UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10‑Q
(Mark One)
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2019
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001‑35525
SMITH MICRO SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
|
DELAWARE |
33‑0029027 |
|
(State or other jurisdiction of |
(I.R.S. Employer |
5800 CORPORATE DRIVE
PITTSBURGH, PA 15237
(Address of principal executive offices, including zip code)
(412) 837-5300
(Registrant’s telephone number, including area code)
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 |
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 such 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
|
|
|
|
|||
|
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
☒ |
|
|
|
|
|
|
|
|
|
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 31, 2019, there were 36,951,259 shares of common stock outstanding.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 2019
|
PART I. |
|
|
|
|
|
Item 1. |
|
|
2 |
|
|
|
|
Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018 |
|
2 |
|
|
|
|
3 |
|
|
|
|
|
4 |
|
|
|
|
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 |
|
6 |
|
|
|
|
7 |
|
|
Item 2. |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
16 |
|
Item 4. |
|
|
21 |
|
|
|
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|
|
|
|
PART II. |
|
|
|
|
|
Item 1. |
|
|
22 |
|
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Item 2. |
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22 |
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Item 6. |
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23 |
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24 |
|||
1
SMITH MICRO SOFTWARE, INC.
(in thousands, except share and par value data)
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2019 |
|
|
2018 |
|
||
|
|
|
(unaudited) |
|
|
(audited) |
|
||
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
6,611 |
|
|
$ |
12,159 |
|
|
Accounts receivable, net of allowances for doubtful accounts and other adjustments of $143 (2019) and $135 (2018) |
|
|
13,017 |
|
|
|
7,130 |
|
|
Prepaid expenses and other current assets |
|
|
938 |
|
|
|
795 |
|
|
Total current assets |
|
|
20,566 |
|
|
|
20,084 |
|
|
Equipment and improvements, net |
|
|
930 |
|
|
|
865 |
|
|
Right-of-use assets |
|
|
6,708 |
|
|
|
— |
|
|
Deferred tax assets, net |
|
|
191 |
|
|
|
191 |
|
|
Other assets |
|
|
267 |
|
|
|
140 |
|
|
Intangible assets, net |
|
|
5,002 |
|
|
|
238 |
|
|
Goodwill |
|
|
7,797 |
|
|
|
3,685 |
|
|
Total assets |
|
$ |
41,461 |
|
|
$ |
25,203 |
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,227 |
|
|
$ |
1,160 |
|
|
Accrued payroll and benefits |
|
|
2,232 |
|
|
|
1,745 |
|
|
Current operating lease liabilities |
|
|
1,057 |
|
|
|
— |
|
|
Other accrued liabilities |
|
|
246 |
|
|
|
450 |
|
|
Deferred revenue |
|
|
183 |
|
|
|
28 |
|
|
Total current liabilities |
|
|
4,945 |
|
|
|
3,383 |
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
6,135 |
|
|
|
— |
|
|
Deferred rent |
|
|
547 |
|
|
|
723 |
|
|
Other long term liabilities |
|
|
168 |
|
|
|
534 |
|
|
Total non-current liabilities |
|
|
6,850 |
|
|
|
1,257 |
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001 per share; 5,000,000 shares authorized; 5,500 shares issued (2019 and 2018); 1,335 and 1,345 shares outstanding (2019 and 2018, respectively) |
|
|
— |
|
|
|
— |
|
|
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 32,041,685 and 28,241,129 shares issued and outstanding (2019 and 2018, respectively) |
|
|
32 |
|
|
|
28 |
|
|
Additional paid-in capital |
|
|
262,215 |
|
|
|
256,626 |
|
|
Accumulated comprehensive deficit |
|
|
(232,581 |
) |
|
|
(236,091 |
) |
|
Total stockholders’ equity |
|
|
29,666 |
|
|
|
20,563 |
|
|
Total liabilities and stockholders' equity |
|
$ |
41,461 |
|
|
$ |
25,203 |
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share data)
|
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
|
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
||||
|
Revenues |
|
$ |
10,854 |
|
|
