	)
Total stockholders' equity		26,038			20,563
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	33,598		$	25,203