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Smith Micro Returns To Profitability In Its Second Quarter 2005 Financial Performance

Aug 09, 2005
Company Ships First Enterprise Customer; Regains Financial Momentum

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 2005 results.

The company reported net revenues of $3.3 million for the quarter ended June 30, 2005, compared to $3.1 million recorded in the second quarter of 2004. The company's net income of $764,000 in the second quarter of 2005 resulted in a net income of $0.04 per basic share and $0.03 per diluted share, compared to net income of $634,000 in the second quarter of 2004 or net income of $0.04 per basic share and $0.04 per diluted share. From a sequential quarter perspective, net income for the second quarter of 2005 of $764,000, or $0.03 per fully diluted share, was a significant increase from the first quarter 2005 net loss of $128,000 or $(0.01) per fully diluted share.

The company also reported a backlog entering into the third quarter of 2005 of $1.3 million.

The company reported net revenues of $5.4 million for the six months ended June 30, 2005, compared to $5.6 million recorded in the six months ended June 30, 2004. The company's net income of $636,000 for the six months ended June 30, 2005 resulted in a net income of $0.03 per basic share and $0.03 per diluted share.

The company ended the quarter with cash and cash equivalents of $30 million, $20.8 million was the net result of an equity transaction in February of 2005. Cash and cash equivalents do not reflect the recent acquisition of Allume Systems, which closed on July 1, 2005. The agreement called for Smith Micro to pay $11 million in cash and 397,547 shares of restricted Smith Micro common stock, valued at $1.75 million to purchase all of the outstanding shares of Allume Systems, Inc from International Microcomputer Software, Inc. (IMSI).

"As we stated during the previous quarter conference call, we saw the issues resulting in our shortfall in the first quarter to be temporary and we are pleased by the performance for the second quarter," said William W. Smith, Jr., President and Chief Executive Officer. "We are excited with the potential that the acquisition of Allume Systems brings to a combined company. Allume's strong product line and new JPEG compression technology will be an important addition to our wireless software offerings," Mr. Smith continues.

Investor Conference Call

Smith Micro will hold an investor conference call today, August 9, 2005, at 4:30 pm EDT to discuss the company's second quarter financial results. Investors may access the conference call over the Internet via the company's website www.smithmicro.com or at http://phx.corporate-ir.net/playerlink.zhtml?c=107760&s=wm&e=1099397.

About Smith Micro Software

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


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

 Three Months Ended
June 30 (unaudited)
 20052004
Net Revenues:
   Products$3,179$2,840
   Services151277
 
Total Net Revenues3,3303,117
 
Cost of Revenues:
   Products476627
   Services69105
 
Total Cost of Revenues545732
 
Gross Margin2,7852,385
 
Operating Expenses:
   Selling & Marketing369387
   Research & Development697621
   General & Administrative1,161733
 
Total Operating Expenses2,2271,741
 
Operating Income558644
Interest Income2145
 
Income Before Income Tax772649
Income Tax Expense815
 
Net Income764634
 
Net Income per share, basic$0.04$0.04
 
Weighted average shares outstanding, basic21,58417,072
 
Net Income per share, fully diluted$0.03$0.04
 
Weighted average shares outstanding, fully diluted22,71318,022
 


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

 Six Months Ended
June 30 (unaudited)
 20052004
Net Revenues:
   Products$5,038$5,110
   Services322495
 
Total Net Revenues5,3605,605
 
Cost of Revenues:
   Products7461,247
   Services144175
 
Total Cost of Revenues8901,422
 
Gross Margin4,4704,183
 
Operating Expenses:
   Selling & Marketing809790
   Research & Development1,3941,289
   General & Administrative1,9371,366
 
Total Operating Expenses4,1403,445
 
Operating Income330738
Interest Income31414
 
Income Before Income Tax644752
Income Tax Expense815
 
Net Income636737
 
Net Income per share, basic$0.03$0.04
 
Weighted average shares outstanding, basic20,62917,048
 
Net Income per share, fully diluted$0.03$0.04
 
Weighted average shares outstanding, fully diluted21,90118,019
 



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

 June 30,
2005
(unaudited)
December 31,
2004
ASSETS
Current Assets:
Cash & Cash Equivalents$29,946$8,634
Accounts Receivable, Net2,6602,024
Income Tax Receivable3535
Inventory, Net2647
Prepaids & Other Assets271203
 
   Total Current Assets32,93810,943
Equipment and Improvements, Net108113
Goodwill1,7151,715
Other Assets1957
 
TOTAL ASSETS$34,780$12,828
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable$1,048$939
Accrued Liabilities1,020790
 
   Total Current Liabilities2,0681,729
 
Common Stock22 18 
Additional Paid In Capital48,723 27,750 
Accumulated Deficit(16,033)(16,669)
 
   Total Stockholders' Equity32,71211,099
 
TOTAL LIABILITIES & EQUITY$34,780$12,828
 
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