$ |
6,945 |
|
|
$ |
19,286 |
|
|
$ |
12,408 |
|
|
Cost of revenues |
|
|
974 |
|
|
|
1,116 |
|
|
|
1,891 |
|
|
|
2,425 |
|
|
Gross profit |
|
|
9,880 |
|
|
|
5,829 |
|
|
|
17,395 |
|
|
|
9,983 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
|
1,768 |
|
|
|
1,447 |
|
|
|
3,735 |
|
|
|
3,177 |
|
|
Research and development |
|
|
2,743 |
|
|
|
2,195 |
|
|
|
5,425 |
|
|
|
4,450 |
|
|
General and administrative |
|
|
2,426 |
|
|
|
2,061 |
|
|
|
5,126 |
|
|
|
4,251 |
|
|
Restructuring expense |
|
|
11 |
|
|
|
52 |
|
|
|
115 |
|
|
|
52 |
|
|
Total operating expenses |
|
|
6,948 |
|
|
|
5,755 |
|
|
|
14,401 |
|
|
|
11,930 |
|
|
Operating income (loss) |
|
|
2,932 |
|
|
|
74 |
|
|
|
2,994 |
|
|
|
(1,947 |
) |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
|
31 |
|
|
|
(143 |
) |
|
|
30 |
|
|
|
(314 |
) |
|
Change in fair value of warrant liability |
|
|
— |
|
|
|
(2,085 |
) |
|
|
— |
|
|
|
(2,224 |
) |
|
Gain on sale of software product |
|
|
483 |
|
|
|
— |
|
|
|
483 |
|
|
|
— |
|
|
Other expense |
|
|
(6 |
) |
|
|
(10 |
) |
|
|
(15 |
) |
|
|
(50 |
) |
|
Income (loss) before provision for income taxes |
|
|
3,440 |
|
|
|
(2,164 |
) |
|
|
3,492 |
|
|
|
(4,535 |
) |
|
Provision for income tax expense |
|
|
4 |
|
|
|
13 |
|
|
|
8 |
|
|
|
23 |
|
|
Net income (loss) |
|
$ |
3,436 |
|
|
$ |
(2,177 |
) |
|
$ |
3,484 |
|
|
$ |
(4,558 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.11 |
|
|
$ |
(0.11 |
) |
|
$ |
0.11 |
|
|
$ |
(0.26 |
) |
|
Diluted |
|
$ |
0.10 |
|
|
$ |
(0.11 |
) |
|
$ |
0.10 |
|
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
32,068 |
|
|
|
21,888 |
|
|
|
31,685 |
|
|
|
18,612 |
|
|
Diluted |
|
|
35,308 |
|
|
|
21,888 |
|
|
|
33,365 |
|
|
|
18,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred dividends per share |
|
$ |
25.01 |
|
|
$ |
50.38 |
|
|
$ |
50.01 |
|
|
$ |
71.16 |
|
See accompanying notes to the consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated |
|
|
|
|
|
||
|
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
|
|
|
||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|||||||
|
BALANCE, March 31, 2019 (unaudited) |
|
|
1 |
|
|
$ |
— |
|
|
|
32,065 |
|
|
$ |
32 |
|
|
$ |
261,990 |
|
|
$ |
(235,984 |
) |
|
$ |
26,038 |
|
|
Non-cash compensation recognized on stock options and ESPP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
Restricted stock grants, net of cancellations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
323 |
|
|
|
— |
|
|
|
323 |
|
|
Cancellation of shares for payment of withholding tax |
|
|
— |
|
|
|
— |
|
|
|
(35 |
) |
|
|
— |
|
|
|
(108 |
) |
|
|
— |
|
|
|
(108 |
) |
|
Exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Conversion of preferred stock to common stock |
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34 |
) |
|
|
(34 |
) |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
Comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,436 |
|
|
|
3,436 |
|
|
BALANCE, June 30, 2019 (unaudited) |
|
|
1 |
|
|
$ |
— |
|
|
|
32,042 |
|
|
$ |
32 |
|
|
$ |
262,215 |
|
|
$ |
(232,581 |
) |
|
$ |
29,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated |
|
|
|
|
|
||
|
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
|
|
|
||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|||||||
|
BALANCE, December 31, 2018 (audited) |
|
|
1 |
|
|
$ |
— |
|
|
|
28,242 |
|
|
$ |
28 |
|
|
$ |
256,626 |
|
|
$ |
(236,091 |
) |
|
$ |
20,563 |
|
|
Non-cash compensation recognized on stock options and ESPP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
18 |
|
|
|
— |
|
|
|
18 |
|
|
Restricted stock grants, net of cancellations |
|
|
— |
|
|
|
— |
|
|
|
1,225 |
|
|
|
1 |
|
|
|
769 |
|
|
|
— |
|
|
|
770 |
|
|
Cancellation of shares for payment of withholding tax |
|
|
— |
|
|
|
— |
|
|
|
(138 |
) |
|
|
— |
|
|
|
(315 |
) |
|
|
— |
|
|
|
(315 |
) |
|
Employee stock purchase plan |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
Common shares issued in stock offering, net of offering costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14 |
) |
|
|
— |
|
|
|
