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Smith Micro Announces 2002 Second Quarter Results

Jul 25, 2002
68% Increase in Revenues over Previous Year

Aliso Viejo, CA -- Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software and service solutions for the wireless and Internet markets, today reported its second quarter 2002 results.

The company reported net revenues for the quarter ended June 30, 2002, of $1.6 million, compared to $965 thousand in the second quarter of 2001, an increase of 68%. The company's net loss of $495,000 in the second quarter of 2002 resulted in a loss of $.03 per basic and diluted share, compared to a net loss of $3.8 million in the second quarter 2001 or a loss of $.24 per basic and diluted share, a net income increase of 87%.

"Our effort in the wireless sector is paying off as we have signed on and started to ship our wireless products to several new companies including Cingular," said William W. Smith, Jr., President and Chief Executive Officer. "We also believe we have a continual and predictable revenue stream coming from several of our wireless customers which helps us in our forecasting effort. We continue to be very confident that the wireless sector is an exciting market for us to address and our efforts have proven that it is fruitful," Mr. Smith continues.

The company also announced that it has voluntarily submitted an application to transfer from the Nasdaq National Market to the Nasdaq SmallCap Market. "We continue to believe in our business case going forward and making the decision to transfer to the SmallCap Market will provide us with more time to allow the company's stock to recover," Mr. Smith concludes.

Investor Conference Call

Smith Micro will hold an investor conference call to discuss the company's results at 4:30 p.m. Eastern time later today. Investors may access the conference call over the Internet via the company's website www.smithmicro.com or PRNewswire/Thonpson.

About Smith Micro Software

Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communication and utility software products. The company designs integrated, cross platform, easy-to-use software for personal computing and business solutions around the world. With a focus on the Wireless, and Broadband technologies, the Internet and the company's products and services enable wireless communications, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, and network fax, along with traditional computer telephony. Smith Micro's complete line of products is available through original equipment manufacturers (OEMs), direct sales, retail stores, value-added resellers (VARs). 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. 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, fluctuations or cancellations in orders from distribution 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.

Financial Schedules follow

Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (see note below)
(in thousands, except per share amounts)

 Three Months Ended
June 30
(unaudited)
 20022001
Net Revenues:
   Products1,35397
   Services264868

Total Net Revenues1,617965
 
Cost of Revenues:
   Products234375
   Services151566

Total Cost of Revenues385941

Gross Margin1,23224
 
Operating Expenses:
   Sales & Marketing5671,429
   Research & Development520832
   General & Administrative6221,264
   Restructuring Costs 345

Total Operating Expenses1,7093,870

Operating Loss(477)(3,846)
Other (Expense) Income, net(14)33

Loss Before Income Tax(491)(3,813)
Income Tax Expense420

Net (Loss)$(495)$(3,833)

Net Loss per share, basic and diluted$(0.03)$(0.24)

Weighted average shares outstanding,
basic and diluted
16,23416,232

Notes: The adoption of Statement of Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires that Smith Micro no longer amortize goodwill. For comparison purposes, goodwill amortization expense was $136,000 in the second quarter of 2001.

Certain reclassifications have been made to prior year's balances to conform to the current period's presentation, which includes the adoption of Emerging Issues Task Force (EITF) 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). The result of this adoption was a decrease in revenue with a corresponding decrease in selling and marketing expense of $116,000 for the three months ended June 30, 2001. The impact for the current year is lower revenue and lower selling and marketing expense of $77,000.

Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (see note below)
(in thousands, except per share amounts)

 Six Months Ended
June 30
(unaudited)
 20022001
Net Revenues:
   Products2,8102,530
   Services7001,484

Total Net Revenues3,5104,014
 
Cost of Revenues:
   Products604892
   Services5501,087

Total Cost of Revenues1,1541,979

Gross Margin2,3562,035
 
Operating Expenses:
   Sales & Marketing1,2322,952
   Research & Development1,0601,839
   General & Administrative1,1112,322
   Restructuring Costs 345

Total Operating Expenses3,4037,458

Operating Loss(1,047)(5,423)
Other (Expense) Income, net(22)65

Loss Before Income Tax(1,069)(5,358)
Income Tax Expense889

Net (Loss)$(1,077)$(5,447)

Net Loss per share, basic and diluted$(0.07)$(0.34)

Weighted average shares outstanding,
basic and diluted
16,23516,232

Notes: : The adoption of Statement of Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires that Smith Micro no longer amortize goodwill. For comparison purposes, goodwill amortization expense was $272,000 in the six months ended, June 30, 2001.

Certain reclassifications have been made to prior year's balances to conform to the current period's presentation, which includes the adoption of Emerging Issues Task Force (EITF) 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). The result of this adoption was a decrease in revenue with a corresponding decrease in selling and marketing expense of $312,000 for the six months ended June 30, 2001. The impact for the current year is lower revenue and lower selling and marketing expense of $227,000.

Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)

 June 30,
2002
(unaudited)
December 31,
2001
ASSETS
Current Assets:
Cash & Cash Equivalents$2,603$3,226
Accounts Receivable, Net1,4312,724
Inventory, Net253295
Prepaids & Other Assets188265

   Total Current Assets4,4756,510
Equipment and Improvements, net349482
Other Assets5342
Intangible Assets2,0882,223

TOTAL ASSETS$6,965$9,257

 
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable$569$1,160
Accrued Liabilities1,1681,795

   Total Current Liabilities1,7372,955
 
Common Stock1616
Additional Paid In Capital24,79224,789
Accumulated Deficit(19,580)(18,503)

   Total Stockholders' Equity5,2286,302

TOTAL LIABILITIES AND EQUITY$6,965$9,257

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