(14 |
) |
|
Common shares issued in connection with Smart Retail acquisition, net |
|
|
— |
|
|
|
— |
|
|
|
2,699 |
|
|
|
3 |
|
|
|
5,126 |
|
|
|
— |
|
|
|
5,129 |
|
|
Exercise of warrants |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Conversion of preferred stock to common stock |
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(67 |
) |
|
|
(67 |
) |
|
Cumulative effect of adoption of ASC 842 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
93 |
|
|
|
93 |
|
|
Comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,484 |
|
|
|
3,484 |
|
|
BALANCE, June 30, 2019 (unaudited) |
|
|
1 |
|
|
$ |
— |
|
|
|
32,042 |
|
|
$ |
32 |
|
|
$ |
262,215 |
|
|
$ |
(232,581 |
) |
|
$ |
29,666 |
|
See accompanying notes to the consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated |
|
|
|
|
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||
|
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
|
|
|
||||||||||||
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|
|
Shares |
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|
Amount |
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|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|||||||
|
BALANCE, March 31, 2018 (unaudited) |
|
|
5 |
|
|
$ |
— |
|
|
|
18,237 |
|
|
$ |
18 |
|
|
$ |
239,179 |
|
|
$ |
(235,467 |
) |
|
$ |
3,730 |
|
|
Non-cash compensation recognized on stock options and ESPP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
Restricted stock grants, net of cancellations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
236 |
|
|
|
— |
|
|
|
236 |
|
|
Cancellation of shares for payment of withholding tax |
|
|
— |
|
|
|
— |
|
|
|
(26 |
) |
|
|
— |
|
|
|
(53 |
) |
|
|
— |
|
|
|
(53 |
) |
|
Employee stock purchase plan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Common shares issued in stock offering, net of offering costs |
|
|
— |
|
|
|
— |
|
|
|
3,170 |
|
|
|
3 |
|
|
|
6,294 |
|
|
|
— |
|
|
|
6,297 |
|
|
Issuance of warrants in stock offering |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,872 |
) |
|
|
— |
|
|
|
(3,872 |
) |
|
Conversion of preferred stock to common stock |
|
|
(4 |
) |
|
|
— |
|
|
|
3,623 |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
Preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(185 |
) |
|
|
(185 |
) |
|
Other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
|
Comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,177 |
) |
|
|
(2,177 |
) |
|
BALANCE, June 30, 2018 (unaudited) |
|
|
1 |
|
|
$ |
— |
|
|
|
25,004 |
|
|
$ |
25 |
|
|
$ |
241,790 |
|
|
$ |
(237,831 |
) |
|
$ |
3,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated |
|
|
|
|
|
||
|
|
|
Series B Preferred Stock |
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
|
|
|
||||||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Total |
|
|||||||
|
BALANCE, December 31, 2017 (audited) |
|
|
5 |
|
|
$ |
— |
|
|
|
14,269 |
|
|
$ |
14 |
|
|
$ |
237,486 |
|
|
$ |
(232,933 |
) |
|
$ |
4,567 |
|
|
Non-cash compensation recognized on stock options and ESPP |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
21 |
|
|
Restricted stock grants, net of cancellations |
|
|
— |
|
|
|
— |
|
|
|
1,124 |
|
|
|
1 |
|
|
|
388 |
|
|
|
— |
|
|
|
389 |
|
|
Cancellation of shares for payment of withholding tax |
|
|
— |
|
|
|
— |
|
|
|
(42 |
) |
|
|
— |
|
|
|
(88 |
) |
|
|
— |
|
|
|
(88 |
) |
|
Employee stock purchase plan |
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
|
Common shares issued in stock offering, net of offering costs |
|
|
— |
|
|
|
— |
|
|
|
6,027 |
|
|
|
6 |
|
|
|
10,753 |
|
|
|
— |
|
|
|
10,759 |
|
|
Issuance of warrants in stock offering |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,780 |
) |
|
|
— |
|
|
|
(6,780 |
) |
|
Conversion of preferred stock to common stock |
|
|
(4 |
) |
|
|
— |
|
|
|
3,623 |
|
|
|
4 |
|
|
|
(4 |
) |
|
|
— |
|
|
|
— |
|
|
Preferred stock dividends |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(326 |
) |
|
|
(326 |
) |
|
Other |
|
|
— |
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